The city of Durango wants to make it easier for whistleblowers, both employees of the city and members of the public, to report concerns.

A new whistleblower policy was drafted in response to a massive fraud case involving the previous finance director who embezzled more than $700,000 over the course of 11 years. That resulted in a citation in the city’s 2019 audit report and prompted the city to rework some of its internal financial controls.

City councilors are scheduled to vote on the new policy Tuesday.

“It’s great that we’re finally getting to this,” said City Councilor Melissa Youssef during a council study session this week. “Things tend to take a while, but this is important progress for a very important policy. It is a culture, and I’m very thankful that we have leadership in place now that can work to change that culture.”

Durango’s former finance director, Julie Brown, was sentenced to five years behind bars for embezzling more than $712,000 from town coffers over an 11-year period. Brown worked in city finance for more than 17 years before resigning in October 2019 amid allegations of fraud.

The city did not learn of Brown’s fraud until a staff member raised concerns during a leadership switch-up, as former City Manager Ron LeBlanc left his position.

“The situation with the embezzlement: Whoever the person was that raised the concerns, you have my deepest thanks for taking that forward,” said City Councilor Barbara Noseworthy. “You’re a hero in my book for having the courage to raise concerns.”

What followed was an investigation by the Colorado Bureau of Investigation, a forensic audit and months of updating and improving the city’s internal financial management policies.

The city’s 2019 audit, presented in early April, also listed several issues within the budgeting process, one of which was the absence of a whistleblower policy or fraud hotline.

Such avenues for employee reporting have proved to reduce loss from fraud, according to the audit conducted by Eide Bailly LLP. The city’s policy will provide routes for employees and nonemployees, including the public, to share concerns about the city. The city is also working to establish a hotline for complaints as part of the policy.

Councilors also discussed how to allow for confidentiality, a process for initial review of complaints and when to allow for third-party investigations, depending on the complaint.

Complaints would be directed to the appropriate party depending on the subject of the issue. For example, if it is about staff members, the concern is reported to the city manager. Some parts of the policy’s implementation are still being determined.

“It’s one thing to have a policy, and it’s another thing for employees to feel protected by that policy,” Noseworthy said. She asked how the city planned to help staff members feel protected and willing to share concerns.

“It’s really establishing a culture where people feel they can be heard,” said City Manager José Madrigal.

He said city officials, including himself, would need to convey the expectation that Durango will take concerns seriously and whistleblowers will not be punished for reporting wrongdoing.

“Sometimes when the trust is broken, it’s not repaired overnight. Employees have long memories,” Madrigal said. “It really becomes on the management and our leadership team to walk the talk.”

City Council also discussed judicial proceedings that remain active concerning Brown’s fraud case.

Brown was sentenced to five years in prison for felony theft and three years for embezzlement, both of which run concurrently.

In addition, the court sentenced her to spend three years on parole and to pay full restitution to the city in the amount of about $712,000.

If Brown can pay the city of Durango about $250,000 before her next court date, which is scheduled for May 14, 6th Judicial District Judge William Herringer said he would reconsider her jail sentence, possibly reducing it to probation.

Brown paid the city of Durango $249,811 as of April 2, according to a public records request by The Durango Herald.

“We’re looking for $700,000-plus, full restitution,” said Mayor Dean Brookie. “We know it hasn’t been received yet, but I think the judge is in the best place to make that assessment. I’m ready for the court system to make their rulings and honor them.”

smullane@durangoherald.com