CRIME BLOTTER

Washington auditor sees biggest state employee fraud case in 15 years

Jul 1, 2024, 5:20 PM

Image: A Washington employee misappropriated $878,115 between 2019 and 2023 at the Office of Admini...

A Washington employee misappropriated $878,115 between 2019 and 2023 at the Office of Administrative Hearings, according to the SAO. (File photo: Matt Slocum, AP)

(File photo: Matt Slocum, AP)

The Office of the Washington State Auditor (SAO) discovered a Washington employee was committing fraud via a report released Monday. The office said it is the largest internal misappropriation in a state agency the SAO has seen in 15 years.

The state employee misappropriated $878,115 between 2019 and 2023 at the Office of Administrative Hearings (OAH), according to the SAO.

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The SAO explained in a news release that fraud normally starts with a series of small transactions, which people use as a test to see if they can get away with it. If no one detects them, they start to exponentially increase the size of the charges.

The state auditor’s office developed a new data analysis tool to find patterns of large growth by scanning a dataset of state purchase card transactions. The analysis highlighted the credit card belonging to the OAH, which auditors reviewed and subsequently found the nearly $900,000 fraud.

“This report demonstrates the power of our improving analytical tools and the continued importance of having our outside, professional auditors review government finances,” State Auditor Pat McCarthy said via the news release. “It should serve as a reminder to all government managers — be vigilant in your oversight. Trust, but verify.”

Additional investigative work uncovered more

Further investigation showed the charges on the OAH card were for a consulting business but when auditors asked for proof, the OAH couldn’t find the documentation and didn’t recognize the business. According to the SAO, the business was registered with the Department of Revenue in the name of a management analyst who worked in the OAH’s fiscal department.

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The SAO stated that the OAH lacked the necessary financial controls and allowed the analyst to charge cards through four different business names the analyst created, in addition to making direct personal purchases with the card. The SAO reported no one in the agency looked over the analyst’s purchases or charges on the credit card.

“I am greatly concerned by the increasing boldness of misappropriations of public funds at all levels of government,” McCarthy said via the news release. “This is the second case of six-figure losses we have reported this year, in addition to multiple smaller cases. We offer several fraud-prevention resources and trainings, and I encourage every local government and state agency to take advantage of them.”

According to the SAO, the OAH no longer employs the analyst.

Julia Dallas is a content editor at MyNorthwest. You can read her stories here. Follow Julia on X here and email her here.

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Washington auditor sees biggest state employee fraud case in 15 years