Washington Counties Insurance Fund defrauded, money still missing

WASHINGTON STATE — The Washington Counties Insurance Fund acknowledges tens of thousands of dollars of public funding has gone missing due to a lack of oversight.

It comes after the State Auditor completed a fraud investigation in the department after a finance manager noticed a discrepancy of more than $123,000.

The Fund is a public entity and manages public money because the funds come from governments,” described Kathleen Cooper of the Washington State Auditor’s Office. “Rather than each county buying insurance policies individually through insurance companies, state law (RCW 48.62) allows governments to pool their resources together to form a “risk pool,” which is what WCIF is.

The SAO started investigating last year after the WCIF finance manager was fired following not one, but two issues within the department. The WCIF had lost money in a phishing scheme, according to the investigation, and there were other workplace-related issues. When a new manager took over, she noticed that more money had been misappropriated.

This had gone on for so long, according to the SAO, because the WCIF had limited oversight or internal controls.

“There were not enough reviews, secondary reviews,” said Cooper in an interview.

The money has still not been recovered. The Thurston County Prosecutor’s Office has since charged Anthony Matagi with fraud. No one was in the Tumwater office on Friday. A woman who answered the phone said the staff was at a “benefits retreat.”

In a lengthy statement to KOMO News, the WCIF’s Interim Executive Director Bridget Lockling acknowledged the issue and wrote in part:

Unfortunately, the Finance Manager took advantage of his role to make additional payroll payments to himself. It wasn’t until after he was terminated for other work performance issues that these payments were discovered. The new finance manager quickly identified the transactions and notified the bank and authorities. The internal control weaknesses identified by the SAO have been addressed, and there is now substantial oversight, reviews, and approvals in place. The funds lost should be recaptured through restitution, depending on the trial. Or through an insurance claim. The loss of these funds does not affect the clients, and there will be no impact on insurance rates or fees. And this loss does not jeopardize the stability of the organization.

“Reports like this are an example of how Washington State has really strong public accountability,” Cooper added.

Matagi is set to stand trial this summer.