Bryan Cohen Jul. 25, 2013, 7:03pm

ROCKPORT, Ind. (Legal Newsline) - Indiana Attorney General Greg Zoeller announced a lawsuit Friday against a former extracurricular school treasurer in Spencer County who allegedly misappropriated school funds.

Melissa Isaacs, the extracurricular school treasurer at Heritage Hills middle and high schools between June 2007 and February, was in charge of collecting school fees and depositing them. The State Board of Accounts conducted a certified audit report on June 27 and alleged Isaacs misappropriated $71,922.88 in school funds during the six-year period.

Isaacs allegedly failed to deposit money she collected into the school bank account and wrote unauthorized checks to herself. Isaacs already repaid the North Spencer County School Corporation $22,502.17, but the audit alleges she still owes the school system $49,420.17.

The SBOA examiners incurred $34,134.43 in auditing costs. The lawsuit seeks the auditing costs and the remaining missing funds from Isaacs, a total of $83,555.14.

"Although the vast majority of government workers are diligent and honest, when one individual who handles school money embezzles it instead, it creates mistrust toward all public employees by taxpayers, parents and students," Zoeller said. "My office will use all the legal tools in our toolkit to make this defendant pay back what she owes to the school system and the public."

On July 12, Zoeller's office obtained a temporary restraining order against Isaacs to prevent her from selling, transferring or concealing financial assets. A court hearing on Zoeller's motion for a preliminary injunction took place on Monday. If the injunction is granted, Isaacs' assets would be frozen indefinitely until the overall lawsuit is concluded.

The Peoria, Ill.-based RLI Insurance Company was also named in the lawsuit. The company provided $50,000 worth of employee-theft insurance coverage per school year during Isaacs' six-year tenure at the school district. Zoeller's office looks to recover insurance to reimburse the school treasury. Any amount not covered by insurance would be the personal responsibility of Isaacs.

Since January 2009, Zoeller's office collected more than $2.4 million from former local government officials who allegedly appropriated public money.

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