Thursday, February 27, 2014

News Dispatch Reports Audit of LaPorte County Finds Funds Mislabeled and Funds Missing

From the LaPorte News Dispatch:

With the Indiana State Board of Accounts requesting nearly $200,000 from a former La Porte County deputy auditor, the state attorney general and the county prosecutor are looking at possible civil and criminal charges to recoup the missing funds and punish the defendant.

On Feb. 21, the state board of accounts filed its audit report on the La Porte County Auditor’s Office.

Amidst millions of dollars worth of mislabeled funds and other errors between Sept. 19, 2011 and Dec. 31, 2012, field examiners found $153,000 in missing money from the county auditor’s office.

In the audit report, investigators said there were 150 instances where less cash was deposited than receipted. Investigators said former deputy auditor Mary Ray was suspected because she was the primary employee responsible for receipting money and recording funds during this time. She was also mainly responsible for taking cash and checks down to the treasurer’s office for deposit.

On Sept. 6, 2013, Ray’s assets, including four vehicles and a house, were frozen after a temporary restraining order was filed in La Porte Count Circuit Court. She was accused of embezzling more than $150,000 at the time.

The investigation began after a bank deposit bag was discovered with $3,200 in missing cash in a local library. When a $1,800 discrepancy between receipts and deposits was found, examiners from the State Board of Accounts launched a preliminary audit.

According to the report, Ray tried to conceal the cash removal by not receipting some cash and checks, using voided checks to replace cash, writing receipts to departments and not posting them to the records, receipting lower amounts than were on the checks, holding receipted checks and turning them over to the treasurer at later dates, and not receipting electric fund transfers to the records.

The report listed more errors related to the auditor’s office, including a negative cash balance of $4.9 million in the excess tax fund, which is used to refund residents for overpaid taxes.

Mike Mauer, La Porte County chief deputy treasurer, said this error was a “snafu” on behalf of her office. The tax money simply wasn’t placed in the fund during settlement time. She said her department was distracted trying to get six years worth of tax bills out in two years because of the county-wide tax situation. She said checks written to residents during this time were still good, and the funds weren’t mislabeled or put in the wrong account.

But the report also listed a disbursement error of $5.7 million from the major moves fund in 2012 that wasn’t corrected until 2013, and $23.6 million worth of major move fund transactions posted as “transfers in” on the funds ledger and later included as part of the cash and investment balance, among other deficiencies.

Former county auditor Craig Hinchman, who served during the period of the errors, said some of the day-to-day operations of his office suffered because it had to get out three years worth of tax bill in 2012, or else get the county fined $1 million. And the office was short handed, needing at least two more employees to handle the workload.

“When I took office no auditor in the history of the state of Indiana found their office in the turmoil I did,” he said. “We were four years behind in collecting tax monies and had major assessment problems. The department of local government and finance created these problems because they did not follow their own rules.”