How $500,000 in Clallam County money was stolen over five years

A former Treasurer's Office cashier in the courthouse

PORT ANGELES — How does a Clallam County employee steal more than $500,000 in public money over five years from a courthouse office cash drawer and get away with it?

That’s the question hanging over the ongoing fraud investigation by the state Auditor’s Office into the theft of more than $500,000 in real estate excise taxes from the county Treasurer’s Office.

The amount was revealed in a joint statement issued Tuesday by the county Sheriff’s Office and the Treasurer’s Office.

It appears former $45,000-a-year Treasurer’s Office cashier Cathy Betts cashed real estate excise tax checks directly from the cash drawer in the Treasurer’s Office, then doctored the books to make it look like everything added up, Treasurer Judy Scott said Wednesday.

“I’m doing the best job I can,” Scott said.

“I’m sorry it happened. We have yearly audits, and nobody picked up on this.”

Betts has since moved from Port Angeles and has been unavailable for comment.

But authorities have said they know her whereabouts and they do not consider her to be a flight risk.

County Administrator Jim Jones said Wednesday that the loss is covered by the county’s risk-pool insurance, less the $10,000 deductible, but that the county’s insurance rates “without question” will increase as a result of the payout.

In all of 2008, the state Auditor’s Office investigated 35 cases involving the loss of $549,000 in public funds, according to the agency’s Division of Special Investigations 2008 Fraud Report.

Just one case statewide involved more than $100,000.

Jones said the cities of Port Angeles, Forks and Sequim will be paid real estate taxes revenues they are owed going back to 2004, when Betts allegedly began stealing the funds.

Sole responsibility

The theft grew out of Betts being solely responsible for processing county real estate excise tax payments and for distributing the funds to municipalities, Scott said.

Scott speculated that spreadsheets and other accounting records were manipulated in a way that will be made clear by a state Auditor’s Office report due by Jan. 31 that will itemize five years of real estate excise tax transactions.

“How she manipulated that, I’m not sure,” Scott said. “It was intricate.”

The cash drawer that Betts allegedly gutted periodically holds more than $1,000 on a daily basis but “not thousands,” Scott said, adding that the real estate excise taxes on the sale of a $250,000 Port Angeles home, for example, would be $4,450.

The thefts were “a sporadic type of thing,” she added.

“Maybe she was stockpiling money,” Scott said, adding the processing of real estate excise taxes lacked the “dual controls” now in place in which two people, not one, are involved in processing the tax payments.

Transactions tracked

The state Auditor’s Office traced thousands of individual transactions involving real estate excise taxes dating back to 2003, discovering anomalies dating to 2004, Jones said, noting that 2004 to 2007 “was one of the highest real estate transaction periods ever.”

Jones said the theft was discovered during a changeover of computer systems, when the old and new processes for recording real estate excise taxes were being compared and real estate excise tax records did not balance.

Betts was put on paid administrative leave May 19, unpaid leave June 1 and fired June 26.

The state Attorney General’s Office will review the Auditor’s Office audit for possible criminal charges, which could include felony first-degree theft, the threshold for which is the theft of more than $1,500.

Betts was a smart employee with an accounting background and “savvy” with numbers, Scott said, adding she worked with Betts for eight years.

During that time, Betts did not show any signs of newfound wealth, such as an unusual amount of new clothing, a new car or extravagant vacations.

New procedures enacted by Scott include far more oversight by the office accountant in tracking real estate excise tax payments, the treasurer said.

The office accountant will inspect all real estate excise tax affidavits, run daily totals and check off each affidavit against a daily list, according to the new procedures.

The procedures were distributed to office employees on Dec. 31 and forwarded to county commissioners on Jan. 8 in light, she said, of a Jan. 5 Peninsula Daily News article on the case.


Senior staff writer Paul Gottlieb can be reached at 360-417-3536 or at [email protected]

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