Former city clerk pleads guilty in two cases of misuing funds

(ABC 6 News) – The former city clerk and treasurer of Canton has pleaded guilty to embezzling over $130,000 over an eight year span.

Lolitta Marie Melander, 54 of Lanesboro, pleaded guilty Monday in Fillmore County District Court to one count of theft by swindle. 25 other criminal charges will likely be dismissed when she is sentenced on March 7.

According the criminal complaint, Melander wrongfully, unlawfully and feloniously swindled City of Canton funds in excess of $35,000 between February 1, 2011 and March 1, 2019. The theft by swindle charge was one of 26 felony charges filed against Melander following an investigation prompted by a routine financial audit. Based on findings from the Office of the Minnesota State Auditor, Melander was accused of misappropriating funds totaling $134,639 between 2011 and 2019. She resigned as clerk/treasurer on March 11, 2019, after more than 15 years on the job.

A statement from the City of Canton said under terms of the settlement negotiated by Fillmore County Attorney Brett Corson, representing the State of Minnesota, Melander will serve 120 days in jail, with work release privileges. Restitution to the City of Canton is in the amount of $93,916, with credit for $24,000 Melander previously reimbursed to the City. If she satisfies the restitution requirement within 10 years and complies with all probationary terms, Melander will be eligible for a stay of adjudication. Attorney Corson presented details of the settlement to the Canton City Council on December 8, 2021, during closed session.

“We support the settlement,” stated Canton Mayor Nick Prestby. “Our focus has been on the restitution aspect and getting back as much money as possible for our taxpaying residents.”

Since Melander’s resignation, the City has implemented safeguards to prevent future financial wrongdoing. A deputy clerk has been added to the administrative staff for additional oversight and a new accounting, billing and payroll system has been installed.

“We’re confident we have the staff and resources in place to restore integrity to city hall,” added Mayor Prestby. “It’s time for Canton to move on.”

In a separate case filed March 22, 2021, Lolitta Marie Melander pleaded guilty Monday in Fillmore County District Court to one count of embezzlement of public funds. 12 other criminal charges will likely be dismissed when she is sentenced on March 7.

The Minnesota Office of the State Auditor received an audit request from the City of Whalan after city officials shared concerns regarding possible misuse of city funds by their city clerk at the time, Lolitta Marie Melander.

Specifically, city officials were concerned about city checks written to Melander that appeared questionable from January 1, 2014 through December 31, 2019.

The OSA’s review resulted in approximately $13,769.97 in improper payments to or on behalf of Melander. According to the OSA’s report, approximately $10,469 of the city funds appeared to have been paid to Melander for which no legitimate purpose was documented or for which the supporting documentation was contradictory.

Approximately $1,865 of the city funds appeared to have been paid to the IRS, MNDOR, and PERA for Melander’s employee share of tax withholding, however, the amounts were not withheld from Melander’s pay and therefore, Melander appears to have been overpaid. Approximately $779 of the city funds appeared to have been paid to Melander that were not approved by the City Council and lacked sufficient documentation.

Lastly, approximately $657 of the city funds appeared to have been paid to Melander or on her behalf for what appear to be non-business purposes. In addition, the OSA observed that Melander was consistently paid for monthly wages in advance of the relevant pay period. According to Melander, she was in charge of issuing her own paychecks from the city.

The OSA broke down Melander’s improper payments into six-month increments as follows:

$1,477.41 improperly used from 12/11/2015 through 5/12/2016;
$2,869.92 improperly used from 06/20/2017 through 12/20/2017;
$3,211.85 improperly used from 07/03/2018 through 12/31/2018;
$2,159.96 improperly used from 01/02/2019 through 05/03/2019;
$737.54 improperly used from 07/01/2019 through 12/31/2019.

Melander is scheduled to be sentenced in both cases on March 7, 2022.