Proposal Would Allow Public Employee Pensions To Be Garnished In Embezzlement Cases

Public employees convicted of embezzling taxpayer funds could have their pensions garnished under legislation proposed by state lawmakers in western Wisconsin.

The bill follows a high-profile case in Eau Claire County where a longtime treasurer and assistant were accused of stealing nearly $1.4 million over a 12-year period.

In 2015, Eau Claire County Treasurer Larry Lokken and assistant Kay Onarheim were arrested on suspicion of stealing more than $625,000 between 2011 and 2013. A press release issued in 2016 by Gregg Moore, former county board chair, said an audit found nearly $1.4 million in missing funds between 2001 and 2013. It also noted that while the two would be responsible for paying restitution, “there are legal limitations on prohibiting collection of restitution from retirement savings.”

A bill co-authored by state Reps. Warren Petryk, R-Eleva, and Kathy Bernier, R-Chippewa Falls, seeks to undo that prohibition by allowing judges to garnish up to 25 percent of a public pension if a government employee is convicted of felony theft and misconduct while in office.

Petryk said federal law only allows a quarter of the pension to be diverted for restitution. Still, he said that would go a long way.

“So, what we’ve done here is give, in my opinion, a tool for judges to bring fiscal restorative justice to the people and the taxpayers,” Petryk said.

A press release describing the bill, which hasn’t yet been introduced, said there are 25 other states that allow court-ordered restitution from state pensions.

Nick Smiar, current Eau Claire County Board chair, said the bill isn’t retroactive, meaning Lokken’s and Onarheim’s pensions can only be used for restitution unless they volunteer to have them garnished.

“There’s no benefit to Eau Claire County from this particular bill, but we support it because we want our fellow counties to be very aware,” Smiar said. “We wouldn’t want to see any of them go through this same thing.”

According to local news reports, Onarheim has agreed to use half of her pension for restitution while Lokken hasn’t.

The Petryk-Bernier bill is currently circulating for co-sponsors. Petryk said he hopes to have strong bipartisan support for the legislation and he expects to formally introduce it later this week.