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Council Member DeLapp: Steve asked if this was an implication in that his campaign manager had told this person (Dean), and therefore, he (Steve) had known about missing funds. Steve said he had listened to some of the tapes, and one of the tapes showed a City employee saying to the sheriff that she knew about this so called rumor. Steve noted that Mr. Johnston said he did not spread a rumor, but he preceded his comments by saying he told the City administrator about it and chose not to give any source. Steve explained that one of the other members of the staff (Kim) indicated that she heard from someone, who had some association with a bar and didn't know she worked for City Hall, but supposedly knew Steve well and claimed that he routinely spread rumors all over town, came up with a $40,000 accusation that the City Administrator had embezzled some money. Steve added, curiously enough, this person knew this 4 or 5 days before Chuck Siedow brought it up, which she stated on the tape to the Sheriff. Steve stated it seemed the only people that knew about this rumor were the staff members. He said that Sharon, recording secretary, indicated to him at a Council meeting that she knew something, and two other people, Kim and someone else, knew about it. Shortly after, Steve said Abby came back to him and said, "My God, Steve; he accused me of embezzling $40,000." Steve answered, "What?" In his deposition with Sgt. Kurtz, Steve said he was asked what he lmew about this embezzlement. Steve answered that he thought the rumor was Abby Grenfell had embezzled the money. Steve said so here I am supposedly spreading a rumor to someone I don't even know, about something that is exactly the opposite of what I heard four days later. Steve stated Mr. Johnston is trying to play by the book on this. Steve said he showed Dean a flyer that came out ... a last minute drop damning him for the mayor's race. It turns out that Mr. Johnston knew about this because he had brought this same piece to the City earlier in the day. Dean Johnston responded, "That is inaccurate, untrue. Wrong again." Dean stated the only time that he repeated that information was when he told Mary Kueffner. He said he had no responsibility or any involvement beyond that. He said the only flyer he brought to City Hall was what he considered a smear sheet that endorsed the Mayor, DeLapp and Schneider. Dean said he had nothing to do with that. Council member Armstrong: Rose said she talked to Steve's campaign manager, and she thought she (campaign manager) should have a chance to say what she knows. Rose thought it was really unfair for Dean to bring her (manager) up without her being in attendance. Dean Johnston responded that Rose brought it up without his being in attendance. Armstrong explained she brought this up because Dean Johnston stated he concentrated on running a positive campaign, but sent out a sheet against Steve on assessments for Hill Trail. On one final thought, she hoped that his position on the City Council will allow Dean to be enlightened as to what goes on with City staff and that she hoped that he uses this wisely. LAKE ELMO COUNCIL MINUTES NOVEMBER 19, 2002