Carlton County authorities were told about alleged embezzlement years before arrest | Duluth News Tribune | Duluth, Minnesota

Published October 27, 2013, 12:00 AM

Carlton County authorities were told about alleged embezzlement years before arrest

NEWS TRIBUNE INVESTIGATION: Carlton County officials were made aware of allegations that a county transfer station employee was embezzling significant amounts of cash more than two years before she was charged, according to court records obtained by the News Tribune.

By: Tom Olsen, Duluth News Tribune

Carlton County officials were made aware of allegations that a county transfer station employee was embezzling significant amounts of cash more than two years before she was charged, according to court records obtained by the News Tribune.

Joanne Wappes, who worked at the landfill for nearly 30 years, was charged on Sept. 20 in State District Court with theft by swindle and theft of public funds. According to the criminal complaint, the Carlton County Sheriff’s Office began investigating the case after being made aware of a complaint on July 10.

However, court records show that a man who burglarized Wappes’ home on two occasions told a judge and prosecutors in a January 2011 letter that there was substantial reason to believe Wappes was embezzling from the county.

“During the course of and following the 1st burglary at this home at 2104 Selmser (Avenue), I discovered that the owner was obviously embezzling monies from the Carlton County landfill for many decades,” David Michael Smith wrote in the letter.

Smith, now 52, pleaded guilty to breaking into Wappes’ home twice in 2010. He described seeing “multitudes of envelopes containing cash register receipts that had contained cash in the exact amount of said receipts,” several zippered bank bags marked “landfill” and bank statements showing that Wappes had more than $600,000 in her savings account.

A Carlton County news release issued last week about the Wappes case states “Upon receiving information earlier this year that there was a possible financial impropriety at the Transfer Station, the current County administration undertook immediate steps to ensure that an investigation was conducted.”

However, when asked by the News Tribune on Friday about Smith’s allegations, Carlton County Sheriff Kelly Lake confirmed Smith’s account that he told her department during his October 2010 arrest, and said her staff began investigating Wappes then.

As part of the department’s investigation, it requested the county auditor’s office examine the transfer station’s financial records, but there was no evidence to implicate Wappes at the time, Lake said.

“Unfortunately, we were not given all of the information that we have now,” she said. “There was nothing in the books showing any suspicious activity at that time.”

For those reasons, the sheriff’s office did not request a search warrant of Wappes’ home or conduct an interview with the employee at the time, Lake said.

When the zoning office, which oversees the transfer station, received a complaint about financial impropriety in July 2013, the investigation of Wappes resumed, Lake said. Because the case is still open, the sheriff declined to discuss specific evidence that came to light this year.

“A lot of questions will be answered,” Lake said. “When the case is active, we can’t share a lot of that stuff. But we will.”

A person close to the investigation, however, told the News Tribune that the county was unable to pursue a case against Wappes because the transfer station had no bookkeeping system at the landfill.

“It was very concerning to me that, in 2010, there wasn’t a recordkeeping system,” the source said. “We had the information and couldn’t do anything, at that point.”

The break-in

Wappes’ riches were an open secret among many in the community, Smith told the News Tribune. She lived frugally and apparently never spent much of the money, but people who had been in her house described seeing piles of cash, he said.

Smith said he targeted the house because he had heard it contained a lot of cash. He admitted breaking in during the daytime hours on Sept. 21 and again Oct. 11, 2010, while Wappes was away. He estimated that he took about $40,000 the first time and $90,000 during the second break-in.

“I thought, ‘OK, well, I’m in dire straits here,’” Smith said. “My son was in foreclosure, kids and everything. I thought, well, trying to get myself out of the hole here. Apparently it’s not her money. I just figured something’s not right. Where is she getting all this cash?”

During the break-in, Smith said he observed money piled throughout the house — in cabinets, under the TV and in cookie jars.

“I couldn’t even carry all the money that woman had in that house,” he said. “She was a hoarder, and I’d have to spend three days in that house in order to go over everything.”

Smith said he gave most of the money to his son and hid a bag of evidence — including cash register receipts and bank bags — in the woods near his son’s house.

Wappes called 911 after the first break-in and officers came to the scene to investigate, according to the complaint. Officers found that the glass window on a side door had been smashed. Wappes did not know what, if anything, was missing from the home, the complaint says.

