PORT ANGELES — State Auditor’s Office fraud investigator Jim Brittain believes that former Clallam County Treasurer’s Office cashier Catherine Betts embezzled at least $617,467 in public funds — adding that “the actual amount of the loss cannot be determined.”
Brittain’s long-awaited, eight-page report on the missing money was released Tuesday.
With the report now in hand, Port Angeles Police Department detectives are moving ahead with their investigation, which is expected to lead to the arrest of Betts.
Betts left the Treasurer’s Office last May and is now living in Shelton. Authorities say she is not a flight risk.
Though the stolen funds are covered by county insurance, there is little probability they will ever be recovered, state Assistant Attorney General Scott Marlow told a meeting of Clallam County and Port Angeles city officials on Feb. 17.
“It was further mentioned that [Betts] had been known to frequent casinos,” Sheriff Bill Benedict told the Peninsula Daily News.
Betts was in charge of processing real estate excise taxes, preparing daily cash reconciliations, deposits and tax affidavits and prepared monthly reports of taxes collected.
In the report, Brittain said that procedures in the Treasurer’s Office were lax.
“The county did not monitor this activity, enabling her to manipulate transactions and misappropriate funds,” his report said.
Accusations
Brittain accused Betts of:
• Destroying affidavits and recording them in lesser amounts.
• Crossing out amounts on documents and recording lesser amounts.
• Recording affidavits and using a spreadsheet function to conceal the amounts she embezzled.
• Taking cash payments from sellers of property and homes and then pocketing the money.
Betts, who earned $45,000 a year as a cashier, could be charged with first-degree theft, punishable by up to 10 years in prison and a maximum $20,000 fine.
The state Auditor’s Office investigation has been ongoing since last May 19, when another Treasurer’s Office employee discovered that the tax records, over which Betts had considerable control, did not balance.
Betts was put on administrative leave on May 19 and was terminated on June 19.
“We confirmed that at least $617,467 in REET [real estate excise tax] payments from property owners had been misapporpriated between Feb. 1, 2004, and May 19, 2009,” Brittain’s report said.
“The actual amount of the loss cannot be determined due to records retention limitations and missing REET documents, daily reconciliations and daily and monthly tax schedules.
“In addition, we could not open some password-protected files.”
New measures
Treasurer Judy Scott said she has implemented measures to prevent similar thefts from recurring.
Scott said the accounting system was in place for more than 20 years without any apparent problems.
“Do you think if I had any inclination this was going on I would tolerate it? Give me a break,” said Scott. Scott is up for re-election in November. She said she plans to run again.
“I will not say I am totally responsible, because our office found [the theft],” she said.
One method Betts allegedly employed was a check-for-cash scheme, Scott said.
It works like this:
• An employee who receives the incoming check sets it aside without recording it.
• When an equal amount of currency has been received, the employee takes the currency and replaces it with a check.
Betts cashed and recorded an average of $11,022 a month in checks between June 1, 2003, and last May 19, Brittain said.
Upon her departure, check transactions dropped to $2,108 in June 2009 and $1,281 in July.
“This shows that most of [the] recorded cashed check transactions prior to June 1, 2009, were for fictitious amounts,” Brittain concluded.
Now, real estate excise tax checks are immediately scanned when they are received, Scott said.
The amount known to be stolen is the fifth highest theft of public funds investigated by the state Auditor’s Office in the last 10 years.
“Because we did find it, we are doing every effort we can to make this whole,” Scott said.
The known public cost of the theft?
When $60,067 in investigative costs and $6,000 for bank-related records cited by Brittain are factored in, it is $683,534.
Brittain’s report is available at www.sao.wa.gov.
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Staff writer Paul Gottlieb can be reached at 360-417-3536 or at paul.gottlieb@peninsuladailynews.com.
