THE LARGEST embezzlement ever investigated by the state auditor has ended with a whimper. High-rolling Seattle liquor delivery driver Russell Lee LaFountaine has gone off to prison, apparently penniless after stealing $840,000 over three years from under the state Liquor Control Board's nose. His accomplice of sorts, board office worker Geriann Silva, who claims she was duped by LaFountaine and then made the board's scapegoat, was fired for neglect of duty but never charged with a crime. The liquor board, meanwhile, decided the theftfrom January 1999 through February 2002was rare and won't happen again.
In the end, taxpayers are stuck with the tab, and Gov. Gary Locke, who appointed the board to watch over the public's $200 million annual liquor receipts, has no apparent reservations about the board's actions. "I am confident the Liquor Control Board has taken the necessary steps to ensure this type of fraud won't happen again," he said last week. "Fortunately, this was an isolated event." The board itself says it just wants to move on, confident it has a secure accounting system in place.
Yet, according to liquor board records obtained last week, those "new" controls failed almost immediately after they were put in place last year and consisted mostly of what already should have been routine checks and balances, such as requiring that driver invoices be originals rather than copies and that booze deliveries to state stores be reconciled with the invoices sent to Olympia for payment. The basic questiondid the contract driver deliver and properly charge for the liquor he picked up?was not asked, or the answer was not verified by board headquarters.
In March 2002, when the fraud was revealed, the board began an investigation and learned it couldn't locate LaFountaine's contract, papers showing who hired the politically connected Democratic activist in 1997, or, for that matter, papers showing he'd actually been hired (see "$840,000 Bar Tab," Sept. 25, 2002). The board reassured the state auditor that its accounting system was secure, though, claiming it had taken "immediate action" to conduct a "100 percent review" of freight-carrier payments and to "implement new controls."
BUT DOCUMENTS now show that a subsequent audit, of April 2002 receipts, found similar control breakdowns. The auditdone last November, seven months after the discovery of the theftalso determined that trucking vendors still could arbitrarily add their own charges to deliveries and use "whatever rate they feel appropriate" on some shipments.
Despite the shortcomings of delivery documentation, the board placed most responsibility for Boozegate on Geri Silva. The board concluded that "this case of fraud is an isolated case [and] internal controls were compromised by an agency employee. . . . " Silva failed to reveal LaFountaine's fraudulent billing after discovering he was inflating weights and ginning up invoices of the liquor shipments he picked up at the board warehouse in Seattle and delivered to state stores along the Interstate 5 corridor. A 10-year board employee and single mother of two in Olympia, Silva, 43, went on dates and trips with LaFountaine, 35, and also accepted $10,000 in cash from him.
However, it was Silva who alerted the board. She finally blew the whistle on LaFountaine, admitting what she called her unwitting and then reluctant role in the theft and revealing the $10,000 payment ($6,000 of which she says she returned). She laid everything out in a narrative confessional she wrote for the auditor (see "Hush Money," Oct. 16, 2002). Though her dismissal letter states, "You misused your position to assist another in a theft," Thurston County prosecutors say they didn't charge her because they found no evidence she participated in the crime or received stolen money.
The board today says it's confident its controls are really working. As for the $840,000, the state is investigating whether any of it is recoverable. The cocaine-snorting LaFountaine insists he spent the whole bundle on perishablesan apartment, entertainment, drugs, leased cars, and parties. At his May 13 sentencing, the remorseful defendant could only shrug. "My addictions," LaFountaine said, "got the best of me."