WA State Auditor’s Office finds fraud of nearly $900,000 at state agency

A new fraud report released Monday by the Washington State Auditor’s Office showed that a management analyst with the Office of Administrative Hearings’ (OAH) fiscal department misappropriated nearly $900,000 in state funds to a consulting business registered under the analyst’s name.

According to the report , the misappropriation of $878,115 is the largest from a state agency in at least 15 years.

The charges took place between 2019 and 2023 and were found using a new data analysis tool developed by the Auditor’s Office. That analysis found the charges on the credit card belonging to OAH, which was charging a consulting business registered with the Department of Revenue under the employee’s name.

“Auditors have long known that fraud frequently begins with a series of small transactions that people use as (a) test scheme to secretly move money to themselves or others,” according to a news release from the Auditor’s Office on Monday. “If the smaller misappropriations are not detected, they often balloon in frequency and size.”

OAH’s Chief Financial Officer did not recognize the consulting business when auditors asked for supporting documentation about it.

Auditors found that no one at the agency was reviewing the credit card charges, which allowed the analyst to charge four different business names the analyst created and allowed the analyst to charge personal expenses to the card.

The Auditor’s Office noted in their news release that the employee is no longer working for the agency but they plan to forward the report to the Thurston County Prosecuting Attorney’s Office.

“I am greatly concerned by the increasing boldness of misappropriations of public funds at all levels of government,” State Auditor Pat McCarthy said in a statement. “This is the second case of six-figure losses we have reported this year, in addition to multiple smaller cases. We offer several fraud-prevention resources and trainings, and I encourage every local government and state agency to take advantage of them.”

The other case of misappropriated funds noted by McCarthy was found earlier this year in Cusick, the headquarters of the Kalispel Indian Community. The case found a nearly $278,000 loss in public funds for the small community in northeast Washington. Cusick operates on an average annual budget of $838,000, according to the report.