A long-term lack of financial oversight at a municipal golf course was revealed by the state auditor after a Renton employee was fired for stealing thousands of dollars.

Almost a year ago, employee Ryan McClintock was fired for stealing money over the course of four months — November 2017 to February 2018 — from the city-run Maplewood Golf Course on Southeast Maple Valley Road.

But that former city employee had been a cashier since 2013, and had been working at the golf course since 2000. Because the golf course lacked a proper accounting system, there is almost no way to know if the employee took more money over a longer period of time, according to the Washington State Auditor’s office.

In September 2018, the state auditor’s office released a report that the city of Renton had failed to create proper checks and balances in its funding system for the golf course and beyond, finding that “internal controls at the city were not adequate to safeguard public resources.” Auditors suggested the employee might have stolen much more — as much as $19,140 between January 2017 and Feb. 6, 2018, according to their initial findings.

The auditors interviewed McClintock, who said he might have taken as much as $15,000. The auditor’s office determined $9,120 was a conservative estimate of what McClintock had taken during the time frame he admitted to, and he denied that he took more.

On Sept. 25, 2018, McClintock settled with the city in the form of a public restitution agreement. Auditors had also suggested this solution to the city. He agreed to pay back $9,120 to the city along with an additional $22,406 for the investigation costs, totaling $31,526. He also was informally trespassed from the golf course for five years. The city stated in the audit report that it planned to recover as much money as possible.

Since the settlement, McClintock has made each payment on time, and as of March 15, he had paid the city $9,000, according to the city’s Fiscal Services Director Jamie Thomas. Thomas was frequently updated on the investigation. She said the city was fortunate to be recouping all of its costs with McClintock’s restitution agreement.

Renton police also began an investigation of the fraud, but because the city came to a restitution agreement with the former employee, police closed the case on Dec. 18, 2018.

“McClintock confessing was the only evidence to positively say he took the money,” the police report stated.

The full audit investigation, received through a public records request, also shows that golf course employees were not regularly checking financial discrepancies and had been using one another’s cashier logins. This makes it hard to know who is responsible for the discrepancies, according to the audit.

The city brought this potential fraud case to state auditors shortly after McClintock was terminated in February 2018. Thomas said they decided not to perform a city audit because state auditors would provide an unbiased third party investigation.

Misty Baker, senior finance analyst, reported to auditors that the city had seen a drop in golf course revenue. Charges for goods and services had dropped $471,591 from 2016 to 2017, according to the city’s analysis. Baker also looked at another golf course nearby to make sure the decrease in revenue was not related to bad weather.

Thomas said in an interview that margins are thin at the golf course due to the nature of the business, and that the issue was not different from other municipal golf courses in the area.

The Maplewood Golf Course is an enterprise fund facility. Like the Renton Municipal Airport, the city operates these locations as businesses that are meant to pay for themselves.

Even with the declining funds at the golf course, Thomas said the city hasn’t put any general government money into it. But city council is able to do that if needed, she said.

In early 2018, prior to the discovery of potential fraud, the city had separated the golf course from parks as its own branch of the community services department.

The installation of new security cameras at the golf course Pro Shop, listed in the 2019-2020 biennial budget, was expedited because of the fraud by the former cashier, Thomas said. Other than that, this year’s budget items for Maplewood, including increasing green fees at the golf course $1 to $2 per round, were not related to the fraud, she said.

That increased course rate will result in a 5,694 percent increase in golf course funds because of how extraordinarily low reserves are now, according to the city.

As a result of the auditors’ investigtion, the finance department is rolling out a cash handling training for new employees across the city with annual refresher courses. Thomas said the training will be implemented at the same time a human resources orientation is introduced.

How it happened

Maplewood Golf Course offers “range cards” for customers, who load money on the cards to buy buckets of golf balls for the driving range. The cards are created and monitored using a system called Range Servant. Separately, any money received is put into the point of sale system, where the cashier is supposed to include how much was purchased, then put the cash into the till.

Instead of following this procedure, McClintock said he would take money from customers for their range cards, update their points in Range Servant, but pocket the cash, according to reports. McClintock said he would give old range cards to people he knew and give the card a fake name. He would also process the cards with other employees’ accounts to hide his trail, according to reports.

The auditor’s office was unable to determine the loss from green fees, but McClintock admitted he also took some cash through those fees. He said it was an occasional occurrence by all employees to waive green fees if someone was golfing for a short amount of time or before closing time, according to reports. There was no consistent documentation for golf cart rentals and green booking fees, and therefore no way to accurately determine fraud, auditors wrote.

McClintock also admitted to taking inventory — he estimated at $300 worth — and that other employees did as well. The auditor’s investigation found $2,506.90 loss in inventory from 2014 to 2017, but determined the discrepancy was small enough to be attributed to human error or customer theft.

