LaPorte County reimbursed after embezzlement
NWI Times
Oct 20, 2016
http://www.nwitimes.com/news/local/laporte/laporte-county-reimbursed-after-embezzlement/article_e3601bc4-c39b-5379-93e2-4000afa0fbba.html
LAPORTE — LaPorte County is no longer in the hole for the $152,000 embezzled by a former public official whose actions driven by a gambling addiction landed her in a federal prison.
A check for the entire amount was presented Wednesday to the LaPorte County commissioners. The funds came from a county insurance policy covering such losses.
‘’The process was long, but we’re finally pleased to close the claim,’’ said John Klingenmeier, Michiana Insurance agent.
Originally, the goal was to get the money back directly from former LaPorte County deputy auditor Mary Ray, who was convicted of the crime, to avoid a rate hike on the policy.
However, many of Ray’s assets, like her house, were jointly owned, making them practically untouchable, said LaPorte County attorney Shaw Friedman.
Ray, 68, is serving a 7-year federal prison sentence handed down in March.
The state is seeking close to $300,000 from Ray for the $45,000 cost of its audit of county ledgers and to cash in on a state law allowing up to three times the amount stolen from a government agency to be recovered.
The legal action has not been decided, but LaPorte County has been replaced by the insurance carrier as a co-plaintiff trying to recover its payout on the claim.
Ray’s activities occurred in 2011 and 2012 and came to light after a bank bag containing cash and checks from the auditor’s office mysteriously turned up in a book depository at the public library in LaPorte.
The investigation shows checks and cash were often left laying around the auditor’s office for days while Ray was second in command under Craig Hinchman, who lost his bid for a second term to Joie Winski.
Winski after taking office in 2013 required cash and checks be promptly deposited instead of laying out in the open for extended periods.
Indiana LaPorte County Deputy Auditor sentenced to 84 months for Embezzling Government Funds, Tax Fraud, and Wire Fraud
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Wednesday, March 2, 2016
https://www.justice.gov/opa/pr/former-county-chief-deputy-auditor-sentenced-84-months-embezzling-government-funds-tax-fraud
A former chief deputy auditor for LaPorte County, Indiana, was sentenced today to 84 months in prison for embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her father-in-law out of more than $600,000, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana.
Mary Ray, 68, of LaPorte, was also ordered to forfeit $137,249.59 and pay $801,315.66 in restitution as part of her sentence, which was imposed by U.S. District Judge Jon E. Deguilio of the Northern District of Indiana. On Sept. 17, 2015, Ray was convicted of two counts of theft of government monies, two counts of making false statements on a tax return and seven counts of wire fraud.
According to evidence presented at trial, from September 2011 through December 2012, while she served as chief deputy auditor for LaPorte County, Ray embezzled more than $150,000 from county coffers and underreported her income on her U.S. Individual Tax Returns by failing to report the embezzled funds. Evidence at trial also showed that Ray defrauded her father-in-law, an 86-year-old disabled veteran, out of more than $600,000 in funds that he entrusted her to oversee. The evidence also demonstrated that Ray used the illegally-obtained funds to gamble at casinos.
The FBI and Internal Revenue Service-Criminal Investigation investigated the case with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts. Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana prosecuted the case.
Indiana LaPorte County Deputy Auditor sentenced to 84 months for Embezzling Government Funds, Tax Fraud, and Wire Fraud
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Wednesday, March 2, 2016
https://www.justice.gov/opa/pr/former-county-chief-deputy-auditor-sentenced-84-months-embezzling-government-funds-tax-fraud
Former County Chief Deputy Auditor Sentenced to 84 Months for Embezzling Government Funds, Tax Fraud and Wire Fraud
A former chief deputy auditor for LaPorte County, Indiana, was sentenced today to 84 months in prison for embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her father-in-law out of more than $600,000, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana.
Mary Ray, 68, of LaPorte, was also ordered to forfeit $137,249.59 and pay $801,315.66 in restitution as part of her sentence, which was imposed by U.S. District Judge Jon E. Deguilio of the Northern District of Indiana. On Sept. 17, 2015, Ray was convicted of two counts of theft of government monies, two counts of making false statements on a tax return and seven counts of wire fraud.
According to evidence presented at trial, from September 2011 through December 2012, while she served as chief deputy auditor for LaPorte County, Ray embezzled more than $150,000 from county coffers and underreported her income on her U.S. Individual Tax Returns by failing to report the embezzled funds. Evidence at trial also showed that Ray defrauded her father-in-law, an 86-year-old disabled veteran, out of more than $600,000 in funds that he entrusted her to oversee. The evidence also demonstrated that Ray used the illegally-obtained funds to gamble at casinos.
The FBI and Internal Revenue Service-Criminal Investigation investigated the case with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts. Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana prosecuted the case.
Former LaPorte County auditor embezzlement nets 7-year term
A former chief deputy auditor for LaPorte County, Indiana, was sentenced today to 84 months in prison for embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her father-in-law out of more than $600,000, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana.
Mary Ray, 68, of LaPorte, was also ordered to forfeit $137,249.59 and pay $801,315.66 in restitution as part of her sentence, which was imposed by U.S. District Judge Jon E. Deguilio of the Northern District of Indiana. On Sept. 17, 2015, Ray was convicted of two counts of theft of government monies, two counts of making false statements on a tax return and seven counts of wire fraud.
According to evidence presented at trial, from September 2011 through December 2012, while she served as chief deputy auditor for LaPorte County, Ray embezzled more than $150,000 from county coffers and underreported her income on her U.S. Individual Tax Returns by failing to report the embezzled funds. Evidence at trial also showed that Ray defrauded her father-in-law, an 86-year-old disabled veteran, out of more than $600,000 in funds that he entrusted her to oversee. The evidence also demonstrated that Ray used the illegally-obtained funds to gamble at casinos.
