Fire 12 inquiry continues

SAO report recommends recovering lost money

Matt Baide | Sep 29, 20220

Mason County Fire District 12 in Matlock says it is conducting an internal investigation into the allegations of fraud and misappropriation of public money by the state Auditor’s Office.

The accountability audit and the fraud investigation reports were released Sept. 20 at the fire commissioners’ regular monthly meeting. The fraud investigation report alleges the district misappropriated almost $70,000, and had $95,000 in questionable spending.

Mason County Sheriff’s Office Chief Criminal Deputy of Investigations Jason Dracobly confirmed to the Journal that the department has received the auditor’s reports and has started an investigation. Dracobly said the investigation will take some time because the allegations date to 2017.

The case also has been referred to the Mason County Prosecutor’s Office and the Internal Revenue Service.

Mason County Prosecuting Attorney Michael Dorcy said he’s been in contact with Special Investigations Program Manager Stephanie Sullivan and the Mason County Sheriff’s Office, and all parties agreed that a criminal investigation is necessary before any criminal charges are considered.

Fire Chief Kelli Walsworth and two commissioners were interviewed in April as part of the fraud investigation report, but a request to interview former secretary Brenda Wilder was never responded to. Investigators attempted to contact volunteer fire Captain Bryan Walsworth by emailing Kelli Walsworth and a commissioner in July, but the district did not provide contact information. The third commissioner was contacted by email in April but didn’t respond.

The fraud investigation alleges nepotism was part of the reason for the noncompliance with state laws and the alleged lack of adequate monitoring.

The Journal emailed the fire commissioners for comment about the reports. Commissioner John Pais responded that the fire district has retained an investigator to “conduct further investigation into the auditor’s allegations and cannot comment further until our investigation is complete.”

Mason County Commissioner Kevin Shutty, who represents Matlock and Fire District 12, said the findings identify a concerning, yearslong pattern of behavior misusing taxpayer money for the personal gain of those in authority in the fire district.

“That the district’s Board of Commissioners failed to take action, even after SAO recommended they file a police report, represents malfeasance and they should resign,” Shutty said in an emailed statement to the Journal. “The public loses faith in their elected and appointed officials when behavior like this goes unchecked, especially by those who were elected to ensure transparency and accountability. I expect the Mason County Prosecutor’s Office to review the report filed by SAO and take appropriate action to hold all those involved accountable. I am grateful for the work done by staff at SAO. State Auditor McCarthy and her team are true professionals and exhaust every opportunity to work with organizations to find resolutions and ensure accountability. I trust their work and know the community’s best interests are in mind throughout. Their findings should not be discredited in order to protect and enable people in a position to abuse their power.”

According to the fraud investigation report, the Auditor’s Office recommends the district “seek recovery of the misappropriated $68,672, including questionable amounts of $95,093 and related investigation costs of $48,500” from former fire chief Kelli Walsworth, former secretary Brenda Wilder, commissioner Albert Wilder and volunteer captain Bryan Walsworth. Any compromise or settlement of the claim by the district must be approved in writing by Attorney General Bob Ferguson and Auditor McCarthy as directed by state law.

The report allows the district to respond to the allegations.

“The Board of Commissioners of Mason County Fire Protection District No. 12 is committed to operating transparently and in full compliance with the law,” the response in the report states. “We appreciate the auditor’s efforts in identifying areas of concern and the district is working to further investigate and address the allegations contained in this report. Given the short deadline for providing a response to this report, and not having access to the auditor’s supporting documentation, the district is unable to provide a detailed factual response within the constraints of the audit report format. The district is following the recommendation of the auditor to investigate the allegations, is retaining an attorney to assist with further investigation into the allegations and the district will take appropriate action if it determines that any of the allegations are sustained. The Board of Commissioners recognizes that auditor’s report of misappropriation and questionable expenditures is based primarily on an absence of supporting records. The Board of Commissioners is working to implement better recordkeeping processes and is working to improve its process of reviewing and approving expenditures to avoid similar issues in the future. The board has already begun working with the IRS to bring the district into full compliance with all reporting requirements. The board believes that once it has the chance to further investigate the allegations contained in the report the majority of the auditor’s concerns will be addressed by the district’s investigation and the district is confident that the investigation will determine that no fraud occurred.”

The state Auditor’s Office responded to those remarks in the fraud investigation report, stating “Our investigation was based on an audit of the district’s financial activity using the district’s own records. When the district could not provide records it should have had, we subpoenaed credit card statements and vendor activity reports to identify inappropriate transactions. Our determination of misappropriation is based on an overall assessment of the financial transaction, not merely on an absence of supporting records. The office of the Washington state auditor reaffirms its findings and will follow up on the district’s internal controls during the next audit.”

Other than the alleged misappropriation and questionable spending, the accountability audit also identified other areas of concern, including conflicts of interest and ethical violations. The report says state law limits the amount public officials can receive to $1,500 in a calendar month, and a commissioner was paid $2,819 and $1,600 in two months in 2021 for providing maintenance services on district vehicles.

The report states the district violated the Open Public Meetings Act, failing to provide adequate notice of meeting days, admit members of the public to virtual meetings and hold regular board meetings, including having only one meeting in 2020 and not holding regular meetings at a regularly scheduled time in 2021 and held meetings “inconsistently and unpredictably.” The district also did not properly document voucher payment approvals in meeting minutes since September 2018, and the total voucher payments shown in minutes were inconsistent with accounting records, according to the audit.

The report also states the district submitted its 2018 and 2019 reports to the Auditor’s Office 496 days and 99 days after the statutory deadline respectively. The 2020 and 2021 annual reports were due May 30, and as of Aug. 1, had not submitted either report.

Fire Chief Kelli Walsworth also misused the district vehicle, using it for personal purposes such as shopping and going to her spouse’s place of employment in Shelton and hauling a personally owned utility trailer for a purpose not clearly intended to benefit the district, according to the report.

The Journal submitted a public records request to the district July 21, but has not received a response that it was received or is being processed by the district.