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Originally published February 19, 2013 at 7:43 PM | Page modified February 19, 2013 at 10:33 PM

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Audit: Lake Forest Park water-district worker siphoned away $350,000

An office administrator used her teenage children to help siphon away more than $350,000 in ratepayer money over seven years, according to a state audit.

Seattle Times staff reporter

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A Lake Forest Park water-district office administrator used her teenage children to help siphon away more than $350,000 in ratepayer money over seven years, according to a state audit.

The administrator allegedly put her children on the payroll, forged receipts and kept the district’s financial records in a padlocked cabinet while she was one of two full-time employees in the Lake Forest Park Water District’s tiny modular office on Northeast 178th Street.

A three-member board approved her expenses and budgets for years while she charged new laminate flooring for her house and used district money for motorcycle parts, a dog kennel and college tuition, the state audit shows.

Her alleged actions weren’t uncovered until state auditors, during a routine audit, asked about a receipt for an item that just said, “soft.” The rest of the word was whited out. She told the board members it was for software, but when board members investigated, they discovered it was actually a receipt for a “soft mattress cover,” said Matt Miller, a spokesman for the Washington state Auditor.

The water district fired the woman Tuesday, after the state released the results of its two-year investigation. The Seattle Times is not identifying her because no criminal charges have been filed. The U.S. Attorney’s Office has been notified and Lake Forest Park police are investigating.

“We did have the foresight to be insured,” said district manager Alan Kerley, who said the district will file a claim to try to recoup the lost money. “Our ratepayers are not going to suffer any significant loss.”

Two current board members and one former board member did not return calls seeking comment. The administrator was placed on unpaid leave in January 2011, and since she left, the entire three-member board has been replaced. One of its members has died, and two resigned.

The office administrator started work there in 2004 and was paid about $53,000 a year. Auditors were never able to speak to her. Their audit says she misappropriated at least $352,641 between 2004 and 2011 using a variety of methods: altering receipts, charging items on two credit cards, faking reimbursements and fudging time sheets.

The water district serves about 900 customers in North King County, with a total annual budget of about $600,000.

Two of the woman’s three children were at some point part-time employees of the water district. State auditors watched surveillance video showing that the woman paid all three children starting when they were 15 years old.

She allegedly had their wages deposited in her bank account and even enrolled two of them in the state retirement plan, though they did not meet the eligibility requirements.

The oldest of her three children was paid $56,351 between 2005, when he was 15, and February 2011. One time sheet was signed off for five hours, then altered to say he worked 41.5 hours.

The woman’s daughter started temporary work at the water district when she was 15 and was paid $84,791 between April 2007 and January 2011.

The administrator had a water-district cellphone, but she added an extra one in 2008 and used 20,000 minutes and 300,000 text messages in two years.

Receipts revealed $99,000 in misappropriated credit-card charges. The administrator allegedly paid for her own college tuition and her daughter’s and bought motorcycle- and car-stereo systems, video games, energy drinks, household furniture, groceries, wood-laminate flooring and clothing.

She also bought things for office use, took them back to the store, and then kept the refunded money, according to the report.

“Internal controls at the district were not adequate to safeguard public resources,” auditors wrote.

In response, the district has hired an outside bookkeeping firm, made one board member the treasurer, and established new financial-reporting systems.

Emily Heffter: 206-464-8246 or eheffter@seattletimes.com

On Twitter: @EmilyHeffter

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