State auditor reports back fraud allegations against former Camas mayor

The Washington State Auditor today released two reports related to the Camas-Washougal Economic Development Association (CWEDA) and its longtime executive director, former Camas mayor Paul Dennis. 

The reports — one declaring CWEDA “unauditable” and another investigating Dennis’ misuse of public funds — come less than one month after the Camas Police Department forwarded its investigation into Dennis to the Clark County Prosecutor’s Office and accused the former Camas mayor of stealing nearly $15,000 in public funds during his time leading CWEDA. 

State auditors say Dennis used more than $19,000 in public funds for personal expenses, including the purchase of a home climate-control system. 

“An additional $45,000 in costs were questioned, meaning the funds could have been spent on business items but were not adequately documented,” the auditor’s office stated in a press release sent to media today. 

Those questionable purchases included nearly $14,000 for meals, $8,483 for fuel, nearly $6,000 for electronics and software, $1,239 for car rentals and $2,826 in “reimbursements” to Dennis. 

“All questionable transactions were directly associated with (Dennis) and had the potential to be for (CWEDA) purposes,” the auditor’s report states. “But because we did not locate any supporting documentation to explain the purpose of those disbursements and (CWEDA) had not clearly defined allowable use of funds, they are considered questionable.”

State auditors interviewed Dennis on Jan. 23, 2020, and said the former CWEDA director “acknowledged making personal purchases with (CWEDA) funds,” but said the items he bought “should have been deducted from his regular monthly pay.” 

Founded in 2011 to help bring new businesses and industry to East Clark County and pull Camas-Washougal out of the recession, CWEDA received $200,000 a year in public funds: $100,000 from the Port of Camas-Washougal, and $50,000 each from the cities of Camas and Washougal. 

Dennis, 50, served on the Camas City Council for six years and as Camas’ mayor for nearly eight years before stepping down in 2011 to lead CWEDA. Dennis resigned from his role as CWEDA’s executive director in May 2019. 

State auditor: CWEDA Board did not have procedures in place to protect public funds

In its report on CWEDA’s “unauditable” status, the state auditor’s office states that CWEDA did not submit annual financial reports from June 2011 to December 2017, failed to respond to requests for financial documents until March 2019 and “was unable to provide (the state auditor) with financial records, other than bank statements.” 

The state auditor’s report says CWEDA’s board of directors — originally comprised of three representatives from the Port and the cities of Camas and Washougal until three new members, representing the Camas and Washougal school districts and the Columbia River Economic Development Council also joined in 2017 — “did not adequately monitor (CWEDA’s) financial activity … (and) did not have adequate procedures in place to safeguard public funds.” 

The auditor’s report shows Dennis approved more than $1.2 million in CWEDA expenditures over eight years with little oversight from the Board. 

“For almost all of these payments, we found (CWEDA) did not have supporting documentation beyond bank statements,” the report states. “Further, payments were not reviewed or approved by the Board, as required by state law.” 

The report shows that Dennis “wrote checks for $850,000 during the audit period (June 7, 2011 through May 31, 2019) to his company for professional services, without a contract in place.”

The state auditor’s office found that those payments “were made inconsistently and for varying amounts, and sometimes occurred multiple times in the same month.”

The report also shows Dennis worked an average of four hours a day on CWEDA activities and that the CWEDA Board “verbally approved” increasing Dennis’ pay from $9,700 a month to $11,000 a month during its March 2019 Board meeting. 

The state auditor’s office stated in the report that it could not conclude whether $1.1 million in CWEDA expenditures “were allowable and served a public purpose due to the majority of (CWEDA’s) expenditures not having supporting documentation.”

The CWEDA Board of Directors said it concurs with the state auditor’s findings. 

“At the time CWEDA was established  in 2011, it was the understanding of the CWEDA Board that CWEDA was not a public agency for the purposes of being subject to audit by the (state),” the Board stated in the state auditor’s report.
“Once the CWEDA (board members were) aware that they were a public agency subject to audit, they adopted new bylaws, reincorporated as a public not-for-profit agency, appointed a (chief financial officer) and established financial procedures consistent with those utilized by public agencies subject to audit and as described in this report,” the Board stated in its response to the state auditor. “These necessary financial practices have been in place since March 2019.”

The Board is disbanding CWEDA in June for reasons board members have said are unrelated to the state auditor’s investigations.

The state auditor’s office has referred its fraud investigation report to the Clark County Prosecutor’s Office and is recommending that CWEDA’s board of directors seek recovery of “the misappropriated” $19,311, as well as an additional $23,653 to cover investigation costs, from Dennis. 

“Public funds need oversight and they need regular audits. Unfortunately, this is an example of the danger to tax dollars and public trust when accountability is shortchanged,” State Auditor Pat McCarthy stated in a press release sent to the media this morning. “I hope it serves as a reminder of the importance of transparency and independent auditing, regardless of circumstance.”

To read the state auditor’s fraud investigation report, visit https://bit.ly/3bxqL7T.To learn more about the state’s report on CWEDA’s “unauditable” status, visit https://bit.ly/2TpDVh5.

Read more about the Camas Police investigation into Dennis’ alleged theft of public funds, in this Post-Record article, published April 20.