Wake County

$600,000 in cash missing from Wake government office, records show

More than $600,000 in cash disappeared from the Wake County Register of Deeds office during the last two years, county records show – and investigators are looking further back to see if the theft could be even larger.

At the center of the mystery is Laura Riddick, the recently retired Register of Deeds who served 20 years in office after being elected six times. Riddick, 51, quit April 1, citing health problems.

Records obtained by The News & Observer show that Riddick’s office violated the most basic accounting rules. According to the records, an employee collected the 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 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. There was 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.

“There were not audit control procedures in place for the collection of cash,” Wake County District Attorney Lorrin Freeman said in an interview.

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

“It’s possible there were multiple people engaged in taking money from the office,” Freeman said.

Riddick, a Republican earning $143,000 a year, resigned April 1, citing a serious heart condition. She is married to Matthew Eisley, a former News & Observer reporter and editor who left The N&O in 2010. Riddick declined to be interviewed for this report.

County Manager Jim Hartmann said the Register of Deeds appeared to be a well-run office that succeeded in its core mission of accurately filing hundreds of thousands of real estate and vital records every year. Financial audits of Wake County by an outside firm did not detect signs of wrongdoing.

“It is always surprising,” Hartmann said, “when there are potential elements of fraud.”

Cash from newlyweds

The Register of Deeds office documents life’s most important transactions. If you are born, marry or die in Wake County, the office holds your birth and death certificates and marriage license. If you buy or sell land or borrow money for a mortgage, the office maintains the deeds and other records.

Most money enters the Register of Deeds office as electronic transfers from law offices handling real estate transactions and the excise tax paid on the purchase of property. But some people pay cash for real estate transactions, birth and death certificates and copies of documents. Office policy requires cash payments of $60 for marriage licenses, which bring in about $37,500 each month.

Those fees account for the majority of cash in the office.

The N&O obtained documents involving the Register of Deeds office through a public records request. They include an internal audit revealing $606,000 missing in 2015 and 2016, as well as a memo that outlines the former money-handling procedures and the changes made early this year in an attempt to find out where the cash was going.

Read the Wake memo

The exposure of the sloppy policies began in early 2016 with the arrival of Darryl Black as Deputy Register of Deeds, the second-ranking person in the office. On his first day at work, he said Riddick texted him that he was likely to be the next Register of Deeds.

An industrial engineer with an auditing background, Black said he requested reports on basic management metrics such as employee workloads and error rates in document filings.

In May 2016, Black said, he asked information technology (IT) manager Jim Pollina to run a financial report. But Riddick directed Pollina not to do it, records show.

“...at the direction of the Register of Deeds, IT was not to pursue at the given time,” Pollina wrote in an email to Black.

Black said Riddick shunted him aside. In December, at Riddick’s direction, he was not sworn in again as deputy register. In January, one of Riddick’s aides told him to submit a letter of resignation, Black said. His last day was Feb. 10.

In January, while Riddick was out of the office on medical leave, Pollina started working on producing automatic monthly financial reports to the county manager’s office, which is responsible for finances at all county offices.

One of Riddick’s deputies, Anne Redd, told Pollina that the daily deposit never balanced and was usually several hundred dollars short, records show.

“Anne states Laura knows about the money not reconciling but hasn’t mentioned recently attempting to balance the deposit,” according to an 11-page memo written by Pollina.

At that time, the cash practices were sloppy at best. Cash from the marriage, deeds and another unit was put into a white envelope. There was no documentation on how much cash went into in the envelope, according to Pollina’s memo and John Stephenson, Wake’s internal audit director.

An employee, Troy Ellis III, routinely walked the cash to Riddick, who counted it and recorded the amount for the first time. She then gave it to a deputy to check her count, according to the memo.

Pollina ran the report requested earlier by Black, a financial analysis that compared the daily bank deposit with expected daily revenue, which was based on the number of transactions and the associated fees. The report showed an average shortage of $26,000 a month.

Counting the cash

Pollina and other staffers came up with a new procedure unbeknownst to Riddick, who was out of the office for three weeks in January for a medical procedure. Pollina’s memo summarized the process and the results:

A supervisor would count all the cash, report the count to Pollina before sending the cash to Riddick. This procedure started three days before Riddick returned to the office.

There were discrepancies in the first four days while Riddick was absent. Bank deposits were slightly over on two days ($41 and $54) and short on the other two days ($14 and $63).

After her return the week of January 23, Ellis delivered the cash to Riddick. Her daily cash counts were lower than the supervisor’s: $200, $300 and $700. On a day when Riddick was absent, the cash counts were identical.

On the Friday of that week, the staff did not use Ellis as a courier. Riddick’s count was short by $780 – 39 $20 bills.

Two days later, on Sunday evening, Hartmann, the county manager, said he received a call from an aide about the missing cash.

The next day, Hartmann met with an aide, his chief information officer and Pollina’s supervisor at the county, then later with Scott Warren, the county attorney. Riddick’s cash count was short $600 – one $100 bill and 25 $20 bills.

On Tuesday, Ellis was not the courier. Riddick’s count was short $800, all in twenties, the memo said.

The next day, Feb. 1, Hartmann and Warren met with Freeman, the district attorney. Freeman said they were all unsure whether the missing cash was as a result of bad management, sloppy accounting or criminal conduct.

Freeman said she asked Hartmann to start an internal audit. She did not set in motion more aggressive tactics such as hidden cameras or using marked bills.

According to the memo, that evening Ellis carried the cash to Riddick, whose count was $600 short – one $100 and 25 $20 bills.

On Feb. 2, Hartmann and Warren had a short meeting with Riddick and her husband. Hartmann told Riddick he wanted to start the audit. Riddick agreed. Hartmann gave her a copy of Pollina’s memo, which included details of the missing $20 and $100 bills.

“She was very upset that she was being accused,” Hartmann said.

Pollina later made a note about Riddick’s conduct in the office after she met with Hartmann: “It appears Laura knows quite a bit of information about who found the anomalies. Questioning a staff member on why Troy didn’t take the envelope back on two separate occasions.”

The internal audit started on Feb. 3. That afternoon, Hartmann spoke with Black, who was concerned the internal audit had ended any chance of using hidden cameras or marked bills to identify culprits. Hartmann said he was following the district attorney’s advice.

Ellis, an employee since 2011, was fired April 5, four days after Riddick retired. He admitted to stealing $50,000 within the past year and is now cooperating with investigators.

Freeman asked the State Bureau of Investigation to open a case on March 30. The SBI and the Wake internal auditor are going back to July 2008 to track the extent of the theft.

On March 31, Freeman and Hartmann announced the investigation at a press conference, and distributed a statement from Riddick.

“Due to a recently diagnosed heart condition that has required surgery, and likely will involve more, I am retiring April 1,” Riddick said. “I have been honored to serve the people of Wake County for the past two decades.”

Joseph Neff: 919-829-4516, @josephcneff

Related stories from Raleigh News & Observer

  Comments