Three employees accused of embezzling $200,000 from central Minnesota city

Three municipal employees are accused of embezzling about $200,000 from Clear Lake, Minn., when they were employed as city clerk, public works director and firefighters.

Kari K. Koren, 48, of Clear Lake defrauded the city of more than $125,000, according to criminal charges filed in early November in Sherburne County District Court. Her husband, Chad M. Koren, 39, is accused of using city credit cards to pay for about $5,000 in personal purchases, documents state.

Dustin J. Luhning, 55, of Rogers defrauded the city of more than $71,000, according to the complaint.

All three were charged with one felony count each of theft and embezzling public funds. Court documents do not list attorneys for the three.

According to the criminal complaints, the Sherburne County Sheriff’s Office received a report of financial fraud from the city in April 2024. Clear Lake, with about 650 residents, is 10 miles southeast of St. Cloud.

A forensic accountant investigated the city’s financial activities from November 2022 through 2023.

The investigation found Kari Koren, who as city clerk oversaw day-to-day financial operations, was overpaid by $14,000 for hours she didn’t work and made more than 130 personal purchases on her city-issued credit card, documents state. She was also overpaid about $500 for hours claimed but not worked as a firefighter.

Investigators found Chad Koren, who worked as a firefighter for the city, used a city card to pay for nearly $5,000 in gas and retail purchases. This summer, he told investigators “money was tight” and that “things had snowballed,” documents state.

Luhning, who was public works director during the period investigated by a forensic accountant, was overpaid by $4,300 for hours he didn’t work. He also allegedly used his city credit card to make nearly $64,000 in personal charges and used the city’s Home Depot account to make more than $3,000 in personal charges.

The complaint states Luhning made purchases from two bogus vendors. Luhning “admitted to creating the accounts for those vendors and [said] he profited from the price the city paid,” the complaint states.

Clear Lake hired a new city clerk, Ryan McCann, in June, according to City Council meeting minutes. McCann said Monday that the three employees accused of fraud haven’t worked for the city in more than a year.

A social-media post from the Clear Lake Fire Department says Kari and Chad Koren retired from the department in February.