State Auditor's Office: Government employee embezzled nearly $900K

(The Center Square) — A former management analyst at the Washington State Office of Administrative Hearings spent nearly $900,000 via fraudulent credit card purchases, according to a report released Monday by the state auditor.

“This is the largest of its kind since at least 2009,” Adam Wilson, Assistant Director of Communications at the State Auditor’s Office, told The Center Square.

The Office of Administrative Hearings is an independent state agency of more than 200 employees that resolves disputes between state or local government agencies and Washingtonians.

Stephanie Sullivan is a special investigations program manager at the State Auditor’s Office who took part in the investigation. 

“We had selected credit card reports as part of an internal control review, so we selected some transactions to do some testing,” she explained.

“There was a spike that just didn’t seem to make sense,” Sullivan said.

“We shared that with the entity [OAH] at the end of May 2023 and our audit liaison was the CFO, but she also had the management analyst in the meeting with her to help pull records," she noted.

“He was the credit card custodian as well,” Sullivan said of the management analyst, “so it made sense to include him in that meeting. After that meeting, he took unexpected leave the next day.”

The investigation found the former state employee, who later resigned, placed charges on an OAH credit card related to a consulting business registered with the Department of Revenue under his name.

And it wasn’t just the one business in those questionable transactions linked to the then-employee.

“There were four that we found and an additional fifth one that we weren’t able to fully confirm,” Sullivan said.

The misappropriation amounted to $878,115 between 2019 and 2023.

“It’s pretty significant, and the controls were just absolutely not there, unfortunately,” Sullivan lamented.

“No one outside of him looked at the credit card statements, payments going to the credit card company,” she said. “There was full trust in him by management, and he took complete advantage of it.”

In response to the fraud investigation and report, OAH said in part, “We are implementing all the recommendations of the SAO and integrating ongoing oversight and monitoring to assure those controls remain effective. The credit card online account and credit card statements can now be accessed by several employees, ensuring that all the information is shared and monitored.”

As for the ex-employee, it’s up to the county prosecutor to determine potential fraud charges.

“Because we are a civil reporting agency, we produce our report then refer that over to the Thurston County Prosecutor’s Office, and it’s up to them to pursue any charges,” said Wilson, who added that OAH did file a report with Olympia police. “They have an open investigation at the moment.”

Wilson said the case — while significant — is not unusual as of late.

“Stephanie has been unfortunately busy lately,” Wilson said. “This case is unusual for a state agency, but it’s not unusual at all that we’re finding misappropriations and it’s a trend we don’t want to see.”