Tuesday, the Washington State Auditor’s Office released its findings from an audit and fraud investigation of Mason County Fire District No. 12. According to the Fraud Investigation Report for the period January 1, 2017 through July 31, 2022, auditors identified “potential losses of public funds in multiple areas of operations” and determined “misappropriations involving payroll, credit card and other disbursements” totaling $68,672 while finding “questionable” expenditures in “amounts of $95,093”.
The report also points to nepotism and four individuals: Fire Chief, Secretary, Commissioner A, and Captain. The investigation explains that Commissioner A is married to the District Secretary. The Fire Chief is their daughter. The Fire Chief is married to the Captain, a volunteer position. The Fire Chief and Secretary are the District’s only employees. The Fire Chief is under the Board’s supervision and authority, and the Secretary is under the Fire Chief’s supervision and authority.
The fraud investigation reports says “These relationships led the Board to trust District employees even more unquestionably than it ordinarily would” which led to the majority of the misappropriation and questionable expenditures.
To obtain the necessary documentation to complete their investigation, State Auditors subpoenaed vendor activity reports and credit card statements as well as used records from outside agencies because the District “could not provide records it should have had…”
In the Accountability Audit Report for the period January 1, 2017 through December 31, 2020, auditors identified several District operations that did not comply with applicable state laws, regulations, or its own policies. And the District did not provide adequate controls over safeguarding of public resources.
State Auditors recommend the District establish internal controls to ensure compliance with state law and the safeguarding of public funds from loss or misappropriation in the following areas:
- Conflict of interest and code of ethics
- Open Public Meetings Act
- Annual filing of financial reports
- Use of District vehicle
- Cash receipting
The State Auditor’s Office told the Fire District 12 Commissioners they will refer the case to the Mason County Prosecuting Attorney, State Attorney General, and the IRS for further consideration.
In its response to the fraud report, the Fire District said it will investigate the allegations further and has hired an additional attorney. The Fire Commissioners also stated they will take “appropriate action” if their investigation “determines that any of the allegations are sustained.” And concluded their response with “the District is confident that the investigation will determine that no fraud occurred.”