State officials say checks totaling $803,309 soon will be sent to more than 200 police departments and government agencies that purchased vehicles from Nelson Auto Center, a car dealership located in Fergus Falls, Minnesota.
The refunds come in the wake of a KARE 11 investigation that exposed widespread overcharges on specially-equipped police vehicles sold under Nelson Auto’s master contract with the state.
According to a recently completed state audit, taxpayers were overcharged on 3,225 vehicles on sales dating back to 2010.
“We went through line item by line item and so that was pretty painstaking,” Minnesota Department of Administration Assistant Commissioner Curt Yoakum said.
He estimated the agency’s auditor and purchasing staff spent eight to nine hundred hours on the review. “This is no small feat whatsoever,” he added.
The state began its audit last year after a KARE 11 investigation documented how police agencies across Minnesota were being double billed for equipment like spotlights and heated mirrors that were supposed to be included as standard items under the contract.
“Obviously the biggest surprise was that someone had the audacity to try overcharging law enforcement,” Yoakum said.
Criminal charges and expanded audit
In July, prosecutors filed a five-count criminal complaint accusing Gerry Worner, Nelson Auto’s former fleet manager, of Theft by Swindle.
Worner has denied the charges and is awaiting trial.
During the criminal probe, the Minnesota BCA identified $379,729 in overcharges on 1,220 Ford Police Interceptor squad cars model years 2015 to 2017.
The Minnesota Department of Administration launched an expanded audit, broadening the review to include Nelson Auto’s contracts to sell Dodge police vehicles and tracing sales dating all the way back to model year 2010.
In addition to the amount the BCA initially identified, the expanded audit found other overcharges totaling $423,581 on the sale of 2,015 more vehicles.
The biggest victim of those additional overcharges was the Minnesota Department of Public Safety – which oversees both the State Patrol and the BCA. The Agency was overcharged by $64,445 on top of what the BCA originally identified.
Other additional overcharges included:
- Minneapolis - $18,277 on 74 vehicles,
- St. Paul - $13,584 on 60 vehicles,
- Hennepin County - $19,200 on 74 vehicles, and
- Wright County - $21,349 on 61 vehicles.
Checks from Nelson Auto to reimburse the overcharged law enforcement agencies for the combined total of more than $800,000 will be issued soon, according to state officials.
“We expect in the next two to three weeks that entities that are owed money will start receiving checks,” Yoakum said.
Otter Tail County Chief Deputy Prosecutor Michelle Eldien tells KARE 11 Worner could face additional charges. The overcharges revealed by the expanded audit more than double the amount listed in the original criminal complaint.
Nelson Auto’s owners are not facing charges. They say they were not aware of the overcharges and have cooperated with the investigation
However, Minnesota Department of Administration Commissioner Matt Massman said his agency stripped Nelson Auto of its $15 million-a-year contract to sell Ford SUV’s to law enforcement agencies.
“I’m angry!” Massman told KARE 11 last year. “This is a very frustrating experience to have had a state contract taken advantage of like this.”
KARE 11’s investigation also revealed major holes in the oversight of purchases made through state contracts.
Records showed the Department of Administration and the Department of Public Safety failed to investigate early warnings from a whistleblower and even reports of overcharges from several police agencies.
In response, Commissioner Massman has instituted new fraud prevention policies and hired a compliance expert to review other state contracts for abuses.
“We want to make sure we’re putting the resources on it to get this right – and frankly to deter any potential vendor from doing something similar on another state contract,” Massman said.
Minnesota’s Office of the Legislative Auditor is still conducting a probe of the double billing on state contracts and additional steps government agencies need to adopt to prevent a similar occurrence in the future.
Our investigation started after a tip from a viewer.
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