Embezzling secretary says proper audit procedures could have stopped her earlier

This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Weeks before Denise Aughney was sentenced to prison, the former secretary who embezzled more than $1 million from the Weber School District Foundation criticized the nonprofit's financial safeguards in a letter to the superintendent.

Now foundation and district officials confirm there were problems. The district has a new auditor and is no longer handling the foundation's financial matters, which have been turned over to an outside accounting firm.

For years, foundation check numbers - not the checks themselves - were reviewed by district business officials. That apparently made it easy for Aughney, a part-time secretary for the foundation, to write checks to herself. Since 1999, and perhaps even earlier, Aughney had written duplicate checks netting her at least $1.13 million in donations intended for school children.

She worked for 11 years for the foundation, a nonprofit that serves mainstream and special needs children in the district.

Her theft finally came to light when areas in the budget were overspent and the records were scrutinized. Copies of the checks showed that Aughney, who declined an interview for this story, had been writing them to her own credit card accounts, while typically stating in financial records that the money was going to schools.

In an April 28 letter obtained by The Salt Lake Tribune through a public records request, Aughney took "full criminal responsibility" for the embezzlement but wrote: "I would hope that some things have changed and new policies are in place, that this is not so easily done again . . . [if the] auditing team had done their job this could have been caught during any of the seven years. I never changed any information during an audit to hide my crimes."

Sherm Smith of Schmitt Griffiths Smith & Co., the Ogden-based firm that had conducted audits for the district, declined to comment for this story. Robert Petersen, the district's business administrator, also would not comment.

This year, the district solicited bids for auditing services and chose a different firm.

"You can put two and two together," said district superintendent Mike Jacobsen.

Part of the problem was the structure of the foundation, he said. Aughney was technically a district employee who was supervised by the foundation, which has a volunteer board.

"The lack of a clear line of authority is definitely detrimental to safeguards," said Jacobsen, who does not place any blame for the embezzlement on the foundation's board.

The foundation assuming control of its own finances is a positive thing, Jacobsen said.

What bothers him is that Aughney is not accepting responsibility, but wants to blame other people.

"You've got a criminal person who's trying to blame it on noncriminals," he said.

Aughney's "pretty accurate" letter didn't surprise Dave Howells, the foundation's director for 16 years. Bank statements were not balanced regularly and when they were, it was often done quickly, he said, agreeing with Aughney's claims.

"If everybody would have fulfilled their assignments this should not have happened," said Howells, who is about to retire. Though the checks and balances were there "obviously they weren't working because for seven years we were being bled."

An accounting firm is now donating its services to oversee the foundation's finances.

"Some people want to start pointing fingers and I'm not one of those," he said. "So rather than pointing fingers we just made a change."

At the end of her two-page, hand-written letter, Aughney concludes:

"Again, I am sincerely sorry and am taking this time for repentance and restitution and hope that new policy and procedures will keep this from happening again. Please have someone read the Utah Money Management Act for guidelines."

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* JULIA LYON can be contacted at jlyon@sltrib.com or 801-257-8748.