The FBI and Internal Revenue Service-Criminal Investigation investigated the case with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts. Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana prosecuted the case.
Mar 2, 2016
NWI Times
HAMMOND — A former chief deputy auditor for LaPorte County was sentenced Wednesday to seven years in prison for embezzling $150,000 in government money and defrauding her elderly father-in-law out of more than $600,000 so she could gamble.
Mary Ray, 68, of LaPorte, also was ordered by U.S. District Judge Jon Deguilio to forfeit $137,249 and pay $801,315 in restitution, according to the U.S. attorney's office.
Ray was convicted Sept. 17 of two counts of theft of government money, two counts of making false statements on a tax return and seven counts of mail fraud.
Ray embezzled more than $150,000 from county coffers from September 2011 to December 2012, while she worked as LaPorte County's chief deputy auditor, prosecutors said. She made false statements on her federal tax return by not reporting the embezzled funds.
Ray also defrauded her father-in-law, an 86-year-old disabled veteran, out of more than $600,000 that he entrusted her to oversee, prosecutors said.
Evidence presented at trial showed Ray used the money to gamble at casinos, prosecutors said.
WNDU News
Posted: Tue 6:47 PM, Dec 22, 2015
Updated: Tue 7:02 PM, Dec 22, 2015
http://www.wndu.com/home/headlines/Former-LaPorte-County-auditor-to-be-sentenced-for-embezzlement-363231431.html
LaPorte County, Ind. -- Federal attorneys say a former LaPorte County auditor will wait another few weeks for her final sentencing.
In Tuesday, Mary Ray, 67, appeared in federal court after prosecutors say she stole more than $150,000 in government funds and defrauded her father-in-law of at least $400,000.
Back in September, a jury convicted Ray on charges including theft of government monies, lying on tax returns, and wire fraud.
This all happened between September 2011 and December 2012 while she served as the county's chief deputy auditor. According to prosecutors, Ray used the funds to gamble at casinos.
Among the objections raised at the Tuesday hearing were the prosecution's characterization of Ray's father-in-law as a "vulnerable victim." According to the government, Norman Ray relocated to LaPorte in April 2013, after recently losing his wife. Ray, now 86, is a disabled war veteran. On direct examination, an FBI agent said the elder Ray could not remember at which banks he held bank accounts. Mary Ray's attorney countered, saying Norman could give directions to where he banked.
The bifurcated hearing will reconvene sometime in January, said U.S. Assistant Attorney Donald Schmid. Mary Ray could face up to ten years in prison, plus an additional two years of supervised release.
Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Thursday, September 17, 2015
https://www.justice.gov/opa/pr/former-county-chief-deputy-auditor-convicted-embezzling-government-funds-tax-fraud-and-wire
Former County Chief Deputy Auditor Convicted of Embezzling Government Funds, Tax Fraud and Wire Fraud
A former chief deputy auditor for LaPorte County, Indiana, was convicted today by a federal jury in the Northern District of Indiana of embezzling over $150,000 from the LaPorte County government, tax fraud and defrauding her elderly father-in-law out of at least $400,000.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana made the announcement.
Mary Ray, 67, of La Porte, Indiana, was convicted of two counts each of theft of government monies and making false statements on a tax return, and with seven counts of wire fraud. Ray will be sentenced by Judge Jon E. Deguilio of the Northern District of Indiana on Dec. 22, 2015.
According to evidence presented at trial, from September 2011 through December 2012, while she served as deputy chief auditor for LaPorte County, Ray embezzled over $150,000 from county coffers, and underreported her income on her U.S. Individual Tax Returns for those years by failing to report the embezzled funds. Evidence at trial also showed that Ray defrauded her 86-year-old father-in-law, a disabled veteran, out of at least $400,000 that he entrusted her to oversee. The trial evidence also demonstrated that Ray used the funds that she embezzled from LaPorte County and stole from her father-in-law to gamble at casinos.
This case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts. The case is being prosecuted by Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.
Former LaPorte County official convicted of embezzlement, tax fraud, defrauding
NWI Times
September 17, 2015
http://www.nwitimes.com/news/local/laporte/former-laporte-county-official-convicted-of-embezzlement-tax-fraud-defrauding/article_f4a159a6-14d6-508c-96de-b558db646102.html
A federal jury has convicted a former LaPorte County chief deputy auditor for embezzling more than $150,000 from the LaPorte County government, tax fraud and defrauding her elderly father-in-law of at least $400,000, according to the U.S. Department of Justice.
Mary Ray, 67, of LaPorte, was convicted of two counts each of theft of government monies and making false statements on a tax return, and with seven counts of wire fraud, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David A. Capp of the Northern District of Indiana announced Thursday.
Ray will be sentenced Dec. 22.
Evidence presented at the trial showed that, from September 2011 through December 2012, while she served as deputy chief auditor for LaPorte County, Ray embezzled more than $150,000 from county coffers.
She also underreported her income on her tax returns for those years by not reporting the embezzled funds. Evidence also showed she defrauded her 86-year-old father-in-law, a disabled veteran, out of at least $400,000 that he entrusted her to oversee.
She used the money she embezzled from LaPorte County and stole from her father-in-law to gamble at casinos, evidence showed, according to the Department of Justice.
Former LaPorte County deputy auditor faces federal charges
Chesterton Tribune
Posted 9/12/2014
http://chestertontribune.com/PoliceFireEmergency/former_laporte_county_deputy_aud.htm
A former LaPorte County deputy auditor has been indicted by a federal grand jury on charges of tax fraud and embezzling over $150,000 from the LaPorte County government, the U.S. Attorney’s Office for the Northern District of Indiana said.
Mary Ray, 66, of LaPorte, who was indicted on Wednesday, is charged with two counts each of theft of government moneys and making false statements on a tax return, the U.S. Attorney’s Office said.
