‘Improper’ transfer of DHS funds found Auditors flag $434,000 in redirected checks

AUGUSTA – A state Department of Human Services employee’s transfer of checks totaling $434,000 to avoid DHS losing the money was “deliberate” and “improper,” State Auditor Gail Chase said. But Chase said there was no theft or personal gain by the employee.

In a letter to Gov. John Baldacci and legislative leaders, Chase said 27 checks were processed a few days before the close of the fiscal year in June 2001 to DHS service providers who were not owed any money.

Chase said the DHS employee then requested that the checks be returned to her rather than sent to the service providers. The employee held the checks and months later deposited the money as department revenue, Chase said in a letter, which was written Dec. 12 and appeared in the legislative calendar Jan. 8.

“The stated purpose was to prevent program funds from lapsing to the General Fund and Block Grant Fund as required,” Chase’s letter said.

Chase’s letter also said the Maine Attorney General’s Office has determined that no criminal action was taken. But Assistant Attorney General Leann Robbin said Tuesday that its investigation “has not concluded.”

Of the $434,000, said Chase, $320,000 would have gone back to the General Fund.

“Our concern is not limited to the fact that deliberate, improper transactions were made,” Chase said. The case also highlights lack of controls that would allow an employee to ignore proper policy, said Chase, adding that other DHS workers knew of the incident but did not inform departmental management.

The letter asks that controls be put in place to prevent such incidents in the future.

Chase did not identify the employees involved, saying DHS is conducting a probe focusing on personnel issues. The matter was referred to federal officials, who decided no further action was warranted, the auditor said.

A message left with a DHS spokesman was not immediately returned Tuesday.

DHS spokesman Newell Augur said the department is working with the auditor’s office to make sure employees understand proper financial procedures so similar problems can be avoided in the future.

House Speaker Patrick Colwell, D-Gardiner, said it was important that auditors caught the transfers, but noted that no personal gain resulted.