Agency missed chances to stop $400K in alleged theft from state, disabled

The Ohio agency responsible for caring for people with developmental disabilities missed multiple chances to catch a man charged with pilfering more than $400,000 from the state and agency clients over several years.

Authorities say this lax oversight allowed Douglas Carter to write himself checks from an account that paid for activities for developmentally disabled adults. He is accused of spending the money to pay for his own liposuction, jewelry and automobiles.

Carter was arraigned Thursday in Montgomery County court on 15 felony charges including forgery and theft in office.

He worked for the Montgomery Developmental Center in Huber Heights, which cares for nearly 100 clients from across the region. He also is accused of stealing money from the Warrensville Developmental Center near Cleveland.

Details of Carter’s case are outlined in an Office of Inspector General report obtained by the Dayton Daily News that calls out a lack of oversight on the part of the Ohio Department of Developmental Disabilities.

Jeff Fox, whose adult son Matthew has severe autism and lives at MDC, said the allegations are troubling because the residents “are vulnerable individuals who are there because they can’t fend for themselves. They need people watching out for them.”

“He stole from my son, from other people’s sons and daughters, and in a sense from every person in the state of Ohio who has paid a penny in taxes,” Fox said.

When asked why he did it, Carter — whose annual salary as business administrator of the center was $76,149 — told investigators he felt he “deserved the money” and that there would be no repercussions, according to the OIG report.

The investigation into Carter’s actions began in March 2012 after the Credit Union of Ohio questioned why Carter had deposited five checks totaling $25,824 into his personal bank account from the Montgomery Developmental Center.

At that point, Carter had written himself more than 100 checks since 2009, the report says.

Missed clues

The inspector general’s report lists 26 recommendations to help prevent such actions. It says if simple checks had been in place, the agency could have noticed the theft as early as October 2009.

The Ohio Department of Developmental Disabilities has not issued a formal response to the report.

In response to a request for an interview, agency spokeswoman Vicki Rich issued a written statement saying “(Carter) should be prosecuted to the fullest extent of the law for all crimes committed.”

“It’s extremely unfortunate anyone would do this kind of harm against any organization, especially a residential facility for vulnerable individuals,” the statement says. “When the department discovered suspicious checks last March we sought investigation immediately, removed the employee in question and began a thorough examination of our internal processes.”

If Carter’s supervisor, Robert Dix, had performed checks required under his job description, he could have noticed something was amiss as early as April 2010, the report notes. Dix was terminated in April 2012.

Carter came to Huber Heights from the Warrensville center. His boss at Warrensville, Randy Russell, raised questions about bookkeeping issues and said Carter showed a “lack of dedication to the facility” and may not be capable of doing his job.

A July 2009 memo to Carter from agency Assistant Deputy Director Ginnie Whisman obtained by the Daily News spells out “significant performance issues” Carter had at Warrensville. It chides Carter for blaming his problems on issues with Russell but grants him a requested transfer to MDC in August 2009 – after he allegedly had already pocketed $4,516.

Money paid for cars, jewelry, engagement

Looking into Carter’s work in April 2010 would have been early enough to prevent more than $360,000 in theft and would have been before investigators say Carter spent money on a 2009 KIA Borrego ($24,110), a Camaro ($15,000 down payment), plastic surgery ($6,500), and an engagement ring ($5,362).

Carter cashed a check from the developmental center for $5,280 in February 2012. A photo from Wright-Patt Credit Union shows him holding a large stack of cash as he deposited it into his account right before a trip to Florida, where he proposed to his girlfriend. When he got back he spent $1,222 at Andrews Jewelers to upgrade the engagement ring. Days before the investigation began, he purchased two cashier’s checks totaling $17,586 payable to Jared’s Galleria of Jewelry.

The report identified $276,725 that Carter spent in excess from his state pay.

“Without depositing the stolen cash, Carter would not have been able to fund his lifestyle during this period,” it said.

But soon after the investigation began, his life fell apart. His fiancée called off their wedding on March 16, 2012, after receiving a text message from Carter saying, in part: “(sic) … i thinkni know what the the investigation is about i was taking money from work. There is no way u can want to marry me aftr this or can feel the same way about me.”