According to the indictment, from September 2011 through December 2012 and while she was working as an auditor, Ray embezzled more than $5,000 from LaPorte County, which had received more than $10,000 in federal benefits in both 2011 and 2012.
“The indictment also alleges that Ray underreported her income on her U.S. Individual Tax Returns in 2011 and 2012 by failing to report the embezzled funds,” the U.S. Attorney’s Office said.
The case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department, and the Indiana State Board of Accounts.
County Deputy Auditor in Indiana Charged with Embezzlement and Tax Fraud
U.S. Department of Justice
Office of Public Affairs
September 11, 2014
http://www.fbi.gov/indianapolis/press-releases/2014/county-deputy-auditor-in-indiana-charged-with-embezzlement-and-tax-fraud
WASHINGTON—A former LaPorte County deputy auditor has been indicted by a federal grand jury in the Northern District of Indiana for embezzling over $150,000 from the LaPorte County government and committing tax fraud.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement.
The indictment returned on Sept. 10, 2014, charges Mary Ray, 66, of La Porte, Indiana, with two counts each of theft of government monies and of making false statements on a tax return.
According to the indictment, from September 2011 through December 2012 and while she was working as an auditor, Ray embezzled more than $5,000 from LaPorte County, which had received more than $10,000 in federal benefits in both 2011 and 2012.
The indictment also alleges that Ray underreported her income on her U.S. Individual Tax Returns in 2011 and 2012 by failing to report the embezzled funds.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty.
This case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts. The case is being prosecuted by Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.
Former deputy auditor indicted for embezzlement, tax fraud
The News Dispatch
September 11, 2014 - 8:03 pm
September 11, 2014 - 8:03 pm
HAMMOND — A former La Porte County deputy auditor has been indicted by a federal grand jury in the Northern District of Indiana for allegedly embezzling more than $150,000 from the La Porte County government and committing tax fraud.
Assistant Attorney General Leslie R. Caldwell of the Justice Department's Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement on Thursday.
The indictment returned Wednesday charges Mary Ray, 66, of La Porte, with two counts of theft of government monies and two counts of making false statements on a tax return.
According to the indictment, from September 2011 through December 2012 and while she was working as an auditor, Ray embezzled more than $5,000 from La Porte County, which had received more than $10,000 in federal benefits in both 2011 and 2012.
The indictment also alleges that Ray underreported her income
on her U.S. tax returns in 2011 and 2012 by failing to report the embezzled funds.
This case was investigated by the FBI and IRS – Criminal Investigation, with assistance from the Indiana State Police, the La Porte County Sheriff's Department and the Indiana State Board of Accounts.
The case is being prosecuted by Peter Halpern of the Criminal Division's Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.
Former N. Indiana auditor accused of embezzling
The News Dispatch
Associated Press
Posted: Thursday, September 11, 2014 - 4:48 pm
Associated Press
Posted: Thursday, September 11, 2014 - 4:48 pm
Updated: 7:02 pm, Thu Sep 11, 2014.
LAPORTE, Ind. (AP) — A federal grand jury has indicted a former northern Indiana official on charges alleging she embezzled more than $150,000.
The Justice Department announced Thursday that 66-year-old Mary Ray of LaPorte faces two counts each of theft of government monies and of making false statements on a tax return.
The indictment alleges the former LaPorte County deputy auditor embezzled the money between September 2011 and December 2012. It also alleges she underreported her income on her federal tax returns for those two years by failing to report the embezzled funds.
A telephone message seeking comment was left for Ray's attorney.
Former LaPorte deputy auditor indicted by federal grand jury
ABC 27 News
Story Created: Sep 11, 2014 at 3:27 PM EDT
Story Updated: Sep 11, 2014 at 3:27 PM EDT
SOUTH BEND, Ind. -- A federal grand jury has indicted former LaPorte County deputy auditor Mary Ray on two counts of embezzlement and two counts of tax fraud.
The 66-year-old was indicted September 10 for theft of government monies and making false statements on tax returns.
According to the indictment, Ray embezzled more than $150,000 from LaPorte County between September 2011 and December 2011, when she was deputy auditor.
Ray is also accused of underreporting her income on her tax returns in 2011 and 2012.
A state audit released in February 2014 found 150 instances where county funds were missing between September 2011 and December 2012 totaling $153,002.46.
The lawsuit seeks repayment of the $153,002.46 as well as $45,815.25 - the cost of the investigation.
In September 2013, the state was granted a restraining order freezing Ray's assets during the investigation. The state filed a complaint to recover public funds in March 2014.
The civil case has been transferred to Pulaski County Circuit Court, but has not been resolved.
Former LaPorte County deputy auditor indicted for theft, tax fraud
Suntimes News
September 11, 2014 - 2:16 pm
September 11, 2014 - 2:16 pm
(SOUTH BEND, Ind.) A former deputy auditor in northwest Indiana, who stole more than $150,000 from the county for which she worked, now faces federal fraud and embezzlement charges, according to federal prosecutors.
A federal grand jury in South Bend on Wednesday indicted Mary Ray, 66, of La Porte, Ind., on two counts each of theft of government monies and making false statements on a tax return, according to the U.S. Attorney’s office for the Northern District of Indiana.
Between September 2011 and December 2012, when Ray was the deputy LaPorte County auditor, she stole the money from LaPorte County, and it included at least $5,000 in federal funds, federal prosecutors allege.
A spokesman for the U.S. Attorney’s office said the indictment charges she stole “more than $5,000,” and “later events in process” show the total was over $150,000.
The indictment also claims she under-reported income on federal tax returns in 2011 and 2012 by not reporting the stolen money.
Indiana Attorney General Greg Zoeller filed a lawsuit against Ray in March, charging she embezzled $153,002.46 from the auditor’s office between September 2011 and December 2012.