During the second break-in, Smith said he took a Ziploc bag filled with more than $40,000 and a water cooler jug full of large bills. A neighbor saw Smith entering the house and called 911. He was apprehended while walking down a street near Wappes’ house.

“(The detectives were) visibly shaking holding this bag of cash, going, ‘God, there’s got to be about $40,000 or $50,000 here!’ Smith said. “I said, ‘Yeah, that’s right. You’re going to have a nice Christmas, aren’t you?’”

Smith was questioned by authorities and admitted to breaking in to Wappes’ home twice, and also told them that there was still approximately $2,500 at his son’s residence.

Acting on a search warrant, detectives went to Brittan Jay Michael Smith’s house, 2011 Carlton Avenue, where they found $3,400 in cash behind some boards in the basement. Brittan Smith complied with the investigation, and led detectives to David Smith’s storage locker at McDonald Rentals, where an additional $480 was discovered, according to the complaint. Brittan Smith was later convicted of receiving stolen property and received a stayed jail sentence and two years of probation.

The police report states that officers and detectives responding to both break-ins identified broken door windows as the points of entry, but makes no mention of cash in the Wappes’ home.

A deal denied

Smith wrote the January 2011 letter to 6th Judicial District Judge Robert E. Macaulay to ask for leniency prior to his sentencing in the burglary cases. Court administration notations indicate that the letter was also sent to the county attorney’s office, probation officers and the Indian Legal Assistance Program, through which Smith’s attorney was hired.

Smith said he asked for a deal with prosecutors in exchange for helping them catch Wappes, but then-Assistant Carlton County Attorney Nichole Carter rejected the idea. Carter even threatened to argue for a longer-than-guideline sentence if he kept talking about Wappes, who she called a “vulnerable victim,” Smith said.

“I truly feel, and all those I’ve presented this to agree, that prosecutor Nicole (sic) Carter is wrong in not pursuing this embezzlement case and … (in) her unwillingness to accept my help working with those interested in bringing justice to the other ‘vulnerable victim:’ the taxpayers of Carlton County and the Western Lake Superior Sanitary District,” Smith wrote in the letter.

Carter, who left the county attorney’s office in November 2011 to open a private practice in Cloquet, confirmed receiving Smith’s letter and hearing of the allegations against Wappes. But said she could not allow Smith to benefit from his crimes.

“The information he garnered was from a crime he had committed,” she told the News Tribune last week. “He obtained it through a burglary of her home. He wanted to use that to better his sentence. You can’t use that to get a better deal.”

Carter said she told county authorities about Smith’s allegations and asked them to investigate. Because information Smith gathered against Wappes was obtained illegally, it could not be used against her, Carter said, but the accusations opened the door for the county to conduct its own investigation.

Smith was eventually sentenced in March 2011 to serve 18 months in the Carlton County Jail, with credit for time served, per the terms of a plea agreement that did not include the Wappes allegations.

“Looking at eight months versus 20 months was a no-brainer,” Smith said of his decision to back off the Wappes claims.

Wappes charged

Wappes, 62, was not charged with any crime until last month, and the criminal complaint in her case does not make any reference to past allegations.

Carlton County Attorney Thom Pertler told the News Tribune on Friday that he was not aware of Smith’s allegations until recently. He said he did not specifically recall Smith sending a letter, but acknowledged that it was possible.

Pertler said it is typical for him to forward any criminal allegations to the sheriff’s office for investigation.

The county announced last week that Wappes was terminated on Oct. 3 and did not file a grievance. Wappes was released from jail on bail and is next scheduled to appear in court on Jan. 31.

Because Wappes is accused of stealing from Carlton County, her case will be handled by a prosecutor and judge from St. Louis County, to avoid any conflict of interest.

County Department of Human Resources officials said last week that Wappes’ most recent supervisor has only been on the job since 2012. No complaints were ever brought against the previous transfer station supervisor, the county said.

Additionally, the county said it is reviewing its procedures for the handling of cash transactions.

Smith, meanwhile, expressed frustration that it took so long for the county to catch up with Wappes.

“They had the opportunity to get this woman three years ago,” he said.

via Carlton County authorities were told about alleged embezzlement years before arrest | Duluth News Tribune | Duluth, Minnesota.

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