State auditor will refer Shellsburg insurance issue to Benton County attorney

The Iowa State Auditor’s Office released a report this week detailing a potential conflict of interest between the former Shellsburg mayor and the city’s insurance, saying it will refer the matter to law enforcement for investigation.

Lonnie Speckner was mayor of Shellsburg, a Benton County city of around 1,000, until Phillip Travis became mayor in January.

At the beginning of fiscal year 2023, while Speckner was mayor, the city signed an annual contract with Speckner Insurance Agency for $31,407 in July 2022. Speckner owned the company at the time, the auditor’s report said.

The city had used Speckner Insurance for multiple years and had previously been censured by the auditor’s office for not competitively bidding the contract.

In fiscal year 2022, the city opened competitive bidding for the contract and decided to sign with Speckner Insurance again. For fiscal 2023, Speckner Insurance was chosen without a bidding process, the report states.

In January 2023, Atkins Savings Bank Insurance bought Speckner Insurance, and both agencies were rebranded as Compass Insurance Agency. Speckner did not retain any ownership in Compass, but his spouse is listed as a team member for insurance sales, according to the auditor’s report.

“Mayor Speckner’s continued interest in the insurance agency receiving city business appears to be a conflict of interest issue once again,” the report stated.

“The city should consult legal counsel to determine the disposition of this matter. The city is required to provide an open competitive bidding process for its insurance and other such contracts when any city officer or employee has any interest, direct or indirect, in any such contract award.”

According to Sonya Heitshusen, public information officer for the state auditor’s office, the office intends to refer the matter to the Benton County Attorney’s Office for further investigation.

Andrew Jones, president of Atkins Savings Bank & Trust, said in a statement that Compass Insurance is owned solely by the bank and has no current conflict of interest with the city.

“We are aware of the letter issued by the State Auditor’s Office,” Jones said. “If there was a conflict of interest between Speckner Insurance and owner Lonnie Speckner, who was also the mayor of Shellsburg, it would have been prior to Speckner’s selling the agency to Compass Insurance. Lonnie Speckner is not nor has he ever been employed by Compass Insurance Agency LLC.”

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