Alleged embezzlement drew from account that wasn’t audited

Kootenai County’s former chief deputy clerk is suspected of embezzling $138,905 over 10 years, ending in October, the month before she retired, Coeur d’Alene police said Wednesday.

Sandy Martinson, 62, has not been charged or arrested. Coeur d’Alene police, however, sent a formal request for charges to the Bonner County prosecutor, who is handling the case because Martinson worked for Kootenai County. Bonner County Prosecutor Louis Marshall said he hopes to make a decision by late next week. Potential charges include grand theft and felony misuse of public funds, Marshall said.

The suspected theft highlights a funding loophole within the county that commissioners and the finance director say they are trying to close. Over the years, Commissioner Rick Currie said, various county officials have created accounts that fall outside the oversight of either the annual audit or the finance director because they don’t have “budgetary ramifications.”

“They pop up every now and then,” Currie said. “Over the eight years I’ve been here … half a dozen of these accounts have popped up that we have brought in under the auspices (of the finance director). A lot of times it is a surprise not only to the financial officer or to the board, but to the elected official (as well).”

One of those accounts – the district court clerk account – is the focus of the investigation involving Martinson, who worked for the county for almost 35 years.

County Clerk Dan English said he and Martinson established that account in 1996 or 1997 to receive credit card payments of fines or fees, such as speeding tickets. He said the money in the account then was distributed among agencies, including the court and the law enforcement agency that issued the ticket.

The account was established so that either he or Martinson could sign checks making payments from it, English said. Upon discovery of the alleged embezzlement, English said his office made changes to the account, including the number of signatures required to make payments.

Though the county is audited annually, as required by state law, the account was among those not included in the audit. English said he didn’t know how or why that happened. “That’s a question for the technical accounting people,” he said.

Finance Director David McDowell said the account was not part of the county’s budgeting system but should have been. He said if that account were being established today, it definitely would be within the county’s budgeting system. That was rectified immediately following Martinson’s retirement, he said.

“It has been modified,” McDowell said. “It has been brought into the operations of the county.”

A statewide system ensures law enforcement agencies and the state receive payment for the citations they issue, McDowell said, so Kootenai County must absorb the loss of the funds allegedly stolen.

Efforts to reach Martinson were unsuccessful Tuesday and Wednesday. McDowell worked with Martinson for 10 years and said the discovery of the stolen funds was “just a crushing blow” and that “it weighs heavy on the heart of anybody that had the opportunity to work with her.” He said Martinson worked closely with people from the county’s 44 taxing districts and personnel in the state Tax Commission.

Police interviewed Martinson on Monday, said Sgt. Christie Wood of the Coeur d’Alene Police Department. On Tuesday afternoon, the Kootenai County Board of Commissioners and English held a news conference to release the initial details of the investigation. English said that when Martinson retired last month, a routine review of her records revealed irregularities that led the county to suspect embezzlement. English said he met with county Prosecutor Barry McHugh, who in turn notified authorities.

Currie said Idaho statutes are severe when it comes to theft by a public employee. The law allows the court to seek restitution through public retirement funds, he said. When Martinson retired she was earning $66,477 annually.

English said that when he took over as clerk in 1995, Martinson already was serving as chief deputy and auditing supervisor. The clerk’s office is multifaceted, overseeing the auditor, elections office, district court, county assistance and recorder’s office.

English said about 80 percent of Martinson’s time was spent in the auditor’s office, where she was responsible for supervising taxation.