Audit documents embezzlement allegations against Hunter, Kremlin official

Town of Hunter audit

ENID, Okla. — An investigative audit report released Monday by Oklahoma State Auditor & Inspector Cindy Byrd has uncovered allegations of embezzlement by the town clerk and treasurer for the towns of Hunter and Kremlin.

The audit found between Nov. 10, 2015, and April 9, 2019, Donna Rainey, then clerk and treasurer of Hunter, misappropriated 74 payroll checks totaling $29,783.15. Rainey also issued herself 83 unsupported mileage reimbursement payments during the period of July 1, 2014, through April 9, 2019, totaling $7,457.33.

According to the investigative report, while Byrd's office was performing a citizen petition audit in Kremlin it was discovered Rainey also was serving as the clerk/treasurer for Hunter.

"Records reflected that the transactions were being comingled between the two towns," according to the investigative report. "Based on this information, the State Auditor and Inspector's Office (SA&I) approached District Attorney Michael Fields for assistance in obtaining authority to audit records on the Town of Hunter."

Hunter is organized under a statutory town board of trustees form of government, and the town combined the positions of town clerk and town treasurer, eliminating a segregation of duties related to the town's finances and allowing control over financial activity to one person.

"To further impede the lack of internal controls, the clerk/treasurer was permitted to operate Town business from her home located in Kremlin," according to the report. "The Board of Trustees (Board) allowed Rainey to operate the home office for at least 15 years."

During the audit, it was found the operations of Hunter and Kremlin were comingled. Rainey accepted utility payments for both towns at her home office, according to the report.

"Hunter utility payments were collected exclusively at Rainey’s home in Kremlin or at the Bank of Kremlin. Utility payments collected at the bank were not properly reconciled to the Town’s records," according to the report. "The third-party involvement provided additional opportunity for funds to be comingled."

The report includes a receipt used to record a Hunter water bill payment for $100 written from a Kremlin receipt book. Another example proffered in the report is a deposit of $91.71 that was transferred to the Kremlin Public Works bank account after being erroneously deposited in the Hunter Public Works bank account. A $35 utility payment to Hunter was erroneously deposited into the Kremlin’s Public Works bank account. The deposit was subsequently corrected and transferred into the Hunter Public Works bank account.

The audit also found Rainey received 74 payroll checks between November 2015 to April 2019, with payments ranging from $70 to $1,250.

Records showed Rainey's salary was $750 a month from each fund, Hunter's general fund and Hunter's Public Works Authority fund, for a total pay of $1,500 per month.

In January, Rainey issued herself six payroll checks totaling $6,600, according to the audit. Of those payments, $5,100 were in excess of her $1,500 salary, according to the report. Records did not document any town purpose for the excess payments and no supporting documentation was provided.

"Rainey had complete control of financial reports, including reports listing checks written, that were submitted for the Board’s approval," according to the report. "The excess payroll payments made to Rainey were not included in the reports presented for the Board’s approval."

According to the report, Rainey acknowledged she issued payroll payments to herself without board approval in excess of her regular payroll.

Rainey also issued herself 83 mileage reimbursement payments between July 1, 2014, and April 9, 2019.

"Mileage logs, odometer readings, or any additional supporting documentation was not provided to support the payments which totaled $7,457.33," according to the report. "Despite the fact that Rainey operated the Town’s business from her home in Kremlin, and the bank utilized by the Town of Hunter was in Kremlin, Rainey claimed an average of 284 miles for reimbursement per month. The monthly mileage totals were frequently made for the same amount and the claims often overlapped funds."

In the report's final comments, it is noted when a lack of segregation of duties exist, the board should use "hyper-vigilance" in their oversight of financial transactions and increase areas of oversight.

"At the time of this report the Town of Hunter had not obtained an independent audit since June 30, 2015," according to the report. "The Board should immediately resume obtaining annual audits as required by statute."

Fields confirmed Tuesday his office had received the report from the Oklahoma State Auditor & Inspector's office.

A search of online court records found no formal charges against Rainey.

Enid News & Eagle attempted to reach the towns of Hunter and Kremlin repeatedly via phone Tuesday but numbers for both were disconnected.

Staff writer Jordan Miller contributed to this story.

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