The Office of the Auditor General reported today that it conducted a special investigation of the Roosevelt Elementary School District and Kelly Cozad, a former district bookkeeper with the District, and her friend, Neville McCulloch, for the period February through April 2013 to “determine the amount of public monies that were misused during that period and the extent to which those monies were misused.”
The investigation revealed that from February through April 2013, Cozad “may have violated state laws related to theft, fraudulent schemes, computer tampering, forgery, and misuse of public monies when she embezzled $30,922.”
The Office found that “Cozad issued 23 unauthorized district checks with forged signatures totaling $22,016 to herself and McCulloch. They cashed some checks and deposited the rest in their respective personal accounts. Additionally, Cozad concealed some of her theft by misdirecting into the account from which she embezzled an $8,386 deposit that should have gone into a separate district fund. She also unlawfully deposited to her personal account a retired employee’s $520 insurance subsidy check.”
On August 3, 2015, the Attorney General’s Office presented evidence of Cozad’s and McCulloch’s alleged crimes to the State Grand Jury, resulting in her indictment on ten felony counts and his indictment on one felony count.
Auditor’s report reads in part:
From February through April 2013, Ms. Cozad embezzled and misused $22,016 of public monies by issuing to herself and Mr. McCulloch 23 unauthorized checks with forged signatures and falsely recording these checks in the District’s accounting system as payments to legitimate vendors. Ms. Cozad deposited 10 of these checks totaling $11,189 in her personal account and used them mostly for cash withdrawals, primarily at casinos, but also for her personal debt. Mr. McCulloch received 13 district checks totaling $10,827, depositing two in his personal account and cashing the rest. The deposited checks were used primarily for cash withdrawals at casinos.
Further, in February 2013, Ms. Cozad improperly deposited two utility-related checks totaling $8,386 in the District’s IFTA account although they should have been deposited in the District’s Maintenance and Operation Fund. She falsified several deposit-related forms and created copies of fake checks to make it appear as if the improperly deposited utility-related checks were from the ASRS. By misdirecting this deposit, Ms. Cozad was able to help conceal her fraud scheme and obscure some of the IFTA shortfall her embezzlement caused.
Finally, in February 2013, Ms. Cozad unlawfully deposited in her personal account a $520 district IFTA check issued to a retired employee for that individual’s health insurance subsidy. The check was endorsed with Ms. Cozad’s signature and the retired employee’s forged signature. Ms. Cozad used the money for cash withdrawals.
Former district officials did not provide adequate oversight or establish controls to ensure all IFTA transactions were appropriately recorded and processed. Specifically, account reconciliations were not performed in a timely manner, and cleared checks were not compared to district records during the reconciliation process. In addition, the same employee who issued checks often also mailed or distributed check payments.
Consequently, Ms. Cozad was able to take for herself another individual’s check as well as both issue checks to herself and a friend and then receive those same checks without detection. Additionally, the District did not ensure all revenue was deposited in the appropriate fund or account, thereby allowing Ms. Cozad to conceal her fraud scheme and obscure some of the account’s shortfall by misdirecting a deposit to the account from which she had been stealing.