Franklin County paid $1.5 million to defunct company, records show

By Kristi Pihl, Tri-City HeraldMarch 3, 2012 

PASCO — Almost $1.6 million of Franklin County taxpayer money was sent to a defunct company via a P.O. Box in Spokane during the past decade.

County financial records show that a former county manager and previously convicted embezzler might have stolen $600,000 more than officials originally estimated.

County records obtained by the Herald under the state Public Records Act show Dennis M. Huston might have embezzled $1.58 million using Critzer Equipment's name since at least 2003.

When he was arrested last month, Huston allegedly told investigators he used some of the money to buy drugs, according to court documents.

Huston, 65, is not charged with a crime. He initially was arrested but then released while county and state officials investigate the theft allegations.

The Herald also learned this week that Huston might have been the subject of a federal grand jury investigation three years ago, about the time the FBI was asked to investigate fraud allegations against Huston.

Documents subpoenaed included pre-hiring and payroll documents for Huston, who was hired less than eight months after he finished serving a federal prison term after admitting to using a fake company to steal money from a federal agency.

In 2009, the FBI did not find any evidence to support claims made in an anonymous complaint, according to documents obtained by the Herald.

Huston continued to work and get paid about $76,000 a year as the Public Works Department's accounting and administrative director until his arrest Feb. 2. He was fired on Feb. 8.

He is under investigation for creating a bank account for Critzer Equipment of Spokane, which went out of business in 2001.

Between 2003 and 2011, county checks sent to Critzer Equipment ranged from $122,874 in 2011 to a high of $220,211 in 2007. Records before 2003 were not immediately available this week.

The most recent payments were in January 2012, when two checks totaling $10,242 were issued to the company.

Invoices show the checks were for parts and equipment, including 780 edges for road graders, 66 torque rods, 36 clutches, 112 brake pads and six hydraulic motors.

A closer look shows the county wrote 18 to 24 checks a year to Critzer in amounts ranging from about $1,500 to $10,800.

Each check was well under the $25,000 amount that triggers a public bidding requirement.

Counties use a list of approved companies, called a small works roster, for projects and equipment costing $2,500 to $25,000, said county commission Chairman Brad Peck.

For projects or materials costing less than $2,500, a local purchase can be made, he said.

Peck could not confirm whether Critzer Equipment was on the county's small works roster. He said that is part of what is being investigated.

Vouchers to pay the invoices were authorized by Tim Fife, the county Public Works director and engineer, with final approval from county commissioners, according to county documents.

When Fife signed a voucher, he was certifying under penalty of perjury that the parts had been delivered to the county and the claims for payment were "just, due and unpaid obligation against Franklin County," according to the vouchers.

Fife and Guy Walters, assistant Public Works director, remain on paid leave. Officials have said the employees on leave are not accused of any wrongdoing.

Six other county employees who were on paid leave since have returned to work.

Peck said if the county had a better inventory process in place, the alleged embezzlement might have been discovered sooner.

The inventory system is part of what is being investigated, he said.

Exactly when Huston might have started embezzling from the county is not clear.

Payment records for before 2003 were not available this week because of the way older financial records were kept. But investigators have said they suspect money might have been stolen since the time Critzer went out of business.

In December 2001, Critzer Equipment's assets were sold to Cobalt Truck Equipment of Spokane, according to the Spokane Journal of Business archives. The state Department of Revenue lists the company as going out of business Dec. 31, 2001.

At the time Huston was hired, Critzer Equipment already was doing business with Franklin County, according to commissioner meeting minutes from 1989.

Huston was hired in May 1989, less than eight months after he finished serving 21 months for stealing $142,000 in taxpayer money by using a fake company while he was a finance officer with the federal Bureau of Reclamation in Montana.

He admitted at the time to having a drug problem and entered a drug treatment program.

When Huston was arrested last month, he had a blank check from the Critzer company and a small leather bag reportedly containing cocaine.

Officials still have not said if Huston's criminal history was known by the Franklin County officials who hired him. His personnel files are among those taken by investigators.

Rosie Rumsey, Franklin County's Human Resources director, and Fife received subpoenas dated Aug. 17, 2009, to appear before a grand jury panel at U.S. District Court in Spokane on Sept. 22, 2009.

They were asked to provide a copy of all pre-hire, personnel and payroll records for Huston, according to documents obtained by the Herald this week through the Public Records Act.

Fife sent a letter to Assistant U.S. Attorney Robert Ellis on Sept. 17, 2009, saying it would take longer to compile all the requested information.

The records requested included all voucher and invoice records for Public Works projects, purchases and payments between 2006 and 2009, and credit card statements, numbers and assignment of cards for Public Works employees for the same years, according to the subpoenas.

Fife said in the letter that he was sending the records already compiled, but that it would take more time to review the motor vehicle maintenance and work order records because they are filed by vehicle number, not date.

It is not clear if the grand jury proceedings occurred.

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