The state Auditor’s Office released a report Thursday concluding a former secretary with the Lake Quinault School district used a district credit card for unauthorized personal purchases totaling at least $118,871 and as much as $142,797 between August 2008 and January 2015.
The investigation began into the former secretary – who was not named in the report – when school district officials noticed unauthorized charges on the school’s credit cards and filed a report with the Grays Harbor County Sheriff’s Office in February of 2015.
“We initiated an investigation on February 2, 2015,” said Steve Shumate, Chief Criminal Deputy for the Sheriff’s Office. “Unfortunately, these cases that involve the state Auditor’s Office can take a long time for them to complete and get the results to us. We waited until December 2016 and still had no results from the state. At that point we decided to submit our case to the prosecutor’s office without the state’s investigation.”
A call to County Prosecutor Katie Svoboda was not immediately returned Thursday afternoon.
Rich Dubois, Superintendent for the Lake Quinault School District, provided the Auditor’s Office with a statement in response to the state’s conclusion of guilt in the fraud case.
“The Lake Quinault School District concurs with the findings for fraud from the State Auditor,” he wrote. “Since the district uncovered the potential fraud it has taken steps to insure internal financial controls were strengthened.”
The state report pointed out several weaknesses in their financial practices that could have allowed the former secretary to defraud the district over such a long period of time. Some of the steps Dubois said the district has taken include, “First, the district reviews all requisitions and the superintendent must sign off before a purchase order is made. Second, the district has established stronger control of all credit cards, including a policy on use. Staff must sign out and back in any card they will use. Upon turning the card back in they must return all receipts and/or invoices they received. The history of any purchase (requisition, purchase order, invoice, receipts, etc.) are attached to the credit card statement. Third, the petty cash account is reviewed by the Quinault Education Association President every six months to insure the account balances correctly.”
He added the hiring of a new district business manager has led to greater control over transactions coming out of the district. “She has undergone two annual audits by the State Auditor’s Office and has been complimented on her maintenance of financial records. The superintendent also reviews each month all purchases and signs off. In all the district financial controls are stronger and the district is in a better financial condition than January 2015.”
The former district employee who is the subject of the investigation started with the district as a bus driver in 1977. According to the state report, she moved into the accounts payable secretary role in 2005, then was given the additional responsibility of payroll secretary in 2010, making her responsible for “completing, submitting, monitoring and closing purchase orders as well as monitoring inventory of all received goods and supplies. The secretary was also responsible for performing all payroll duties and for safeguarding and monitoring district credit cards and petty cash accounts. Despite being responsible for making accounts payable and payroll payments, the Secretary’s purchasing responsibility was limited to copy machine maintenance and supplies.”
Suspicions arose in December of 2014, when the high school principal requested a copy of the district’s credit card statements after a parent reported the card had been declined when they tried to use it for a fundraising purchase. The principal noticed the photocopied version he received had been altered. After requesting an original page of the statement, he noticed a charge to a pet store vendor that had been altered out of the photocopied statement he’d received earlier.
The secretary denied she had made the purchase at the pet store, saying the purchase was actually made by a teacher. The teacher denied it, and the principal forwarded the superintendent the credit card statement.
Further investigation by the superintendent found that the secretary had used the school’s bank account to get credit cards in her name, using the superintendent’s signature stamp without his knowledge or permission to sign the bank forms.
The secretary was placed on administrative leave January 26, 2015, and fired a few weeks later.
The state’s investigation found a number of unauthorized purchases attributed to the secretary. On March 11, 2015, the Grays Harbor County Sheriff’s Office searched the former secretary’s residence, observing and recovering items that were linked directly to district credit card charges and vendor expenses. These items included a 60-inch flat screen television and a French door style refrigerator. She had also purchased items including about $10,600 in pet supplies, multiple vacations, clothing, shoes, perfume and cosmetic services, according to the report.
It is now up to Svoboda to determine what charges should be filed, if any. The Auditor’s report also recommended the Quinault School District attempt to recover the total amount the secretary used for personal purchases and another $35,000 in court and administrative costs.