The tragic story of Kathy Beutler
Files: Sheriff unaware of wife’s theft
By BOB BLAKE
OTTAWA — Massive credit card debt began amassing years before an area sheriff’s wife began taking money from her employer, according to a review of state investigative records.
Kathy Beutler told state investigators the household’s reliance on her income during her husband’s initial run for office in 2000 led to her eventual theft of more than $261,000 from the Ohio Farmers Union, according to records. The investigation also concluded Beutler’s husband, Putnam County Sheriff Jim Beutler, had no knowledge of the theft.
There was also a missed opportunity to catch the theft sooner, investigation documents show. An internal audit commissioned by the OFU discovered missing funds a year before the allegations against Kathy Beutler came to light. Officials at the union and the accountant who performed the audit, however, reconciled the discrepancies since the union added more counties into its insurance coverage.
The revelations come from the investigative files the Ohio Bureau of Criminal Identification and Investigation kept on Kathy Beutler. The Ohio Attorney General’s office released the records to The Lima News following a public records request. By law, investigative records do not become public records until after the conclusion of the appeals process.
Kathy Beutler pleaded guilty in September to one count of aggravated theft, a third-degree felony. A special prosecutor said over the course of four years, from 2005 through 2009, Beutler made 86 transactions to embezzle $261,159 from the OFU, where she worked since December 2003. She is currently serving a three-year prison sentence at the Ohio Reformatory for Women in Marysville.
Campaign and credit cards
The road from law-abiding citizen to convicted felon for Kathy Beutler began with her husband’s campaign for sheriff, according to accounts from BCI&I reports.
In order to enter the 2000 campaign for sheriff, Jim Beutler resigned from the sheriff’s office after 24 years as a deputy. As the sheriff spent more time campaigning, he was able to devote less time to a construction company he operated as a side business.
In an October 2009 interview, Jim Beutler told Special Agent David W. Pauly, of the Ohio Bureau of Criminal Identification and Investigation, he thought between his wife’s job, his job and the construction business that household finances were on solid ground.
Kathy Beutler was responsible for the family’s finances. In August 2009, Kathy Beutler told Pauly her husband “didn’t have a clue.” She told investigators during Jim Beutler’s campaign in 2000 she assumed full responsibility for bringing in money to pay bills, and it put them “in a big hole financially.”
“Ms. Beutler stated that they had four kids in school and that was the start of once again utilizing credit cards to make ends meet,” Pauly wrote. “Ms. Beutler did not tell her husband that she was relying on credit cards to get them through financially at the time, primarily because she was afraid to do so.”
According to the reports, Kathy Beutler soon maxed out her credit cards, and interest rates climbed to 26 percent. She used a cash advance from one to pay off the fees of another. She told Pauly she took the money from the OFU to pay down the debt and that “it became a huge monster.”
A question of influence
As Kathy Beutler’s web of deception unraveled, she begged for mercy from the very agency she defrauded. Questions also arose on the part of OFU employees about whether the sheriff attempted to influence how they handled the situation.
With mounting suspicion and increasing evidence, officials at the OFU placed Kathy Beutler on paid administrative leave on June 3, 2009. Five days later, she sent an e-mail to Roger Crossgrove, the executive director of the OFU at the time. In the e-mail, Kathy Beutler begged Crossgrove not to go to the authorities.
“I am asking that you not take legal action against me, but let me make it right,” Kathy Beutler wrote. “OFU at this point does not need any more scandal, and I want to make this right with you. I will do or sign [whatever] you need.”
According to one investigative report, OFU officials were concerned the sheriff attempted to influence how things were handled.
In a June 2009 report by Pauly, Crossgrove told investigators, “the second time the Sheriff came in he wanted to make a deal with us to kind of keep it quiet. He wanted us to contact the prosecutor and put any investigation on hold and to not involve BCI agents.”
The sheriff adamantly denied ever attempting to influence how OFU officials ultimately decided to handle the situation or the official investigation. Jim Beutler said OFU officials invited him to talk about the situation and asked for guidance.
