Largest theft in 15 years: WA employee charged with $878K fraud

A Washington state employee misappropriated nearly $900,000 through fraudulent credit card purchases, according to a report released Monday by the Office of the Washington State Auditor.

The case marks the largest internal misappropriation in a state agency in at least 15 years.

The report revealed that $878,115 was misappropriated at the Office of Administrative Hearings (OAH) between 2019 and 2023.

“This report demonstrates the power of our improving analytical tools and the continued importance of having our outside, professional auditors review government finances,” said State Auditor Pat McCarthy. “It should serve as a reminder to all government managers – be vigilant in your oversight. Trust, but verify.”

Auditors have learned that fraud often starts with a series of small transactions as a test before escalating. When those transactions go undetected, these fraudulent activities can increase in frequency and size.

The State Auditor’s Office developed a new tool to identify exponential growth patterns and scan large sets of state purchase card transactions.

A recent report highlighted a suspicious credit card belonging to OAH, which auditors then reviewed.

The charges were for a consulting business, but OAH administrators could not find supporting records or identify the business.

It turned out to be registered under the name of a management analyst in OAH’s fiscal department.

Auditors discovered the agency allowed the management analyst to make charges through four different business names the analyst created, in addition to making direct personal purchases with the cards.

Additionally, no one in the agency independently reviewed the analyst’s monthly credit card charges or payments.

“I am greatly concerned by the increasing boldness of misappropriations of public funds at all levels of government,” said McCarthy. “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.”

OAH no longer employs the analyst, and the report will be forwarded to the Thurston County Prosecuting Attorney’s Office for further action.

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