The City of Morton will pursue all legal options to ensure its former clerk-treasurer who is accused of misappropriating $950,000 in public funds over nearly a decade is “prosecuted to the full extent of the law,” the city announced Monday.
“The city knows that the community places their trust in the city employees who serve them and that this is damaging to that relationship,” the City of Morton said in a news release.
No current Morton city employees were involved in the theft and there is no evidence the theft involved any customer utility accounts, according to the city.
“The city is angry and disappointed to know this happened and recognizes the community will
be too,” the City of Morton said in a news release. “ … Theft of any kind will not be tolerated by the city.”
The statement was part of a news release the City of Morton published after the Washington state Auditor’s Office released four audits of Morton on Monday: one fraud investigation report on the clerk-treasurer's activity, a second fraud investigation report on a smaller misappropriation, an accountability audit and a financial statement audit.
The clerk-treasurer investigated in the audit, Tammy Clevenger, started in her position in 2012 and resigned shortly after the Morton City Council passed an ordinance separating the clerk and treasurer positions, according to the City of Morton.
“By doing so, the city sought to provide checks and balances necessary for accountability and accuracy, and to also reduce the workload and responsibility for any single person,” the City of Morton said in a written response to the state auditor’s office’s audit. “With the elimination of the joint clerk-treasurer position, there was no longer a single person responsible for banking, bill-paying and payroll reconciliation.”
The auditor’s office reportedly contacted the city’s new clerk, LuAnn Ward, in September 2022 during a scheduled audit “and advised her that the financial records did not balance,” according to a City of Morton news release. The city was reportedly “offered a chance to reconcile the records before moving forward with the audit.”
According to the City of Morton, “Ms. Ward gathered and began inspecting the city’s past financial documents and discovered large discrepancies.” She immediately notified Mayor Ricky M. Mead, the Morton City Council and the state auditor’s office.
“At the request of the state auditor’s office, Ms. Ward continued the inspection of the city’s financial records and provided them to the state auditors’ office. When it became evident that an extremely large amount of money appeared to be unaccounted for, the state auditor’s office advised Ms. Ward to cease her investigation, and the state auditor’s fraud team would take over the investigation,” the City of Morton said in a news release.
Ward reportedly put over 800 hours of her time into gathering information and evidence for the investigation, which was completed in May 2024, according to the news release.
“Based on the information and evidence, it is believed that former clerk-treasurer Tammy Clevenger stole this money from the city and its citizens,” the City of Morton said in a news release.
The City of Morton does have risk management insurance to cover the stolen funds, according to the news release.
“The city will continue to do what is necessary to protect our community, keep the community’s
trust and ensure this does not happen again,” the City of Morton said in a news release. “The city will strive to implement any recommendations received from the state auditor’s office to strengthen the city’s processes.”
The state auditor’s office stated Monday that the City of Morton previously ignored warning signs, including ATM withdrawals of over $10,000 from the city’s bank account that the improper activity was occurring.
“What is so incredible in this case is that the leadership of Morton took no action when they had been informed of two different problems with the clerk-treasurer. We say, ‘trust but verify,’ for a reason,” state Auditor Pat McCarthy said in a news release on Monday. “Blind trust doesn’t protect the public’s money. Proper controls do.”
Clevenger allegedly authorized a $2,400 city check to herself in 2013, one year after she was hired.
“Auditors questioned the payment in 2014, but the then-mayor described it as an approved personal loan,” the auditor’s office stated. “The audit, published in 2015, took exception to this, and recommended the city require repayment and refrain from loaning public funds.”
The City of Morton has had three mayors since Clevenger was hired in 2012. Jim Gerwig was Morton’s mayor from 2008 to 2016, when Dan Mortensen was elected to fill the position. Mortensen served two terms before Mead was elected in November 2023.
In 2019, Clevenger reported to the state Department of Retirement Systems that she had left the city and withdrew her retirement funds, according to the auditor’s office. The next year, the state agency discovered she was still working at the city and questioned city management about the withdrawal.
“Despite these warning signs, the city council and mayor did not detect these misappropriations,” the auditor’s office stated. “Auditors found the clerk/treasurer was solely responsible for processing payments, writing checks and reconciling bank accounts. This allowed her to initiate payments without approvals, then process those payments without management oversight. Exploiting the lack of independent reviews of her work, the clerk-treasurer hid her activities since 2013, including taking customer cash payments that she did not deposit at the bank and writing checks to herself, then recording them as payments to legitimate vendors.”
The full fraud investigation report, including the city’s response, can be found on the state auditor's office website at https://tinyurl.com/27z8sftb.
In a separate fraud investigation report, auditors investigated concerns regarding credit card purchases by former Morton Police Chief Roger Morningstar, who resigned last year amid claims he lied about his background and sexually harassed staffers and others.
“The police chief also had maintained access to a bank account that was outside the city’s control but had been holding donations for police-related activities,” the auditor’s office stated. “Auditors found the police chief made $199 in personal purchases on a city credit card, as well as additional questionable purchases.
In a written response to that investigation report, the City of Morton stated that the city clerk “was advised of possible misconduct with a bank account that was previously not associated with the city” in 2023, which prompted an internal investigation that resulted in the account being closed in August 2023. “The city has since disallowed any such account be created. Any fundraising must be done and ran through the city’s books using bar codes for revenue and expenditures as all other accounts.”
The city added that a new credit card policy involving “stricter scrutiny on receipts” has been implemented.
“Any questionable receipt is immediately turned over to the mayor for follow-through. If an employee does not adhere to these rules, their credit privileges will be revoked,” the city stated.
The full report can be found at https://tinyurl.com/evx6psfm.
“This case is an important reminder that the first line of defense against public fraud is having strong financial controls in place today, not having an audit after the fact,” McCarthy said. “I sincerely hope this painful experience inspires other governments to double-check their statements and insist on reviewing payments.”
The state auditor’s office thanked Morton city officials “for their assistance and cooperation during the investigation” adding, “We will follow up on the city’s internal controls during the next audit.”
The accountability and financial audits that first detected the misappropriations can be found at https://tinyurl.com/4dvcxuyw and https://tinyurl.com/mr49n2rj.
Morton’s is the third six-figure loss of public funds reported by the state auditor’s office this year. The others involved the state Office of Administrative Hearings and the town of Cusick.
