Trustees in the Village of Fox Lake have adopted a plan to repay an estimated $2.5 million missing from the coffers of the Northwest Regional Water Reclamation District, the taxpayer-funded and village-run agency that treats sewage for nearly 50,000 customers in northwestern Lake County, Mayor Jim Pappas said Tuesday.
In addition, Pappas disclosed that FBI agents have been conducting a criminal probe in Fox Lake to determine what happened to the $2.5 million, which recently was discovered to be missing from a district account.
“What we’ve got here is not just questionable accounting practices involving the village,” the mayor said. “It’s also a criminal investigation of expenditures, missing documents and computers that were tampered with.
“In fact, the $2.5 million may turn out to be just the tip of the iceberg,” the mayor said.
Pappas made his remarks after the Tribune reported Tuesday that federal and state authorities were looking into the apparent disappearance of $2.5 million from the district’s account, which is maintained by village officials.
Deborah Jones-Buggs, a spokeswoman for the FBI in Chicago, refused to say whether the agency was involved in the investigation.
The Lake County state’s attorney’s office joined the investigation last week at the request of several Lake County Board members who became alarmed after reviewing an audit that showed the money to be missing.
The Village of Fox Lake is responsible for operations at the sewer-treatment plant because it owns the facility. For the last 20 years, however, the plant has served residents not only of Fox Lake but also Lake Villa, Round Lake, Round Lake Beach, Round Lake Heights, Round Lake Park, parts of Antioch and several unincorporated areas served by the Lakes Region Sanitary District.
Under an intergovernmental agreement, each of the municipalities collect monthly user fees from local residents for sewage treatment at the plant, and the money is sent to the Lake County Department of Public Works. The Public Works Department then transfers the money to the Village of Fox Lake, where it is supposed to be deposited into what’s called a Regional Account.
A village audit of the fiscal year ending April 30, 1997, however, showed that $2.5 million is missing from the Regional Account–a discrepancy that is at the core of the twin investigations by the FBI and Lake County prosecutor’s office.
In an attempt to replace the missing funds, village trustees voted Monday night to immediately take $500,000 from one of the village’s accounts and transfer it into the district’s Regional Account.
“Our plan is to transfer in $500,000 a year for the next five years,” Pappas said. “Our hope is the people who were responsible (for the disappearance of the $2.5 million) will ultimately be held responsible and we’ll be able to recover some of that money.”
Pappas said that FBI agents served a subpoena on the village in January, seeking records related to the operation of the sewage-treatment plant, which has a $7 million annual operating budget.
Pappas, a former trustee, said after his election as mayor the village elected not to renew its contract with a private firm that had operated the plant for 18 months. Instead, the village assigned responsibility for the plant’s operation back to various village employees as part of a wholesale restructuring of personnel assignments and departments at Village Hall.
Some Lake County Board members, however, are still questioning the actions of Pappas, saying they don’t believe he’s done enough to rectify the problem.
“The $500,000 isn’t good enough,” said board member Bonnie Thomson Carter (R-Ingleside), a vocal critic of the mayor. “Why aren’t they paying all the money back today?”
