The questionable spending cited by the auditor included:
— Excess payroll payments to Dales: $60,726.
— Unauthorized comp time for Dales: $27,451
— Unauthorized paid time off for Dales: $9,863
— Improper reimbursement payments to Dales: $19,204
The report noted that much of the questionable spending was tied to pay and benefits collected by Dales in violation of city policies. However, the report also noted that regardless of the policy, city council members did not agree as to whether Dales, as a part-time employee, was entitled to such payments.
According to the auditor’s office, its investigation stemmed from a May 2021 Elgin City Council meeting at which Dales was informed she was being fired due to concerns with her job performance. Because of the concerns, city officials asked state auditors to review the city’s financial records from 2017 through June 2021.
Within days of the auditor’s report being released in 2023, Fayette County officials criminally charged Dales with felony first-degree theft. Dales pleaded not guilty, and the case was initially scheduled for trial in July 2023.
Court records show that over the next two-and-a-half years, judges granted 14 continuances in the case, and on Aug. 22, 2025, Fayette County prosecutor Jason Dunn reduced the charge from felony first-degree theft to misdemeanor fourth-degree theft, alleging Dales stole no more than $750 worth of property from the city.
Dales pleaded guilty to the charge and on Sept. 3, 2025, was fined $430 and placed on informal probation for one year. There was no restitution ordered in the case.
“This is very disappointing,” Elgin Mayor Jim Knobloch said Tuesday, adding that he was surprised by the outcome of the matter given the $37,000 in expenses the city incurred just for commissioning the state audit.
“The courts of the land have spoken and are saying this is worth a $430 fine,” Knobloch said. “It is what it is. I feel bad because I’m also a taxpayer with the City of Elgin.”
Knobloch said that at one point, he met with a county prosecutor about the case but “I just felt, like, ‘I’m wasting my time here.'”
Dunn and Fayette County Attorney Nathan Lein did not respond to calls Tuesday from the Iowa Capital Dispatch.
In an interview Tuesday, Dales said Dunn had indicated to her earlier this year that he wasn’t sure how to prosecute the case “since no money was missing,” and that the state attorney general’s office had declined to take over the case.
Dales said the criminal case stemmed from local officials’ desire for “revenge” after she reported that Knobloch appeared to be sexually harassing her. Knobloch said all of the allegations of harassment against him were “debunked” by the Iowa Civil Rights Commission.
“That was all thrown out,” he said. “That was false.”
Dales said that’s not the case and provided the Iowa Capital Dispatch with a copy of the right-to-sue letter the commission granted her on Dec. 12, 2024. While the letter doesn’t amount to a ruling on the merits of Dales’ civil rights complaint, a right-to-sue letter is issued only in cases where there’s a finding of probable cause, allowing a complainant to pursue litigation.
As for the findings of Iowa Auditor of State Rob Sand, Dales said Sand wanted to make a name for himself by claiming to have ferreted out wrongdoing by local officials. “He used this as a platform to get his face out in public,” Dales said of Sand. “He went around the state telling people how many clerks he had charged with embezzlement.”
“Elgin city officials asked for this investigation, and we’re glad they did,” Sand said in a written response to Dales’ claims. “We stand by our report, which showed over $130,000 of improper self-dealings. Any prosecutor in the state of Iowa who has questions about how to do justice for taxpayers knows how to get a hold of the Attorney General’s Office or me.”
Dales pointed out that many of the auditor’s findings were tied to her receipt of insurance coverage, comp time and other benefits as a part-time employee of the city. “My harasser was saying I wasn’t entitled to it because I was only working 30 hours per week, and so I broke the law by collecting those insurance benefits,” she said. “There is no such law, but Sand went along with it.”
According to the auditor’s report, the findings of wrongdoing were based on the benefits being contrary to city policy. The report highlighted several deficiencies in financial oversight by the council, noting that the city didn’t follow its own personnel policies and, as a result, Dales “periodically paid herself” for more hours worked than the council had ever authorized.
“The lack of appropriate oversight and the failure to ensure implementation of adequate internal controls permitted an employee to exercise too much control over the financial operations of the city,” the report concluded.
