PASCO — Two months after Dennis M. Huston was hired as a Franklin County accountant, some county managers learned he was previously convicted of embezzling federal money.
Huston, who now stands accused of stealing more than $2.8 million from the county to support cocaine and gambling habits, admitted he was on federal probation 23 years ago after serving time in prison.
A nine-month FBI investigation in 2009 found Huston revealed his past to his new boss in 1989 after his probation officer threatened to tell the county if Huston didn't do it himself.
But road department supervisors, reportedly after conferring with county commissioners, decided Huston could stay on as the department's accountant.
Huston's supervisor at the time "didn't view it as a great situation, but decided to take a wait-and-see attitude," said an FBI report obtained by the Herald through the Freedom of Information Act.
The supervisor told FBI investigators that Huston was doing good work and he believed there were "enough checks and balances" in place that Huston's past wouldn't be a problem. So, the county extended his probation from six months to a year.
"There was also some legal concerns among county commissioners about firing him after the fact when he was doing a good job, particularly because Franklin County had been sued for past practices by union employees who had been laid off," the former employee told the FBI.
Huston, who went on to become the public works accounting and administrative director, is scheduled to appear Tuesday in Franklin County Superior Court in connection with the theft scheme he allegedly started less than a year after he was hired.
Anonymous letter prompts investigation
Huston, 65, is charged with first-degree theft, money laundering and cocaine possession. He told Pasco police he used the money to support his $100-a-day cocaine habit and for gambling, court documents said.
Huston has hired Kennewick attorney John Jensen, who declined last week to talk about the specific allegations.
But Jensen said he's concerned it will be difficult to get a fair trial in Franklin County.
"It's important we remember he's got a presumption of innocence and it's very difficult to fight that when we put someone's history and entire story in the paper," Jensen said.
Huston had worked for the county for 10 months when he opened a bank account in the name of a Spokane company and allegedly began charging Franklin County for equipment and parts it would never receive, according to court documents.
Though Huston's name was whited out in the FBI report before it was made public, the focus of the investigation was spurred by an anonymous letter left at county Commissioner Rick Miller's home in April 2009.
Documents previously obtained by the Herald show the letter alleged Huston falsified an invoice and pocketed $21,000 to $40,000 for tires bought but never received from Ben's Tires in Basin City.
The letter writer encouraged investigators to "look further than this one incident" and questioned how Huston was hired given his criminal history.
Miller told the Herald last week that what he didn't know at the time was that his wife, Brigitte, wrote the letter in hopes of sparking an investigation into a county whistleblower's allegations.
Miller said he had received some calls from the whistleblower and shared the concerns with his wife, an investigator at the Hanford site. Miller was worried he didn't have enough information to get a law enforcement investigation started, so he advised the caller to write a letter that he could give to the county prosecutor.
He told the Herald that unbeknownst to him, his wife wrote the letter, which he didn't know until long after the FBI closed the case.
Miller turned the letter over to then-Prosecutor Steve Lowe to be investigated.
"I didn't share (a copy of the letter) with other commissioners," Miller said. "I felt the right thing to do was to give it to the (prosecutor) because it wasn't known if it was true."
FBI queries co-workers
Lowe turned to the FBI for help to avoid a conflict of interest, and the federal agency opened its investigation in May 2009. The case was closed in February 2010.
Even though Huston failed a polygraph test, FBI investigators said they could find "no evidence" Huston "has embezzled funds in any fashion from Franklin County," documents said.
Co-workers and supervisors interviewed by the FBI indicated they never had any suspicion that Huston was involved in improper activity and thought the theft allegation was "bogus."
One co-worker said Huston was meticulous about making sure things were done properly and described him as having "a high character and generally is a very honest person."
Special Agent John Ryther in the FBI's Richland office led the investigation that resulted in a 381-page case file. The U.S. Department of Justice released 274 pages to the Herald.
The names of most people interviewed -- and sometimes their positions -- were redacted, along with portions of some interviews.
Agents interviewed: a male county employee suspected of writing the anonymous letter; Commissioner Miller; Huston's former probation officer; a county auditor's office worker; and five people in the public works department.
Investigators also talked to a man who worked for Ben's Tires and a former public works employee who apparently had a role in hiring Huston.
The former public works employee said he didn't know at the time Huston was hired that he had a criminal conviction. He said Huston looked like a good candidate and had good references. He noticed a two- or three-year gap in Huston's resume, but he didn't ask about it and none of Huston's references mentioned it.
The supervisor told the FBI he didn't "think there was a question about past criminal convictions on the application."
Huston also was interviewed by FBI agents and voluntarily agreed to take a polygraph, documents said.
