PORT ANGELES — Former Clallam County employee Catherine Betts, who is accused of embezzling $617,467 in public funds from the county Treasurer’s Office, will plead not guilty to a charge of first-degree theft during her first court appearance Friday, her attorney said Wednesday.

Betts’ appearance before Clallam County Superior Court Judge Brooke Taylor will be at 9 a.m. at the Clallam County Courthouse, 223 E. Fourth St., in Port Angeles.

“I will be asking the court to appoint an attorney to represent her,” said attorney Michelle Ahrens of Port Angeles, who is representing Betts. “She does not have the means to have me represent her privately.”

Funds allegedly stolen by the former Treasurer’s Office cashier have not been recovered, Police Chief Terry Gallagher said Wednesday.

AG’s office prosecuting

State’s Assistant Attorney General Scott Marlow will prosecute Betts, who will remain free on her own recognizance since she is not considered a flight risk, Attorney General’s Office spokesman Dan Sytman said Wednesday.

If convicted, Betts could spend more than the standard 10 years in prison because she allegedly violated a position of trust, stole far more than the $5,000 that is standard for a Class B felony, and pilfered public funds over several years, according to the Attorney General’s Office.

County Prosecuting Attorney Deb Kelly’s office is not handling the case to avoid conflict-of-interest issues that could arise by prosecuting a county employee, she has said.

Betts, 46, who now lives in Shelton, said she stole money to get away from a troubled home situation in Port Angeles, Police Department Detective Jason Viada said in a March 26 search warrant affidavit.

The warrant was executed to review the records of Columbia Bank — formerly American Marine Bank — in Port Angeles, where Betts had an account.

The affidavit includes Viada’s summaries of a memo from Jim Brittain, director of special investigations with the state Auditor’s Office, whose investigation led to the March 16 theft charge. Brittain’s memo reiterates the findings of his Feb. 23 report.

The affidavit also includes summaries of interviews with and statements from Anne Stallard, a former Treasurer’s Office accountant who played a role in discovering the theft, and current Treasurer Judy Scott, who is running for re-election this year.

The thefts occurred between Feb. 1, 2004 and May 19, 2009, when employees discovered bookkeeping anomalies in Betts’ record keeping, according to court documents.

Betts was put on administrative leave immediately and was fired on June 19.

Betts allegedly admitted to stealing about $1,200 when the thefts were discovered, according to Viada’s affidavit.

Scott took Betts to the downstairs courthouse office of Human Resources Director Marge Upham and then to Ahrens’ office, because Betts threatened to commit suicide and said she was afraid to go home, Upham and Scott said Wednesday in separate interviews.

“Betts is having trouble at home,” Scott told Viada.

“Betts said she stole the money to finance a possible flight away from her abusive husband.”

According to court records, Tracy Betts was arrested on Dec. 23, 2008, for investigation of fourth-degree assault-domestic violence.

The charge was later dropped and the case dismissed, according to county District Court records.

Tracy Betts filed for divorce from Catherine Betts on Feb. 11. The two are now legally separated.

‘Prudent thing to do’

When the theft was uncovered, taking Betts to a lawyer’s office “seemed the most prudent thing to do,” Scott said Wednesday.

“We were thinking there was a significantly smaller amount [stolen], and we were concerned about the individual for their safety,” she said.

Scott and Upham said county policy required them to immediately seek help for Betts once Betts raised the issue of domestic violence.

The same day, Stallard and Betts walked from the Treasurer’s Office to the Auditor’s Office to further check financial records, stopping first outside the ladies’ restroom a few paces from their destination, Stallard told Viada.

“Betts was crying,” Stallard said.

“Betts said she was going to kill herself. Betts said she was going to kill her kids. Betts said she didn’t mean that. Betts wanted to run away without even returning to the Treasurer’s Office to get her purse.”

Scott did return to the Treasurer’s Office, where she confessed to two thefts totalling about $1,200 to $1,300, according to Viada’s affidavit.

Stallard did not return a call for comment Wednesday afternoon.

Scott: Betts destroyed records

Betts destroyed records and primarily manipulated the office’s computer-generated Excel spreadsheet to hide the scheme, Scott said.

Betts, responsible for cash transactions, allegedly took checks from property owners for real estate excise taxes, cashed them with funds from the office’s cash drawer, and entered the amounts on lines and columns Betts hid on the spreadsheet, Scott said.

Betts had help from a defective machine that is supposed to sequentially stamps numbers on excise tax affidavits to track them but which skips numbers, according to Viada’s affidavit.

Betts allegedly used those missing numbers to track the amounts she stole and then hid them on the spreadsheet, Scott said.

“When Scott and others inspected Betts’ spreadsheet more closely, they found hidden lines where Betts had put in negative amounts,” Viada said.

“The state report would indicate that nothing was missing,” Viada said.

“Hidden lines on Betts’ spreadsheet have been located. Evidence suggests that excise numbers reported not used are attached to actual transactions involving money.”

When employees looked at the Excel spreadsheet that reflected the daily activities, “everything looked like it was in balance,” Scott said.

“Everything would appear normal until you actually sat down and read the column. That’s when it was discovered.”

Despite continued use of the defective machine, enough double-check safeguards are now in place that a similar problem cannot happen in the future, Scott said.

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Senior Staff Writer Paul Gottlieb can be reached at 360-417-3536 or at paul.gottlieb@peninsuladailynews.com.