Wake County

With $895K missing, Wake County office adopts new safeguards

Wake County has put new practices in place, including counting cash five times a day, in response to an investigation into missing money at the Register of Deeds office.

District Attorney Lorrin Freeman began a criminal investigation March 31 after officials found out $895,000 was missing from the office. A recent county audit showed the money had gone missing since 2014. Laura Riddick, a Republican who ran the office for 20 years, resigned April 1, citing health issues.

On Monday, newly appointed Register of Deeds Charles Gilliam laid out new safeguards meant to prevent theft. Gilliam, a former judge, criticized the way money had been handled in the office for years.

County policy requires cash to be counted twice a day, Gilliam said, but his office has been counting money five times a day since February. Several people are counting the money, he said.

Workers are also more diligent about documenting discrepancies, Gilliam said.

“The county policy says you have to document it if you’re off by $10 or more, but we document anything even if it’s 5 cents, because we want to know why,” he said. “We’re following best practices, maybe even better than best practices. Before, they were following worst practices.”

Gilliam said it was easy for cash to go missing under previous policies. Tellers who accept cash from people applying for marriage certificates or other documents weren’t required to count the money in their drawers before lumping it in with money collected by other tellers.

If someone was pocketing cash at the end of the day, he said, it would have been tough for an auditor to pinpoint whose drawer came up short.

But Gilliam said problems with how cash was handled should have been apparent.

“The system that was being run, let’s say last year: If somebody had come down to the office and just looked around, asked some questions like somebody right out of Campbell (University) business school would do, they would’ve detected this situation,” Gilliam said. “It was very blatant.”

Since the new safeguards were adopted, the deeds office has averaged $4.02 in daily overages, according to a memo from County Manager Jim Hartmann on Friday.

Gilliam’s comments Monday came less than a week after some Wake commissioners criticized Hartmann for not acting more quickly to adopt new cash-handling policies countywide. A day after commissioners criticized Hartmann, Gilliam released a statement saying Wake leaders had yet to reach out to the deeds office for an update.

In his memo, Hartmann said the county plans to provide training for tellers in August and September.

“We believe the theft in the Register of Deeds Office is an isolated occurrence and not reflective of practices elsewhere in the county,” Hartmann wrote. “Nevertheless, I feel intensifying our efforts on controls countywide is an absolute priority to be accomplished quickly in a measured manner.”

Gilliam is working with Hartmann’s staff to begin accepting credit and debit card payments for notary, birth, death and marriage records by the end of the year. It’s unclear how much the new electronic systems will cost, said county spokeswoman Kerry McComber.

The Register of Deeds office is an elected office, so it largely operates independently of the county government. However, Gilliam said he thinks the county would have detected the missing money sooner if its finance officer had audited the deeds office more frequently, as allowed by state law.

Prior to this year, Gilliam said, the Register of Deeds office hadn’t been audited since 1999.

“For 17 years, nobody ever came. So if something was being set up to make it easy to embezzle, nobody ever saw it,” Gilliam said.

McComber said a department-specific audit for the deeds office had not been conducted in at least 10 years. She said there was “no indication of questionable processes and practices to prompt a department-specific audit of the office.”

It’s also unclear how external auditors missed financial discrepancies. Every year, Wake hires an outside firm to review office policies, the “reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements,” according to Hartmann’s memo.

Last year, the firm Elliott Davis Decosimo, which has an office in Raleigh, conducted an audit for Wake.

“There are unexplained differences between amounts charged and amounts deposited,” Hartmann wrote in his memo. “Cumulative amount is extremely significant.”

Riddick has previously declined to respond to requests for comment.

“A lot of times fraud is difficult to spot because it’s being done in a clever way,” Gilliam said. “This was not being done in a clever way at all.”

Paul A. Specht: 919-829-4870, @AndySpecht