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City of West Linn Town Hall Meeting

City of West Linn Town Hall Meeting. Embezzlement Case May 1, 2006. Disclaimers. Elma Magkamit has the right to a fair trial and we need to make sure we do nothing that infringes on that right or possibly damages the DA’s case

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City of West Linn Town Hall Meeting

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  1. City of West Linn Town Hall Meeting Embezzlement Case May 1, 2006

  2. Disclaimers • Elma Magkamit has the right to a fair trial and we need to make sure we do nothing that infringes on that right or possibly damages the DA’s case • As part of its effort to recover some of the stolen funds, the City may need to seek legal action and we need to make sure we don’t damage any possible civil remedies

  3. Disclaimers (cont.) • This is a continuing investigation – the City of West Linn, the Justice Department and our forensic accountants will follow all leads until this is concluded.

  4. What are the Charges • Ms. Magkamit was indicted on 114 felonies: 52 counts of Aggravated Theft ; 5 counts of Theft 1; 57 counts of Forgery 1 • In total, we believe she wrote 57 checks totaling $1,411,560 between September 2000 and March 2005.

  5. When did she work for West Linn? • Ms. Magkamit began working for West Linn in 1994 in the Finance Department. She was promoted to Acting Finance Director in March 2001, and received the permanent appointment in September 2001.

  6. How did the City Uncover the Embezzlement • Currently, the City is two years behind on completing state-mandated annual audits. • As part of preparing financial information for the 2004-05 audit, Finance Director Elizabeth Carlson directed our accountant working on this project to initiate bank reconciliations for that fiscal year

  7. How did the City Uncover the Embezzlement (cont.) • When performing the reconciliation for September 2004, a discrepancy was uncovered. After further review, it was discovered that a check was missing from the City’s copy of the bank statement. • This check was for $36,884.70 and made payable to: Larry Magkamit, Magkamit Consulting • This check was uncovered on April 12, 2006.

  8. How did the City Uncover the Embezzlement (cont.) • This was immediately brought to the attention of the Finance Director and the City Manager. Later that day, we met with the Police Chief. We then contacted the Oregon Department of Justice. • One week later (April 19), the Justice Department and the West Linn Police Chief confronted Ms. Magkamit.

  9. How did the City Uncover the Embezzlement (cont.) • Later that day, now with 24 checks totaling approximately $750,000, the West Linn Police Department arrested Ms. Magkamit on 48 felonies. • After that arrest, 33 more checks were uncovered as part of the continuing investigation.

  10. How Could this have happened? • It appears that appropriate internal controls were not in place or followed during this period of time. • For example, only Ms. Magkamit reviewed bank statements. This responsibility should have been delegated to another staff member and then approved by Ms. Magkamit. This process has already been changed by the new Finance Director.

  11. How Could this have happened? • We believe Ms. Magkamit altered the bank statements and destroyed the forged checks to cover-up her theft. • It wasn’t until the new Finance Director insisted on completing bank reconciliations for 2004 that this was uncovered.

  12. What has the City done since Ms. Magkamit resigned? • The City hired Andy Parks, a municipal finance consultant, to do a thorough review of the Finance Department and recommend changes. • A new City Manager was hired in October 2005. • The 2003 audit was completed in November 2005.

  13. What has the City done since Ms. Magkamit resigned? (cont.) • A new Finance Director was hired in February 2006. Ms. Carlson is in the process of implementing new internal controls, including those that uncovered this crime. • We have worked diligently to prepare the financial reports needed to complete the 2004 and 2005 audit. • Auditors have been here consistently for the past few months attempting to complete these audits.

  14. What are the Next Steps? • The City Council has authorized the creation of one additional senior staff position in the Finance Department – a recommendation of the Finance Department analysis completed by Mr. Parks in 2005. • The City will hire a forensic accounting firm to assist in the investigation and uncover if there was any additional fraud

  15. What are the Next Steps? • After the forensic accounting is complete, we will re-initiate work on the 2004 audit and 2005 audits. • The City will take all possible steps to recover as much of the stolen funds as possible.

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