Auditor General says Town of Parker office specialist allegedly embezzled roughly $173,000; indictment filed

The director of financial investigations for the Arizona Auditor General told the Joint Legislative Audit Committee that a Town of Parker employee has been indicted on nine felony counts after an audit found what the office called apparent embezzlement of town funds.

Gretchen Augustine, director of the Auditor General’s Division of Financial Investigations, told the committee that her team’s investigation found that “from February 21 to October 2021, the former office specialist may have embezzled over a $173,000 of town monies” by issuing unauthorized checks to herself and others, keeping cash receipts that should have been deposited, and making personal purchases on town credit cards. Augustine said the Auditor General’s office submitted a confidential report to the Arizona Attorney General’s Office; the Attorney General later presented evidence to a grand jury and an indictment was returned.

The office’s June public report, Augustine said, documented three schemes the investigation attributed to the former office specialist: issuing unauthorized payroll checks (described in the report as more than $180,000 in issued checks, of which about $158,000 were negotiated), withholding cash receipts of $9,768 that should have been part of town deposits, and making personal purchases on two town credit cards totaling $4,690. Augustine told the committee the alleged purchases included electronics and designer colognes and that the employee admitted to the conduct to the then-town manager.

Augustine described control failures that she said enabled the alleged schemes: the former town manager failed to secure payroll check stock and did not perform reconciliations of payroll records to bank statements beginning in March 2021; deposit slips were not independently reconciled to cash-receipt records; and credit card receipts were not reviewed.

The Auditor General’s office said it provided a public version of its investigation report to lawmakers (tab 1, attachment A of the committee packet). Augustine said the office offered seven recommendations to the town to strengthen controls, including separating cash‑handling duties, enforcing a written credit‑card policy, requiring independent and periodic unannounced reviews of financial records, and ensuring independent audits are timely completed and acted on.

Auditor General Lindsey Perry told the committee the office’s financial investigations group has, over time, supported prosecutorial referrals that led to indictments in other public‑sector corruption cases and that the Parker matter was submitted to the Arizona Attorney General for prosecutorial consideration. Augustine told the committee that the Attorney General’s Office informed her they were assessing whether the matter had a federal nexus (Paycheck Protection Program funds were involved) but had not referred the matter to federal prosecutors as of the hearing; she cautioned the investigation’s public record is limited because criminal proceedings are pending.

The committee asked the Auditor General’s office to provide additional details including the town staffing levels, and the Auditor General staff said they would return with follow‑ups. The Auditor General emphasized that the public report focuses on control failures and includes recommendations intended to help the town detect and deter similar conduct.

Ending — The Auditor General’s division closed its presentation after committee members asked for follow‑up items; Augustine said the town had reported some corrective steps since the investigation, including outside reconciliation of payroll, periodic unannounced payroll reviews, two‑person cash‑handling procedures and stricter credit‑card documentation requirements. The committee did not take formal action but requested additional follow‑up information from the Auditor General’s office.