Wake County to routinely audit deeds office after theft

Still smarting from the theft of more than $2 million from the Wake County Register of Deeds Office, the county Board of Commissioners on Monday approved a process to conduct annual audits of the office.

The deeds office handles millions of dollars in cash each year for everything from recording real estate transactions to issuing marriage licenses, birth and death certificates and new business filings because the office doesn’t accept electronic payment or credit cards for vital records and other services.

Employees found irregularities in January as they were trying to automate cash-handling systems, so County Manager Jim Hartmann brought in county auditors to go over the books. District Attorney Lorrin Freeman called in the State Bureau of Investigation in late March to assist in the probe.

John Stephenson, the county's internal auditor, said an average of $1,100 to $1,900 a day was taken from the office's cash receipts for vital records since at least 2008. Commissioners expressed disbelief that the fraud had gone on for so long.

"When you're missing 40 to 50 percent of deposits from a single office every day, I guess I'm wondering, and perhaps you can explain, why red flags didn't go up," Commissioner John Burns said.

Stephenson said there was no indication of a problem because the office's reports had been doctored to match the deposits.

His small office was scheduled to audit the Register of Deeds Office at some point in the future – the office hasn't been audited in at least 13 years, Stephenson said – but has been auditing larger county departments first. The county has scheduled regular audits only since 2014.

"I don’t think it could have been caught," Board of Commissioners Chairman Sig Hutchinson said, noting that the blame lies with whoever stole the money.

Hartmann said audits of other county departments have found no similar problems.

The county filed an insurance claim last month, stating a loss of $2,333,591.30 from the Register of Deeds Office over nine years because of "employee dishonesty or employee theft."

Register of deeds is an elected office, so it operates independently of the Board of Commissioners, but both parties agreed more oversight is needed in the light of the missing money.

"As a county, we’ve had the appropriate financial policies in place since 2010," Hartmann said in a statement. "They just weren’t followed by the Register of Deeds Office."

In addition to the annual audit, the new memorandum of understanding allows county officials to review the office's financial materials at any time.

No criminal charges have been filed in the case, but Troy Ellis, a technician at the office, was fired April 5 after he confessed to taking $50,000 within the last year. Ellis is now cooperating with investigators.

Longtime Register of Deeds Laura Riddick retired in March for health reasons.

Riddick's successor, Charles Gilliam, said the Register of Deeds Office has adopted stricter cash handling procedures and policies requiring daily reconciliation of receipts and deposits to improve accountability. He also plans to conduct an information systems audit of the office’s financial reporting system and begin accepting credit and debit card payments for notary, birth, death and marriage certificates by December.

Countywide, employees who handle cash are now given additional in-person training, and the county is working with internal and external auditors to plan further reviews of sites that accept cash. Other departments also will expand the use of credit and debit cards for payments instead of cash, officials said.

"When the red flag came up, this manager’s office jumped all over it, and the DA has done her job as well," Burns said. "I’m confident that since it came to light the right things have been done."

"This is incredibly unfortunate," Hutchinson said. "That being said, we have taken steps, in my view, that we are going to make sure this doesn’t happen again."