CURTIS F KLIGORA, Employee
BEGINNINGS GROUP FOSTER HOME INC, Employer
An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.
The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission makes the following:
The employee worked about 13 years as the executive director of the employer, the operator of three foster homes for juveniles referred by the legal system. His last day of work was January 26, 2004 (week 5) when the employer notified him that it was terminating his employment.
The issue to be decided is whether the employee's actions, which led to the discharge by the employer, constitute misconduct connected with the employment.
The employer is run by two boards, a properties board and an operations board. The president of the operations board discharged the employee. The properties board owns the properties and some of the furnishings in the homes. Properties is paid rent from operations. A judge will determine that a resident is to be placed in the foster home and this generates a fee per resident. The employer also receives donations and grants.
In the fall of 2003 the employer received a "non-compliance" from the State's Child & Health Services, and this triggered an investigation into the employee's expenditures.
The president of the properties board learned that the employee had placed expensive fish tanks in his office and in a barn on his property. The employee had also purchased fish tanks for the group homes, but the employee was not discharged for purchasing those tanks because the employer considered those to be for the benefit of the residents. The employee's office was located at 15 West Milwaukee in the Riverfront athletic club facility.
In September of 2002, the board agreed to pay the employee a monthly rate of about $400 per home, or $1,200 per month for the three homes owned by the employer, to have a horse program on his property. The employer determined that the employee appeared to be doing very little to operate this program, and in December of 2003, instructed the employee to have something more concrete set up by January of 2004. The employee agreed with the employer's assessment of the program, but blamed the managers of the homes for not bringing the children to his property.
The employee purchased an ATV that cost over $7,000 and kept it at his home. The operations board had no knowledge of this purchase, which was made in October of 2002. The employer had several checking accounts, and the employee purchased the ATV with a check drawn on one of these accounts, a household account in the employee's possession. The other two accounts required two signatures on any check, however, the employee could draw checks on the household account with only his signature. The president of the operations board was not aware of the existence of the household account until the employee had been discharged. The operations board attempted to regain possession of the ATV but the employee would not turn it over to them.
The employee bought two grand pianos. The employee testified that one cost $15,199.10 and one cost $5,969. The cheaper one was sent to one of the homes. The more expensive one was sent directly to the home of the employee's father. The employee claimed that this piano did not fit in any of the group homes and he did not return it because the music store closed down. The president operations board never informed the properties board that it wanted the employee to purchase a piano. The properties board approved the purchase of the pianos after the fact.
In Boynton Cab Co. v. Neubeck & Ind. Comm., 237 Wis. 249, 296 N.W. 636 (1941), the leading case with respect to the meaning of the term "misconduct" as applied to unemployment compensation in the United States, the court said, in part, as follows:
" . . . the intended meaning of the term 'misconduct' . . . is limited to conduct evincing such wilful or wanton disregard of an employer's interests as is found in deliberate violations or disregard of standards of behavior which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability, wrongful intent or evil design, or to show an intentional and substantial disregard of the employer's interests or of the employee's duties and obligations to his employer. On the other hand mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good-faith errors in judgment or discretion are not to be deemed 'misconduct' with in the meaning of the statute."
The employer asserted that it discharged the employee for misconduct connected with his work. The commission agrees. The employer asserted several reasons for discharging the employee. The employer argued that the employee rarely visited the group homes. The employer presented no evidence to support these allegations. Therefore the commission does not consider this allegation in determining whether the employee's discharge was for misconduct connected with his work.
The commission does not credit the employee's claim that the more expensive piano was at his father's house because it was too big for any of the group homes. The piano in question cost more than $13,000. According to the employee, he purchased the piano before realizing that the piano was too large for the home he purchased it for. However, the employee had the item delivered directly to his father's home. Accepting for the sake of argument that the piano was too big for the group home, the employee alleged he could not return the piano because the piano store closed. However, the commission does not find credible his claim that he could not have rescinded the agreement prior to or at the time of the delivery. At least by the time of the delivery, the employee knew that the piano was too big, because he had it delivered to his father's home, and the store was still in business at that time. The purchase agreement indicated that if the buyer elected not to complete the transaction, the buyer would receive a credit in the amount of the deposit for future purchases from the Forbes-Meagher Music Company. The commission infers that the properties board's approval of the purchase was made without full knowledge of the employee's behavior in purchasing the piano.
The employee testified that he made a mistake when he bought the piano but he considered it to be such a bargain. It was a $60,000 piano that he was able to buy for around $15,000. He believed the kids deserved nice things because it encouraged pursuits other than getting in trouble with the law. The employee specifically testified that the properties fund was "quite exorbitant" so he believed he had to spend some money, and he spent it on nice things. He indicated the fund had a large balance that often exceeded $60,000. Even were this true, it would not excuse the employee's acceptance of a piano which could not be placed on the employer's premises, and was instead kept in his father's house. In addition, the employee testified that the properties board approved or disapproved purchases at the time they were made, but this is inconsistent with his testimony that the properties board approved the purchase of the piano after the fact. Finally, the president of the operations board credibly testified that she was concerned about this purchase because money spent on large purchases leaves less money available for programs for the residents. She also credibly testified that rather than having large reserves of money, there was a limited source of funds available for all the employer's programs.
