In what felt at times like an interrogation, Wake County leaders asked county staff Monday how they never noticed that $2.3 million was leaving the Register of Deeds office, bit-by-bit, over a 10-year period.
“When you’re missing 40 to 50 percent of the deposits from a single office every day, I’m wondering why red flags didn’t go up,” county commissioner John Burns said.
Wake employees said Monday that, prior to this year, they had no indication that money was missing.
The county’s annual financial audits, which don’t dive deep into each department’s books, revealed nothing suspicious. Staff didn’t consider reviewing deeds office practices because the office was run by an elected official, who’s responsible for its operations. And former Register of Deeds Laura Riddick appeared to be a “meticulous” office leader, said Johnna Rogers, deputy county manager.
“Just from our regular interactions with her and how she was so customer-focused, very much into improving the technology, there just wasn’t any indication she wasn’t at the top of her profession,” Rogers said.
So, over the last 13 years, Wake’s internal audit team never inspected the Register of Deeds office.
The staff’s explanations didn’t sit well with commissioner Jessica Holmes.
“For me, not getting around to any particular department for 13 years is unacceptable,” Holmes told Rogers and John Stephenson, director of Wake’s internal auditing team.
The county now plans to audit the deeds office once a year.
Could be more than $2.3M
The State Bureau of Investigation and Wake County District Attorney Lorrin Freeman are investigating how $2.3 million has gone missing since 2008. One former employee, Troy Ellis, admitted to taking $50,000 and was fired.
Riddick, first elected in 1996, resigned in April citing health reasons and is now the person at the heart of the mystery of the missing cash. In June, The News & Observer reported that Riddick’s office violated the most basic rules for handling cash.
Some deeds reports were “misstated,” Rogers noted Monday.
Rogers said it’s possible that Wake’s deeds office has lost more than $2.3 million. Internal auditors were able to examine records dating back to 2008 but older records are harder to access and interpret, she said.
Stephenson said his team of three full-time employees and two part-time employees are mostly directed by the county manager, Jim Hartmann, or the county attorney, Scott Warren, to help with specific, pressing needs.
He said his team launched a plan in 2014 to review each of the county’s departments while also keeping 25 percent of his time open for urgent needs. The team had audited the planning department, community services, environmental services, the board of elections and the sheriff’s office before Hartmann launched the deeds review in February.
Until then, the deeds office wasn’t a high priority because it appeared to be a well-run office.
“I want to be crystal clear when we talk about priorities and work,” Stephenson said. “... My plan is laid out by the board, the county attorney, the county manager and other people within the county when they’ve asked for help.”
He continued: “When you say I should’ve known here or I should’ve gone there, to me, (between) missing money and making sure people get their food stamps or making sure people get their services, I’m always going to make sure people get those services because that’s what this government is for.”
When will probe end?
Freeman, the district attorney, attended the meeting on Monday and said investigators are making progress toward determining where all of the money went. She declined to predict when they might announce their findings.
Freeman said she understands the commissioners’ frustration. The tone of the meeting, she said, “is not unlike many meetings I’ve had to have with victims of embezzlement.”
Commissioners’ chairman Sig Hutchinson said he spoke with state auditor Beth Wood about the missing money and the county’s annual audits. Hutchinson said that, according to Wood, auditors can do everything right and still not notice that funds were missing.
“I can’t personally blame an internal or external auditor,” Hutchinson said. “I don’t see how it could’ve been caught.”
Burns, for his part, said he too lays the blame solely on the person or people who might’ve taken the money.
Commissioners voted unanimously to adopt an agreement – known as a memorandum of understanding – that reinforces some of the county’s legal authority over the deeds office.
State laws and county policies already state what the county legally can do. Commissioners’ endorsement of this agreement is meant to signal that county officials will, in fact, exercise those powers – including through annual audits.
The county also plans to usher-in new technology to enable customers to use credit cards instead of cash to pay for marriage licenses and other records. And it plans to conduct more training of employees who handle cash.
Rogers said the county will also begin enforcing a new county policy, which it enacted last month, that requires workers who suspect wrongdoing to alert the county manager or internal audit director. Employees can blow the whistle anonymously, Rogers said, should they worry about upsetting their immediate supervisor.