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Auditor Claims Bank Muzzled Whistleblowers

TACOMA, Wash. (CN) - An auditor sued Riverview Bancorp for $1.4 million, claiming her supervisor repeatedly changed her audit reports to remove problems she cited and fired her before she could investigate allegations of embezzlement.

Tracey McEuen sued Riverview Bancorp and Riverview Community Bank in Federal Court, alleging Sarbanes-Oxley violations and wrongful firing against public policy.

McEuen was hired in February 2011 as an internal auditor for the regional bank operating in southern Washington and northern Oregon. She claims her supervisor, Don Sasaki, interfered with her audits.

The only defendants are Riverview Bancorp and Riverview Community Bank.

"During March and April 2011, McEuen completed all 2010 Year End Sarbanes-Oxley testing and reporting for attestation (as required by law). At that time, McEuen noticed that her reports were being rewritten by her supervisor Sasaki, including the removal of issues McEuen had found in her audits. In addition, Sasaki w [sic] contacted area managers and provide[d] them with a 'heads up' that certain issues had been identified in the reports and would allow them to correct the issues. Once the issues were corrected, Sasaki would remove all mention of it from the 'final' audit documents. McEuen believed Sasaki's edits and corrections to be unlawful under the banking statutes and regulations and Sarbanes-Oxley," the complaint states.

It continues: "During March and April 2011, McEuen also became aware that the reason for the high level of turnover in the audit department was because regularly Sasaki changed audit findings in reports to hide problems or issues at the Bank."

McEuen claims that a coworker, Jeanne Cromwell, quit due to her frustration with Sasaki.

"On June 15, 2011, Cromwell, the internal auditor hired at the same time as McEuen, gave her notice and told McEuen that she was quitting because she could not continue to work for a manager who hid audit findings and changed audit reports. McEuen spoke with another supervisor, Brenda Lockett, a compliance manager, about both her and Cromwell's concerns regarding the unlawful activities of their supervisor, Sasaki. Lockett confirmed that Sasaki 'does this to all audit employees and has done it for years,'" according to the complaint.

McEuen claims the vice president of human resources, Krista Holland, summoned her for a meeting and asked her why Cromwell had quit. McEuen said that she and Cromwell were concerned about Sasaki's tampering with audits and believed the actions were "likely illegal, constituted fraud and were in violation of the bank's code of conduct, and several regulatory guidelines as well as Sarbanes-Oxley compliance regulations," according to the complaint.

McEuen says she told the president of the bank about her concerns and also informed the compliance manager that Sasaki had failed to conduct his own risk assessment for the prior eight years, instead using a copy of a risk assessment report prepared by the bank's accountant in 2003.

According to the complaint, Holland told McEuen "management is aware" of the problems and promised "there will be changes in the department."

In September 2011, McEuen says, she was preparing to audit the HR/Payroll department when the assistant controller for the bank took her out in the parking lot and secretly told her he thought Holland was stealing money from the bank by manipulating the payroll system.

"The Assistant Controller also recommended that McEuen speak with Tiffany Kelly (an HR analyst) to find out the details. The Assistant Controller then confirmed that this information was provided to Sasaki. McEuen later tells Lockett of this allegation and her grave concerns for the Bank," according to the complaint.

"Kelly then meets with McEuen and confirms that Kelly believes Holland is falsifying the payroll records and system and that both the Assistant Controller and Sasaki are aware of this information. Kelly also states that she has provided all of the information to the Assistant Controller."

Before McEuen could complete the audit, she says, Kelly was fired.

The next day the former auditor whom McEuen replaced, Lisa Wourms, was fired from her new position with the bank. McEuen was fired the day after that, according to the complaint.

"On October 12, 2011, Kelly's employment with the bank was terminated. Kelly was told that she has been terminated as a result of a reduction in force. McEuen believes Kelly was terminated because she knew and complained about fraud. As part of her termination, the IT department reviewed Kelly's email account and discovered the email exchange between Kelly and McEuen regarding McEuen's preparations to audit the HR/Payroll department.

"On October 13, 2011, Wourms was also terminated, again allegedly as a result of a reduction in force. The IT department also reviews Wourms' emails and discovers emails between her and others (not McEuen) regarding the evidence of fraud in the HR/Payroll department.

"Just two weeks after receiving a glowing review from Sasaki, on October 14, 2011, McEuen was fired. McEuen was told that she was being fired because she had violated company policy when she brought an external hard drive to work four months earlier. The Bank's stated reason for terminating McEuen was a pretext and was in fact retaliation for McEuen's reporting of the Bank's violations of Bank guidelines, Sarbanes-Oxley and governmental regulatory requirements."

McEuen claims she was fired in retaliation for uncovering and reporting changes to internal audit reports, violations of bank policies and codes of conduct, violations of Sarbanes-Oxley regulations, falsifications of risk assessment reports and potential embezzlement.

She seeks economic damages of $400,000 and $1 million in damages for emotional distress and loss of reputation.

She also wants an order expunging her employment records of disciplinary action and prohibiting the bank from disclosing any disparaging information to prospective employers.

She is represented by Anne Foster, with Dunn Carney Allen Higgins & Tongue, in Portland, Ore.

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