Missing money report released

By Adam Spencer, The Triplicate June 02, 2014 05:36 pm

Waste Authority funds were embezzled, sheriff finds 

Last year, it was publicly disclosed that up to $29,000 in public money was missing from the coffers of the Del Norte Solid Waste Management Authority, triggering the forced retirement of former authority director Kevin Hendrick and a criminal investigation.

More than four months after the Del Norte County Sheriff’s Office completed its investigation, a summary of what was found was finally released last week during the Solid Waste Authority’s monthly public meeting.

“The investigating detective stated that his conclusion was that there had been financial embezzlement from the authority but that there was not evidence to indicate who did this, an exact time frame of when they did this, or really even how they did this,” said Martha Rice, the authority’s legal counsel, during the meeting.

 

The public money was pilfered from the authority over a period of several years, going back as far as 2004, making it nearly impossible to pinpoint who was the culprit, according to Sheriff Dean Wilson.

Through the sheriff’s investigation and multiple audits, it was determined that the actual amount of unaccounted public money from the authority is closer to around $9,000, according to Wilson, with the rest of the unaccounted funds attributed to bounced checks that were paid back to the authority later. Since the authority’s records for these reimbursed bounced checks did not match records at the county office, it was originally suspected that up to $29,000 was missing, Wilson said.

“This was an ongoing problem over many years that had accumulated over time; however, what was evident in the process was that there was an effort to hide the loss of the money by using accounting practices that were deceptive by using money they had in hand and applying it retroactively,” Wilson said in an interview with the Triplicate.

Although the investigation could not prove intent to embezzle funds for personal gain or point to any suspect, the investigation did find there was an intent to cover up that money was going missing, and that is why it was appropriate for former director Hendrick to step down, Wilson said. 

“We’re holding him accountable for it because he was in charge,” Wilson said.

Hendrick told the Triplicate that ever since the unaccounted money problem was uncovered in October 2012, the authority cooperated in every way possible to document the problem and prevent it from happening further.

“This suggestion that there was an attempt to cover it up is completely unfounded; my staff and I cooperated every step of the way,” Hendrick said. “During the sheriff’s investigation, no one contacted me or asked me any questions, so how can they accuse me of a cover-up?”

Surprise cash counts that started in 2012 showed that the unaccounted money situation did not continue after first discovered, Hendrick said.

“We are doing surprise cash counts and it comes down to the penny every time,” said Rich Taylor, the authority’s treasurer.

Hendrick pointed out that during the discovery of the problem the Solid Waste Authority Board was unable to have a meeting due to lack of quorum for more than three months.

“The board was AWOL while this was all happening,” Hendrick said.

Hendrick said that he was the one who hired forensic auditor Don Scanlon to get to the bottom of what happened. 

Scanlon told the Triplicate that there were no “smoking guns” to pinpoint where the money went, but that “there was a problem, and it never got fixed and it was on (Hendrick’s) watch.”

Hendrick said he was not hired to be an accountant and that the authority has a team to oversee finances internally, including the county auditor and county treasurer on top of an external auditor.

“Kevin left because he said it was his responsibility as the department head and he let it happen too long without addressing it,” said City Council member Rich Enea, who was the chairman of the authority board when Hendrick retired.

Hendrick questioned why he was given a severance package worth more than $35,000 — more than the suspected missing funds — if he was really culpable for what happened.

“The way my reputation has been smeared by certain Board members in public statements and implying and inferring that I was responsible for missing money is not true and not fair,” Hendrick said, adding that in 20 years as director he consistently received good performance evaluations and didn’t have a single reprimand.

Due to the nearly “impossible” nature of tracking down when or by whom the money was taken, it is unlikely that the $9,000 will be recovered, Wilson said.

“It’s disappointing that we didn’t come to some sort of conclusion but its not surprising,” said county supervisor and Authority Board member Mike Sullivan during last week’s Authority meeting.

“Maybe the staff will feel a little bit less like there’s a cloud hanging over them, and we can move about our business,” said City Council and Authority Board member Rick Holley during the meeting.

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