WSI worker, state official tell of questionable spending

BISMARCK — A former procurement officer at Workforce Safety and Insurance testified this morning at Charles “Sandy” Blunt’s trial that she did not do more to put a stop to questionable spending at the agency because “there was a culture of fear there.”

Angie Scherbenske also said “upper management,” including Blunt, who was CEO, often circumvented proper procurement practices. She would see bills for things that had already been ordered or purchased.

Scherbenske worked at WSI from 1998 until November 2005, and was a procurement officer the final three years. Blunt was CEO from about May 2004 to December 2007. She is now a procurement officer at for the state Budget Office.

WSI is the state agency that supplies workers compensation insurance to businesses in North Dakota.

Scherbenske testified about the hundreds of dollars that would be spent for trinkets, coffee, donuts and meals for employees at the agency’s internal meetings.

But Blunt’s attorney, Mike Hoffman, quizzed Scherbenske pointedly about why she had personally ac-cepted things like employee gift certificates from WSI if she thought it was wrong.

Scherbenske said she did talk to her superior, the director of finance, about her concerns and helped put on training about the proper practices. Scherbenske said she did not go directly to Blunt with her concerns because “I had seen other co-workers (do so) and what had been done to them (as a result).”

Also today, the retired head of the state Risk Management Division told how she had an outside auditor investigate WSI’s spending practices and warned Blunt that the unauthorized spending that was turned up had to stop. That was in 2006.

Johanna Zschomler testified that the investigation was prompted by statements Scherbenske made in her exit interview upon leaving WSI. She said she left WSI because she did not like management’s spending practices.

When Blunt read Zschomler’s report and warning letter, he fired back a three-page letter demanding changes in the report, particularly references to fraud. Blunt complained that the report was full of inaccu-rate accusations, character assassinations and slander.

Because WSI funds are part of state government, prosecutors allege the expenditures are covered by laws that prohibit spending of public funds for private benefit.

Prosecutors are alleging that Blunt violated state law in authorizing unlawful spending of nearly $50,000 from WSI funds while he was CEO.

He is charged with two felony counts of misapplication of entrusted property, one involving $7,000 worth of alleged improper bonus pay to three managers at WSI and the second involving $41,000, which covers party favors, meeting refreshments and gift certificates to employees; failure to collect reimbursement of moving expenses for an employee who quit; paying sick leave to the same employee when he was not sick and was planning to resign.

Cole works for Forum Communications Co., which owns The Jamestown Sun

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