GRAND ISLAND, Neb. (KGFW) – The Nebraska State Auditor’s office has referred findings of its investigation into the Nebraska State Fair’s finances to state and local law enforcement agencies for further review.
According to a public letter to State Fair Board Chair Beth Smith, the Nebraska Auditor of Public Accounts (APA) launched its independent investigation after it had “received allegations of wrongdoing regarding employee layoffs and certain financial activities.”
Though, limited in scope, the APA investigation uncovered a bevy of questionable payments, including two large checks made out to RKBB Enterprises, LLC, an alleged cattle company created by former State Fair finance director Patrick Kopke, totaling $149,415.60.
The APA subpoenaed bank records for both RKBB Enterprises, LLC and Kopke’s personal account.
“In addition to reviewing the deposits into that RKBB bank account, the APA analyzed the checks and other debits from it, attempting unsuccessfully to determine what, if any, services had been provided to the State Fair for the two payments received,” the State Auditor’s letter reads.
According to the APA letter, Kopke made several purchases with the funds, including a pickup, trailer, ATV and land. $54,812.29 in payments were also made to what appeared to be a personal credit card.
The investigation also found that, when Kopke sent 2019 employee bonuses to the State Fair’s payroll processor, his bonus was 20%. All others were 10% or less or a smaller flat amount. The Fair Board approved the bonuses at its February 22, 2019 meeting – weeks after the bonuses had already been paid – with undetermined review.
Several cash deposits, totaling $9,398, were also made to Kopke’s personal account between Sept. 2018 and Dec. 2019.
“Due to the State Fair’s numerous cash transactions, the APA considered it important to disclose those deposits.”
The APA investigation also analyzed credit card purchases by both Kopke and former State Fair executive director Lori Cox. Between Nov. 2018 and Nov. 2019, Kopke’s card charges totaled $46,665.48. Cox’s card charges totaled $139,755.64 between Aug. 2018 and Dec. 2019.
“The APA noted several possible concerns, including expenditures for spouses, unsupported procurement of fuel, and meal purchases in Grand Island, Nebraska, and elsewhere,” as well as “an inordinately expensive car wash,” for $512.01 on Kopke’s card.
A charge on Kopke’s card appeared to be airfare for his spouse. While a charge on Cox’s card appeared to be airfare for the spouse of former Fair Board member Kirk Shane.
The APA has recommended numerous changes:
1. Specifically, regarding the two checks written to RKBB Enterprises, LLC, “We recommend the State Fair implement procedures to ensure all expenditures of its funds are supported by documentation, including detailed Board meeting minutes, that thoroughly delineates the purpose for, as well as the specific benefits to be received from, those disbursements. Furthermore, we recommend the State Fair take immediate action to recover any funds that are found to have been disbursed improperly. Finally, because this comment gives rise to concerns regarding possible violations of State statute, we are forwarding the information herein to the Nebraska Attorney General, the Nebraska State Patrol, and the Hall County Attorney for further review. The APA will also refer this matter to the Nebraska Department of Revenue and the Internal Revenue Service.”
2. “We recommend the Board implement procedures to ensure all disbursements of State Fair funds are approved before payment.”
3. “We recommend the State Fair implement procedures for specifying both allowable expenditure of State Fair funds and proper use of State Fair credit cards.”
4. “We recommend the Board consider implementing procedures to ensure a proper segregation of duties, so no one individual is capable of handling all phases of a transaction from beginning to end. In doing so, of course, the cost of hiring additional personnel must be weighed against the benefit of such segregation of duties. We recommend also that the State Fair implement procedures ensuring a method for Board approval of itemized claims that are detailed in the minutes of the meetings during which they were allowed. Finally, the State Fair’s procedures should ensure adherence to administrative requirements, such as the Board’s July 12, 2019, motion requiring dual signatures on all checks for more than $5,000.”
The State Fair Board received the APA letter and an opportunity to respond prior to its public release. The State Fair issued the following press release Tuesday afternoon:
The Nebraska Auditor of Public Accounts released their findings from investigation today at 10 a.m. on their website.
The Nebraska State Fair Board (NSFB) plans to institute policies and procedures to tighten internal controls such as supporting documentation for journal entries including but not limited to: initiation, review and approval of journal entries; a procurement policy; an expense reimbursement policy, including receipt procedures for travel and other purchases; implementation of a vendor approval process wherein vendor research is conducted before relationships are established and/or invoices are paid; and a credit card policy. The NSFB has already eliminated the use of a signature stamp and is requiring two signatures for checks in the amount of $5,000.00 or more, drafted a procurement policy, employed a new Executive Director with extensive budgeting experience and is working on an Request For Proposal (RFP) for an outside accounting firm. The NSFB’s Finance committee is closely examining the budget and related monthly vendor and other expenditures.
The Board is working with its newly hired Executive Director to quickly and thoroughly assess and implement recommendations from the State Auditor, as well as those from a recent forensic investigation.
“The Nebraska State Fair Board is aware of the State Auditor Report which was released today. The Nebraska State Fair Board is a proud community member and
takes seriously any alleged financial concerns within the organization. In recent months, the Board has initiated several steps to ensure accurate financial records and accountability, including initiating a financial audit, cooperating with the State Auditor and local authorities, and instituting financially sound policies and procedures. The Board will continue to take steps to ensure our resources are spent wisely and for the benefit of the Nebraska State Fair, “stated Chair Beth Smith.
We are grateful for the community’s patience and support.