In his termination interview, McClintock said he also gave away power carts or range buckets. Interviews from police reports obtained through a public records request show that McClintock had shown behaviors in the past of needing money and asking for money from customers.

In an interview with the auditors, McClintock said he took the money to pay rent and utility bills. The former employee also mentioned that it took 17 years for his wage to reach $13.50 an hour at the golf course.

More undetected losses?

The auditor’s preliminary notes on the case mentioned that the Renton City Council was asking questions in February 2018 about the decline in funds at the golf course. The state auditors wrote that this might “create an incentive to be less than forthright in response to audit inquiries.”

Finance staff were concerned the golf course might not be receptive to investigating the fraud. Golf course staff initially told auditors they were convinced this was an isolated incident of skimming off Range Servant cards.

Finance staff also told auditors the golf course staff had ignored previous suggestions for internal controls.

The finance division had not received daily cash summaries from the golf course on a regular basis, and instead got batches of them around the end of each month. According to city documents, the finance division had numerously requested to receive these on a daily basis.

During a surprise cash count from the city on July 10, 2018, city finance staff noticed “the golf professional’s office door in the Pro Shop was always open and unlocked with the safe in view.”

Thomas said the unlocked office was a concern because it’s available to employees with badges, not customers. In a draft memorandum dated July 13, 2018, finance staff who conducted the spot check said they were able to enter the office unnoticed as all cashiers were busy with customers.

City staff also reported in July other control deficiencies in how money was handled, such as cash counts only partially finished by cashiers, an endorsed check that should have been voided, and two Range Servant transactions with handwritten notes saying the machine jammed.

“Considering the ongoing audit around the abuse of the Range Servant system, this was concerning,” finance staff wrote in the memorandum.

Thomas said the city recommendations were not to say these internal controls were consistently ignored, but it was just “inconsistent in some areas.”

Diane Wagner, the operations specialist for the golf course, told auditors she was unaware that her position was responsible for reconciling the point of sales and Range Servant systems — the systems McClintock used to steal the money. She’s been with the Pro Shop since early 2016. City personnel said the previous operations specialist did perform this reconciliation, but auditors did not receive documentation of this during the investigation, according to reports.

From this, the auditors concluded there could be even more undetected losses for those years. Looking at financial trends and possible discrepancies, they decided a conservative amount of losses, for the time McClintock admitted to taking money, was $9,120.

After examining daily reconciliation amounts for January 2017 to February 2018, auditors noted the trend in discrepancies appeared to go up exponentially around October 2017 — a month from when McClintock said he began taking cash.

Given this trend, auditors went with a conservative estimate only including the months McClintock said he did this. They determined the trend was evidence that misappropriation either did not occur, or was at a much lower rate before October 2017.

The auditors did not examine the other four years McClintock was a cashier. They said given the lack of confidence in the financial reporting and time it would take, “it was not worth going into further depth to determine the actual misappropriation amount.”

Fraud can happen anywhere

The state auditor’s office offered recommendations to reconcile the lack of financial controls at the golf course, including an independent person from the golf course doing a secondary review of daily transactions.

“The city acknowledges and agrees with the state auditor’s office recommendations and has already begun implementing many of the recommendations provided,” the city replied in the audit report.

Thomas said the city has implemented the recommendations of state auditors, with the exception of a more consistent documentation for golf cart rentals and green booking fees, which city staff intends to finalize this year.

Finance staff with the city also sent a memo to Jan Hawn, finance director for Renton, that included a list of checks to be implemented immediately. The memo, dated July 10, 2018, notes that more changes and a specific program for the golf course will be introduced in the near future.

Suggestions in the memo included preparing cash deposits daily; preparing explanations for all voided, adjusted or missing receipts; and never leaving cash, checks and tills unattended.

Thomas said they have since implemented all of these suggestions at the golf course, as well as periodic spot checks, and the city is now “more closely” reviewing these daily for all of its decentralized locations. She said they can’t look at every piece of information, but are checking for evidence of lack of internal controls.

“Fraud can happen anywhere and you always have that risk. As much as you like your employees, as much as you trust them, you have to have it in the back of your mind, it’s a distinct possibility,” Thomas said. “That’s why you have those internal controls in place to protect everybody, protect the employee, protect from an opportunity they shouldn’t be and protecting the city and administrators from ending up in the newspaper.”

The Reporter reached out to McClintock for comment. He did not respond to the request.

From State Auditor records, an analysis for January 2017 to February 2018 that shows the misappropriation found has a spike around October, around when a former employee said he began to take money from the municipal golf course. Due to a lack of internal controls at the golf course, the auditors were unable to determine the source of previous losses. The graph includes both positive and negative discrepancies found throughout the year.