Negotiations stalled between NEA, former manager over embezzled funds

Nov 3, 2016

Naknek Electric says Donna Vukich has not agreed to the amount an audit says she misspent between 2010 and 2013. Vukich, the longtime manager, has already paid back $405,000 since her retirement in March.

Naknek Electric Association is negotiating with its former manager Donna Vukich to recover funds she 'misspent.' Those efforts stalled when Vukich took issue with an amount a recent audit of 2010-13 books claimed she owed.
Credit KDLG

The Naknek Electric Association has a more complete picture of the amount of money embezzled by its former manager, at least through 2010. But the board decided Monday not to release more details yet. KDLG’s Dave Bendinger reports.

Audio Transcript:

Former NEA manager Donna Vukich has already paid back $405,000, which covered funds misspent back to 2013. NEA has now completed a forensic audit of its books from 2010 to 2013, but current manager Dianne King says Vukich took issue with those findings.

"The total amount was sent to Donna to let her know that that was what we found was owed to NEA," King said at Monday's NEA board meeting. "Then we received an email from her saying that there was a discrepancy as far as she was concerned. And so at this time, without knowing what the details are of the discrepancy, I can’t really tell you what kind of a number is out there.”

Several members attended hoping for more answers. During an executive session, the board discussed Vukich's claims and opted not to release further details. NEA does say it has a good sense of how much money Vukich took, at least to 2010, and how she took it. But NEA's attorney Andrew Fierro advised the board continue to keep that information under wraps.

"In the effort to try and get full, one hundred percent restitution, which is the goal and which I do believe is possible, we need to proceed in the manner that we’re doing even though it’s taking what might seem to the general membership to be an inordinate amount of time," Fierro explained during the open meeting. "It’s really the only way that makes sense."

Vukich managed NEA for almost two decades, working her way to the top post from many years of prior employment with the electric coop. She retired in March, just as her successor and an independent audit were turning up what appeared to be misspent funds.

NEA now says openly that Vukich is to blame, having prior referred to the person in question as simply a "former employee." Asked by a co-op member if Vukich has acknowledged guilt, the board chair, manager, and lawyer all said indeed, she has.

"She has clearly admitted what she did was wrong," said Fierro.

Many of NEA's members have voiced their strong desire to see the matter turned over to the state for criminal prosecution. Fierro spoke to that Monday as well, again recommending patience.

"Here’s the problem: we’re doing a forensic accounting. We’re trying to go back as many years as possible, and it is a very slow, painstaking type of procedure to do that. If you, at this point, turn the matter over to law enforcement, any cooperation that you’d expect to get we’re going to lose completely," he said.

In casual conversations with the members in attendance, NEA's leadership said Vukich apparently claims the amount NEA says she misspent between 2010 and 2013 is too high. One member asked if Vukich was calling the shots by stalling negotiations with her disputes. Absolutely not, said board chair Nanci Morris Lyon.

"It doesn't mean we have to accept that, and we don't plan on it. [Her claims] will have to be proven. So don't think by her saying that we're just rolling over," she said.

The board, the membership, and independent auditors were all caught off guard by the actions of its longtime manager who was a longtime member of the community. That hundreds of thousands of dollars were embezzled over many years has infuriated many and saddened most. The co-op has alluded to a pattern of unauthorized spending, some online, that went unnoticed till just before Vukich retired in March. NEA says it now has much tighter oversight over all spending that will prevent repeat behavior in the future.

If there is to be a silver lining, said Morris Lyon, it's that this incident can serve as an example for NEA and others.

"As I've said before, I certainly hope this turns into a great learning experience," she said.

NEA says it is auditing back to 2009, and will go back further if necessary. It also says if necessary it will look into the millions of dollars that flowed through the controversial geothermal project, which ultimately failed and put the electric cooperative into bankruptcy.

It’s believed that Vukich has been in her husband’s home country of Croatia since late spring or early summer. NEA has been in email contact with her while negotiations are underway. Whether she’ll face criminal charges is still unclear, as is whether she’ll ever come back home.

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