KINGMAN, Ariz. (CN) — Kingman, Arizona, has sued its former interim finance director for $1.1 million it claims she embezzled during eight years to pay off gambling debts at Nevada casinos and other bills.
Kingman and the Arizona Municipal Risk Retention Pool sued Diane Richards and her John Doe husband on Feb. 24 in Mohave County Superior Court. It also sued Heinfeld, Meech & Co., its auditor from 2001 until 2015. Kingman, pop. 30,000, claims Richards embezzled the money from 2007 to 2015.
Diane Richards also faces a 23-count criminal grand jury indictment, according to the civil lawsuit. Richards’ attorney did not return requests for comment.
Investigations began in September 2015, after Richards’ bank tipped off the Arizona Attorney General’s Office and Immigrations and Customs Enforcement Homeland Security Investigations to “highly unusual activity involving Ms. Richards’ bank accounts,” according to the complaint.
When in November 2015 the state and feds informed the city of widespread fraud, it fired Richards immediately and fired Heinfeld & Meech a week later.
The Risk Retention Pool hired a forensic accountant, which “discovered three methods in which Ms. Richards conducted fraudulent transaction totaling $1,113,589.85 in city funds,” according to the complaint.
The three methods were taking money from the city’s Employee Benefits Trust Account, cash advances on city credit cards and fraudulent transactions on city credit cards, Kingman says.
It claims Heinfeld & Meech breached its duties as auditor, failed to perform “in accordance with acceptable accounting standards, failed to detect inaccuracies in financial statements, failed to properly assess the internal control for the risk of material misstatements on financial statements, and failed to detect material misstatements on the city’s financial statements.”
Heinfeld Meech’s managing partner Corey Arvizu said in a telephone interview: “We have no comment at this time.”
William Doyle and Jonathan Yu, attorneys Kingman, did not return requests for comment.
Richards is at home awaiting trial on $10,000 bond. It is the largest embezzlement allegation in Kingman’s history.