Former Red Wing city worker sentenced to probation, service for stealing funds

A woman who stole roughly $30,000 from the city of Red Wing has been convicted of felony theft after pleading guilty to the charge on Wednesday.

According to Goodhue County court records, Kaleen Ann Gustafson, 39, was sentenced Wednesday to spend five years on supervised probation and 100 hours of community service work.

Gustafson was also ordered to pay back the $29,530 in restitution, as well as other fees and fines.

As reported last November, a criminal complaint accused Gustafson of stealing a total of $30,699.29 from Red Wing during the time she was employed from March 28, 2022, to Feb. 6, 2023.

Police said they were first made aware of missing funds after a city employee called to report a fake invoice that amounted to about $1,000. The complaint says Gustafson took a check that was written to pay that invoice, deposited it, took the cash back out from the bank and kept it. City officials then noticed other alleged thefts through fake invoices.

Court documents detailed an interview where Gustafson said she would talk to “clear up this mistake.”

She initially said she was “discombobulated” and thought she had added everything up correctly. She was then confronted with the fact that city officials noticed more cash missing, to which she reportedly responded, “Umm okay.”

The complaint states she was then pressed about not noticing the extra cash she had that wasn’t hers. She responded by saying, “I know this looks horrible,” to which the officer responded, “actually, it was called the theft,” according to the complaint. The officer then said it was time to “own up” so she could “move beyond this.”

After lengthy explanations about other missing funds during the interview, court documents say that Gustafson then sent an email to city officials that read as follows:

“My sincerest apologies for the misjudgment on my part. I just met with Officer Sather. I accept full blame for the two issues that arose today. I understand this speaks poorly on my character. There are no excuses to make this right. I hope I can make this right. I hope I can make this right. Pay back the funds and resign? I’ve never broken the law in my life and I apologize for this. The last 6 months of my life have been a blur and tougher then most. Let me make this right with you guys. I’m so sorry, KELLY GUSTAFSON.”

Gustafson’s employment was reportedly terminated on Feb. 7, 2023 because of “allegations of fraud/theft and misuse of public funds” according to the complaint.

Court documents cite several fraudulent charges found by investigators during an audit of her time working for the city. The charges include small reimbursements for things such as mileage and larger transactions for thousands of dollars for purchases that didn’t happen or were paid in another way.

The complaint also shows that Gustafson runs a photography business called Backwood Photography or Backwoods Freestyle Photography which she also wrote checks out to.

During another interview with police on Oct. 25, Gustafson was asked by police if she could explain why there were checks written out to her business. She reportedly responded, “No. I literally lost my mind. I don’t even know what I was doing honestly” according to the complaint.

During that same interview, Red Wing police said they were giving her the opportunity to let them know why this happened. Gustafson responded by saying she was only working part-time despite being told she was going to be put on full-time. She also said she had been diagnosed with kidney cancer and that her sister-in-law also died after being diagnosed with cancer.

Gustafson reportedly said it was her intention to give the money back, but it “did not work out that way.”