Lawmakers try again to make department officials talk about alleged employee crimes

South Dakota State Capitol in Pierre (Makenzie Huber/South Dakota Searchlight)

After a state department resisted an order requiring its leaders to speak with lawmakers about alleged crimes by state employees, the lawmakers decided Thursday in Pierre to issue more specific subpoenas. 

The Legislature’s Government Operations and Audit Committee approved the new subpoenas on a 9-1 vote. The committee’s subpoena motion calls for Department of Revenue Secretary Michael Houdyshell and Division of Motor Vehicles Director Rosa Yaeger to appear before the committee in a closed-door meeting April 1, after the upcoming legislative session. The lone no vote came from Sen. Dean Wink, R-Howes, who did not explain his vote during the meeting.

The Department of Revenue did not immediately respond to a message Thursday from South Dakota Searchlight.

Under the new subpoena language, Houdyshell and Yaeger would be required to answer questions about past and present policies governing employee conduct, document handling, and oversight procedures. Lawmakers also want details on changes made to the DMV’s management structure and internal controls since the departure of Sandra O’Day, a deceased former employee who allegedly created 13 fake vehicle titles to secure $400,000 in loans.

Sen. David Wheeler, R-Huron, introduced the new subpoena motion. He said the revised language would better withstand judicial scrutiny.

“Basically, the purpose of this is to provide more detail, more specificity in the subpoena,” he said. 

None of the new details appeared in the prior subpoenas, which were brief documents that did little more than command Houdyshell and Yaeger to appear. 

The Department of Revenue is challenging the previous subpoenas in court. 

DMV trouble

The subpoena motion focused on the operations of the DMV, including its “organizational structure, electronic systems, and internal processes.” It also calls for details regarding the investigation into O’Day. 

O’Day worked for the division for decades. After her death, her family found suspicious financial records that ultimately led the state Division of Criminal Investigation to discover O’Day’s allegedly illegal behavior.

Lawmakers want to know how the investigation was conducted, any internal controls that O’Day violated, any changes made specifically as a result of the investigation, and what documents were in her possession.

The subpoenas do not mention Lynne Hunsley, 64, of Pierre. She used her former position with the department to create a fake vehicle title that helped her avoid some excise taxes. She took a plea deal Monday and was sentenced to three years of probation and was ordered to pay a $1,000 fine and $1,200 in restitution to the state.

Nor does the order mention Danielle Degenstein, 51, of Pierre. She is charged with a misdemeanor for allegedly concealing her knowledge of a crime committed by a person identified in court documents only as “S.O.” — a set of initials that matches O’Day’s. Degenstein has pleaded not guilty.

Effectiveness questioned

At Thursday’s meeting, Sen. Jean Hunhoff, R-Yankton, questioned whether scheduling a hearing for April signals a lack of urgency.

Wheeler said current and future court proceedings — including any possible future appeals and lawsuits — could take a significant amount of time.

“I also think there’s a decent likelihood that the April 1 date probably won’t actually be the day that any meeting occurs,” Wheeler said. “That’s more or less a placeholder to ensure that we can issue a subpoena, that there is a meeting currently set.”

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“This is the process we have to go through to make sure we are continuing to move forward on the investigation and we as a legislature are doing our proper oversight duties,” he added.

The subpoena will be sent to the Legislative Research Council for review, and to the Legislature’s Executive Board for final approval Friday. Given the board’s unanimous vote on the prior subpoena, Sen. Lee Schoenbeck, R-Watertown, said he anticipates it will be quickly approved. 

Other cases pending

Recently alleged criminal activity by state employees extends beyond the DMV.

In July, former Department of Social Services employee Lonna Carroll, 68, of Algona, Iowa, was accused of embezzling $1.8 million from the state by creating and approving fraudulent financial support orders for children over the course of 13 years. Her case is scheduled for a trial in April.

Earlier this month, Attorney General Marty Jackley announced charges against former Department of Public Safety employee Renee Strong, 55, of Springfield, for allegedly forging and falsifying food-service health inspection records for inspections she never conducted. There have been no further proceedings so far in Strong’s case.

Jackley plans to propose legislation this winter to strengthen protections against state employee fraud. Gov. Kristi Noem recently responded to the string of charges by adding an extra internal control officer position to the executive branch and by ordering state employees to undergo annual training aimed at preventing criminal activity.

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