Huston started working for Franklin County on May 8, 1989, about eight months after he was paroled by the Federal Bureau of Prisons. It's not clear when his federal probation ended.
Huston is accused of creating a fake business account and billing the county with fraudulent invoices -- essentially the same process he used to steal $142,000 when he was a financial officer with the federal Bureau of Reclamation in Montana in 1986.
It wasn't until earlier this year that Pasco police Officer David Yates discovered Huston opened a business bank account as the sole proprietor under the name Doyle BR/Critzer Equipment and submitted false invoices to Franklin County.
The signature card on file, dated March 7, 1990, was signed Dennis Huston, court documents said.
Critzer Equipment is a former Spokane business that closed in November 2001. Investigators say Huston was submitting fraudulent invoices under the Critzer name well before the company closed, but they can't prove it.
According to court documents, Huston allegedly stole $2.84 million since 1996, but the charges filed by the state Attorney General's Office, which is prosecuting the current case, account for a "conservative minimum" of about $1.8 million.
'A different ball game'
County commissioners at the time Huston was hired were Neva Corkrum, Ken Miller and Harold Mathews.
Corkum, who left the commissioner's office at the end of 2008 after losing her seat to Commissioner Brad Peck, said she didn't know anything about Huston's problems in Montana during her time as commissioner.
"I was never privileged to those conversations," she told the Herald.
Former Commissioner Ken Miller also apparently did not have any recollection about meeting Huston or hearing about his past, his wife told the Herald.
Mathews' wife told the Herald the former commissioner is in poor health and can't be interviewed.
Corkrum said she doesn't recall if the job application in 1989 asked about criminal convictions, but she doubts it did.
"Back in 1989, we were under 40,000 people in the whole county -- city, county and Connell and all the little communities," she said. "We didn't have human resources and we didn't do background checks. It was just a different ball game."
Corkrum said she was shocked when the county's former auditor told her about Huston's conviction and the FBI investigation.
Corkrum said she depended on Huston when she was reviewing budgets to help her sort out the numbers and percentages. He also served twice as the treasurer of her re-election campaign.
"I'm devastated," she said. "He was a prince of a guy. Everybody loved him in our church. That Sunday after he was arrested, I don't think there was a dry eye in the church."
Corkrum said it seemed like "deja vu" when she read copies of letters Huston's co-workers and supervisors wrote to the federal court judge in his support in 1989.
Co-worker 'never thought it was true'
The FBI's interviews of Franklin County employees also showed over and over that Huston was well liked.
The auditor's office worker told the FBI she had a hard time believing Huston would "put his family through another criminal investigation," and said he "is the type of person that would give you the shirt off his back."
Huston reportedly told the woman about his past conviction but denied any wrongdoing in Franklin County.
The public works employees also generally said they didn't think Huston could embezzle money without being caught and without colluding with someone else, but the five didn't believe he had done anything wrong.
One worker said "she thought the rumor was a lie; never in her wildest dream thought it was true, and didn't believe it until he admitted it to her," documents said. The worker also added that Huston is "involved with his church and is always talking about Jesus."
The shop supervisor in the county's public works department said he was aware that Huston "had done things he shouldn't have in his past," but he looked at Huston's "time in jail as a reason why (Huston) has to be particularly squeaky clean now."
The supervisor also said he'd been through drug awareness training and didn't see any drug-use indicators with Huston. If Huston was using drugs, it wasn't influencing his work, he said.
Ryther's investigation never found any evidence of the alleged tire fraud, and there was no evidence Huston lied on his employment application. He also found no evidence of current drug abuse.
While opinions differed on Huston's gambling habits, no one viewed him as a problem gambler beyond the author of the anonymous letter, documents said.
Because Huston's federal conviction involved a scheme to create a fake company for billing purposes, investigators also checked the county's vendor list and used the internet to research any that weren't commonly known. The FBI documents said agents were "satisfied that all the vendors listed actually exist."
Critzer Equipment was one of 144 vendors on the list reviewed. The former business' Spokane address and phone number were found in an online search.
"In the absence of any empirical data or confession, the conclusion of the case agent is that there is no basis to further pursue this investigation or to see prosecution," FBI documents said.
But in January 2012, staff in the county Auditor's Office discovered Huston's alleged fraud after auditing the vendor list and discovering that Critzer Equipment was no longer in business, but that the county continued to pay invoices submitted in the company's name.
Huston was arrested and fired in February. Eight other county employees -- most employees of the public works department -- were put on administrative leave.
All employees have since returned to work, with the exception of public works Director Tim Fife. He was not suspected of any criminal wrongdoing, but was fired for mismanagement.
County commissioners have since invested in a new computer software system and have transferred some of the accounting duties to the auditor's office.
-- Paula Horton: 582-1556; email@example.com