CLAY CITY, Ind. (WTWO/WAWV)— The Indiana State Board found a former town official allegedly made hundreds of thousands of dollars in unauthorized payments.
The Indiana State Board of Accounts (SBOA) conducted a special investigation from January 1, 2020, to December 31, 2023, when Karla Pipes was Clay City’s Clerk-Treasurer.
According to a special investigation report filed by SBOA, Pipes allegedly made unauthorized credit card transactions totaling over $280,000.
According to the report, “Town officials became suspicious after a review of the Town’s credit card statements. A significant number of transactions were made by Pipes with the Town’s credit card wherein a point-of-sale company was utilized; Square.”
Pipes allegedly created an account on Square with a name similar to that of a legitimate vendor with whom the town regularly does business. She allegedly made 141 transactions to the fake vendor totaling $238,567.17 for which no receipts or records were provided to SBOA. The SBOA report found that those transactions paid to the fake vendor were linked to an account owned by Pipes.
The SBOA says she also allegedly overpaid herself. According to the report, the approved salary ordinances state the Clerk-Treasurer was to be paid quarterly. In 2020 and 2022 Pipes paid herself an additional check of $2,187.42 and $2,411.73.
The report also states that the Clerk-Treasurer would also serve as the utility clerk and would be paid weekly.
“In 2021, Pipes paid herself 57 utility clerk checks,” The report reads. “Fifty-two checks were written for the correct amount of $409.92. The five additional checks were handwritten for $5,666.67.”
The report states that Pipes was interviewed by the SOBA in October 2024 but could not provide an explanation as to how the $32,932.50 of town funding was deposited into her account.
In addition, Pipes allegedly wrote an unauthorized check to herself for $33,000 on June 11, 2020. No receipts, invoices, contracts, or other public records were able to determine the validity of the check, the report states.
According to the report, the ledger stated the check was written to a vendor, but when the check cleared it was deposited into a personal account of Pipes.
The report states, “Four days after the check was deposited a large wire transfer was made from Pipes’ personal bank account to a title company.”
The SBOA states that during the period of the examination, Pipes allegedly did not properly and timely remit payments to the Indiana Department of Revenue, Indiana Department of Workforce Development, a financial institution, and a vendor causing the town to incur penalties, interest, and other charges.
The report states that “officials and employees have the duty to pay claims and remit taxes in a timely fashion. It goes on to say that failure to do so can be an indicator of serious financial problems which should be investigated by the unit.”
The board says these accusations, in addition to the cost of the special investigation, totaled over $385,000.
The SBOA says in its report that it’s the board’s understanding that there is an ongoing investigation by the FBI.
WTWO reached out to the FBI and received the following statement:
“Per policy, we don’t confirm or deny investigations. You would have to contact the US Attorney’s office regarding any federal charges.”
-Chris Bavender, Public Affairs, FBI Indianapolis
WTWO reached out to the US Attorney’s office and Indiana Attorney General Todd Rokita’s office and is awaiting a response.
WTWO reached out to the SBOA for a comment on the special investigation report, and they replied with this statement:
Thank you for reaching out to the State Board of Accounts. We have no comments or anything further to add to the information contained within our Special Investigation Report.
Jennifer Gauger, Chief of Staff, State Board of Accounts
WTWO also spoke with Terry Silvers, Chief of the Clay City Police Department.
“Since this is part of a federal investigation, they (him and town officials) are unable to comment at this time,” he said.
WTWO reached out to Pipes for comment but has not yet heard back.
This is a developing story, WTWO will update this story as more information becomes available.
Read the special investigation report in its entirety below:
