Former small-town official accused of stealing $937,000 from Washington city

The former clerk-treasurer in the tiny town of Morton, Washington, is accused of stealing upwards of $900,000 from the city over nearly nine years.

A state audit released on Monday found the clerk-treasurer misappropriated $937,584 from the city coffers between 2013 and 2021 using unauthorized ATM withdrawals and other methods – including taking customer cash payments that she did not deposit at the bank and writing city checks to herself and recording them in the city’s accounting system as vendor payments.

Morton, located in Lewis County, southwest of Mount Rainier, has about 1,100 residents and an annual budget of around $4.6 million.

The auditor’s office said it would refer the case to the Lewis County Prosecuting Attorney’s Office and that the city has filed a report with its police department, which is investigating the matter. The findings from the audit will be provided to law enforcement.

In a statement, the city said it has risk management insurance to cover stolen funds.

“The City knows that the community places their trust in the City employees who serve them and that this is damaging to that relationship,” the statement added. “For the sake of transparency and to protect that trust, the City wants the community to know that none of the City’s current employees were involved with stealing City funds.”

Donna Royle, Morton’s current deputy clerk, answered the phone at City Hall on Monday and said the city had no comment beyond the statement, citing an ongoing investigation.

The city’s clerk-treasurer served as a “backup cashier” for the deputy clerk-treasurer and was responsible for overseeing day-to-day city operations, including handling bank deposits and reconciling the city’s accounting system and bank statements, the audit report explains.

In 2021, the Morton City Council passed legislation eliminating the combined clerk-treasurer position and created standalone city clerk and treasurer jobs.

“With the elimination of the joint Clerk/Treasurer position, there was no longer a single person responsible for banking, bill paying, and payroll reconciliation,” Mayor Rick Mead, the City Council, and city staff said in a response included in the audit report.

The city said the former clerk-treasurer resigned shortly after the role’s job duties were split up. In the city’s statement, Morton officials said they “will be pursuing all legal options” to ensure she is prosecuted.

The audit report did not name the former clerk-treasurer, but the city in its statement did name the person accused of the theft. The Standard is not naming her because she could not be reached for comment and it was not clear whether any charges have been filed.

Investigators with the auditor’s office said they interviewed the former clerk-treasurer in May and she “took responsibility for misappropriating city funds.”

The audit report says the former clerk-treasurer began working for the city in July 2012 and drew attention during a scheduled 2014 audit for a $2,400 city check written to herself.

She said the $2,400 was a personal loan, according to the report, and the mayor at the time subsequently wrote to the state auditor’s office indicating that the city approved the loan.

“In January 2015, we recommended the City refrain from loaning public funds, and ensure that the Clerk-Treasurer repays the money in a timely manner,” the audit report said, noting that the latest investigation found that the $2,400 was eventually paid back.

The former clerk-treasurer also ran into trouble for telling the Department of Retirement Services she was no longer working for the city in 2019 and then withdrawing $23,837 from a retirement account – a move not allowed if she were employed. The department later found she was still with the city.

Unusual ATM withdrawals from the city’s bank account detected during a routine 2022 state audit led to the investigation that resulted in the findings released on Monday.

“What is so incredible in this case is that the leadership of Morton took no action when they had been informed of two different problems with the clerk-treasurer. We say, ‘trust but verify,’ for a reason,” State Auditor Pat McCarthy said in a statement.

“Blind trust doesn’t protect the public’s money. Proper controls do,” McCarthy added.

In a separate fraud investigation report, auditors investigated concerns related to a former Morton police chief’s credit card purchases.

The chief also had access to a bank account that was outside the city’s control but had been holding donations for police-related activities. Auditors found the police chief made $199 in personal purchases on a city credit card, as well as additional questionable purchases.

Morton’s episode marks the third six-figure loss of public funds by a Washington local government or state agency that the auditor’s office has reported this year. The others involved the state Office of Administrative Hearings and the town of Cusick.

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