Fraud Investigation Uncovered $121,000 in Public Fund Losses in Latah
A comprehensive fraud review issued November 10, 2025, by the Washington State Auditor’s Office revealed substantial mismanagement of public funds in the Town of Latah, with total losses exceeding $121,000 over a four-year span.
The audit examined financial activity from January 1, 2020, through April 16, 2024, and determined that the town’s former Clerk-Treasurer accounted for at least $75,124 in confirmed misappropriated funds. An additional $45,013 was categorized as “questionable,” meaning expenditures lacked clear documentation or identifiable business justification.
Multiple financial practices contributed to the shortfall, including personal use of municipal credit and debit instruments, compensation for hours not worked, and improper adjustments to utility billing.
Credit and Debit Card Usage Accounted for Largest Share
The majority of the misappropriated amount—$62,060—stemmed from routine and repeated personal purchases made with town-issued cards. Starting in 2021, the Clerk-Treasurer utilized both her own assigned credit card and one assigned to the mayor, often without adherence to established procurement protocols.
A notable lapse occurred in 2023, when the Clerk-Treasurer secured a town debit card without council authorization, enabling her to bypass standard payment workflows. These cards funded everything from groceries and fuel to home improvements and travel expenses.
Because a maintenance staff member shared access to the debit card, auditors could not always attribute transactions to a specific user. As a result, $18,014 of card-related spending remained uncertain in origin and was grouped among the “questionable” expenditures.
Payroll irregularities added another $12,669 to the total. Among the discrepancies were payments for overtime and base hours that were never actually worked, plus a $1,200 cash advance that remained outstanding at the time of the employee’s departure.
Asset Management Also Under Scrutiny
The town’s vehicle management drew attention as well. In October 2023, Latah purchased a pickup truck, permitting the Clerk-Treasurer to use it for official duties. However, she regularly operated the vehicle for personal trips and was in an accident before the town registered it with the Department of Licensing—a delay that limited the town’s ability to respond promptly to liability concerns.
Weak Oversight Enabled Prolonged Misuse
Auditors cited insufficient internal controls as a central enabler of the financial irregularities. The Clerk-Treasurer maintained unrestricted access to core financial systems—including accounting, banking, and payroll—without consistent verification from either the mayor or the town council.
After her employment ended in April 2024, the matter was forwarded to the Spokane County Prosecutor’s Office. In May 2025, the former Clerk-Treasurer entered a guilty plea to one count of first-degree theft in Spokane Superior Court. She received a two-day jail sentence and, notably, was not required to reimburse the town for the losses.
Town Implements New Safeguards
In its formal response, Latah outlined several corrective measures aimed at reinforcing fiscal accountability. These include joint review of bank and credit card statements by the mayor and council, supported by itemized receipts.
Debit card privileges are expected to be eliminated going forward, and formal oversight protocols for town-owned equipment—including registration timelines and usage logs—are now being codified.
The State Auditor’s Office has advised the town to pursue recovery of $75,124 in misappropriated funds and $65,035 in associated investigation expenses, either from the former employee or her surety bond provider.
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