State audit finds misuse of funds by former Grays Harbor Fire District 5 chief

The State Auditor’s Office in December published its findings into the investigation of possible misuse of public funds by then Grays Harbor Fire District 5 Chief Dan Prater.

In its response to the audit, the fire district, headquartered in Elma, illustrated the steps it took immediately after the alleged misuse was discovered in March 2019 to guard against such misappropriations in the future.

The state audit report found that payroll misappropriations of $105,822 occurred between October 2016 and March 2019, with additional “questionable disbursements” made in March 2019.

It was in March 2019 that the district began an internal investigations to payments made to Prater after a district fire commissioner “reviewed a reimbursement paid to the Fire Chief that did not appear to be an allowable business expense,” read the report.

The report also stated that Prater “had cashed out a large number of vacation hours on multiple occasions and that he was paid overtime when he was not eligible.”

Prater was put on paid administrative leave April 17, 2019. On May 9, Prater was fired.

The auditor’s report reads, “We reviewed payroll disbursements between January 2015 and May 2019 and found inaccurate calculations in the Fire Chief’s vacation balance. We re-calculated the balance, then compared what the Chief had been paid with what he should have been paid. We found: From October 2016 to February 2019, the Fire Chief cashed out 1,719 vacation hours he hadn’t earned, totaling $92,267; In December 2016, the Chief used 56 hours of vacation leave when his leave balance was negative, totaling $2,869; and in November 2018 and March 2019, the Fire Chief received overtime pay he wasn’t eligible for, totaling $10,686.”

The auditor’s report states Prater and his attorney were interviewed Oct. 12, 2020, and Prater said he had cashed out more vacation than was available to him.

“He also said that not only did he receive overtime pay he was not eligible for, he had not worked extra hours at all,” read the report. “He said he knew he had made mistakes and he wanted to make things right by returning the money he did not earn.”

The state audit said the internal controls of the district at the time of the discovery of the misuse of funds were not adequate to safeguard public resources. The fire chief handled the entire payroll process, including his own payroll information and submitting payroll to the county without any review, as well as being the only person responsible for monitoring and tracking leave balances and usage, including his own. The chief was also allowed to approve and submit for payment his own vacation cash outs without board approval.

In the district’s response included in the state audit report, the many steps the district has taken since the investigation began were detailed. These include a full time district secretary trained in payroll and accounts payable, and a change in policy where the fire chief may approve employee reimbursements but not his/her own. Fire chief reimbursements are now submitted to the district board for approval.

The fire district filed a report with the Grays Harbor County Sheriff’s Office to investigate the case, the report read. The state audit report will also be forwarded to the county prosecutor’s office.

Prosecutor Katie Svoboda said Tuesday that the investigation report has been forwarded to her office but a decision has not yet been made on whether or not to file charges against Prater. Tuesday was Svoboda’s last day on the job before taking over the seat she was elected to on the Superior Court bench.