A special investigation by the State Board of Accounts documents that a former Portage firefighter allegedly falsely claimed $84,723.85 in overtime, but also cited a number of issues with how city officials oversaw its payroll system.
William Thomas Lundy III, 26, of Michigan City, was charged last June with two Level 5 felonies of fraud and theft.
The case is pending in Porter Superior Court 1. The results from the State Board of Accounts investigation were forwarded to the Porter County Prosecutor’s office.
Lundy, the son of Bill Lundy, who formerly served as Portage’s fire chief, resigned from the department effective in April 2025. He was placed on administrative leave in January 2025.
As part of his resignation, Lundy signed a separation agreement in May 2025 that stated he intended to hire his own accountant to determine the exact amount of unearned wages. He also submitted a $26,000 check to the city as a partial payment.
At the time of his resignation, a city police investigation believed that Lundy had pocketed more than $96,000 in fraudulent overtime between 2022 and 2025.
When Lundy was charged, the amount of fraudulent payments was pegged at $93,001.11, according to court documents.
The city of Portage requested the special investigation by the State Board of Accounts, which, after an extensive review of records, calculated that Lundy falsely claimed $84,723.85 in overtime.
After Lundy’s payment of $26,000 is deducted for overtime he shouldn’t have been paid, the amount owed to the city would be $58,723.85, the audit says.
The state is charging $55,086.53 for the special investigation and suggests that Lundy pay the cost.
Portage city officials were alerted about the issue in January 2025, when one of Lundy’s former colleagues happened to be perusing the Indiana Gateway website to review the pay of Portage employees. He was suspicious because he knew, as a fellow paramedic, that Lundy hadn’t worked a significant amount of overtime, according to court documents and the state investigation.
When confronted by fire department supervisors, Lundy replied in an email that, in review, his pay from 2024 was much higher than it should have been, the report said.
Carrie Belt, Portage’s deputy clerk-treasurer, discovered that Lundy had made numerous unauthorized entries in the city’s payroll system.
Lundy had entered the overtime hours he worked through an Automatic Data Payroll (ADP) app on his cellphone. The hours didn’t match the fire department’s schedule.
The state report noted it was significant that Belt, the deputy clerk, told police that she was unaware that the ADP software system allowed any firefighter or other city employee who had access to the ADP app to enter hours into the payroll system.
There were also issues with the city’s internal control procedures, according to the audit. For instance, it was determined that 25 of the time cards were processed by someone from the payroll department without the fire department’s approval, the state report said.
Of those 25 cards, 18 of them included hours added by Lundy that resulted in overpayment of compensation, the report said.
For the other 29 time cards approved in ADP by the fire department, the state audit determined that 19 included hours added by Lundy that resulted in him receiving overpayment.
The State Board of Accounts also found several pay periods where clerical errors were made by someone other than Lundy that resulted in overpayment of compensation. For example, Lundy received $1,476.24 in excess wages on Dec. 15, 2023, due to the application of an incorrect overtime rate.
The state report also questioned whether the city obtained enough documentation of hours worked when a firefighter went through paramedic training. Lundy had obtained paramedic training in 2022 and 2023.
Before results of the special investigation were publicly released, the state board shared its observations with several Portage city officials, including Mayor Austin Bonta, Clerk-Treasurer Elizabeth Modesto and Fire Chief Christopher Crail.
Jim Woods is a freelance reporter for the Post-Tribune.
