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Three former municipal employees in Clear Lake, Minn., are charged with embezzling $201,000, or nearly half of the city’s annual property tax revenue and a fifth of its entire budget.

City leaders reported the suspected fraud to the Sherburne County Sheriff’s Office in early 2024 after hiring a forensic accountant to review the books. 

Clear Lake, which is 57 miles northwest of downtown Minneapolis, had 641 residents counted in the 2020 census and a total revenue in 2023 of just over $1 million, according to the 

 which tracks local governments’ financial data. Nearly $404,000 of the city’s revenue that year came from property taxes. 

Prosecutors allege that starting in late 2022 and throughout 2023, former City Clerk Kari K. Koren stole $125,217 by overstating the hours that she worked as clerk and as a firefighter and by charging personal expenses to the town’s credit cards. 

According to the criminal complaint, Koren, 48, “made 130 personal purchases on her city-issued credit card” and similarly misused the city’s Menards, Home Depot and other retail credit cards. 

Her husband, Chad M. Koren, 39, a former firefighter, allegedly stole nearly $5,000 largely by charging personal expenses to a gas station credit card. 

Also charged is former Clear Lake public works director Chad Luhning, 55, who stands accused of embezzling $71,000. Prosecutors allege that the majority of Luhning’s charges were to “Luner Equipment” and “Discount Supply,” fictitious vendors that Luhning invented.  

In June, Luhning allegedly told investigators that the purchases saved the city money, but later admitted to creating the phony vendor accounts. 

According to the prosecutors’ complaint, Kari Koren claimed that she made the purchases “with the intention of paying the city back later and knew it was wrong to do so” and explained that she was facing financial hardship. Chad Koren allegedly added that “money was tight” in their household. 

The three were charged in early November and have yet to enter pleas. Their first court appearances are set for Jan. 14. 

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Fraud in Minnesota

Matt Sepic

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Three former municipal employees in Clear Lake, Minn., are charged with embezzling $201,000, or nearly half of the city’s annual property tax revenue and a fifth of its entire budget. 

Charges: Ex-employees embezzled a fifth of town’s revenue

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