PORT ANGELES — Clallam County has approved a $597,516 insurance settlement to cover the theft of public funds from the Treasurer’s Office.

County commissioners on Tuesday authorized County Administrator Jim Jones to sign the agreement with Great American Insurance Co. to authorize the settlement.

Clallam County Treasurer Judy Scott said the county will receive the funds in seven to 10 business days.

A state Auditor’s Office investigation found that at least $617,467 was missing from county coffers between February 2004 and May 2009; former employee Catherine Betts has been charged with the theft.

An internal investigation led by county accountant Jen Santos confirmed $611,485 of the fraud.

After reviewing both investigations, forensic accountants working for Great American Insurance Co. accepted $607,516 of the sum.

The $10,000 deductible brought the final settlement to $597,516.

‘Great job’

“Jen did a great job, and I think the insurance company did a great job,” Commissioner Mike Chapman said.

The county’s insurance policy did not cover the $28,719 for the state Auditor’s Office investigation or $6,000 in fees to reproduce bank records.

Those costs — combined with the deductible and the $3,969 difference between Santos’ finding of fraud and the insurance company’s acceptance of fraud — brought the taxpayers’ cost to $48,688.

Shortly after receiving the payment, Clallam County will transfer the money in full to the agencies to which it should have gone in the first place.

The deductible will come out of the county’s share of the settlement.

Jones told commissioners on Monday that Port Angeles City Manager Kent Myers and City Finance Director Yvonne Ziomkowski lauded the work of the Treasure’s Office and Santos for securing the settlement.

“They were very pleased,” Jones said.

Payments owed

Payments will be made to:

• $345,769 to the Clallam County capital projects fund.

• $199,387 to the state Department of Revenue.

• $34,304 to the city of Port Angeles.

• $13,271 to the city of Sequim.

• $4,640 to the city of Forks.

• $145 to the state for a technology fee.

Betts faces a Jan. 10 trial in Clallam County Superior Court on a charge of aggravated first-degree theft.

Assistant Attorney General Scott Marlow will prosecute the case.

In the theft, state fraud investigator Jim Brittain found a checks-for-cash fraud was covered up by altering and destroying real estate excise tax records. The money has never been recovered.

The embezzlement case is the fifth largest theft of public funds from a government agency in the state over the past decade.

Scott, who became Clallam County treasurer in 2005 and did not hire Betts, has drawn criticism from her election opponent, Selinda Barkhuis, over the embezzlement case.

Barkhuis, a Clallam County senior planner, told a group of Port Angeles Rotarians on Sept. 29 that Scott had a “fiduciary duty” to safeguard public funds.

Barkhuis said Scott could have discovered the missing money within months of taking office but didn’t and allowed the fraud to continue for 53 months under her leadership.

Scott has maintained that she helped discover the fraud and took immediate action.

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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.