Collaboration in Civic Spheres

State details $352,000 public fraud in Lake Forest Park

by February 20th, 2013

The former Office Administrator of a sleepy public water district in a Seattle bedroom suburb allegedly embezzled at least $352,641 from taxpayer coffers from mid-2004 to early 2011 through misuse of multiple credit cards, unwarranted reimbursements and a mostly-fake payroller scheme involving three of her children, whom she also enrolled as beneficiaries in a state retirement system for public workers. Those findings and more about the Lake Forest Park Water District are detailed in a fraud report issued Tuesday by Washington State Auditor Troy Kelley. The former Office Administrator is identified by the auditor’s office as Jackee Zweekhorst. Zweekhorst, 40, of Bothell, was one of two higher-level employees for the district but reported only to an inattentive three-member board of supervisors. She kept the financial records under lock and key and effectively had no oversight, according to the fraud report.

Referred to feds
The case has been referred to the U.S. Attorney’s Office for further investigation and possible prosecution or, says the local police chief, a possible plea settlement. The district says it has robustly tightened its financial procedures and will be reimbursed for the loss by insurance. District officials first reported suspicions about financial misconduct to the auditor’s office in early 2011 and put Zweekhorst on unpaid leave then. Though officials will not confirm it, it is likely the U.S. Attorney’s Office is involved because the district was funded in part through federal grants. U.S. Attorney’s Western District of Washington spokesperson Emily Langlie said the office neither confirms nor denies pending investigations. Lake Forest Park is an upscale community near Seattle on the northern tip of Lake Washington, with a population of 12,849. The water district says it serves about 873 connections from 11 wells. Its annual expenditures ranged from about $500,000 to almost $1.5 million between 2004 and 2010.

Credit card bonanza alleged
According to the state auditor’s fraud report, Zweekhorst used the district’s general credit card, her employee credit card, and the district’s office supply store credit cards to run up charges totaling $123,350.51 that weren’t to benefit the district, but herself instead. Items she bought with district credit cards included home improvements, electronics, automotive and motorcycle-related items, clothing, video games, furniture, groceries, flooring, kitchen accessories, energy drinks, gift cards, software, computers for personal use, and unauthorized payments for college tuition for herself and one of her children.

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Reimbursement scams also detailed….
She also directed another $92,759.71 to herself through improper personal and mileage reimbursements, plus cell phone, petty cash and other payments, the report says. These included recompense for home improvements, auto repair motorcycle items, electronics, and department store purchases. A portion of these misappropriations involved reimbursements for items purchased and then returned, such as $1,630 in postage stamps.

Allegedly put her kids on the public payroll and funneled the pay to herself
Zweekhorst also put three of her children on the district’s payroll as workers and funneled $132,911.31 in district monies to them, most of which ended up in her own personal account, the report indicates. According to the state auditor, time sheets for her children were altered to increase the number of hours worked. Some time sheets appeared to have been completed by her children and some by her. A peer employee, then-water manager F. Alan Kerley, told auditors Zweekhorst’s children visited the district’s offices occasionally, but mainly to do their homework. He was unaware they were being paid at all except for one who sometimes worked five hours a week, and another who worked several weeks during one summer and then very rarely as a temp.

The fraud report adds Zweekhorst enrolled the three children as beneficiaries of the State of Washington’s Department of Retirement Systems and the district paid $3,619.90 toward retirement contributions for them, though they did not meet the district’s own eligibility requirements.

In addition to the $352,641.43 the state auditor’s office says was misappropriated by Zweekhorst, she also engineered another $21,400.48 in questioned expenses which may not have been for district purposes, but can’t be definitively categorized yet, the fraud report adds.

District has changed practices and will seek recovery from insurer
In a reply included in the fraud report, the district says it has beefed up its financial oversight practices. In a statement posted today to its Web site the district said it expected to seek recovery of the lost funds through an insurance policy that it has with the Water and Sewer Risk Management Pool, “which includes sufficient coverage to protect the District and its ratepayers against losses incurred due to employee dishonesty and crime.”

In addition to involvement of the State Auditor’s office over two years, Lake Forest Park Police spent 100 hours probing the case, said Interim Police Chief Kent Baxter. Baxter said next steps including possible criminal charges depend on a continuing investigation by the office of the U.S. Attorney General’s Western Washington Division in Seattle. Baxter added that if the key allegations are found to be valid by the feds and criminal charges filed against Zweekhorst, then prosecutors would most likely seek to settle the case out of court and try to recover some of the money from her.

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