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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Embezzlement Audit Reveals Theft Of $4,000 From Medical Lake Municipal Court

A new state audit of Medical Lake’s municipal court has uncovered the embezzlement of about $4,000 over a two-year period in a “check-for-cash” scheme.

The investigation is being turned over to the Spokane County Sheriff’s Department.

City officials said a new computer program installed more than a year ago should prevent any further thefts of city funds.

“The idea of dishonesty is your worst nightmare,” said City Administrator Pete Rose.

The cash was lost some time between Jan. 1, 1994, and July 21, 1996, according to the audit.

Payments to the court during that time were not always documented with a receipt. Someone apparently substituted unrecorded payments made by check for cash payments that had been documented with receipts.

The auditor uncovered the problem in seven bank deposits from the court, but a further investigation revealed a total of 41 potentially suspicious deposits.

During the period the money was lost, several employees worked as cashiers in the court. As a result, funds from the different employees were commingled.

It has not been possible to figure out who was responsible for the loss, the audit said.

Rose said he cannot discuss specifics of the case but wants the public to understand that honest city employees do not deserve to be tainted with suspicion.

The audit was recently released to the public.

Rose said he’s been meeting with state auditors to continue the city’s efforts to improve its financial safeguards.

The Municipal Court in 1996 hooked up to the state’s computer system for keeping track of court transactions.

Now, clerks enter payments on the computer and print a receipt immediately. The entries cannot be changed later.

In addition, court duties have been segregated, and staff members have received new training.

“We feel comfortable we’ve done a 180-degree turnaround,” Rose said.

The city also has submitted a claim to the Washington Cities Insurance Pool to recover the loss through its bond insurance on employees.

The state auditor about two years ago started taking more time investigating municipal operations with a high risk for financial irregularities, Rose said.

Courts are one of the high-risk areas because of the amount of money handled at the counter.

The auditor criticized the way trust funds were being held by the court. Also, the city did not pay the state its share of fines on a timely basis, and in one case it was penalized for overdue interest on the fine money.

Other problems were uncovered in other areas of city operations, but none involved theft.

Deposits were made late. Receipts did not match the pass numbers sold for the use of Waterfront Park.

Payroll claims and warrants were not locked securely. Too many employees had authority to write treasurer’s checks.

The auditor also called for a tighter policy on the use of credit cards, which had been limited to police for travel.

In their response contained within the audit report, city officials said they have made a lot of progress in resolving the problems.

The auditor said in the report, “We recognize the effort that city officials have taken to improve the operation of the court since the end of our fieldwork.”

, DataTimes