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Ex-Treasurer Employee Caught Stealing State Funds
Giannoulias' office uncovers wrongdoing, alerts federal authorities

April 1, 2008

A former employee of the Illinois State Treasurer’s Office has been indicted on federal charges of stealing $750,000 when she worked for Treasurer Judy Baar Topinka, authorities said today.

Debra Kirby, 53, of Taylorville, worked at the State Treasurer’s Office for 33 years, from January 1973 to May 2006. She was indicted by a federal grand jury in Springfield this week on felony charges of wire fraud and money laundering.

Current State Treasurer Alexi Giannoulias’ office recently discovered evidence of wrongdoing and launched an internal investigation before forwarding its findings to the Springfield office of the FBI.

According to federal authorities, Kirby allegedly spent more than $250,000 of the stolen money for personal gain.

“The indictment sends a message that illegal behavior will not be tolerated in this office,” Giannoulias said. “This employee violated the public’s trust, and the state has paid a price for her actions.”

If convicted, Kirby faces up to 30 years in prison.

In October 2005, Kirby allegedly illegally transferred $750,000 in state money to a personal bank account that she established under the name “Debo Craft,” using her elderly mother’s address, according to the indictment.

At the time, Kirby was a supervisor within the Treasurer’s Clearing Unit, then one of four units with its Banking Division, and earned an annual salary of nearly $67,000.

The Banking Division, headquartered in Springfield, acts as a liaison between state agencies and financial institutions by accepting deposits, verifying they will clear, and transferring them to the Comptroller’s Office. The division is designed to prevent the Comptroller’s Office from receiving a bounced check or payment.

The division’s Clearing Unit receives money when it first arrives to the state treasury and remains for a brief period while checks clear and daily transactions are reconciled. Kirby transferred the $750,000, claiming that the Illinois Department of Revenue requested her unit return an overpayment in that amount. The Department of Revenue made no such request, but she was able to transfer the money from the clearing account to her bank account because she had the authority at the time to ensure such a transfer was processed.

Knowing that the $750,000 wire transfer would trigger suspicion, Kirby apparently attempted to cover her tracks by taking advantage of a mistaken payment made by Pekin Hospital during the same time.

The Treasurer’s Office had received a payment of $263,408.41 that Pekin Hospital erroneously made out to the Department of Revenue but was intended for the Internal Revenue Service. Following procedures to return the money to Pekin Hospital or forward it to the IRS, Treasurer’s Office staff debited the Revenue Department’s account and created a special suspense account to hold the funds.

Kirby never returned the money to Pekin Hospital or paid the IRS bill. Instead, she used it to account for part of her stolen funds, according to the indictment.

To cover the remaining balance of what she stole, Kirby allegedly submitted a generic deposit ticket for $486,591.59 in March 2006, according to the indictment. Internal records show that Kirby then used a reconciliation statement to explain the $750,000 wire transfer she authorized in October 2005.

Kirby apparently believed the activity would not raise suspicion because the financial records were balanced on paper and the records she manipulated showed that the wire transfer had been performed “per IDOR’s request,” despite not having supporting documentation.

Kirby retired from the Treasurer’s Office in May 2006. The Treasurer’ Office discovered the missing funds and launched an internal investigation in November 2007 when Pekin Hospital notified the Treasurer’s Office that the IRS never received its payment.

Treasurer’s staff immediately focused on the reconciled funds involving the mistaken payment. A U.S. Bank check from Debo Craft for $486,591.59 was traced to Kirby, who allegedly signed the check with her own name and listed her mother’s street address in Taylorville. In addition, she made the check payable to “STO,” a common abbreviation employees use for the State Treasurer’s Office.

Upon revealing the criminal charges, Giannoulias also announced that his office would conduct a complete audit of procedures employed by the Banking Division and determine how to modernize the unit to ensure future misconduct does not occur.

“Our investigation indicates this is an isolated breach of the public’s trust,” Giannoulias said. “But we intend to continue to make improvements aimed at safeguarding the public’s money and ensure accountability to protect the public’s money.”

Since Kirby’s departure, the Treasurer’s Office has reorganized the division and implemented safeguards that will help prevent such wrongdoing. The Treasurer’s Office now requires multiple layers of verification as well as backup documentation from the institution or agency before any wire transfers are authorized. Outside institutions making payments must also provide verification if any payment errors have occurred and include a confirmation letter from the Department of Revenue.

Giannoulias is also requiring that staff must provide additional information for completing any reconciliation statements, and three different office departments, including two outside the banking division must sign off. In addition, Giannoulias also plans to conduct random audits, carried out by the Treasurer’s chief internal auditor and inspector general.