The suit followed a State Board of Accounts audit and the freezing of Ray’s assets by the state in September 2013, according to a statement from the attorney general’s office.
The suit claims that until retiring, Ray’s duties included collecting payments from other county departments plus payments such as permit fees.
But she used “schemes such as check-kiting” so “certain checks paid to the county were not recorded or deposited, but instead were held for a period of time and then substituted for unrelated cash payments…,” according to the statement.
LaPorte County is a co-plaintiff in the suit, which seeks repayment of $153,002.46, plus $45,815.25 in accounting costs incurred by state examiners.
Ray is scheduled to appear Friday in U.S. District Court in South Bend on the federal charges, authorities said.
Ex-county deputy auditor charged with embezzlement, tax fraud
Herald Argus
Posted: Thursday, September 11, 2014 - 12:22 pm
Posted: Thursday, September 11, 2014 - 12:22 pm
A former La Porte County deputy auditor has been indicted by a federal grand jury in the Northern District of Indiana for embezzling more than $150,000 from the La Porte County government and committing tax fraud.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement.
The indictment returned on Wednesday charges Mary Ray, 66, of La Porte with two counts each of theft of government monies and of making false statements on a tax return.
According to the indictment, from September 2011 through December 2012 and while she was working as an auditor, Ray embezzled more than $5,000 from La Porte County, which had received more than $10,000 in federal benefits in both 2011 and 2012.
The indictment also alleges that Ray underreported her income on her U.S. Individual Tax Returns in 2011 and 2012 by failing to report the embezzled funds.
This case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the La Porte County Sheriff’s Department and the Indiana State Board of Accounts.
The case is being prosecuted by Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.
County Deputy Auditor in Indiana Charged with Embezzlement and Tax Fraud
U.S. Department of Justice
Office of Public Affairs
September 11, 2014
Office of Public Affairs
September 11, 2014
WASHINGTON—A former LaPorte County deputy auditor has been indicted by a federal grand jury in the Northern District of Indiana for embezzling over $150,000 from the LaPorte County government and committing tax fraud.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and U.S. Attorney David Capp of the Northern District of Indiana made the announcement.
The indictment returned on Sept. 10, 2014, charges Mary Ray, 66, of La Porte, Indiana, with two counts each of theft of government monies and of making false statements on a tax return.
According to the indictment, from September 2011 through December 2012 and while she was working as an auditor, Ray embezzled more than $5,000 from LaPorte County, which had received more than $10,000 in federal benefits in both 2011 and 2012.
The indictment also alleges that Ray underreported her income on her U.S. Individual Tax Returns in 2011 and 2012 by failing to report the embezzled funds.
An indictment is merely an accusation, and a defendant is presumed innocent unless and until proven guilty.
This case was investigated by the FBI and IRS-Criminal Investigation, with assistance from the Indiana State Police, the LaPorte County Sheriff’s Department and the Indiana State Board of Accounts. The case is being prosecuted by Trial Attorney Peter Halpern of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Donald J. Schmid of the Northern District of Indiana.
Indiana Attorney General files suit against Ray
Herald Argus
Posted: Tuesday, March 4, 2014 - 12:00 am
Posted: Tuesday, March 4, 2014 - 12:00 am
La PORTE — Despite filing a lawsuit Monday against former La Porte County deputy auditor Mary Ray for some $660,000 worth of allegedly embezzled money, Indiana Attorney General Greg Zoeller said it's going to be an uphill battle before all the funds can finally be collected.
Zoeller spoke Monday after filing the suit—officially a complaint to recover public funds—in the La Porte County Courthouse. La Porte County is a co-plaintiff in the case, and La Porte County Attorney Shaw Friedman is a signatory on the lawsuit.
Zoeller said the complaint is the first step in allowing his office, which acts largely as a collection agency for municipalities, to go after Ray's assets.
Ray is being accused of taking some $153,000 from the county between Sept. 19, 2011, and Dec. 31, 2012. According to an audit filed by the State Board of Accounts on Feb. 21, there were 150 instances where she allegedly embezzled the funds.
Ray's assets, including four vehicles and a house, were previously frozen on Sept, 6, 2012, after a temporary restraining order was filed in La Porte Count Circuit Court.
Since then the state has asked for an additional $45,815 to cover the cost of the audit, and Zoeller said his office and the county are also asking for treble damages, three times the amount of missing funds, to cover the expenses and troubles incurred by the plaintiffs because of the loss.
The treble amount is $459,000.
The lawsuit contains two counts, the first being the roughly $200,000 of the embezzled amount and the cost of the audit, and a second count for the treble damages. All together the amounts total some $660,000.
"We save these types of actions for people who have made off with public funds," Zoeller said. "But this one is going to be a little more difficult because the local government doesn't have a (surety) bond on the employee handling the funds."
He noted that the bonding company is usually the one to go after the assets, while the bond covers most of the county's losses.
La Porte County Attorney Shaw Friedman said the problem with the bonds has since been corrected. He said the current board of commissioners, who took office at the beginning of 2013, moved early on to cover elected officials and their deputies with bonds in case of financial mismanagement.
But he said the events of this case took place before that happened, so there were no bonds in place. He noted that the county has insurance, but commissioners have elected to go after whatever assets they can from Ray before filing any claims. He said these insurance policies are expensive and hard to get.
Zoeller said his office, if it wins the case, can garnish Ray's wages, go after her bank accounts and any other assets it can find to recover all the lost money. But if she doesn't have a lot of money, it will take years of using these methods to get the money back.
"We'll have to see what kind of assets we have to find," he said.
"But one of the reasons I always try and encourage local governments to have bonds is to make sure we have this insurance against embezzlement. It's not all that rampant throughout Indiana….it's less than 1 percent of the people, but it is a good insurance policy against those who might be tempted to take money."