“They asked me, ‘What should we do with this?’” Jim Beutler said. “I said, ‘Look, I can not give you advice. There are two options: Either you can pursue it, or we can deal with it personally. How do you want it? Those are your options, but I can’t give you advice as sheriff as to how to handle this because it does involve my wife.’”
State investigators never opened an investigation into the sheriff’s actions.
The investigation by special agents from the BCI&I was strictly limited to Kathy Beutler, according to Ted Hart, a spokesman for Ohio Attorney General Richard Cordray’s office.
“It was a very thorough investigation,” Hart said. “We did not determine any wrongdoing by the sheriff.”
Kathy Beutler, in the e-mail seeking to avoid a legal proceeding, said she was “not a bad person, monster or a diabolical extortionist. I am a good person that fell into a terrible trap.”
She offered a plan.
“Roger, I would be willing to work for $10,000 a year to help make this up,” Kathy Beutler wrote to Crossgrove.
Officials at the OFU declined to comment. Laurie Pangle, a Toledo attorney representing the union, also declined to comment.
Missed opportunity
The revelation that Kathy Beutler, who served as secretary-treasurer of the OFU, took more than a quarter million dollars from the organization almost came to light a year earlier.
Questions about missing funds began after a 2008 internal audit conducted by a representative of Lentol, Violet, Kienitz and Co., a Lima accounting company. Colleen Diller, a certified public accountant with the firm, told Pauly her audit discovered a discrepancy of approximately $72,000 in one account.
“Ms. Diller advised that she does an analytical evaluation and ‘nothing blipped,’ raising her suspicion that something was wrong,” Pauly wrote. “Ms. Diller explained that they look for different things than what the agents may be looking at.”
Diller told agents she assesses the risk of fraud during her audits. In an agency the size of the OFU, management has the power to override the risk. Pauly wrote that OFU gave Kathy Beutler “all the power to make those transactions, with little or no oversight.”
Crossgrove told Pauly that OFU officials were less concerned with the discrepancies in the insurance account.
“Mr. Crossgrove stated that this was not his biggest concern, as he feels that the payroll account is [where] the majority money deficit is coming from,” Pauly wrote.
Pauly wrote Crossgrove said, “Everyone in the entire organization trusted Kathy [Beutler] one hundred percent.”
Officials at Lentol, Violet, Kienitz and Co. could not be reached for comment.
All is revealed
The series of thefts finally came to light after Kathy Beutler took some vacation time, investigative records show.
Crossgrove acknowledged in a June 2009 interview with BCI&I agents that there had been red flags that OFU officials missed. Crossgrove said some bills were not getting paid on time.
When Crossgrove questioned Kathy Beutler about the bills, she told him the agency didn’t have the money, but that the bills would be paid. Crossgrove said the union’s “bottom line” was always very low, and he decided to start looking at all the bank statements.
According to the investigative records, when Kathy Beutler took vacation the week of May 25, 2009, another OFU employee, who was searching for the agency’s bank statements on Crossgrove’s orders, found Union Bank statements in Kathy Beutler’s desk drawer. The Beutlers and the OFU both use the bank.
The employee inspected the statements and found they belonged to Kathy and Jim Beutler. The statements included multiple transfers from OFU accounts above and beyond Kathy Beutler’s regular paycheck, Crossgrove told investigators.
Even after she was placed on administrative leave, Kathy Beutler continued to hide the situation from her husband. Jim Beutler told investigators he didn’t learn about the investigation or the leave until days later.
“The sheriff advised that he didn’t know that she was actually laid off, as his wife lied to him and told him that she was taking some time off to enjoy the weather and get some things done around the house,” Pauly wrote. “The sheriff advised that he didn’t learn about the offense until six days later, when two of his staff, a detective and an office administrator, met with him in his office.”
Even as the investigation swirled around her, Kathy Beutler lamented the toll it could take on her husband.
“As of this, my dear husband and family are not aware of this situation. This will kill him and his career,” Kathy Beutler wrote in the e-mail to Crossgrove a day before Jim Beutler learned of the investigation. “He has worked so hard and is such a good man. If there is any mercy to be had, I am begging it of you now.”
Published: Aug. 1, 2010
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