The missing cash grows to $895,000 from Wake government office, auditors say

The amount of cash missing from the Wake County Register of Deeds Office has grown to $895,000, county audits show.

Auditors have now looked at the past three calendar years, so the amount missing appears likely to increase as auditors sift through financial records. They plan to track the flow of cash as far back as 2008.

Wake officials on Friday released an internal audit that showed $289,000 missing in 2014, on top of $606,000 previously reported missing for 2015 and 2016.

As the audit continues, some public officials are questioning the initial handling of the investigation into the person at the heart of the case, Laura Riddick, the former register of deeds.

In June, The News & Observer reported that Riddick’s office violated the most basic rules for handling cash. Records showed that an employee collected cash from tellers, most of it uncounted, and delivered it to Riddick. She routinely was the first person to make a daily count and written record of currency received by her office.

Earlier this year, top-level employees concerned about cash deposits being lower than expected took matters into their own hands, changing the process without telling Riddick.

During an eight-day period, they counted the currency before delivering it to her, with surprising results: Each day, after the money left Riddick’s office, cash was missing, mostly $20 and $100 bills, a total of $200 to $800 a day. The records show one exception: No cash was missing the one day Riddick did not go to work.

At the end of eight days, the office was missing $3,980 in cash.

On that last day, Feb. 1, County Manager Jim Hartmann and County Attorney Scott Warren met with Wake County District Attorney Lorrin Freeman, who asked them to perform an internal audit of the Register of Deeds Office. Hartmann and Warren met with Riddick on Feb. 2, and she agreed to the audit.

Riddick did not respond to a request to be interviewed for this report.

Slow to investigate?

Wake County Commissioner Erv Portman worries that criminal investigators were not involved until the district attorney made a request at the end of March – nearly two months after the February meetings – to bring in the State Bureau of Investigation.

“Why were police not notified so they could have investigated?” Portman wrote in an email to other commissioners and county management. “I am troubled by this story, and can’t help but feel the (register of deeds) was not treated in the same way anyone else would be on such a circumstance.”

Portman said he didn’t want to second-guess staff or sound like a Monday morning quarterback, but he wanted to see if there are lessons to learn.

He said he agreed with Darryl Black, a former deputy register of deeds whose attempts to analyze and upgrade procedures in the office ultimately led to the discovery of the missing cash. Black has said the internal audit put staff on notice that cash had been detected missing, thereby spoiling the opportunity for police to use hidden cameras and marked bills to catch perpetrators in the act.

“My concern is that the people under suspicion were being investigated with notice, instead of being investigated without notice,” Portman said.

Jim Coman, a former SBI director and senior deputy attorney general, has probably prosecuted more public officials in North Carolina than any other lawyer.

Coman said he doesn’t want to criticize Freeman, the district attorney, whom he once supervised and admires. But he said he might have made a different decision, given the report that $20 and $100 bills were missing only on the days Riddick was in the office.

“That would have been more than enough to light a fire under my ass,” Coman said. “I would have treated it as a criminal matter right away.”

Consulting the SBI

Freeman said she recommended the internal audit after consulting with Chris Cardwell, special agent in charge at the SBI’s financial crimes unit. Freeman found problems with the eight-day internal investigation: There were no witnesses to the cash count before and after the money was given to Riddick.

Freeman pointed out that she has successfully prosecuted three cases involving the embezzlement of hundred of thousands of dollars in her two and a half years in office: former state employees’ leader Dana Cope; former state employee Chakrapani Tadameti, who admitted taking $440,000 from an insurance program; and Diane Kelley, who admitted to stealing $800,000 from 25 homeowner associations she managed.

Each began with an internal audit, Freeman said. Financial crimes cases can involve hundreds of thousands of transactions over years, unlike a burglary or bank robbery consisting of a single incident.

Freeman said she understands the public concern and flatly rejected any suggestion that Riddick’s prominence as an elected official would influence the case.

“The public has a right to feel like this is being handled appropriately, and has a right to feel that it’s being handled quickly,” Freeman said. “I’m the one in the position who has to see this through, and I hope at the end the public is satisfied.”

Riddick, who was paid $143,000 a year, resigned April 1, citing a serious heart condition. The 51-year-old Republican was elected to office six times and served 20 years. She is married to Matthew Eisley, a former News & Observer reporter and editor who left The N&O in 2010.

The Register of Deeds Office records real estate transactions, birth and death certificates and marriage licenses. Those licenses, which cost $60, were required to be paid for in cash and accounted for much of the currency that passed through the office.

Troy Ellis III, the employee who delivered the cash to Riddick for years, has admitted taking $50,000 in 2016 and is cooperating with investigators, according to his letter of dismissal. His admission does not account for the large amount of money missing.

Despite the $895,000 in missing cash, there may be some good news for taxpayers. The county’s insurance policy contains coverage up to $1 million in employee theft.

Wake County told its insurer on April 5 that it would be filing a claim of employee theft. The county has twice requested and received an extension of time.

“The District Attorney is involved as well as the State Bureau of Investigation and we are not in a position to know exactly when we will be able to finalize a proof of loss,” wrote Roger Askew, a deputy county attorney.

The current deadline for filing the claim is Aug. 28.

This story was originally published July 28, 2017 at 2:38 PM with the headline "The missing cash grows to $895,000 from Wake government office, auditors say."