The investigation began after a bank deposit bag was discovered with $3,200 in missing cash in a local library. When a $1,800 discrepancy between receipts and deposits was found, examiners from the State Board of Accounts launched a preliminary audit.
According to a press release from the attorney general's office, certain checks were held for a period of time instead of being recorded or deposited, and then substituted for unrelated cash payments to the county. Swapping the unrecorded checks for cash allowed the deposits to still balance with the amount of funds listed as receipted.
[ATG] State, LaPorte County sue ex-employee to recover embezzled funds
Office of the Indiana Attorney General
3/3/2014 - 12:00 AM
LAPORTE, Ind. – Today the State of Indiana and LaPorte County filed a lawsuit against a former county government employee to recover more than $153,000 in public funds the ex-employee is accused of embezzling.
Indiana Attorney General Greg Zoeller filed the lawsuit today in LaPorte County Circuit Court. Named as defendant is Mary Ray, a former deputy auditor in the LaPorte County Auditor’s Office.
In an audit issued February 21, the State Board of Accounts found 150 instances where county funds had been embezzled from the county Auditor’s Office between September 2011 and December 2012, totaling $153,002.46, and the audit concluded Ray was the employee responsible for the loss of those funds.
The lawsuit in which the county has joined the state as plaintiff seeks repayment of $153,002.46 from Ray, plus an additional $45,815.25 in accounting costs incurred by state examiners who investigated and calculated the loss, for a total demand of $198,817.71.
“When the very individual in charge of receiving and preparing deposits of taxpayers’ money is accused of embezzling that money, it is a profound violation of public trust, and we will use the legal tools at our disposal to compel repayment from this defendant in order to reimburse the public treasury for the amount lost in this brazen scheme,” Zoeller said.
Today’s lawsuit, called a complaint to recover public funds, is a follow-up to a temporary restraining order and prejudgment attachment the Attorney General’s Office filed for and obtained against Ray last September. At that time, a preliminary audit by State Board of Accounts examiners had uncovered a potential misappropriation of funds in the auditor’s office by Ray. The prejudgment attachment the state obtained in September froze Ray’s financial assets for the time being while the SBoA conducted a full comprehensive audit. The prejudgment attachment prevented Ray from selling, concealing or transferring her house or vehicles, so that there would be assets available to reimburse the county if the court later were to enter a judgment.
Until her retirement, Ray as deputy auditor had collected payments from other county departments, received various payments to the Auditor’s Office such as permit fees, both cash and checks, and prepared deposits for delivery to the County Treasurer. But in its final audit now completed, the State Board of Accounts found that the county had been shorted $153,002.46 through schemes such as check-kiting. Certain checks paid to the county were not recorded or deposited, but instead were held for a period of time and then substituted for unrelated cash payments to the county. Swapping the unrecorded checks for cash allowed the deposits to still balance with the amount of funds listed as receipted, the audit found. The State Board of Accounts determined Ray is responsible for the misappropriation, and asked that she be required to repay the full amount plus investigation costs. The SBoA audit then was referred to the Attorney General’s Office which serves as the state’s collection agent in such cases.
If the court enters a civil judgment against Ray, then the Attorney General’s Office will pursue collections methods against Ray that can include seizure of assets and accounts, liens on property and garnishment of wages. Because there was not a surety bond specifically on Ray to cover employee theft, the entire amount, $198,817.71, is her legal responsibility, Zoeller noted. Funds recovered in the lawsuit will be returned to the LaPorte County treasury as reimbursement for the amount embezzled, with the auditing costs returned to the State Board of Accounts. The county also is seeking to obtain proceeds from its county insurance policy to cover the loss.
The state Attorney General’s jurisdiction in such cases is civil only; the U.S. Attorney’s Office and county prosecutors have sole jurisdiction whether to pursue criminal charges.
The authority to freeze a defendant’s assets based on a preliminary audit to keep funds from being squandered, hidden or transferred while SBoA completes a final audit is based on a public accountability law the Legislature passed in 2009 at Attorney General Zoeller’s recommendation.
“Most government employees are trustworthy and good stewards of taxpayers’ money. But having sued to recover public funds from embezzlers in many similar cases, the Attorney General’s Office now is working on developing a coalition of groups that will provide training to local government agencies on internal accounting controls and best practices that might help deter misappropriation of public funds in the first place,” Zoeller said, noting details will be announced in the spring.
NOTE: The State Board of Accounts audit of the LaPorte County Auditor’s Office issued Feb. 21 is at this link: http://www.in.gov/sboa/WebReports/B43260.pdf.
The complaint to recover public funds, filed in LaPorte County Circuit Court by the State of Indiana and LaPorte County against Mary Ray, is attached.
Audit: County funds mislabeled, missing
The News-Dispatch
Posted: Thursday, February 27, 2014 - 12:00 am
Posted: Thursday, February 27, 2014 - 12:00 am
LaPORTE — With the Indiana State Board of Accounts requesting nearly $200,000 from a former La Porte County deputy auditor, the state attorney general and the county prosecutor are looking at possible civil and criminal charges to recoup the missing funds and punish the defendant.
On Feb. 21, the state board of accounts filed its audit report on the La Porte County Auditor’s Office.
Amidst millions of dollars worth of mislabeled funds and other errors between Sept. 19, 2011 and Dec. 31, 2012, field examiners found $153,000 in missing money from the county auditor’s office.
In the audit report, investigators said there were 150 instances where less cash was deposited than receipted. Investigators said former deputy auditor Mary Ray was suspected because she was the primary employee responsible for receipting money and recording funds during this time. She was also mainly responsible for taking cash and checks down to the treasurer’s office for deposit.
On Sept. 6, 2013, Ray’s assets, including four vehicles and a house, were frozen after a temporary restraining order was filed in La Porte Count Circuit Court. She was accused of embezzling more than $150,000 at the time.
