Editor’s note: This is the first of two stories about embezzlement in Lompoc. On Tuesday, see how lightning struck twice at the Lompoc Valley Association of Realtors office.

Each summer the carnival arrives at Ryon Park, arts and crafts tents rise, the entertainment stage is arranged, and churches and nonprofit groups erect food booths, which for many is the biggest fundraising event of the year.

Community pride is on full display during the Flower Festival. Organized by the Lompoc Valley Festival Association, it’s the community’s premier celebration, complete with selection of a queen, a banquet and parade.

This year, about five weeks after the festival, that community pride turned to stunned disbelief.

When it came time to pay the bills, festival officials learned that about $62,000 was missing from their bank account. They owed about $45,000, with no way to pay it.

“It’s been a nightmare,” said festival President Sue Beltran.

Police were at the festival office Aug. 6 when Office Manager Lacey Porter arrived and admitted that she had taken the money by withdrawing funds with a debit card that was kept in a desk drawer for emergency use. Board members signed checks to pay bills, but Porter never mailed them, Beltran said.

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Porter spent some of the money shopping for clothes and computers, and even used the embezzled money to pay for insurance, Beltran said.

Porter has not been charged with any crime in connection with the missing money. That cannot happen until after an audit, according to Lompoc Police Agent Milt Baldwin, the detective in the case.

Now, the association board of directors is looking for ways to pay its bills. It has some money from mutal funds and from its carnival account, which was kept at a separate bank. But it doesn’t have enough money to pay for a forensic audit or for attorney fees, Beltran said.

The association could borrow money or hold fundraisers, she said. One idea being discussed is turning the board’s annual meeting, at which next year’s slate of officers will be chosen, into a fundraiser, she said. The meeting is Sept. 20.

The board also will revamp its money management system, Beltran said.

“It will be fine in the end,” she said. “As a board and an association, we’re going to make sure everybody’s money is fine.”

Everyone was stunned by the festival association theft, except police.

Embezzlement, it seems, has become all too common in Lompoc.

“We have a lot of embezzlement — not necessarily big embezzlement by big business,” said Baldwin. He said he currently is investigating the embezzlement of $89,000 from a Lompoc business.

“It’s a small town and everybody is like family, and they think they can trust everybody,” Baldwin said.

Beltran said her family business, Valley Auto Specialists, lost $92,000 two years through embezzlement by an office assistant who had worked for the company more than seven years. The assistant, Caroline DeRoin, received no jail time but was ordered to repay the money — $100 per month, Beltran said.

“She paid $50 this month,” Beltran said, adding that it will take years for the business to recover the money. “For the next 72 years or 78 years or something; I figured it out. My great grandkids will be dead.”

The Lompoc Valley Association of Realtors also has been involved in two embezzlement cases in recent years, the first involving as much as $40,000, the second about $145,000.

Most of those cases, the community never hears about.

“It’s common to see maybe half a dozen of substantial-dollar embezzlements a year in the city,” Baldwin said. “The majority of embezzlement cases from private businesses go unreported, or after the report, are settled between the employee and business.”

Business owners or nonprofit groups, the victims in embezzlement cases often decline to press charges, choosing instead to settle, to avoid publicity and embarrassment, Baldwin said.

Perhaps the most well-known Lompoc embezzlement case is that of former Elks Lodge bookkeeper Pollyanna Luis, who pleaded guilty in June 2005 to stealing thousands of dollars from the nonprofit organization.

The Elks Lodge’s insurance company paid off $250,000. Luis, in turn, paid the insurance company $185,000, which included $50,000 that she had put down toward restitution. She also paid $25,000 to the lodge for its legal and investigative costs and $70,000 toward Elk’s bills.

Luis, who managed the Elk’s books for four years, was sentenced to a year in county jail.

Now that the Festival Association is experiencing what the Elks and so many other groups and business have struggled with, it must pay for a forensic audit to determine how much money was lost and how it happened. Forensic audits are typically used to prepare evidence for use in court.

Once the audit is complete, Baldwin said, he will begin to assemble the case to submit to the District Attorney’s Office. The DA will officially decide whether to press charges against Porter.

“In this case, it will,” he said. “She has basically given us a statement. That part of it is already done. What we’re doing now is waiting for some official documentation that gives us a dollar figure.”

That amount is likely to be higher than the $62,000 estimated by festival officials, Baldwin said. Forensic audits generally reveal additional missing money, he said.

Each of the embezzlement cases has something in common, according to Baldwin.

“Greed is what drives everybody,” he said. “When you make it easy for money to get taken, it’s going to get taken.

“Money is the root of all evil.”

Bo Poertner can be reached at 737-1053 or bpoertner@santamariatimes.com.

September 8, 2008