Clallam theft may hit $793K

Money stolen from the Clallam County Treasurer's Office could be as much as $793,595 dating back to 2003 but only $617,467 can be confirmed because some records are unavailable.

That's the conclusion of a special investigation by the Washington State Auditor's Office into theft that was uncovered in May 2009. The five-page summary was released Tuesday, Feb. 23.

The report recommends seeking recovery of the $617,467, investigative costs of $60,067 and $6,000 charged to the county by the bank for the records.

The investigation began after the Clallam County Treasurer's Office reported on May 19, 2009, a "possible misappropriation of public funds" consisting of $1,200 from two real estate excise tax transactions.

Employee fired

A seven-month investigation revealed the theft totaled $617,467 over six years beginning in 2004 and several methods were used to conceal it.

The suspect employee was hired in January 2001 and in January 2003 became a cashier whose duties included receiving payments, preparing daily deposits and reconciliations, recording daily real estate excise tax affidavits and preparing a monthly real estate excise tax statement.

She was placed on administrative leave before being fired on June 19, 2009, the report said.

State auditors examined every real estate excise tax document available from June 1, 2003, the identified starting point of the questionable transactions, through May 19, 2009.

Probe still open

The investigation confirmed "at least $617,467" in real estate excise tax payments was stolen between Feb. 1, 2004, and May 19, 2009.

In a prepared statement, Clallam County Treasurer Judy Scott said it remains an open investigation according to the state attorney general's office.

"I wish to assure you that my current staff and I have worked responsibly, diligently and expeditiously through this investigation," Scott's statement said.

"We secured the evidence, we notified the appropriate authorities and we severed any access from the now former employee.

Covering tracks

According to the report, the cashier would deposit checks, steal cash and record fictitious checks in the county's accounting system equal to what she stole.

To reconcile the stolen money, she under-reported the real estate excise tax payments.

The cashier recorded an average of $11,022 per month in checks, which dropped to $2,108 in June 2009 and $1,281 in July 2009.

"We noted that no checks or fewer cashed checks were recorded in the accounting system when the cashier was on leave," the report said.

As part of the scheme, the cashier would destroy the copy of the sequentially numbered real estate sales tax affidavit the treasurer's office is required to keep.

Numbers 'skipped'

The auditor's office kept copies, however, which were compared to those in the treasurer's office to verify the amount stolen, the report said.

When these reports were sent monthly to the state Department of Revenue, the cashier listed explanations such as system glitches, missing affidavits or the word "skipped" to explain the missing numbers, according to the report.

"We found many of these 'missing' numbers were actually used in reporting REET transactions," the report stated.

"When the treasurer learned of the weaknesses in the system, she promptly developed new internal controls to prevent or detect misappropriation."

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