Former LFP water district employee embezzled over $360,000 from District

Wednesday, February 20, 2013

Updated and corrected 02-20-2013 5:02pm

Lake Forest Park Water District offices
Photo courtesy LFP Water

The Washington State Auditor's office has released the results of a two year investigation into suspected fraud and embezzlement by the former office administrator of the Lake Forest Park Water District. (see previous story).

Lake Forest Park Water District is a small District at the north end of Lake Washington in King County, Washington. The District serves about 873 connections with clean, unchlorinated well water from 8 artesian wells and 3 deep wells in a watershed located within the District.

The employee, who has not yet been charged, had worked at the district for half a dozen years, the only full-time office staff. A routine audit in December 2010 quickly uncovered massive irregularities in the bookkeeping. The employee was suspended without pay and a firm of forensic accountants hired to go over the books and overhaul the district's bookkeeping methods.

According to our news partner, The Seattle Times, the two year state audit revealed that the trusted employee had been charging home improvements to the district. She hired her children to do part-time jobs, then inflated the hours and salaries. She had a district cell phone but added a second one and "used 20,000 minutes and 300,000 text messages in two years." In all, she took $350,000 from a district whose annual budget is around $600,000.

After being on unpaid leave for two years during the investigation, she was fired on Tuesday.

The losses are all covered by the state insurance pool and the district will be submitting a claim, now that the audit is complete. According to a statement on the district's website,

"The District has a crime insurance policy as a member of the Water and Sewer Risk Management Pool (WSRMP). The District is in the process of filling a claim through WSRMP, which includes sufficient coverage to protect the District and its ratepayers against losses incurred due to employee dishonesty and crime." 

A new district manager position was created and the operations manager was promoted into the position, effective January 2011. This position will now supervise the bookkeepers and office assistant. The old board included one who had stepped in to finish the term of her husband, who had died. Another board member retired because of ill health, and the third board member died unexpectedly. New board members were appointed and subsequently elected to their positions. 

The accountants cleaned up the bookkeeping and set up reports that balanced against each other and were easier to spot discrepancies. Bookkeeping is now done by an outside firm. Internal controls have been established and two people are required to approve expense vouchers, as well as a Treasurer from the new Board.

The former employee's fate is now in the hands of the Lake Forest Park police and the U.S. Attorney's office.


Anonymous,  February 20, 2013 at 11:53 AM  

And the Washington State Auditor's staff never noticed anything amiss during their seven years of auditing the LFP Water District?

So much for the "clean" audit reports issued by the Washington State Auditor, I think the credibility of that agency was all puffery generated by former Brian Sonntag anyway.

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