The investigation began after a bank deposit bag was discovered with $3,200 in missing cash in a local library. When a $1,800 discrepancy between receipts and deposits was found, examiners from the State Board of Accounts launched a preliminary audit.
According to the report, Ray tried to conceal the cash removal by not receipting some cash and checks, using voided checks to replace cash, writing receipts to departments and not posting them to the records, receipting lower amounts than were on the checks, holding receipted checks and turning them over to the treasurer at later dates, and not receipting electric fund transfers to the records.
Case is up to prosecutors
Saying the Indiana Attorney General’s Office essentially acts as a collection agency for the state, public information officer Bryan Corbin said its involvement with the case will be on the civil side, and could result in the filing of a civil complaint against Ray.
“We will carefully review the audit,” he said, “and will likely take appropriate legal action soon to recover the misappropriated funds to reimburse the public treasury.”
He said his office can collect funds by placing liens on property and going after bank and retirement accounts. He said bond money sometimes covers the entire amount, and sometimes there is no bond money, so the repayment becomes the sole responsibility of the defendant.
La Porte County Prosecuting Attorney Bob Szilagyi said his office will handle the criminal side of the case if it determines charges are necessary. He said his office has to wait until the state police finishes its investigation. He added his office needs the original interviews and documentation to make its decision.
He said Ray faces up to three years in jail if convicted on a charge of unauthorized control of funds (basically theft). But if charges are elevated to a class C felony, he said she could be facing between two and eight years in jail.
But Szilagyi said he will most likely ask for a special prosecuting attorney to handle the case because he knows Mary Ray. He said his wife also works in Ray’s former office. His wife handles accounts payable.
“So I don’t want to create an appearance of any impropriety,” he said.
La Porte County Attorney Shaw Friedman said the county intends to cooperate with the state to recoup any money owed.
The State of Indiana also incurred an additional audit cost of $45,815 related to the investigation, so the State Board of Accounts is requesting the defendant pay that amount, too, for a total of $198,817.
Problems don’t end there
The report listed more errors related to the auditor’s office, including a negative cash balance of $4.9 million in the excess tax fund, which is used to refund residents for overpaid taxes.
Mike Mauer, La Porte County chief deputy treasurer, said this error was a “snafu” on behalf of her office. The tax money simply wasn’t placed in the fund during settlement time. She said her department was distracted trying to get six years worth of tax bills out in two years because of the county-wide tax situation. She said checks written to residents during this time were still good, and the funds weren’t mislabeled or put in the wrong account.
But the report also listed a disbursement error of $5.7 million from the major moves fund in 2012 that wasn’t corrected until 2013, and $23.6 million worth of major move fund transactions posted as “transfers in” on the funds ledger and later included as part of the cash and investment balance, among other deficiencies.
Former county auditor Craig Hinchman, who served during the period of the errors, said some of the day-to-day operations of his office suffered because it had to get out three years worth of tax bill in 2012, or else get the county fined $1 million. And the office was short handed, needing at least two more employees to handle the workload.
“When I took office no auditor in the history of the state of Indiana found their office in the turmoil I did,” he said. “We were four years behind in collecting tax monies and had major assessment problems. The department of local government and finance created these problems because they did not follow their own rules.”
He said he did not believe Ray took the money.
“I have known Mary Ray for over 30 years,” he said in his response. “She was a very good employee. Mary Ray is a very smart person, and would know that you could not tamper with the deposits and not get caught. Plus she was my friend and would realize that the missing funds would put a black eye on my administration.”
But he said he could not explain how the cash was deposited but not receipted.
Current La Porte County Auditor Joie Winski, who took office after the errors allegedly occurred, said she suspected misplaced money on her second day in office. She said her office has since put in place a check-and-balance system to ensure it will never happen again, which includes a reconciliation of bills with the treasurer’s office on a monthly basis, a change in the receipting portion of the financial program and another level of security for vendor software. She said most of their errors were regarding mislabeled, not misappropriated, funds.
More controls needed
But the report also contained suggestions for preventing these issues in the future, such as depositing checks and cash on the same day they are received, instituting a credit card policy and introducing controls to make sure the financial transactions are recorded timely and properly. The field examiners noted instances where the funds hadn’t been deposited until five days after their receipt.
La Porte County Attorney Shaw Friedman said the commissioners approved a credit card policy in December, and the auditor’s office has since developed a policy where checks and cash are immediately recorded and brought to the treasurer’s office for deposit.
He said neither his office nor the current group of commissioners were in charge when these problems occurred, and said it was their first act of business during the Jan. 3, 2013 organizational session to hire Cender & Company to help them get their arms around the county’s financial situation.
“In addition to doing projections on estimated revenue and expenditures,” he said, “(Cender & Company) was instrumental in working with the auditor’s office and the treasurer’s office to help us get to the point where the bank records were reconciled with the county’s ledger.”
Audit Report of County Auditor - La Porte County Indiana
State Board of Accounts, Indianapolis, Indiana
September 19, 2011 - December 31, 2012
Filed - February 21, 2014
Winski: New check and balance system will prevent future embezzlement
The News-Dispatch
Posted: Thursday, September 19, 2013 - 12:00 am
La PORTE — Current La Porte County Auditor Joie Winski took the podium on Wednesday night at the La Porte County Commissioners meeting to make a statement on the alleged embezzlement made by the former deputy auditor.
“To the citizens of La Porte County, I am sorry this is another black eye for us. However, we can and will get through this,” said Winski. “The auditor’s office put into action a check and balance system to assure this will not happen again. We have corrected over $5 million of misappropriated county funds.”
Former deputy auditor Mary C. Ray has been accused of embezzling an excess of $150,000 funds from the La Porte County government. This accusation is rooted from evidence of her time working in the auditor’s office during the entire year of 2012.
Winski started her position as county auditor on Jan. 1, 2013.
