Audit shows former Pasco exec’s embezzlement topped $143,000

The former head of the Downtown Pasco Development Authority embezzled $53,000 more than investigators initially thought.

The results of a state audit released Monday show Michael A. Goins took $143,242 for his personal use between August 2013 and last November.

Auditors also found $30,456 in questionable expenditures and $54,765 in penalties that have been assessed to the downtown organization because of Goins’ actions.

Though the final tally is well over the $90,000 that Goins admitted stealing, it is below the $150,000 threshold set by Franklin County Prosecutor Shawn Sant to bring him back to court to face more charges.

When Goins pleaded guilty in January to first-degree theft with aggravating factors, the deal hinged on the embezzlement not topping $150,000. But at sentencing in April, Sant raised the threshold to $250,000.

On Monday, Sant told the Herald he knew the total would come in over $90,000, but wasn’t expecting $143,000, “I guess just because he hadn’t been there that long.”

Goins, 36, was released from prison July 21 after serving his one-year term. He received credit toward his sentence for good behavior during the three months he spent in the Washington State Penitentiary in Walla Walla.

A restitution hearing is planned Sept. 27, though Goins is not expected to appear in person in Franklin County Superior Court.

Sant has been working on preliminary figures with defense attorney Daniel Stovern and hopes they will reach a stipulated agreement.

The restitution amount could be about $270,000 with not only the misappropriated and questionable amounts, but also IRS and bank penalties and fees, the downtown authority’s attorney fees and other costs the agency incurred since Goins wreaked havoc on its finances.

Washington state Auditor Troy Kelley released the 11-page Fraud Investigation Report and a seven-page Accountability Audit Report.

One report said the state office learned about the suspected embezzlement through initial media reports because the Downtown Pasco Development Authority’s board members weren’t aware that state law requires notification when involving public funds.

Board members had taken their concerns to the Pasco Police Department for investigation.

The association is partially funded by taxpayer dollars. It oversees the Pasco Farmers Market and Pasco Specialty Kitchen, and coordinates events like the Cinco de Mayo celebration and the Fiery Foods Festival.

It operates on an annual budget of about $250,000, with $240,000 in annual expenditures, according to the audit report.

Goins was hired to lead the downtown authority in July 2013, and it didn’t take long for him to start dipping into those accounts for personal use, including groceries, utilities at his Richland home, back child support and trips to New Jersey to visit his two kids.

In an interview with Pasco detectives, Goins said he did not intend for the Pasco agency to suffer a loss. He claimed he planned to replace the stolen money.

“I got into quicksand and it got bigger and bigger, and I … wasn’t able to catch it up,” he told police.

Yet while he was neglecting or falling behind on a majority of the agency’s bills, he made sure to keep current on the insurance — just in case he ever was caught.

Goins’ scheme came crashing down in late 2015 when he no longer could delay IRS queries about unpaid taxes. It ultimately was discovered the downtown authority had overdue payroll taxes totaling $59,397 by the time Goins was arrested and fired last December.

At the same time, agency board members started hearing from vendors about outstanding bills on numerous accounts.

The audit report says Goins skimmed: $6,192 from the Specialty Kitchen funds in 2014 and 2015; $85,885 from Farmers Market money from 2013-15; and $44,724 from special event revenues from 2013-15.

Auditors said the revenue loss was “a conservative estimate” because of the condition of records retained by the downtown authority, “which limited our ability to completely assess the full extent.”

Board members were not aware Goins got a bank debit card in his name. He used the card to make $17,103 in cash withdrawals, $11,481 in disbursements to a check-into-cash vendor and cover more than $8,000 in personal bills and out-of-state travel expenses.

Goins also had a credit card in his name that was connected to the agency’s account. Expenses on that card included $5,535 in legal fees to an out-of-state law firm.

Auditors said he used agency money to buy a flat-screen TV for $2,645, a laptop for $466 and an electronic notebook and wireless mouse for $379.

The audit also notes that Goins bounced a total of $141,140 in checks over two years, which resulted in $34,611 in non-sufficient funds fees.

Sant said he is frustrated that a bank official did not take note of all the bounced checks in that time period and reach out to an authority board member with questions. He said the bounced checks fees cost the association roughly 6 percent of its annual revenue.

Auditors said the biggest problem was that Goins “maintained complete control” over the bank accounts, with no one doing a secondary review, and payments and payroll checks “were not scrutinized in sufficient detail to detect concerns.”

In the accountability report, state auditors recommend the authority “strengthen internal controls over operations.”

Board members should better monitor cash receipting, payroll and disbursements “to ensure adequate oversight and monitoring to safeguard public resources and compliance with (Downtown Pasco Development) Authority policies.”

Auditors also suggested the agency comply with established local government records retention schedules.

In June, the downtown authority’s board hired Luke Hallowell of Kennewick as the new executive director.

This story was originally published September 26, 2016 at 8:01 PM.