His fiancée said she asked him where the money was coming from and that he told her he got a raise at work and a sizeable inheritance. These were both lies, according to the OIG.

“Carter abandoned his duty to protect some of our state’s most vulnerable citizens, and instead chose to victimize the developmentally disabled and the Ohio taxpayers to gratify his own desire for cash, cars, and jewelry,” Inspector General Randall Meyer said.

Money should have paid for activities

The Montgomery Developmental Center is a state-owned facility located at 7650 Timbercrest Drive in Huber Heights. It has an annual budget of about $15.5 million, funded by federal and state Medicaid dollars.

The money Carter is accused of pocketing came from an account used to pay for activities for the facility’s roughly 95 residents. They come from across the region, including Montgomery, Greene, Butler, Warren and other area counties.

Every resident gets a monthly needs allowance of between $30 and $105 that they can use on such things as field trips, clothing, gifts and other services not provided at the center. If they accrue more than $1,500, the excess money is given to the state. Other money can be donated by family members.

Matthew Fox, for example, gets $40 a month from Social Security and a few dollars a week from a work program. He uses the money to pay for trips to his favorite restaurants, Cici’s Pizza and Spaghetti Warehouse, or shopping trips to add to his collection of Matchbox or Hot Wheels cars.

His parents, Jeff and Betty, also put in money to buy things such as a trampoline that Matthew wanted. Jeff and Betty said their 31-year-old son loves living at the center, and they never suspected any wrongdoings in their interactions with Carter.

“Right now it’s the best place he’s been,” said Betty.

When it was time for a field trip, clients would get envelopes that included their money for the day. They would give back any unspent cash. Leftover money from activities was supposed to go back to the state to help pay for room and board for the residents. This is the majority of the money Carter stole, the report says. Another $15,570 was taken from a fund that family members donated money into, according to investigators.

Carter, 46, lives in Gahanna and could not be reached for comment.

He was indicted in February for 15 felony counts including aggravated theft, theft in office, forgery, tampering with government records and money laundering. He was arrested last week in Franklin County and released on bond.

Assistant Montgomery County Prosectuor Ward Ballantine said Carter has some money in his savings account and will forfeit his pension if convicted, but the odds are “not great” that the state will get all of its money back.

Problems identified before

Investigators laid out the process they say Carter used to steal funds. One method involved reissuing a check previously made payable to cash and altering the check number and date, then printing a new check, signing his and his boss’ name, then cashing the check and pocketing the money. He did this 71 times, the report says.

Another method involved printing a new check, then deleting it from the accounting system. He allegedly did this 38 times.

“What he would do is he would simply siphon off money every single month and cut checks to himself,” Ballantine said. “He would then go into the accounting software and then delete any record of these transations he had done to benefit himself.”

While this changed the bank balance, it left no trace in the state system. And since no one was comparing the two, no one noticed.

Part of the problem, the OIG found, was each of the state’s nine developmental centers operate like “its own little island,” in the words of DODD staff, with varying policies and little centralized oversight.

And this isn’t the first time this sort of thing has happened. An audit found oversight issues in July 2009 when employee Robert Smitherman was found to have stolen $3,175 from resident burial funds at the Warrensville facility.

Had the agency applied lessons learned there, investigators noted, “the probability of Carter being able to steal $440,436 would have been greatly reduced.”

In response to questions from the Daily News, Developmental Disabilities produced memos dated April, June and October 2012 spelling out changes in policy adding oversight and segregation of duties.

“We’re now also reviewing all the recommendations in the investigation report and will continue to make improvements as necessary, so that we can prevent this happening again,” the statement says.

Jeff and Betty Fox said the charges against Carter and the lack of oversight hit them like a “bolt out of the blue.”

They want the agency to do a full review of all nine centers and adopt standardized procedures.

“You have to think, if it could happen here … something very similar is likely going on (elsewhere),” Jeff Fox said. “If the bank (had) just quietly cashed the checks, you wonder how long it’d go on.”

Staff Writer Jim Otte contributed to this report.