13 Investigates: Florence City staff paid $95k in interest-free loans on taxpayers’ dime, records show

FLORENCE, Colo. (KRDO) -- A report provided to 13 Investigates by Florence City leaders says more than $95,000 in interest-free payroll loans paid to several employees over five years were a clear violation of city policy.

The city leaders tell 13 Investigates $2,021 from the "employee advance" account is still owed to the city and there is no documentation to explain what it was used for. 

The majority of the loans were paid to three of the city's top-earning employees between 2013 to 2018.

13 Investigates started looking into the employee payroll advances in January after finding an "employee advance" line item on the City of Florence's budgets from previous years. We received dozens of public records showing the payouts. We asked the City of Florence about the interest-free payroll loans on February 22 after city councilman Brian Allen called for a forensic audit. Allen said he wanted an auditor to come in "for the purposes of conducting a thorough review of the city's financial history" to ensure no additional "unpleasant surprises" came up.

Interim City Manager Thomas Piltinsgrud says fired City Manager Mike Patterson displayed "a rouge arrogance to city government" when he violated city policy by authorizing the wage advances for himself, the former police chief, a former clerk, and other staff from 2014 to 2018. Patterson also provided $24,963 car loans for five employees to purchase cars through the city in payroll deduction, according to the finance director's report to the city manager. 

Patterson, who served as the Florence city manager for a decade, was fired by the city council in August 2021. He was arrested in November 2021 at the Denver International Airport, charged with stalking and sexual contact with no consent, and providing alcohol to a minor. The charges are all related to women he supervised. Patterson was at the center of 13 Investigates special report earlier this week exposing a years-long Florence city sex harassment scandal. Our investigation demonstrated a pattern of abuse with multiple employees alleging they were sexually harassed by Patterson even after the city settled a lawsuit with sexual harassment allegations by a former city clerk in 2019.

City financial records show Patterson borrowed at least $4,000 from the city. Former Police Chief Mike DeLaurentis received $42,000 in interest-free loans from the city and paid it back. DeLaurentis retired from the city in September 2019, nine months after he received his last city-funded loan.

Other city staffers were paid out smaller loans after requests to cover "rent payments", according to records.

A majority of the interest-free loans had written agreements with the City of Florence to pay back the money in installments through their paychecks.

"This was clearly a violation of city policy and should have never been allowed." Finance Director Lori Cobbler wrote in a written explanation. "I had this conversation with the previous city manager and since then it had discontinued." 

Former Clerk Dena Lozano bought a car from the city for half of what it was worth, according to records. Lozano paid $5,150 for a Jeep that the city later bought back from her for $7,970. Records show she was paid out a $6,500 loan to purchase the vehicle, $1,350 more than she paid the City of Florence to buy the Jeep. Records show Lozano received a $600 city loan for vehicle maintenance. Lozano resigned from the City of Florence in February 2019 to take a job with the City of Colorado Springs.

"The city bought back the car from the employee [for] 7,970 which in turn sold it for $10,070, paying off the rest of the loans with a difference of $150," Cobbler wrote in her investigation.

There were also other purchases made in the City of Florence's "employee advance" account, according to records obtained by 13 Investigates.

"There are also some transactions that were connected to credit card purchases. These were difficult to research as I could not find the transactions besides on the check registers," Cobbler wrote.

Financial auditors with John Cutler & Associates mentioned the employee payroll loans in its 2017 audit of the City of Florence.

"It should have never been allowed to happen. Whether it's illegal or not, that's up to an attorney to decide," Florence Interim City Manager Piltingsrud said. 

Piltingsrud said the employees obtained the loans despite a policy prohibiting them from doing so. He has updated the current city employee handbook to say that employee payroll advances are still not allowed in the city. He has also made policy changes that require the city council to now look over the bills they are approving the city to pay out in his first week on the job.

We reached out to Lozano and DeLaurentis for comment by phone, text, and email regarding their interest-free loans at the taxpayers' expense. DeLaurentis called us back saying "everything was approved" by Mike Patterson and he says Patterson told him it was allowed by city policy. In part, DeLaurentis said he used at least some of the money for personal housework and that several other employees used the unauthorized city benefit.

"Let's talk about the money. Why did you think you were entitled to an interest-free loan on the city and taxpayer's dime?" Chief Investigative Reporter Chelsea Brentzel asked Mike Patterson after his court hearing on Monday. He stayed silent and walked down the courthouse stairs.

Wednesday, the City of Florence provided 13 Investigates with extensive documentation on financial information.

13 Investigates has asked the Colorado Attorney General's Office and Colorado Bureau of Investigation (CBI) if it is looking into the case. The Attorney General's Office told us it had no comment. The CBI also said it has no comment at this time.

This is a developing story -- stay with KRDO NewsChannel 13 for the latest on the city hall scandal in Florence.

If you have a tip or lead you'd like our team to investigate, email us at 13Investigates@krdo.com.