Change coming after theft by emergency radio system director

LYNNWOOD — It started with some questions about missing clothes.

Now, it’s ending with a suspected tally of $180,000 in stolen public money, and a government agency that says it’s making changes to ensure something similar never happens again.

Lynnwood police are wrapping up their investigation into alleged embezzlement by Mark McDermott, the former director of the Snohomish County Emergency Radio System. McDermott, 64, took his own life in March, months after he was fired and his actions came under scrutiny.

There won’t be criminal charges, but investigators say they had a duty to attempt to recover any items that belonged to the county-wide public radio system, known locally as SERS. The agency oversees the radios carried by police and firefighters and the radio towers.

Lynnwood police were asked to conduct the theft investigation.

Since fall, they’ve taken five different trips to the house McDermott owned near Arlington. They needed heavy equipment, including a forklift and a flat-bed truck, to move out allegedly stolen property, including four industrial generators and a skid steer tractor.

“We feel we’ve exhausted our investigation,” Lynnwood police Cmdr. Steve Rider said. “The one person we would find criminally responsible is deceased. We’ve done our best to compile as accurate of numbers as we can so the county can try to recoup their losses.”

Not everything can be retrieved and returned. Police suspect that wiring, piping and even the landscaping at the home was paid for using SERS bank accounts.

“We only recovered a fraction of the items that were stolen,” Rider said. “We didn’t unscrew his light fixtures.”

SERS has hired a consultant to review all of its policies and operations. Changes are likely pending that report, said Marysville Mayor Jon Nehring, who is president of the SERS board.

“One thing we implemented immediately after becoming aware of this was that no single person within the SERS organization is allowed to purchase anything on a credit card, or in any other way for that matter, without multiple sign-offs,” he said.

SERS plans to file an insurance claim now that it has some final numbers from the police investigation, Nehring said. The agency’s insurance policy has a provision for theft.

That seemed to be the most realistic legal route, he said.

“We will have the option to liquidate the property we got back,” he said. “Right now our focus is on ensuring through our policies and procedures that nothing like this can happen again, and that to the best of our ability we are able to recoup the taxpayer money that was lost through this series of alleged crimes.”

Lynnwood police Sgt. Scott Dilworth, who specializes in investigating financial crimes, went through years of bank records for SERS.

Dilworth said he looked for high-dollar items, repeated purchases of the same type of item, and purchases that wouldn’t make sense for SERS — such as a kitchen faucet, sports drinks or water softener.

At first, the detectives were asking questions about missing clothing, and then police radios, Rider said.

“Then it just really exploded and in the beginning, you don’t know all this stuff has been purchased,” he said. “It just kept expanding and expanding.”

Dilworth tried to match up every purchase with proof of who made the purchase and where it went, Rider said. The police department counted some 500 hours that Dilworth spent on the case. He focused on purchases going back to 2012.

“This one was a huge investigation,” Dilworth said.

McDermott was named the SERS director in 2013 after more than a decade of working for the agency. He was supervised by the agency’s board, which is made up of police chiefs, fire chiefs and elected officials from around the county.

The board members fired McDermott in October for dishonesty. At the time, they said he lied about his credentials and that his management style fostered distrust. After the firing, the agency started reviewing invoices. Within two weeks, that review prompted a call to law enforcement.

The suspicious purchases started years before McDermott’s promotion.

“It just really ramped up after he became director,” Rider said.

The most expensive recovered item was the $33,443 tractor. McDermott apparently purchased it through a rent-to-own program to avoid triggering questions, according to police. The monthly “rent” was within the amount McDermott was allowed to spend without board authorization. He allegedly reported it as a monthly operating expense rather than a new purchase.

“That’s how he kept it under the radar,” Nehring said. “He found a way around it with that.”

Other items allegedly obtained with public money included bronze ceiling fans, lawn mower accessories and tons of gravel and grass seed. The suspected total for improper purchases at Home Depot alone was $8,871.

One item seized was an upgraded stereo system that was found on McDermott’s Harley Davidson motorcycle. The stereo system allegedly was bought with $1,516 from SERS.

That purchase alone likely could have led to felony theft charges, Rider said.

“That’s one of hundreds of transactions,” he said.

Police say they may never know McDermott’s motive. They found no indication of gambling or addiction — two common factors in embezzling cases. His annual salary was $128,000.

SERS has an annual budget of about $2.4 million and an office in Marysville. The agency is subject to routine state audits. Before the thefts were reported, the auditors found some issues at SERS but no major problems.

Now, the state Auditor’s Office has an ongoing investigation into the McDermott matter, fraud manager Sarah Walker said last week. The agency will issue its report after Lynnwood police close their criminal investigation, she said.

Nehring expects the SERS board to meet with auditors and discuss their findings. The board plans to keep the current interim agency director in place at least through 2017, before deciding on a permanent hire.

“We don’t want to hand this to somebody completely new until we feel like it’s stabilized,” he said.

Rikki King: 425-339-3449; rking@heraldnet.com.