The purchase agreement for the pianos indicates the two pianos, a Weinbach 5'8" Grand piano, costing $13,199.10 and a Nordiska 5'1" Grand at $5,969.00 were purchased for $19,168.10 with ten percent, or $1,920.00 cash down payment. The unpaid balance was $17,248.00 and this entire amount was financed at 12.00 percent interest, with a finance charge of $6,293.60, with total payments of $23,541.60. The total sale price for the pianos was therefore $25,461.60. The paperwork shows the employee financed both pianos, but the employee testified that he financed only one, and that the other was purchased on a credit card. This is another inconsistency undermining the employee's credibility. In addition, the employee incurred over $6,000 in finance charges, which according to his own testimony concerning the balance in the fund, were unnecessary.
The employee purchased the ATV in October of 2002 with a check in the amount of $7,295.99 drawn on the employer's household account. For the period of October 1 through October 31, 2002, checks totaling $8,831.18 were drawn on this account. The employee testified that he "inherited" the household account from the last director, and that the account was to be used for purchases in the nature of emergencies. For example, the account was to be used when he could not get to the accountant to obtain a check, or when he needed to buy groceries, or when he needed to pay a bill immediately. An ATV purchase is hardly an emergency-type purchase. There were months the employee used the household account only once or twice, and when it had only $500 in it, but he had the authority to call the bank and ask it to transfer money from another account into that account. He certainly would have had to exercise that authority to make such a large purchase, but he had no approval from either board to make it. A witness from the properties board credibly testified that he was not aware that the employee had purchased an ATV, which the employee had titled to himself and the properties board. While there was some suggestion that the children may have occasionally used the ATV, the evidence led the commission to infer that in making this purchase, the employee used the household account for a reason outside its purpose. He kept the ATV at his own house, and it is inferred that he primarily used it for his own recreation.
The employee testified at the hearing that at some point he instructed the managers to bring the children out on a weekly basis for the horse program. He further testified that the children were assigned an individual horse, and that some of the horses were owned by persons who boarded them at the employee's farm. The employee alleged that the children would groom the horses, discuss the situation, and keep journals of these activities. These allegations are inconsistent with the employee's allegation that the horse program faltered because the house managers would not bring the children out to the farm. Accordingly, his allegations regarding the work-related use of the horses are also incredible.
The record reflects that the employee purchased expensive items that were kept on his property. The employee was the executive director of the employer's three group homes and by his own testimony had a high degree of responsibility in running the properties. His position required close attention to detail and accountability to the boards. The commission did not find credible his explanations for actions that so directly benefited himself, rather than the children. The employee's actions in purchasing expensive items for his personal use demonstrated such willful and substantial disregard of the employer's interests as to amount to misconduct connected with his work.
The commission therefore finds that in week 5 of 2004 the employee was discharged for misconduct connected with his employment within the meaning of Wis. Stat. § 108.04(5).
The commission further finds that the employee was paid benefits for weeks 5 through 31 of 2004, amounting to a total of $8,554.00 for which he was not eligible and to which he is not entitled, within the meaning of Wis. Stat. § 108.03(1). Pursuant to Wis. Stat. § 108.22(8)(a), the employee is required to repay such sum to the Unemployment Reserve Fund.
The commission further finds that waiver of benefit recovery is not required under Wis. Stat. § 108.22(8)(c), because although the overpayment did not result from the fault of the employee as provided in Wis. Stat. § 108.04(13)(f), the overpayment was not the result of a department error. See Wis. Stat. § 108.22(8)(c)2.
The decision of the administrative law judge is reversed. Accordingly, the employee is ineligible for benefits beginning in week 5 of 2004, and until seven weeks have elapsed since the end of the week of discharge and the employee has earned wages in covered employment performed after the week of discharge equaling at least 14 times the employee's weekly benefit rate that would have been paid had the discharge not occurred. The employee is required to repay the sum of $8,554.00 to the Unemployment Reserve Fund. The initial Benefit Computation (Form UCB-700), issued on January 28, 2004, is set aside. If benefit payments become payable based on other employment, a new computation will be issued as to those benefit rights.
Dated and mailed February 8, 2005
kligocu . urr : 145 : 1 MC 630.05
/s/ James T. Flynn, Chairman
/s/ David B. Falstad, Commissioner
/s/ Robert Glaser, Commissioner
The commission discussed witness credibility and demeanor with the ALJ who held the hearing. The ALJ believed that the employee did not do things by the book and that the board did not provide a great deal of oversight. The ALJ did not believe the employee was actually intending to steal any property from the employer, but was disturbed by the fact that although the ATV was ostensibly purchased for the use of the children the employee took no steps to ensure that the children got out to his farm to use the ATV on any regular basis. Further, the ALJ found it troubling that the employee was accepting payment for a horse program and not ensuring that the children regularly participated in the program. The ALJ did not think the board had been very involved in oversight of the employee or the group homes. The ALJ did believe that given the employee's position the employee should have had a greater fiduciary responsibility to the employer than an average worker. Further, the ALJ suspected the employee may have been taking advantage of the situation. The ALJ noted that the employee's argument with respect to the piano was not logical, because if the piano did not fit in any of the group homes and he could not return it, he should have sold it. For the reasons stated in the decision, the commission found the employee's explanations for his behavior to be largely incredible.
NOTE: Repayment instructions will be mailed after this decision becomes final. The department will with hold benefits due for future weeks of unemployment in order to off set over payment of U.I. and other special benefit programs that are due to this state, an other state or to the federal government.
Contact the Unemployment Insurance Division, Collections Unit, P. O. Box 7888, Madison, WI 53707, to establish an agreement to repay the over payment.
cc:
Attorney John M. Wood
Attorney Richard R. Grant
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uploaded 2005/02/10