She said La Porte County Treasurer Nancy Hawkins informed her on Dec. 28, 2012 about a bank bag that went missing from her office. Hawkins told Winski that the bag was later found at the La Porte Library drop box with $3,000 cash missing and that the checks were accounted for.
Winski said on her second day, money was missing from her office through irregularities of the money debted into the county’s financial system.
“This alarmed me very much and I immediately contacted the State Board of Accounts,” said Winski at the meeting. “They arrived in my office within hours of that telephone call, and they are still here.”
Winski said she is thankful the SBoA has been present to help her implement new procedures for receipting money.
She said she informed all department heads of the new procedures and attached a new accounting form on Jan. 8. She said the office had their vendor add another level of security to the software used for receipting. The auditor’s office and treasurer’s office now have to reconcile their banks on a monthly basis.
“Joie Winski’s office has been working diligently in trying to get to the bottom of this and to make sure there is not a reoccurrence,” said La Porte County Attorney Shaw Friedman.
Winski noticed misappropriated money as well. She said additional appropriations that were approved by the county council were not transferred correctly or not at all.
During public comment, Kyle Bailey, founder of Sellcom Communications Professionals, stood before the commissioners and asked County Councilman Rich Mrozinski to answer why he allegedly withheld information about the missing funds.
“Like many, I’ve followed with interest this emerging scandal about the alleged embezzlement,” said Bailey. “I took the step of going online and searching through public records…and it appears that the State Board of Accounts specifically warned certain county officials three years ago in an exit conference on Oct. 27, 2009 that this business of leaving cash and checks in the auditor’s office for days at a time without them being receipted in could be a huge problem and lead to missing monies.”
Bailey said the exit conference had three people present - Craig Hinchman, Barb Huston and Rich Mrozinski. He said those three had the knowledge and the forewarning to avoid scandal.
“I am here tonight to publicly ask Mrozinski to show us - in the way of minutes of the council, letters, e-mails, memos or anything to stop this practice - that he was warned on Oct. 27, 2009 that this method could lead to missing money,” Bailey said.
“Thank you for the education,” said Commissioner Willie Milsap.
The commissioners also approved an updated list of all county officials to have official bonds through the county’s insurance. Liability Insurance Agent of Record John Jones presented the update and said all of the current county officials have a bond set in place.
“Due to all types of circumstances, several bonds in the past were not recorded,” said Jones.
He said as far as the former auditor and deputy auditor, they did not have a bond set through the county.
In other business brought before the board:
The Flood Plain Ordinance and the Responsible Bidder Ordinance were approved. A community sign on the courthouse lawn has been approved through funding of private parties, the United Way Foundation, the Unity Foundation and Friedman & Associates.
Former deputy auditor’s assets frozen
The News Dispatch
Tuesday, September 17, 2013 12:00 am
Tuesday, September 17, 2013 12:00 am
La PORTE — Former deputy auditor Mary C. Ray, of La Porte, had her assets frozen following a preliminary injunction hearing held on Monday in the La Porte County Circuit Court.
Ray has been accused of embezzling an excess of $150,000 funds from the La Porte County government. This accusation is rooted from evidence of her time working in the auditor’s office during the entire year of 2012.
Her house and four vehicles have been frozen until a complete audit can be made by the state but she still has access to her bank accounts.
“It is the county’s desire to get every dollar from the action. And we want to provide an additional level of security for the county,” said La Porte County Attorney Shaw Friedman at the hearing. “That is why we would like to freeze a portion of her assets.”
According to previous reports, the preliminary audit found that certain checks paid to the county were not recorded or deposited but instead were held for weeks, and then substituted for unrelated cash payments to the county. Swapping the unrecorded checks for cash allowed the deposits to still balance with the amount of funds receipted.
Field Examiner John Panakowski of the State Board of Accounts took the stand on Monday and told the judge the audit for 2012 had incongruences within its account. He said the exhibits supplied by the plaintiff were created by the SBoA as spreadsheets for each auditing day.
Panakowski said he examined the records of La Porte County and looked at the receipts and deposits made from the auditor’s office.
An example of a day where Ray has been accused of taking funds was April 30, 2012. He said the State Board of Accounts found receipts of $9,863.29 collected that day. For that specific batch amount, only $7,509 was deposited. A batch is an amount of receipts that is collected and deposited as one transaction. The excess amount was receipted to Ray and taken out as cash.
Panakowski said he suspected Ray since each transaction with missing funds had a username code that matched Ray.
“Mary Ray was writing receipts when cash was missing,” said Panakowski.
Panakowski said there were 340 batches of receipts that were deposited in the year of review. Out of those, 182 batches were deposited by Ray and 149 of those batches had cash missing.
Ray’s attorney, Kurt Earnst, asked him if someone could have used Ray’s username besides Ray herself. Panakowski said it is possible for someone to take out the cash by using Ray’s username.
Detective L. Scott Boswell was called to the stand and was questioned about his role in the investigation. Boswell said he was assigned to find more information on a treasurer’s bag which was found at the local library in January, when he stumbled upon financial mishaps under Ray’s office.
According to previous reports, based on the eventual final audit report, the Attorney General’s Office could file a complaint to recover public funds at a later date, to seek civil collection of the final amount from Ray in order to reimburse the county treasury.
The final audit will review whether there was any surety bond coverage on Ray that the state could obtain to reimburse the county treasury for the shortage. Any amount not covered by bonds would be Ray’s personal responsibility to repay.
Retired deputy auditor accused of embezzling $150,000
The News Dispatch
Posted: Saturday, September 7, 2013 - 12:00 am
Posted: Saturday, September 7, 2013 - 12:00 am
La PORTE —The mystery of a recovered La Porte County Auditor bank deposit bag at the La Porte library has led to legal action to freeze the assets of a former La Porte County deputy auditor who is accused of embezzling about $150,000 in county funds.
