Fraud Report Discovers Significant Loss of Town of Latah Public Funds

A fraud investigation report released November 10, 2025, by the Washington State Auditor’s Office details a significant loss of public funds in the Town of Latah, identifying over $76,000 in misappropriated money.

The investigation, which covered the period from January 1, 2020, through April 16, 2024, found that the town’s former Clerk-Treasurer was responsible for at least $75,124 of the misappropriated funds. The audit also identified an additional $45,013 in “questionable” spending where the business purpose could not be determined.

According to the report, the misappropriation occurred through multiple schemes, including the personal use of town credit and debit cards, unearned payroll payments, and unauthorized utility adjustments.

The largest portion of the missing funds, $62,060, was tied to credit and debit card misuse. Investigators found that starting in 2021, the Clerk-Treasurer made personal purchases on both her own town-assigned credit card and the Mayor’s card.

In 2023, the Clerk-Treasurer obtained a town debit card without town council approval, allowing her to bypass standard accounts payable processes

The report details that these cards were used for a wide variety of personal expenses.

State auditors noted that because a maintenance employee also had access to the debit card, they could not definitively identify the purchaser for some transactions, leading to an additional $18,014 classified as questionable credit and debit card spending.

Payroll and Town Assets Misused

The investigation also scrutinized the town’s payroll, finding the Clerk-Treasurer misappropriated $12,669. This amount included payments for overtime and regular hours that were never worked, as well as a $1,200 cash advance that was never repaid.

In one instance involving town equipment, the town purchased a truck in October 2023. While the Clerk-Treasurer was granted permission to use it for town business, she used it for personal activities and was involved in a car accident. The town later discovered the vehicle had not been properly registered with the Department of Licensing until months after the accident.

The report highlights a lack of internal controls as a primary factor enabling the fraud. The Clerk-Treasurer had full access to the town’s accounting system, bank accounts, and payroll system without adequate oversight from the Mayor or Town Council.

Following the termination of the Clerk-Treasurer’s employment in April 2024, the case was referred to the Spokane County Prosecutor’s Office. In May 2025, the former Clerk-Treasurer pled guilty to one count of first-degree theft in Spokane Superior Court. She was sentenced to two days in jail and was not ordered to pay restitution.

Town’s Response

In response to the audit, the Town of Latah stated it is implementing stricter policies to prevent future losses. “The town council and mayor will be verifying the bank statements and credit card statements with all receipts,” the town wrote in its official response.

The town also noted that debit cards will no longer be allowed and that strict controls will be placed on town equipment.

The State Auditor’s Office has recommended the town seek recovery of the misappropriated $75,124 and the $65,035 in investigation costs from the former employee or its insurance bonding company.