Sunday, December 27, 2015

Santa Paula library aims to recover funds after embezzlement in California

The Blanchard Community Library in Santa Paula has settled with a former auditor hired to review the library's accounts at a time when at least $470,000 was allegedly stolen.

Accountant Arthur Martinez and his Camarillo-based firm Arthur Martinez & Associates will pay the library $117,500 under the settlement signed Dec 15.

In return, the library has agreed to not pursue any claims against the accountant or his firm. The agreement states that Martinez and his company do not admit any liability in the embezzlement case.

Ned Branch, the library's interim director, said Martinez was contracted to audit the library's finances between 1995 and 2013. Martinez had not yet completed the biennial 2010 to 2012 financial audit when library officials discovered money missing from the institution's accounts in 2013, Branch said.

A former financial officer at the library, Tammy Ferguson, has been charged with embezzlement. She was fired in May 2013 after the library's board discovered irregularities. Ferguson's arraignment is scheduled to continue on Feb. 17. She could face a maximum of 12 years and four months in jail if found guilty.

Branch said the board believes the alleged embezzlement could have been detected sooner if Martinez had done a better job of auditing the library's accounts.

"The embezzlement had been going on for a number of years, so the board felt that there were some deficiencies in the work that had been done," Branch said. "We certainly felt that Martinez, if he'd been a bit more diligent, could have found what was going on."

Contacted about Branch's assertions, Martinez' attorney, Michael Dewberry, responded by email.

"The facts and the evidence are completely contrary to the comment you attribute to the library," he wrote. "Mr. Martinez performed his work responsibly and properly and strongly disagrees with this comment."

Exactly how much Ferguson allegedly stole will likely never be known, Branch said. Forensic accountants hired by the library to investigate the alleged theft documented $473,000 in missing funds, he said. However, the accountants extrapolated that the total amount stolen could be over $700,000 based on the patterns they found, he noted.

Bank and other records are obtainable only back to around 2006, but the theft could have been going on longer than that, Branch said. Ferguson began working at the library in 1993.

Branch said it would be really coincidental if it turned out that the very first theft occurred with the very oldest document that they could find.

Prosecutors did not need to specify the exact amount allegedly stolen to press charges against Ferguson, only that it is over $200,000, Deputy District Attorney Thomas Frye said. An exact figure will be specified if the court orders restitution, he said.

Branch said the settlement fee from the auditor will help the library cover the cost of investigation services and attorney's fees related to the alleged embezzlement. The library has also received $435,000 from its insurance firm toward the losses.

"We feel we've recovered as much as we're going to be able to," he said. "We agree with the forensic accountants, because the records show a pattern, that probably (embezzlement) was going on even before the period we can actually document, but we'll never be able to adequately prove that."

Additional assets could be recovered as a result of the pending criminal case, but that's not certain, Branch said.

In the meantime, the library's insurance firm, Great American Insurance Co., is pursuing a claim against Martinez in Ventura County Superior Court, according to the settlement agreement.

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