Controls added in wake of Kingman embezzlement case

KINGMAN - City of Kingman Finance Director Tina Moline told the City Council on Tuesday the search for a new certified public accountant has begun.

Requests for proposals were sent out Monday after the city severed ties with the previous CPA following the alleged embezzlement of more than $1.1 million from a city bank account.

City Manager John Dougherty also said the alleged embezzlement, which reportedly began in 2007 and continued for the next eight years, prompted a much-needed overhaul of the finance department.

Specifically, no employees will have sole access to city bank accounts, as former budget analyst Diane Richards apparently did.

Two people will be involved in every transaction, he said, including someone to approve it and another to enter the data. Employees will all be cross-trained, and they will all work on the budget.

Moline, who stepped into her position last March, told the Council that there were internal controls in place, but "they weren't always followed."

Regarding Richards, City Attorney Carl Cooper said the federal Department of Homeland Security and the state Attorney General's office, the two agencies investigating Richards, have already initiated "some asset forfeiture."

Cooper also said if Richards is ultimately convicted, the city is a victim and could receive restitution through the sale of Richards' real property, but that likely won't cover the city's loss as its insurance against employee theft is capped at $500,000.

Mayor Richard Anderson said the city's insurance company might go after Phoenix-based auditors Heinfeld, Meech and Co.

Anderson also praised Dougherty and Moline for their response in alerting the pubic when the warrants were served, and again last week when it was determined Richards' alleged embezzlement reached more than $1.1 million rather than the initial estimate of about $300,000.

"It would have been the easiest thing to try to sweep this under the rug, but that wasn't the approach Mr. Dougherty and Ms. Moline took," he said.

Richards' indictment is expected to be handed down in January. If that occurs, and her case is prosecuted, it will be a state and not a federal case.