State auditor: Mason County Fire District 12 misused nearly $200k in public funds

A fraud investigation report from the Washington State Auditor’s office revealed that nearly $200,000 in public funds were misappropriated by a Mason County fire chief and her secretary.

The state auditor recommended to the District to file a police report about the loss of public funds from January 1, 2017 through July 31, 2022, but as of Aug. 17, no police report had been filed.

The investigation, which began in September 2021, determined misappropriations involving payroll, credit card and other disbursements totaling $68,672 were made between October 2017 and July 2022.

Also, the report determined that auditors were unable to identify whether $95,093 in expenditures from May 2017 to July 2022 were for legitimate business purposes.

According to the report, the District only employs the fire chief and a secretary. The fire chief is responsible for managing the District’s financial operations, including payroll.

Additionally, the one of the Mason County commissioners is married to the District secretary. The fire chief is their daughter.

According to the report, the fire chief was hired as the temporary fire chief in April 2018, made permanent in August 2018, terminated by the board in May 2022, then immediately made temporary fire chief again.

The secretary, the fire chief’s mother, was hired in August 2020 and resigned in March 2022.

The fire chief is responsible for preparing two paychecks – one for herself and one for her mother, the secretary.

According to the report, the fire chief paid herself $2,973 in September 2019 as a vacation leave buyout, which was not allowed in her contract.

The fire chief also paid herself five additional paychecks in 2020 and three additional paychecks in 2021, totaling $20,364.

The report also said the fire chief paid herself several times in advance and received $2,982 in unsupported payroll payments.

The fire chief also received $37,104 in payroll payments after her contract was terminated in May 2022, including two questionable severance payments totaling $30,155.

According to the report, the secretary received two additional paychecks in 2020 and three additional paychecks in 2021, totaling $8,839.

After her resignation in March 2022, she received a buyout for vacation and sick leave totaling $3,875, and an additional $1,240 in questionable pay.

The commissioner, who is married to the Secretary, received three meeting paychecks for unknown reasons in 2020, totaling $693.

He also received 10 questionable payments totaling $10,100, of which $5,709 was for maintenance services. The report was unable to determine if these services were actually performed.

The report said the District has not reported quarterly payroll tax payments to the IRS since December 2018.

The fire chief is also responsible for the District’s credit card purchases and paying those balances.

A review of the credit card activity from January 1, 2017, to May 29, 2020, showed the District had not made a credit card payment since January 2020, and had an outstanding balance of $36,841 when the credit card was closed on May 29, 2020 for having the outstanding balance.

The report said the fire chief misappropriated $16,579 and is responsible for $13,941 for purchases that included televisions, movie and music streaming services, groceries, clothing, holiday dishware and personal items, including jewelry, hair spray and school supplies. The purchases also included $1,994 in plastic kitchen products that were delivered to members of her family.

The commissioner’s credit card was also used for $472 in prepaid cellular cards and a flooring supply purchase.

Additional employee reimbursements totaling $18,831 were also misappropriated by the fire chief. For example, $2,000 for “wildland supplies” and $500 for “picnic supplies” was not supported by any records.

Another $20,811 in payments were made to a cellular vendor. The fire chief bought six cellphones and six smart watches, and not only was the report not able to locate the items in the District’s possession, but there was no business purpose for 13 of the 16 phone lines.

In April 2022, the auditor’s office interviewed the fire chief and the commissioner, who said she did not know why she received more paychecks than usual or why some paychecks were issued in advance.

The fire chief also told investigators she bought groceries for holiday parties and a summer barbecue, but the auditor’s office pointed out several of the purchases were small enough to indicate personal usage and not party supplies. She said the groceries were actually for Saturday drills and snacks that were kept at the station and their vehicles.

The fire chief also said the credit card balance was paid each month and that she did not know why the District stopped using credit cards, and did not know about the outstanding balance or that the account was closed.

The commissioner said he did not know the fire chief received extra paychecks, or that the secretary (his wife) received extra paychecks.

The secretary never responded to interview requests from the auditor’s office.

In a written response to the allegations in the auditor’s report, the District said:

“The Board of Commissioners of Mason County Fire Protection District No. 12 is committed to operating transparently and in full compliance with the law. We appreciate the Auditor’s efforts in identifying areas of concern and the District is working to further investigate and address the allegations contained in this report.

“Given the short deadline for providing a response to this report, and not having access to the Auditor’s supporting documentation, the District is unable to provide a detailed factual response within the constraints of the Audit report format. The District is following the recommendation of the Auditor to investigate the allegations, is retaining an attorney to assist with further investigation into the allegations and the District will take appropriate action if it determines that any of the allegations are sustained.

“The Board of Commissioners recognizes that Auditor’s report of misappropriation and questionable expenditures is based primarily on an absence of supporting records. The Board of Commissioners is working to implement better record keeping processes and is working to improve its process of reviewing and approving expenditures to avoid similar issues in the future.

“The Board has already begun working with the IRS to bring the District into full compliance with all reporting requirements.

“The Board believes that once it has the chance to further investigate the allegations contained in the report the majority of the Auditor’s concerns will be addressed by the District’s investigation and the District is confident that the investigation will determine that no fraud occurred.”

The report said this case would be referred to the Mason County Prosecuting Attorney’s Office and the IRS for further consideration.

At Tuesday’s Mason County’s Board of Commissioners meeting, the audit was presented to the public by the auditor’s office, however no additional comments were made by District lawyer Brian Snure and referred to the written statement.

State auditor Pat McCarthy said, “I know it can be challenging to manage local government, but the issues we raised are all intended to serve your community.”

During the ending of the online meeting, several comments were seen on the screen from the Mason County community, however the board refused to hear public comments and quickly ended the meeting.

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