State of Indiana, LaPorte Co. sue former deputy auditor
Post-Tribune staff report March 3, 2014 11:10PM
Updated: March 4, 2014 9:17AM
The State of Indiana and LaPorte County sued a former deputy auditor on Monday to recover more than $153,000 in public funds she is accused of embezzling.
Mary Ray, a former deputy auditor in the LaPorte County Auditor’s Office, is accused of taking $153,002.46 in county funds from September 2011 to December 2012. The State Board of Accounts found 150 instances where county funds were embezzled in a Feb. 21 audit, and concluded Ray was responsible.
The lawsuit seeks repayment of the missing funds, plus an additional $45,815.25 in accounting costs incurred by state examiners who investigated and calculated the loss.
“When the very individual in charge of receiving and preparing deposits of taxpayers’ money is accused of embezzling that money, it is a profound violation of public trust, and we will use the legal tools at our disposal to compel repayment from this defendant in order to reimburse the public treasury for the amount lost in this brazen scheme,” Indiana Attorney General Greg Zoeller said in a statement.
The lawsuit follows a temporary restraining order and prejudgment attachment Zoeller’s office filed against Ray last September, when a preliminary audit by state examiners uncovered a potential misappropriation of funds in the auditor’s office.
That attachment froze Ray’s financial assets while the State Board of Accounts conducted a comprehensive audit. Ray could not sell, conceal or transfer her house or vehicles; this wa to make sure assets would be available to reimburse the county if the court were to enter a judgment.
Until her retirement, Ray collected payments from other county departments, received various payments to the auditor’s office such as permit fees, both cash and checks, and prepared deposits for delivery to the county treasurer. But the State Board of Accounts found that LaPorte County had been shorted $153,002.46 through schemes such as check-kiting, where certain checks paid to the county were not recorded or deposited, but instead were held for a period of time and then substituted for unrelated cash payments to the county. By swapping the unrecorded checks for cash, the scheme allowed deposits to still balance with the amount of funds that had been listed as received, the audit found.
If the court enters a civil judgment against Ray, she could face seizure of assets and accounts, liens on property and garnishment of wages. LaPorte County did not have a surety bond on Ray to specifically cover employee theft, so she is liable for the entire amount, Zoeller said. The county also is seeking to obtain proceeds from its county insurance policy to cover the loss.
The state Attorney General’s jurisdiction in this and other similar cases is only in civil proceedings. The U.S. Attorney’s Office and county prosecutors have sole jurisdiction in deciding whether to pursue criminal charges.
“Most government employees are trustworthy and good stewards of taxpayers’ money,” Zoeller said in a written statement.
“But having sued to recover public funds from embezzlers in many similar cases, the Attorney General’s Office now is working on developing a coalition of groups that will provide training to local government agencies on internal accounting controls and best practices that might help deter misappropriation of public funds in the first place.
Zoeller said details of that effort will be announced in the spring.