LaPORTE, Ind. – Using the state’s new public accountability law, Indiana Attorney General Greg Zoeller’s office today took legal action to freeze the assets of a former LaPorte County deputy auditor who is accused of embezzling approximately $150,000 in county funds.
In LaPorte County Circuit Court today, Zoeller’s office sought and obtained a temporary restraining order freezing the financial assets – including bank accounts, a home and four vehicles – of Mary C. Ray of LaPorte, Ind., until a full audit can be completed. Ray is retired from her position as deputy auditor in the LaPorte County Auditor’s Office.
The Attorney General’s motions for a temporary restraining order and prejudgment attachment were filed under a state law the Legislature passed in 2009 at Zoeller’s urging: House Enrolled Act 1514-2009, the public accountability law.
“It is always disheartening when a government employee is accused of violating the public trust by pocketing taxpayers’ money that does not belong to them. The public accountability law allows the State to identify fraud on public funds earlier in the process and freeze defendants’ assets in the event we must recover them later to reimburse the public treasury,” Zoeller said.
The investigation of missing funds began with a report to State Police that a bank deposit bag the Auditor’s Office used had been stolen. It was later recovered with checks inside but $3,200 in cash was missing. Also, within a two-day period, there was a $1,800 discrepancy between receipts and deposits. Examiners from the State Board of Accounts then launched a preliminary audit.
That audit of the auditor’s office receipts and deposits found that approximately $150,000 had been shorted through check kiting between May 2012 and December 2012, the final months before Ray’s retirement. As deputy auditor, Ray’s duties included collecting payments from other county departments, receiving various payments to the Auditor’s Office such as permit fees made to the county, in both cash and checks, and depositing them into the county’s bank accounts.
The preliminary audit found that certain checks paid to the county were not recorded or deposited but instead were held for weeks, and then substituted for unrelated cash payments to the county. Swapping the unrecorded checks for cash allowed the deposits to still balance with the amount of funds receipted. Prior to May 2012, county records show that cash and checks collected were equal to cash and checks deposited; but after May 2012, on nearly every business day there was less cash deposited than received and more checks deposited than were received, the audit found.
The current amount of restitution the SBoA seeks from Ray is $150,000, but that amount is subject to change pending the release of the final audit report.
The State Board of Accounts conducts regularly scheduled audits of government units and, when completed, routinely certifies them to the Attorney General’s Office for collection if audits discover misappropriation of public funds. The 2009 state law allows the SBoA and Attorney General to take action earlier in the process based on a preliminary audit, when public funds would be at risk if the State waited for the regularly scheduled final audit to be completed.
In the motions filed today, the Attorney General’s Office asked the LaPorte County Circuit Court to freeze Ray’s assets, including real estate, vehicles and any bank or retirement accounts. The Attorney General’s Office asked the court to order that Ray’s assets not be transferred, concealed or distributed, so that funds would be available to reimburse the county if the court were to enter a judgment later.
Based on the eventual final audit report, the Attorney General’s Office could file a complaint to recover public funds at a later date, to seek civil collection of the final amount from Ray in order to reimburse the county treasury.
LaPorte County Circuit Court Judge Thomas J. Alevisos granted the temporary restraining order today against Ray and set the hearing on the motion for prejudgment attachment and garnishment for 11 a.m. September 16.
The final audit will review whether there was any surety bond coverage on Ray that the State could obtain to reimburse the county treasury for the shortage. Any amount not covered by bonds would be Ray’s personal responsibility to repay.
The Attorney General’s jurisdiction is civil only, to collect public funds that have been misappropriated. Criminal charges, if any, would fall under the jurisdiction of the county prosecutor or U.S. Attorney and police agencies.
NOTE: Attached is the State’s motion for temporary restraining order and motion for prejudgment attachment and garnishment, filed against Mary C. Ray in LaPorte County Circuit Court.