The State Auditor’s Office on Monday published the results of an investigation claiming a former chief financial officer of Tacoma’s WorkForce Central deposited $52,382.24 of the agency’s funds into his personal bank account.
The former CFO, identified by an Auditor’s Office official as Lance Mertz, has not been charged with a crime.
He was placed on administrative leave in April, and was terminated soon after the investigation began for “not following controls,” according to WorkForce CEO Linda Nguyen.
According to the investigative report, WorkForce first notified the Auditor’s Office about a “suspected loss of public funds” on April 14. The loss “involved a payment made by its former chief financial officer.”
The office “reviewed all electronic payments and checks that were written while the former CFO was employed” by WorkForce. The office also reviewed credit card transactions and computer files.
“We found one electronic payment that was misappropriated,” the report stated.
The misappropriation – of $52,382.24 in public funds – was completed “by creating a fictitious vendor and invoice from that vendor,” the office said.
A WorkForce accounting technician discovered the suspicious activity and reported it to Nguyen, who immediately contacted the state office.
The amount included $50,870.85 in local and state funds and $1,511.39 in federal funds.
WorkForce, or the Tacoma-Pierce County Employment and Training Consortium, is a quasi-governmental agency that provides employment and job training. Its annul budget of $12.6 million supports 46 employees.
“We have a responsibility for the public dollars,” Nguyen said Monday. “We take it seriously. The controls we have in place caught him with the first transaction that he attempted. As soon as we found out, we called the state auditor.”
Nguyen said WorkForce did an extensive background check before hiring Mertz in June 2009.
“Nothing came up that was unusual,” she said. “He’s a CPA. We had no suspicions whatsoever. He had lots of experience. There was no reason to distrust this guy.”
Nguyen said she expects to file a claim with her insurance company to recoup the lost funds.
The News Tribune was unable to locate Mertz on Monday afternoon.
Mindy Chambers, Auditor’s Office spokeswoman, said Monday that the WorkForce case was uncommon. “What’s unusual – this was a single transaction. Usually it happens over a period of time. This was just a one-time transfer. If you look at some of our larger misappropriations, it happens over a period of time.”
The office navigates some two dozen fraud reports each year, she said. Investigations range from a few questionable credit card transactions to the embezzlement of hundreds of thousands of dollars.
Most larger cases are prosecuted, she said.
Pierce County Prosecutor Mark Lindquist said late Monday that his office had been notified of a “formal referral” concerning the case that was on its way from the Auditor’s Office, although it had not arrived.
In its report, the office said, “We thank Consortium officials and personnel for their assistance and cooperation during this investigation.”
Chambers on Monday noted a number of changes made in accounting procedures at WorkForce, and said, “They notified us. Not everyone wants to notify the Auditor’s Office. They have made some substantial changes. They should be complimented for that.”
C.R. Roberts: 253-597-8535
c.r.roberts@thenewstribune.com
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