DEARBORN — Exclusive details about a murky embezzlement case centered around now-retired Dearborn City Clerk Kathleen Buda have emerged, revealing the reasons State Police raided City Hall last December.

On Dec. 16, 2015, Michigan State Police investigators obtained a warrant and seized several boxes of documents and other property from Buda’s office on suspicion she was stealing residents’ money.

Buda, then in her fifth term, announced her retirement on Jan. 19, citing the stress of upcoming elections, after having worked as the city clerk for 21 years. 

At the time, she told The AANews she was approaching 65-years-old and that her decision had nothing to do with the investigation. 

“People will respond the way that they do; I can’t control it,” she said.

Little had been known about why law enforcement suspected embezzlement – until now. 

Documents obtained by The AANews from the State Police show that city clerk employees notified Dearborn’s human resources director three months prior to the raid after becoming suspicious that Buda was repeatedly stealing large amounts of cash from birth, death and other certificate fees.

At City Hall, individuals pay at the cashier’s window for a variety of certificates. However, when it gets busy – like during tax season – the office accepts payments at the neighboring city clerk’s window to ease long lines.

During those times, workers carry the cash box they used to store the payments from the clerk’s window to the cashier’s window to make deposits throughout the day.

Three of Buda’s close coworkers told State Police last October that they’d begun noticing her often taking the cash box from the clerk’s window directly to her office, where nobody would see her.

She would return the box to the cashier’s office with only minimal change and checks.

Other times, employees would notice large sums had disappeared overnight from the cash box when Buda had late meetings. The box was stored in a locked room. Coworkers would find just an envelope of small change in the box the next day.

According to the State Police, Buda told employees who asked about the money that she’d taken it “for safekeeping” and that she “didn’t trust it being locked in the vault.”

Employees say the alleged embezzlement began when city officials moved to the new Dearborn Administrative Center on Michigan Avenue.

Two employees, one of whom had worked at the clerk’s office for 25 years, began flagging the money by marking copied receipts of payments they kept in the cash box.

They stated that Buda, who never accepted payments and was not familiar with the process, thought by destroying the receipts, she could erase traces of the money. However, the city clerk’s office is legally required to keep additional copies of transactions for a year.

After they started matching those records with the receipts, the employees said that at one point workers flagged that more than $400 had gone missing in the span of a few weeks.

The third employee who had witnessed Buda’s alleged odd behavior with money began working at the clerk’s office during tax season.

He stated that he would notice her often checking inside the cash box before making despots at the cashier’s window. A few times, he and a fourth worker said they saw her taking the box directly to her office.

She would come out with the box and sometimes no cash would be inside.

“Buda was religiously interested in the cash at work,” he told investigators.

The staffer also told an investigator he saw Buda stuffing cash in her wallet through her slightly ajar office door, with more money spread out on her desk, as he invited her for lunch. Buda was “aghast” when he casually entered her office.

The workers had a hunch about Buda’s motivations in allegedly stealing the money.

Both employees who tracked money deposits say they know she had a history of “serious” gambling addiction. 

One staffer said Buda’s bragging about playing the lottery increased when they began noticing missing cash.

The worker said she thinks Buda spent about $50 a day on lottery tickets.

A few weeks after the employees’ interviews with investigators, Dearborn District Court Judge Sam Salamey signed a warrant allowing a hidden camera to be installed in Buda’s office. It revealed the clerk concealing money in her purse twice in mid-November, among other activities.

On Dec. 16, the city clerk’s office was served with a search warrant at around 9 a.m. Investigators took pictures, seized Buda’s work cell phone, boxes of birth and death certificate records, receipts, the office’s account records, flash drives and cash from Buda’s desk drawers, among other property.

Buda resumed her work for the remainder of that day. That evening, she attended a City Council study session with council members and Mayor Jack O’Reilly.

State Police reports show that one of the staff members who complained about Buda stealing money told interviewers she’d informed Human Resources Director Cynthia Pepper of the charges, rather than City Attorney Debra Walling or the mayor’s chief of staff, Mark Guido, who normally handle such allegations.

She said she did so because of Walling and Guido’s “close affiliation with Buda.”

Police Chief Ron Haddad agreed withinvestigators the concern was valid, as there is a “common opinion in city government” that Walling and Guido are close to the city clerk.

For about eight months following the bust, little of the case had been publicly raised by city officials, until Dearborn City Council members disputed over Buda’s salary adjustments. 

A resolution was raised in an August 16 Council meeting by Councilmen Thomas Tafelski and Robert Abraham to set aside and authorize $11,300 from the city’s budget to compensate Buda for sick and leave days.

Abraham later said that he believed Buda had, “not done anything except retire in good standing.” He added that he believed the clerk was eligible for a pension, which multiplies the amount of the mentioned benefits.

Councilman Mike Sareini objected to paying thousands to a city clerk underinvestigation, calling the proposal “borderline insulting.”

“In light of what is going on…regarding embezzlement of taxpayer funds…until this investigation is completed, I do not see how we can authorize this,” Sareini said.

Sareini added while the appropriation is legal, it could be up to the Council’s discretion to approve granting the accumulated benefits.

HR Director Pepper responded, saying city employees are contractually entitled to time off and other earned benefits when they retire.

According to the Michigan Public Employee Retirement Benefits Forfeiture Act, if a public employee is convicted or enters a no contest plea in court, due to a felony or breached public trust during their service, their retirement benefits and other benefits should be forfeited.

All council members, including Mayor O’Reilly, concluded that Buda is entitled to the benefits, especially because the investigation is ongoing and there has been no proof of guilt.

A vote of 6-1 passed to compensate Buda.

City Attorney Walling said if Buda is charged and convicted for embezzlement of tax dollars, the city would seek to restore the funds.

A spokesperson for the Wayne County Prosecutor’s Office told The AANews there is “an active search warrant” and they are currently investigating the embezzlement case.