LFP Water District Employee Fired Over $350K Fraud Investigation

The Lake Forest Park Water District has formally fired an employee who state auditors say used her three children to skim more than $350,000 from the district's coffers over a period of seven years.

The Washington State Auditor's Office concluded its year-long investigation into the district's finances, detailing a litany of fraudulent actions in its report and making way for possible federal charges.

The district fired the administrator, who has not been named and has not yet been charged, said district general manager F. Alan Kerley; she had been on administrative leave since the investigtion began in 2011.

According to the audit finding, she paid her children exorbitant amounts for part time work, by falsifying time sheets, and kept the district's financial records locked away from the eyes of its three-member board of directors. One child was paid more than $84,000 for a few weeks of intermittent summer work, according to the report.

She used her office credit card to pay for everything from a new mattress to college tuition, the auditor said in its report, charging fuel while also submitting requests for mileage reimbursement.

The audit also faults the district for not using appropriate financial controls that could have uncovered the misappropriations sooner.

The district said in its response to the audit finding that it concurred with the conclusions and instituted stricter financial controls as soon as the fraud was discovered.

The District said that the misappropriation was found in its operating funds, as opposed to capital funds, and that it is in the process of filing a claim through its insurer, WSRMP, which includes sufficient coverage to protect the District and its ratepayers against losses incurred due to employee dishonesty and crime.

The small district serves almost 900 customers from a deep-well aquifer, and does not anticipate any impact on customers from the loss because it is insured.

“We don’t foresee that,” Kerley said Wednesday. “We haven’t had a rate increase since 2009. We’re expecting full recovery” of the money from insurance.

The case is being investigated now by Lake Forest Park Police and the U.S. Attorney's Office.

Meanwhile, the city of Lake Forest Park just received a clean audit, qualifying it for a two-year audit cycle.

Editor's note: Patch reporter Greg Johnston contributed to this report.