Western Minn. bookkeeper pleads guilty to stealing $275,000 from schools

For more than a decade, Liane Claassen decided that she should give herself regular pay raises for her work as the business manager of a struggling rural school district in western Minnesota.

She was the bookkeeper responsible for the payroll of the Chokio-Alberta School District in Stevens County, and nobody questioned her accounting because the relatively small, but steady, pay increases were deftly hidden by her ability to electronically move and hide money taken from different accounts. Since she was the person who set up the annual audits, she also was able to decide which records to provide -- or withhold from -- reviewers.

On Friday, Claassen, 43, pleaded guilty in U.S. District Court in Minneapolis to wire fraud in a case that has left her community feeling betrayed by one of their own.

Assistant U.S. Attorney Chris Wilton led Claassen through a series of admissions surrounding her theft that included wire fraud. Judge John Tunheim presided over the pleading.

Claassen's longstanding scheme was uncovered when a new auditing firm was hired last summer and started to dig deeper into her records. The results showed that she'd stolen close to $300,000 from 1999 through 2010, according to federal authorities.

After the plea, Wilton described the case as a classic example of abuse of power by a person placed in a public position of trust. "This is a major case felt by those teachers, administrators and kids, and we're sensitive to them, especially when you consider the recent state government shutdown and the financial struggles that school districts are facing," Wilton said.

He said Claassen apparently was able to hide the fraud by moving funds electronically through the district's computer system, then depositing the money electronically into her personal bank account and retirement funds.

Claassen told Tunheim that she has a two-year accounting degree from Alexandria Technical College.

"Liane is a very good person who's done a very bad thing," Kent Marshall, her attorney, said before the guilty plea was entered. "She did something she shouldn't have done and she knows that."

Marshall said Claassen, a native of Chokio, is prepared to face up to the embarrassment of stealing from her neighbors, who fund operations for about 155 students, kindergarten through high school, in the district's only remaining school.

"She's going to have to face up to it," Marshall said. "She's standing up to the plate. We went to the U.S. attorney's office before charges were filed and arranged for the plea."

He said Claassen's husband, who is employed by the town, did not know about the fraud and is "devastated."

A native of the Chokio area, he returned to oversee the district's operations in the last years before he retired in June. In 2010, during his second year overseeing the district, he said he was dissatisfied with the then-auditor and requested a new firm take over.

"She went to her desk and said, 'Here's my keys,'" Farwell said of Claassen's behavior when she knew her fraud had been discovered. "She basically quit the job in front of the auditor and left. To my knowledge, she confessed in front of him: 'I've been taking from the district.'"

The district's annual budget is more than $1.7 million. "People have worked hard to keep their school," he said. "The loyalty factor here is off the chart for support.

"This is unfortunate when something like this happens -- there's a betrayal. Locally, they voted in an operating referendum to support the school of $2,500 per pupil. Well, when people open up their billfolds and tax themselves and support a school, that says something about how they feel about their schools."

Farwell said he has no idea where the money went. "There are probably about 20 different speculations around. Who knows what's the truth?"