Naknek Electric sues former manager for $1 million over embezzlement allegations

On March 10, NEA filed suit against former manager Donna Vukich, seeking $1 million in punitive damages. NEA alleges Vukich used the company credit card to spend over $970,000 from 2004 till her retirement in 2016.
(KDLG photo)

The Naknek Electric Association has filed a lawsuit against its former longtime manager Donna Vukich, seeking $1 million in damages. NEA alleged Vukich used the company credit card for personal expenses going back more than a decade, and said she is no longer cooperating to pay back the embezzled funds.

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A forensic audit of NEA’s books between 2004 and 2016 shows former manager Donna Vukich spent $970,358 on “personal expenses” using the company credit card. That’s according to a lawsuit filed in Anchorage Superior Court March 10.

Vukich was the only employee with oversight of that spending, and she coded it all to other NEA business accounts to hide the trail, NEA board president Nanci Morris-Lyon said.

“For instance if there was a large purchase of, say, $2000 made for personal use, say $500 would go to operating costs and another $500 would go to waste heat,” Morris-Lyon said of the accounting. “So it would be hidden and buried within the company and nobody would ever see anything other than the coded items that went in there.”

The spending spree increased as the years went by. Looking backwards over the books, the NEA board decided that the embezzling trickled down enough by 2004 that it was no longer worth further auditing. Some of the paper records were missing beyond that point, and digital records from the credit card company were not available.

Vukich was the general manager for 18 years and an employee for three decades before retiring in March 2016. Morris-Lyon said her scheme to embezzle funds from the member-owned electric cooperative was “simple but ingenious.”

“From the management level down, the only person that was seeing or knowing that that money was not spent on the things it was being coded for was the manager herself,” Morris-Lyon said. “I’ve always said I want people to learn from this and hopefully save others from the same predicament.”

The NEA board reiterated to its members Monday night that it has put safeguards in place to guarantee levels of accountability over all spending.

Confronted last summer with an initial accounting, Vukich paid back $398,000. That was on top of a little over $19,000 NEA said she paid back to the company account in 2014, when she was still the manager. But negotiations to recoup the remaining $553,000 have fallen apart.

After a year of answering to a frustrated membership and $60,000 spent in auditing and attorney fees, the board took the matter court.

The first of two counts in the suit read, “The acts of the Defendant were illegal, willful, malicious and reckless with the purpose of defrauding and intentionally exploiting NEA and justify the awarding of punitive damages in the amount of $1,000,000.”.

The case was filed March 10 in Anchorage Superior Court and assigned to Judge Andrew Guidi. Vukich is represented by Anchorage attorney Brian Heady, who did not respond to phone calls or email requests for comment this week.

Vukich was a longtime member of the Naknek community, a friend to many and a trusted manager of the electric co-op until towards the end of her career when an expensive geothermal endeavor she led folded. It was initially difficult for the board and some members to accept the magnitude of her theft, and is still hard to accept the indifference she has displayed about it, Morris-Lyon said.

“We’re broken-hearted, but we’re also indignant at the fact that we could’ve been played like this,” Morris-Lyon said. “It’s terrible to see one of your own having abused the system so tragically. It’s still a mixture of feelings, it’s still emotional, but it’s constantly said in the boardroom that we need to look out for our members.”

The findings from NEA’s audit of Vukich’ spending were turned over to the Bristol Bay Borough Police Department, which has requested the assistance of the FBI. According to BBBPD chief Stan Swetzoff, state and federal prosecutors are aware of the investigation, which could result in criminal charges to accompany the civil lawsuit brought by NEA.