Easy as writing a check

COEUR d'ALENE - A former Kootenai County employee in the clerk's office accused of theft of funds appears to have taken advantage of a lack of internal controls - specifically separation of accounting duties, according to a police report released to The Press Friday.

Sandra Kay Martinson, 62, the former chief deputy clerk and auditing supervisor, was charged in 1st District Court with one count of felony grand theft earlier this week. The case immediately was sealed by court rule or judicial order when it was filed.

The police report shows Martinson had the authority to OK the payment of checks, maintain the record keeping of bank statements (applying a bit of white-out here and there along the way), and she was trusted with custody of a signature stamp (former county clerk-auditor Dan English's signature) for check signing on a district court account.

Ideally, the three responsibilities would be entrusted to separate people, providing valuable oversight for that account.

Coeur d'Alene police, after being notified by English in early December of the suspected theft, investigated for a month and determined more than $130,000 in county funds was unaccounted for from a 10-year period. Detectives received for their review financial records dating from January 2000 to Oct. 31, 2010. Martinson retired in November, after more than 30 years at the county.

County officials said that after Martinson retired auditors began a routine review of her records and discovered "irregularities" that led them to suspect embezzlement.

According to the now released police report, investigators said it looked like Martinson was writing checks to herself from the "clerk of the district court" account. Martinson then apparently deposited the checks into her own personal bank account at US Bank.

Martinson would sometimes use white-out fluid to alter the recipient line on the bank statements sent to the county and would change them to an actual vendor's name, the report said.

These "updated" statements were then photocopied and added to the vendor files instead of the returned-cleared checks, the report said.

"This made it appear as though the checks Sandra wrote herself were actually written to a valid vendor," the report said.

Kootenai County senior auditor Keith Taylor began reconciling one of the county's US Bank accounts that had been under Martinson's control and discovered there was a series of checks written to Martinson dating back to 2000.

Police said Taylor provided them with photocopies of the checks, both front and back images, Martinson wrote herself from January 2004 through Oct. 15 of last year.

Bank statements were also provided to police and separated by year for the years of 2003 through 2010. Included with that submission was a detailed list of check numbers, check dates, and amounts of all the checks which are suspected to have been written by Martinson to herself from 2000 to 2010.

"Some of these checks are ones which Sandra copied, altered with white-out, and then placed in the banking record files at the county clerk's office," the report said.

Police compiled a list of all the checks suspected to have been written by Martinson to herself. Those checks were from 2000 to 2010 and the amounts ranged from about $300 to $950. There are a total of 212 checks, the report said.

Taylor told police that while going through a file for one vendor he located three pages containing photocopies of checks.

The checks were blank except for the "Daniel J. English" stamp on the signature line. One was written to "Sandra Martinson" for $500, dated Jan. 9, 2003, and had English's stamp on the signature line. That photocopy has white-out over Martinson's name, making it difficult to read, but still possible.

"It should be noted that this paper has an actual white-out type correction fluid over Sandra's name and one can physically feel the raised surface," the report said.

A police investigator also wrote, "After reviewing over a hundred pages of banking records, I found a common pattern that would help pinpoint" certain checks.

All of the checks Martinson allegedly wrote to herself were for a "whole-dollar amount, like $400, $525, etc.," he wrote.

"None of the checks written to her with (photocopy) images available, or those of which only fictitious copies exist, ever include any cents," he wrote. "Contrary to this pattern was the fact that nearly all of the other checks written from this (district court) account from 2000 to 2010 included both dollars and cents."

The checks with cents included in the amount were those written to legitimate vendors, the investigator wrote.

"There were a few whole-dollar amount checks written to valid vendors, but they were limited," he wrote.

All of the suspected checks written to Martinson were in multiples of five, the report said.

"Additionally, it should be pointed out that nearly all of the checks written to legitimate vendors appear to be hand-signed with Sandra Martinson's name," the report said. "All of the checks written to Sandra appear to be signed with Dan English's signature stamp."

Police said there were $83,675 in checks written to Martinson with check photo copy images available; $24,350 in checks without any images available; and $25,130 in checks with check images that are suspected to be altered.

The total suspected to be taken from 2000 to 2010 is $133,155, the report said.

With the court case sealed, it was not clear when she would be appearing before a judge. She has not been arrested, and will be appearing in court by summons.

Her attorney has declined comment.