The insurance company for WTVP-TV 47 on March 13 filed suit against two ex-WTVP officials to try to recover money the insurer paid last spring on a claim of embezzlement and fraud.

The Cincinnati Insurance Company is suing the estate of the late Lesley Matuszak, WTVP’s former CEO, and also WTVP’s one-time Director of Finance and Human Resources Linda McLaughlin for $250,000 plus lawyers’ fees and costs tied to the insurer’s investigation of the alleged misuse of funds at WTVP, in what police said was embezzlement and the insurer calls a conspiracy.

The dollar amount sought is what Cincinnati Insurance Co. paid WTVP’s corporation, Illinois Valley Public Telecommunications — the limit the policy provided. The suit says the station actually lost $375,017.29, meaning that WTVP faced “uninsured losses and out-of-pocket expenses” of about $125,000 since $250,000 was the insurer’s maximum obligation.

The lawsuit says, “As part of the conspiracy, defendant McLaughlin knowingly and intentionally participated in, facilitated, and directed the fraudulent actions carried out by defendant Matuszak. This conspiracy was aimed at deceiving WTVP’s board of directors, ultimately leading to the approval and reimbursement of fraudulent and unauthorized expenses.”

WTVP receives grant money from CPB

The suit states, as first reported by journalist Andy Kravetz of WMBD-TV 31, “Upon information and belief, the defendants’ fraudulent actions and scheme and embezzlement [were] reported to the police and an investigation ensued implicating the defendants and their criminal activity.”

Matuszak and McLaughlin had liquidated $320,000 from WTVP’s investment holdings, and withdrew $100,000 line of credit from PNC, the insurer says. Matuszak hid the spending; she “misrepresented the station’s financial condition” and “falsely certified the accuracy of financial reports and concealed fraudulent activities.”

After falsely reporting on finances, the suit claims, “There were no other comments by the board members.

“The defendants improperly used company funds and credit cards for their own personal use and enjoyment,” the suit says, adding that the defendants’ committed “criminal activity” by purchasing items from “luxury clothing stores, liquor stores, furniture stores, gas stations, grocery stores and country club expenses,” all without authorization.

After board members eventually questioned spending, Matuszak committed suicide and McLaughlin resigned, and the station eliminated its magazine, cut some 30% of its budget and laid off nine employees. Most members of the board of directors also quit, and an audited financial statement for the fiscal year ending June 30, 2023, showed an overall loss of more than $870,000.

Later, the Peoria Police Department found probable cause to charge Matuszak, but declined to file charges since she was dead. Although implicated, McLaughlin never faced charges and “probable cause has not been reached for her arrest, unless she is able to be communicated with,” according to the Peoria police report. The police department declined to comment.

In such lawsuits, it’s possible to depose people involved under oath.

“McLaughlin was aware that the expenses in question were unauthorized,” the suit says, which continued to assert that actions by both Matuszak and McLaughlin “were not isolated or incidental but were part of a coordinated effort to conceal and perpetuate the fraudulent activities.”

Unlike criminal cases, which have a burden of proof of “beyond a reasonable doubt,” civil suits only require “a preponderance of evidence.” However, estates are legal entities that hold and manage assets on behalf of someone, and generally cannot be vulnerable to actions seeking a judgment. A “revocable” trust lets people still “own” its assets; in an “irrevocable” trust, people relinquish ownership and control, and plaintiffs can try to seize monetary distributions from the trust’s assets.

The Matuszak estate was served its summons on March 26, according to court records, which at press time do not show a proof of service to McLaughlin.

An initial court appearance is scheduled for 9:30 a.m. Aug. 22.