Former small town official accused of stealing $937,000 from Washington city • Washington State Standard

The former treasurer of the small town of Morton in Washington state is suspected of stealing more than $900,000 from the town over the course of nearly nine years.

A state audit released Monday found that the clerk and treasurer embezzled $937,584 from the city's treasury between 2013 and 2021 by using unauthorized ATM withdrawals and other methods – including accepting cash payments from customers who had not deposited them with the bank, and She writes herself checks for the city and records them in the city's accounting system as vendor payments.

Morton is located in Lewis County southwest of Mount Rainier, has about 1,100 residents and an annual budget of about $4.6 million.

The auditor's office said it will refer the case to the Lewis County District Attorney's Office and that the city has filed a report with its police department, which is investigating the case. The results of the audit will be made available to law enforcement.

The city said in a statement that it has risk management insurance to protect against stolen funds.

“The City knows that the public places trust in the city employees who serve them and that this is damaging that relationship,” the statement continued. “For the sake of transparency and to protect that trust, the City wants the public to know that none of the City's current employees have been involved in the theft of city funds.”

Donna Royle, Morton's current deputy city clerk, answered the phone at City Hall on Monday and said the city had no comment beyond the statement, citing an ongoing investigation.

The city clerk and treasurer served as a “substitute cashier” for the deputy clerk and treasurer and was responsible for overseeing day-to-day city operations, including handling bank deposits and reconciling the city’s accounting system and bank statements, the audit report said.

In 2021, the Morton City Council passed legislation eliminating the combined position of City Clerk and Treasurer and creating standalone positions for City Clerk and Treasurer.

“With the elimination of the joint position of clerk and treasurer, there was no longer a single person responsible for banking, bill payments and payroll reconciliation,” Mayor Rick Mead, the City Council and city staff said in a response included in the audit report.

The city said the former clerk and treasurer resigned shortly after her duties were split. In the city statement, Morton officials said they would “exhaust all legal avenues” to ensure she is prosecuted.

The former clerk and treasurer were not named in the audit report, but the city did provide the name of the person accused of theft in its statement. The Standard is not naming her because she could not be reached for comment and it was not clear whether charges had been filed.

Auditor's office investigators said they interviewed the former treasurer in May and she “took responsibility for embezzling city funds.”

The audit report states that the former clerk and treasurer began working for the city in July 2012 and was noticed during a scheduled audit in 2014 when the city wrote her a check for $2,400.

She said the $2,400 was reportedly a private loan, and the mayor at the time wrote to the state auditor general to say the city had approved the loan.

“In January 2015, we recommended that the city refrain from lending public funds and ensure that the clerk and treasurer repaid the money in a timely manner,” the audit report states. Recent investigations have shown that the $2,400 was ultimately repaid.

The former clerk and treasurer also got in trouble for telling the pension office in 2019 that she no longer worked for the city and then withdrew $23,837 from a retirement account – something she would not be allowed to do if she were employed. The office later determined that she was still with the city.

Unusual ATM withdrawals from the city's bank account discovered during a routine state audit in 2022 prompted the investigation, which resulted in the findings released Monday.

“The incredible thing about this case is that Morton's leadership took no action when informed of two separate problems involving the secretary and treasurer. We say 'trust is good, control is better' for a reason,” State Auditor Pat McCarthy said in a statement.

“Blind trust does not protect the public's money. Proper controls do,” McCarthy added.

In a separate fraud investigation report, auditors investigated concerns related to the credit card purchases of a former Morton police chief.

The police chief also had access to a bank account that was outside of the city's control but that held donations for police activities. Auditors found that the police chief had made $199 in personal purchases and other questionable purchases using a city credit card.

Morton's incident is the third six-figure loss of public funds by a local government or state agency in Washington that the Comptroller's Office has reported this year. The other cases involved the state Office of Administrative Hearings and the City of Cusick.

Morton, Washington Audit – August 2024

A copy of the fraud investigation report released by the Washington State Auditor's Office on Monday, August 26, 2024.