Indiana Attorney General Greg Zoeller obtained a temporary restraining order Friday in La Porte Circuit Court freezing the financial assets of Mary C. Ray, La Porte, until a full audit can be completed. The restraining order freezes all bank accounts, her home and four vehicles.
According to Zoeller’s office, Ray retired from her position as deputy auditor in the La Porte County Auditor’s Office.
The Attorney General’s motions for a temporary restraining order and prejudgment attachment were filed under a state law the Legislature passed in 2009 at Zoeller’s urging: House Enrolled Act 1514-2009, the public accountability law.
“It is always disheartening when a government employee is accused of violating the public trust by pocketing taxpayers’ money that does not belong to them. The public accountability law allows the state to identify fraud on public funds earlier in the process and freeze defendants’ assets in the event we must recover them later to reimburse the public treasury,” Zoeller said.
The investigation of missing funds began with a report to Indiana State Police that a bank deposit bag the La Porte County Auditor’s Office used had been stolen. It was later recovered with checks inside but $3,200 in cash was missing. Also, within a two-day period, there was a $1,800 discrepancy between receipts and deposits. Examiners from the State Board of Accounts then launched a preliminary audit.
That audit of the auditor’s office receipts and deposits found that approximately $150,000 had been shorted through check kiting between May 2012 and December 2012, the final months before Ray’s retirement. As deputy auditor, Ray’s duties included collecting payments from other county departments, receiving various payments to the auditor’s office such as permit fees made to the county, in both cash and checks, and depositing them into the county’s bank accounts.
The preliminary audit found that certain checks paid to the county were not recorded or deposited but instead were held for weeks, and then substituted for unrelated cash payments to the county.
Swapping the unrecorded checks for cash allowed the deposits to still balance with the amount of funds receipted. Prior to May 2012, county records show that cash and checks collected were equal to cash and checks deposited; but after May 2012, on nearly every business day there was less cash deposited than received and more checks deposited than were received, the audit found.
The current amount of restitution the SBoA seeks from Ray is $150,000, but that amount is subject to change pending the release of the final audit report.
The State Board of Accounts conducts regularly scheduled audits of government units and, when completed, routinely certifies them to the Attorney General’s Office for collection if audits discover misappropriation of public funds. The 2009 state law allows the SBoA and Attorney General to take action earlier in the process based on a preliminary audit, when public funds would be at risk if the State waited for the regularly scheduled final audit to be completed.
In the motions filed Friday, the Attorney General’s Office asked the La Porte County Circuit Court to freeze Ray’s assets, including real estate, vehicles and any bank or retirement accounts. The Attorney General’s Office asked the court to order that Ray’s assets not be transferred, concealed or distributed, so that funds would be available to reimburse the county if the court were to enter a judgment later.
Based on the eventual final audit report, the Attorney General’s Office could file a complaint to recover public funds at a later date, to seek civil collection of the final amount from Ray in order to reimburse the county treasury.
La Porte County Circuit Court Judge Thomas J. Alevisos granted the temporary restraining order today against Ray and set the hearing on the motion for prejudgment attachment and garnishment for 11 a.m. on Sept. 16.
The final audit will review whether there was any surety bond coverage on Ray that the state could obtain to reimburse the county treasury for the shortage. Any amount not covered by bonds would be Ray’s personal responsibility to repay.
The Attorney General’s jurisdiction is civil only, to collect misappropriated public funds that have been misappropriated. Criminal charges, if any, would fall under the jurisdiction of the county prosecutor or U.S. Attorney and police agencies.
Court freezes assets of former LaPorte County official
The NWI Times
September 06, 2013 - 2:58 pm
September 06, 2013 - 2:58 pm
LAPORTE | The Indiana Attorney General's Office is freezing the assets of a former LaPorte County official accused of stealing more than $150,000 in tax dollars.
LaPorte Circuit Court Judge Tom Alevizos granted a motion by Deputy Attorney General Kurt Hammel for a temporary restraining order on the assets of Mary Ray.
Ray was deputy LaPorte County auditor during the period the alleged thefts occurred from throughout 2012, according to the findings on file with the court from an audit by the Indiana State Board of Accounts.
John Pajakowski, a field examiner with the SBOA, said in writing more than $150,000 in LaPorte County funds were "being misappropriated, diverted or unaccounted for by Ray."
Specifically, it's alleged in the state's affidavit that Ray failed to record and/or improperly receipted checks that were in her custody then would substitute those checks for cash from the daily deposits.
The temporary restraining order freezes Ray's assets such as a house in LaPorte along with a 2012 Kia Optima, a 2007 Hyundai Tucson, a 1995 Dodge Dakota and a 2008 Kawasaki motorcycle.
Her assets were ordered frozen until the audit is completed, according to the Indiana Attorney General's Office.
The investigation of missing funds began with a report to police that a bank deposit bag the Auditor’s Office used had been stolen.
It was later recovered from a book deposit box at the library in LaPorte with the checks still inside but $3,200 in cash was missing.
As deputy auditor, Ray’s duties included collecting payments from other county departments, receiving various payments to the Auditor’s Office such as permit fees made to the county, in both cash and checks, and depositing them into the county’s bank accounts, according to the Indiana Attorney General's Office.
Ray served as the deputy for LaPorte County Auditor Craig Hinchman from 2009 to 2012 when he was defeated in a bid for a second term.
Current auditor Joie Winski said she contacted police during her first week in office after noticing some "red flags."
"I notified them immediately," said Winski.
LaPorte County Police Chief of Detectives Pat Cicero said his department started working the case later turned over to state police.
He would not offer any further specifics.
"It's an open investigation. We just can't comment on," he said.
He wasn't aware of any criminal charges being filed yet against Ray.
Ray's phone number is unlisted, and could not be reached for comment.
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