Ind. AG sues former superintendent

Bryan Cohen Aug. 27, 2012, 1:26pm


TELL CITY, Ind. (Legal Newsline) - Indiana Attorney General Greg Zoeller filed a lawsuit on Friday against a former Cannelton school superintendent who allegedly misspent more than $615,000 in public school funds.

Marion A. "Al" Chapman, the school superintendent of the Cannelton City School Corporation from July 2005 to Dec. 22, 2011, allegedly owes the schools $615,586.55 for funds he misused, including public funds he overpaid himself, according to a State Board of Accounts certified audit report.

An Aug. 14 report alleges that Chapman also misused a trust fund gift, took ineligible travel advances and caused fees and penalties as a result of his action.

"The amount that the audit found misappropriated is simply shocking even without the misuse of a trust fund gift worth one-third of a million dollars; but what's truly disheartening is that a top school official - a person to whom teachers, students and parents ought to look to for leadership - has drained public school funds intended for children's education in order to overpay himself," Zoeller said.

"This is a betrayal of the public trust, and my office will use all our legal tools to make this individual reimburse the school system."

Chapman, who was terminated by the school board on Dec. 22, allegedly authorized additional payments to himself beyond his contract, overpaying himself $206,688.27. He also allegedly approved the disbursement of the entire principal amount of a $333,333.33 gift from the Dorothy von Solbrig Income Trust in 2011 in violation of Indiana law.

Chapman allegedly discontinued payment of federal taxes, causing the school district to owe taxes to the Internal Revenue Service and to pay $50,185.64 in attorney fees. The audit found that Chapman must reimburse the attorney fees that were charged.

The Cannelton City School Corporation experienced a direct loss of $600,428.66, according to the audit. The SBOA incurred an additional $15,157.89 in audit costs, which Chapman must also pay.

When the SBOA issues a certified audit report, it gives authority to Zoeller's office to try to recover the money to reimburse the public treasury. The complaint to recover funds, filed on Friday in Perry County Circuit Court, requires that Chapman pay $615,586.55 in addition to treble damages, costs, prejudgment interest and attorney fees.

Also named as a defendant in the lawsuit is the Indiana Insurance Company of Indianapolis. The school district had a $1 million insurance policy through Indiana Insurance to cover errors, crime or omissions each year that Chapman was employed as superintendent. Portions not covered by insurance would be the personal responsibility of Chapman.

Zoeller's office also requested a temporary restraining order to freeze Chapman's assets including pension and retirement accounts, bank accounts and Chapman's four vehicles.

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