Auditor discovers $127K in misspent funds in Conesville; former city clerk arrested

Former Conesville City Clerk Yamira Martinez, 33, of Columbus Junction, was arrested Wednesday after a special investigation by Iowa Auditor Rob Sand uncovered more than $127,000 in misused funds.

Martinez served as city clerk for Conesville — a Muscatine County town with a population of about 350 people — from June 2022 through March 2024.

Based on the findings of the audit and the subsequent investigation, Martinez was arrested on two counts of ongoing criminal conduct, each a Class B felony that can carry a sentence of up to 25 years in prison; two counts of first-degree theft, each a Class C felony that can bring up to 10 years in prison; one count of credit card violation, a Class C felony; and one count of forgery, a Class D felony that can bring up to five years in prison. Bond has been set at $100,000.

The sheriff’s office reports this remains an active investigation, and additional charges may be filed.

A special investigation by the Auditor of State’s office identified $65,930 of improper disbursements, $53,915 of uncollected and undeposited utility billings and $7,667 of unsupported disbursements, according to Sand's report. About $47,000 were improper disbursements to the clerk. However, because city records were not sufficiently maintained, it was not possible to determine if additional utility transactions were improperly recorded or if additional amounts were improperly disbursed.

“Unfortunately, what we see happen too commonly across the state of Iowa happened in Conesville,” Sand said at a Tuesday press conference. “The City Clerk who had the keys to the kingdom made off with taxpayer money.”

Sand said public officials misspending money is getting more common throughout the state.

How did the investigation begin?

In May 2024, the Muscatine County Sheriff’s Office was contacted by Conesville Mayor Tom Van Auken and City Clerk Carol Zuniga regarding concerns about Martinez.

The Sheriff’s Office Criminal Investigations Division initiated an investigation, and the city requested a formal audit from the Iowa Office of Auditor of State.

The $65,930 of improper disbursements includes $47,675 of payroll and reimbursements issued to Martinez; $12,409 of purchases using the city’s debit card; $700 of improper disbursements to other vendors from the city’s checking account; $4,553 of IRS penalties and interest; and $613 of IPERS late fees and interest.

“Ms. Martinez was interviewed about this,” Sand said. "She stated that the 24 checks that had been payroll and were made to appear like payroll checks, she admitted were unauthorized. She also stated the checks were for her kids. When she was asked about personal Amazon purchases, she stated that was her fault.”

Sand reported the uncollected and undeposited utility billings identified includes $23,506 in unbilled utility services to customers which resulted in lost revenue to the city and $17,745 of the undeposited collections was identified by comparing utility collections recorded in the city’s utility accounting system to amounts deposited to the city’s bank accounts between July 1, 2022, and April 30, 2024.

The remaining uncollected and undeposited utility collections includes $9,760 of improper adjustments recorded in the city’s utility accounting system and $2,904 of gift card payments received for utility service. There were no explanations for the adjustments or gift cards, and they were not approved by the City Council.

The $7,667 of unsupported disbursements identified includes $2,815 of purchases on the city’s debit card, $2,569 of disbursements from the city’s checking account to vendors, $1,604 in payroll issued to Kassandra Sypherd and $678 of reimbursements to Martinez.

Auditor recommends new city procedures

Sand recommended city officials implement procedures to ensure the city’s internal controls are strengthened, including segregation of duties, performing utility reconciliations, performing independent review of bank statements, and ensuring all disbursements are properly supported, approved and paid in a timely manner.

In addition, city officials should ensure all actions taken by the council, such as utility account adjustments, are properly documented in meeting minutes.

Copies of the report have been filed with the Muscatine County Sheriff’s Office, the Iowa Division of Criminal Investigation, the Muscatine County Attorney’s Office, and the Iowa Attorney General’s Office.