$24 at a time

(Note: You can read two later stories about Karen Brewer here and here.)

Oct. 19, 2008

By Jacob Quinn Sanders
Arkansas Democrat-Gazette

Karen Brewer was a model employee in her 20 years at the Arkansas Department of Finance and Administration, much of the time issuing personalized license plates such as “BIGBOAT” and “MSCUPID.”

All of her performance evaluations say so, using words like “efficient,” “excellent,” “perfect.”

But on Oct. 2, a month to the day after her most recent glowing review, a supervisor called in the Arkansas State Police to investigate her. She was fired the next day.

Brewer, 41, the sole full-time employee assigned to issue personalized license plates, is now being investigated over allegations of a scam that could have cost the state as much as $343,000 — $24 at a time — for as long as a decade.

In response to an Arkansas Democrat-Gazette records request filed under the state Freedom of Information Act and in subsequent interviews, the department confirmed it is working on an audit of 14,323 transactions Brewer made dating to 1999. Internal e-mails suggest the audit could be extended back through 1997, when that section of the department installed its current computer system.

“This was a complicated and sophisticated thing she had going,” said Marla McHughes, administrator of the department’s revenue office. “We still right now don’t know how bad it’s going to be when we find out everything.”

A note in Brewer’s personnel file signed by McHughes says Brewer admitted at least a portion of the scam to state police Special Agent Rick Newton. The state police have not charged or arrested Brewer but have an “open and active” case file, agency spokesman Bill Sadler said.

Brewer could not be reached for comment by phone or in person at her home in unincorporated Pulaski County just west of the North Little Rock city line.

In addition, the state police investigation led to the firing of four other cashiers in the same section of the department who confessed to stealing money — from $5 to $200 — from their cash drawers.

“The state police wanted to talk to them to see if Ms. Brewer’s actions were part of a conspiracy, which it appears wasn’t the case,” McHughes said. “They just started confessing to their own thing. I don’t think the state police ever told them what they were really investigating.”

UNUSUAL ACTIVITY

On Sept. 20, Juanita Shermo saw something a little unusual on one of her monitors.

She had been in her job as assistant director of the enforcement arm of the state’s Alcoholic Beverage Control Board and in charge of revenue security operations in the Department of Finance and Administration for less than a year.

In the two buildings she helps manage on West Seventh Street in Little Rock near the Capitol, there are 78 cameras, five in the section that processes license-fee transactions.

Shermo said she saw a cashier working diligently with no customer at her counter.

“I’m not sure you could say it was suspicious,” she said, “but it was out of the ordinary.”

She told McHughes what she had seen, and McHughes asked the cashier to explain.

“The cashier said she was processing checks for Ms. Brewer,” McHughes said.

The cashier also told McHughes that Brewer needed to convert checks to cash to provide a refund for a few customers.

And that made McHughes even more curious.

“First of all, we are a state agency,” McHughes said. “We would never send a refund in the mail in cash.”

But the cashier — one of a handful, who make an average of about $9 an hour — wouldn’t have known that, McHughes said.

McHughes said she ordered a review of two weeks of transactions Brewer logged into her computer. A number of license plates had been ordered but listed as free.

“Way more than would be appropriate,” said Michael Munns, the department’s assistant commissioner of revenue operations and administration.

He said the department could issue free plates only in rare circumstances, such as in cases where one was damaged or faulty, or to replace one taken back during a mandatory recall.

That’s when their suspicions were aroused.

CHECKS AND CASH

Munns and McHughes said Brewer would take a genuine $25 check, sent in to pay the standard fee for a new license plate, to cashiers outside her office.

Munns and McHughes said that Brewer would tell the cashiers she needed cash in exchange: $1 for a duplicate registration and $24 to give as a refund because the plate requested was unavailable.

Munns and McHughes said Brewer would pocket $24 and use the other $1 to order the duplicate registration. Then she would order the plate anyway and list it in the computer as one issued free, they said.

Internal checks to prevent theft and fraud were geared toward making sure all the accounts added up and were paid in full, McHughes said.

“And they were,” she said. “The system showed no problem whatsoever with the money. Everything added up.”

There were two critical holes in the scam, though, Munns and McHughes said.

A new plate on order would never accompany a duplicate registration, McHughes said.

“You get a new registration when you get a new plate,” she said.

And the second hole?

“For this to really have worked,” McHughes said, “the checks should have been for $26.”

EXCELLENT EVALUATIONS

In the late spring of 1988, Brewer was the last person interviewed for a cashier’s job in the special licenses section of the department’s motor vehicle direct services division but scored the highest on an internal candidate-ranking system and was hired, her personnel file shows. At the time, her resume shows, she worked as a cashier at the Bonanza restaurant on Pershing Boulevard in North Little Rock.

“I work with people daily in my present employment and enjoy it very much,” she typed on her application, “but I feel like it is time for me to further my career in more than one way; (1) to get more experience in other fields of employment, (2) More money.”

After asking politely for consideration for the job, she wrote, “I am a hard worker, trustworthy, dependable and a quick learner.”

Her employee evaluations were consistently excellent. She passed a criminal background check given in 2006 to all department employees who handle money. The department also requires employees to pay their taxes in full and on time as a condition of employment, something that was never an issue with Brewer.

“She was one that we had always trusted,” Munns said. “If you had a list of employees that you had concerns about, she would not be on that list.”

MONEY-HANDLING CHANGES

Brewer was fired Oct. 3. Her annual pay after 20 years with the department was $25,852.94.

McHughes said the department is still evaluating possible changes to policies and protocols to prevent another such situation. Already, she said, cashiers are being told as part of their training that a mailed cash refund is inappropriate.

John Theis, the department’s assistant commissioner of policy and legal matters, said he wanted to focus on money-handling procedures and on separation of duties.

“If we don’t learn anything from this,” Theis said, “we have failed in our jobs.”

Computers and space were being set up for the auditors within four days. The department assigned at least three auditors to the investigation, internal e-mails show, and they planned to split up an inchhigh stack of paper detailing the 14,323 of Brewer’s transactions involving vanity plates.

While the total potential loss could be as much as $343,752, it could also be significantly less, the department indicated.

Regardless, McHughes said she had no idea what could have motivated Brewer.

McHughes was unaware, however, that Brewer and her husband, Timothy, filed for Chapter 13 bankruptcy protection in 2000 with creditors claiming $96,186.62 in debts owed.

Despite at least one instance in which the bankruptcy trustee asked the court to force certain payments the Brewers failed to make, records show, the bankruptcy was closed in 2006 after the couple made payments totaling $73,197.78. The Brewers also promised to continue making payments on one particular debt even after the bankruptcy ended, records show.

Still, their lifestyle appeared modest.

At the Brewers’ home on Friday morning, the 13-year-old doublewide mobile home they own on an acre of land was quiet and strewn with pine needles, looking its age. The black Chevrolet Suburban in the driveway next to a shiny, massive trailer was at least a few years old.

The in-ground pool in the back — the one with the twisting white plastic slide — was covered. A single child’s shoe lay on the deck near the front door.

Nobody answered a knock.

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Comments
  1. Pops says:

    Whatever happened with this?

  2. JQS. says:

    The state police arrested her a few months later. I don’t believe her trial has been scheduled yet.

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