Audit: $192K missing from county’s emergency radio office

MARYSVILLE — State auditors have completed their review of the alleged fraud by the former director of the Snohomish County Emergency Radio System.

The auditors found that a total of $192,280 in public money had been misappropriated, with an additional $45,676 tallied in questionable purchases, according to a report published Thursday. They recommended the public agency continue its efforts to make sure there are better safeguards for spending.

The fraud report by the state Auditor’s Office followed a criminal investigation by Lynnwood police. No charges were filed because the suspect, Mark McDermott, 64, took his own life while the investigation was ongoing.

The radio system, known locally as SERS, oversees the emergency radios and communication towers used by police and firefighters throughout the county. The public agency keeps an office in Marysville.

McDermott was accused of tapping SERS accounts to make lavish upgrades to his home and property near Arlington. The auditors’ review went back to January 2012. The largest single purchase was $41,905 for a tractor and trailer. McDermott allegedly bought the item through a rent-to-own program to avoid triggering questions.

In addition to the police investigation and the state audit, SERS hired attorneys to examine all of its operations in light of the accusations against McDermott. The attorneys’ report also has been completed, according to Marysville Mayor Jon Nehring, who is president of the SERS board.

The report concluded that no other agency employees were involved in the financial misconduct, Nehring said.

SERS still has a pending claim with its insurance company to try to recoup the missing money. That could take several weeks to get resolved, he said. The agency’s insurance policy has a provision to recover damages from theft.

Board leaders are hoping that insurance will help reimburse the Lynnwood Police Department for investigative costs. The criminal case stretched about eight months.

McDermott was fired in October after it was determined that he had lied about his credentials. The firing prompted a review of invoices. Hundreds of inappropriate transactions were documented for items including ceiling fans, motorcycle parts, a drone, home surveillance systems and a Blu-ray player.

The cost of gravel, topsoil and turf mix purchases alone totaled $16,343, according to the auditors’ report.

Police alleged the materials were used on McDermott’s lawn and landscaping and to build a gravel road on his property. McDermott reportedly claimed the items he bought helped with the maintenance and storage of SERS equipment.

Since the discovery of the missing money, SERS changed its rules so that multiple signatures are required for purchases. During future routine audits, the state will check to see if any problems with financial oversight are repeated, the report says.

The former policies for spending did not ensure that “the expenditure was for a valid, public purpose,” auditors wrote. Assets that might be vulnerable to being carted home also needed to be tracked better, the report says.

The state audit was the last step of a lengthy accountability process, Nehring said.

“As far as the SERS board is concerned, we are ever vigilant in ensuring there is a cultural change in the organization and that the safeguards we’ve instituted are maintained,” he said.

Meanwhile, SERS is participating in consolidation talks with two local 911 centers, SNOPAC and SNOCOM. The board is keeping an interim director pending the outcome of those talks. A consolidation decision is expected early next year.

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

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