Theft from public coffers a growing concern
Ryan Summerlin August 31, 2014
Embezzlement from public institutions and offices, despite numerous checks, double-checks and audits, is distressingly common and requires constant diligence, local public officials say.
And thieves keep finding new ways to skim money from the public coffers regardless of whatever protective measures are in place, recent embezzlement cases suggest.
In addition to two embezzling cases originating in the Garfield County Clerk and Recorder’s Office in the past two years, several area governments have been victimized.
Last fall, a former technology director for the Gunnison County School District was charged with stealing $400,000 by allegedly creating a fake computer consulting company and making payments to himself with district money. The Crested Butte News reported that the arrangement slipped past three business managers, two auditors and four superintendents.
Also last year, a finance officer for Paonia was sentenced to four years in prison after pleading guilty to embezzling $400,000 from the town government, again over multiple years before officials were able to put 2 and 2 together.
And a former Marble town clerk, the late Karen Mulhall, was being investigated two years ago for allegedly stealing at least $300,000 from that small town over several years before her departure and subsequent death.
Longtime Garfield County Treasurer Georgia Chamberlain called it a “sad day in the courthouse” earlier this month when word spread that Robin McMillan, a clerk’s office employee, had been fired and accused of stealing upwards of $200,000 from the office over five years.
McMillan, 51, of Rifle, now faces criminal charges of felony theft. She is due in Garfield District Court today for a bond review hearing. She remains free on $10,000 bond.
It was the second case of theft from the county clerk’s office in recent years, following the 2012 arrest of former employee Brenda Caywood, who subsequently pleaded guilty to stealing nearly $16,000 from the office over two years. Caywood was sentenced to two years’ probation, 60 hours of community service and restitution totaling $19,422.
Ironically, McMillan helped provide Garfield County Clerk Jean Alberico and investigators details of Caywood’s theft, while at the same time, as it turns out, allegedly taking money in a different manner herself.
MANY SAFEGUARDS, NO ASSURANCES
Chamberlain said she supports her fellow elected official, Alberico, and said it could happen in any public office where money is handled or tracked.
“It’s really hard to regulate against fraud,” said Chamberlain, who works closely with the county’s other elected officials and department heads. “The scary part is there always seem to be ways around anything you set up to prevent it, especially when there is a lot of money that passes through.”
Chamberlain said she employs several safeguards to protect money through her office.
“As a general rule, we always make sure there are two sets of eyes and that duties are kept separate, so that the same person isn’t doing everything,” she said.
James Bradford, clerk of the combined district and county courts in Garfield County, said his office also has numerous safeguards in place.
“We have a fiscal manual that outlines all of the procedures that we must follow,” Bradford said. “Every few years, we have our audit people come in and audit every aspect of what we do. Every kind of payment we send out, bank deposits, any transactions, are all closely scrutinized.”
Also, whoever cuts a check is not allowed to sign it, he added. And only certain trained people other than cashiers are allowed to prepare deposits. Deposits are delivered to the bank by the Sheriff’s Office, he said.
REVIEW UNDER WAY
Alberico said she had what she believed to be “double, even triple adequate controls in place” after the Caywood thefts.
Especially in an office that can see anywhere from $2,000 to $10,000 in cash pass over the counter in a given day, “We’ve always had pretty tight controls in place when it comes to handling money at the counter and separation of duties” when that money is processed at the end of the day, said Alberico, who has been in office since 2007.
The manner in which McMillan is alleged to have gone about the thefts, by altering daily spreadsheets, was also different than in the Caywood case. Caywood admitted to pocketing tax overpayments in the office’s motor vehicle division. So, one type of safeguard in one case might not work in other instances, Alberico said.
Alberico is now working with the county Finance Director Ann Driggers to have an independent auditor take another look at procedures in all county offices.
The thefts aren’t necessarily something that would show up in the county’s general financial audit, which is required annually, both Alberico and Driggers said.
For one thing, the vast majority of money that flows through county clerks’ offices in Colorado involves state motor vehicle registration fees.
“That wouldn’t show up in the Garfield County audit,” Driggers said. “State requirements do come into play in that case.”
Still, “we as a county are reviewing all of our existing internal controls to look at where things can be improved across the board,” she said.
The Colorado Department of Revenue, which oversees motor vehicle registrations in the state, requires daily and monthly reports from each of the county clerk’s offices, which operate as an agent of the state. That’s done through what’s called the Colorado State Titling and Registration System, according to Daria Serna, spokeswoman for the Department of Revenue.
“Numerous county clerks have also participated in various best practices forums at county clerk’s conferences as it relates to accounting,” Serna said.
The Colorado County Clerks Association is also looking at ways to offer more training around financial security, said CCCA executive director Donetta Davidson.
“It’s not something we’ve focused on much,” she said. “Each county has its own processes and best practices, and our member clerks can learn from each other.”
Alberico said she has gotten calls from other county clerks in the state since the recent embezzlement came to light, offering support and requesting that she share whatever she learns with the latest review.
She also cited statistics that suggest only about 3 percent of embezzlement cases are caught through internal audits, and that 46 percent of the cases come to light when a co-worker runs across something unusual.
“A lot of times it’s just accidental that we would even find out,” Alberico said. “What makes it hard is that oftentimes it’s an employee who is in an absolute position of trust.”
McMillan is someone she would have never suspected. “That’s what’s been so devastating,” she said. “You can’t watch everything, and you have to trust people.”
Ninth District Attorney Sherry Caloia complained that embezzlers, both public and private, often get off with no prison time.
And restitution payments after sentencing can be reduced to a minimum amount of as little as $15 to $25 per month, meaning the likelihood of full recovery of the money is remote, she said.
“It’s very upsetting, because unless these cases are treated very harshly the deterrent effect is not there,” she said.
Public embezzlement is “more prevalent than we would like to believe,” she said.
Not only is prison time a strong message, but she said she has been working with the probation office to obtain a better financial profile on the offenders, including real estate, vehicles and retirement accounts, to determine their ability to pay restitution.
Caloia said it doesn’t matter whether it’s a public institution or office, a nonprofit organization or a private, for-profit business, some people will inevitably find ways to cheat their employers.
“It transcends all places,” she said. “The only real way to detect it is to have very sophisticated audit procedures done every year.”
A more detailed county audit looking at daily transactions could have turned up the Clerk and Recorder Office thefts sooner, Caloia said. “But it’s very expensive to do that,” she said.
“It’s going to cost government a lot to put these kinds of safeguards in effect, if that’s what we want,” Caloia said.