Treasurer used city funds to pay bills, fund travel, Minnesota auditor finds

A former city clerk/treasurer for two southeast Minnesota cities has been sentenced to jail and ordered to pay thousands of dollars in restitution after she embezzled public funds, using them to pay off bills and to travel.

Minnesota State Auditor Julie Blaha on Wednesday issued a public report on her office’s investigations of Lolitta Melander, who served as the clerk/treasurer in the cities of Canton and Whalan. 

Melander pleaded guilty to embezzlement of public funds and theft by swindle, and on March 7 was sentenced to 120 days in jail, up to 10 years of supervised probation and ordered to pay $79,554 in restitution — $69,916 to Canton and $9,638 to Whalan, a news release said. She was also ordered to perform 50 hours of community service work.

According to court documents, Melander used city funds for things like travel, paying off credit cards, taxes and personal medical bills.

The Office of the State Auditor (OSA) began investigating after it received a report from the City of Canton about the possible misuse of city funds. The OSA, through its investigation in 2019, found there were $134,639 in "improper payments" to Melander, who was the city’s former clerk/treasurer, the report said. 

The OSA shared its investigation with the Fillmore County Sheriff’s Office and Fillmore County Attorney’s Office in October 2019. Melander was subsequently charged with 26 counts, including 15 counts of felony theft, five counts of felony embezzlement of public funds, five counts of receiving stolen property and one count of felony public officer permitting false claims against the government. 

Melander had misappropriated funds through payroll and employee reimbursement transactions dating back to 2011, which is when "suspicious expenditures increased," court documents said. City checks were issued for things like personal medical bills, funeral expenses, car repairs, travel to Montana and South Dakota, personal care items, personal credit card balances, and personal taxes. 

Then, the OSA received an audit request from the City of Whalan regarding city checks written to Melander, who was the former clerk/treasurer. The office found $13,770 in improper payments to or on behalf of Melander, which resulted in her being charged in March 2021 with 15 counts of theft, three counts of felony embezzlement of public funds and five counts of felony receiving stolen property. 

Court documents said Melander, who was in charge of issuing her own paychecks from the City of Whalan, was consistently paid for monthly wages in advance of the relevant pay period.