Integrity In Question As Everett Fire Department Fraud Investigation Revealed

January 22, 2021

Everett Fire

Integrity is printed on the outside of every Everett Fire vehicle.

On Wednesday we passed along a report issued on December 28th, 2020 from the Washington State Auditor’s Office into the City’s handling of an investigation conducted in 2019 by the Everett Fire Department into allegations of fraud by an inspector in the Fire Marshal’s Office. The end result of the case is the inspector resigned and paid $12,759.13 to the City, the equivalent of 229 hours in pay. The inspector resigned on January 21, 2020. On January 15, 2021 Everett Fire Chief Dave DeMarco sent an email to Everett City Council members advising of the investigation and attached what he called an executive and detailed summary of the fraud investigation. He also attached a summary of the findings presented to the employee. You can find each below as received from the City of Everett today (1/22/2021) with redactions of employees names by the City.

20210114 Council Executive Summary


At the Wednesday 01/20/2021 Everett City Council meeting councilmember Scott Murphy spoke of the fraud investigation and said he had three concerns including what he called a lack of transparency provided by the Mayor and her administration and claimed this was one of multiple times the Mayor kept the council in the dark on personnel issues. This led councilmembers Vogeli and Moore to chastise Murphy for his statements and bringing them up in that forum. The Mayor advised Murphy it would be better to run the questions by the City Attorney. Murphy went on to ask multiple questions about the investigation. Everett Fire Chief Dave DeMarco who was in the meeting to address a completely different agenda item corrected two mistakes he said Murphy made. 1). The employee resigned and did not retire. 2. The systems put in place caught the fraud and no deal struck to avoid prosecution.

You can see Murphy’s comments and those of the other City Council members here in this video beginning at the 19:30 mark from Everett TV.

Today (01/22/2021) the Everett City Attorney David Hall issued the following email to City Council members regarding issues raised at the City Council meeting.

This email responds to questions about the Fire Department payroll fraud investigation asked by Council at the January 20, 2021 Council meeting. Additional information responsive to Council’s questions is contained in Chief DeMarco’s executive and detailed summary memos provided to Council on January 15, 2021.

Why was Council not consulted on how to handle this matter?

The City of Everett has a work force of 1100. As in any large organization, Administration deals with numerous personnel issues and when appropriate initiates investigations of alleged misconduct – violations of City policies, allegations of harassment, failed drug tests, etc. Under the Charter, these are administrative functions within the Mayor’s responsibility, not policy functions assigned to Council.

There may be a misperception that Council should be apprised of any personnel matter on which legal advice is sought. Administration constantly receives input and advice from the legal department on a wide variety of issues, including personnel matters. It is only when a legal matter involves a policy decision, or when Council authorization is required to initiate a lawsuit, or when a significant lawsuit is filed or likely to be filed against the City, that Council notification and/or consultation is triggered as a matter of course. There was no reason to discuss potential litigation with Council for this matter because the City was made whole without the need for litigation.

Why was Council notified of this matter when it was?

If a matter appears likely to receive media coverage, as a courtesy Administration gives Council a heads up, both so they are not caught off guard and so they have the full context, which may not be apparent from the media coverage. For these reasons, when media expressed interest in this matter, Chief DeMarco notified Council.

Why did the investigation only go back to the beginning of 2019?

The misconduct that was subject to this investigation was discovered only because of the wholesale changes in fire administration made under Mayor Franklin and the new systems put in place by Chief DeMarco and his new administrative team. Records under the old system were insufficient to conclusively prove fraud. The fact that this fraud was uncovered, the thoroughness of the resulting investigation, and the successful conclusion of the matter with no objection from the employee or IAFF representative is evidence of the success of the changes put in place.

What steps have been put in place to keep this from happening in the future?

As reported to the State Auditor, fire administration has retrained FMO staff in the handling of attendance exceptions, required supervisors to deliver exceptions directly to the payroll clerk, and installed a lockbox for their receipt in the absence of the payroll clerk. This month, EFD/FMO moved to TeleStaff digital attendance tracking, which was not available at the time of the initial review.

Transparency with media and the public.

To ensure every incident that involves loss of public funds is disclosed, state law requires all such incidents to be reported to the State Auditor. This incident was timely reported as required. Auditor’s reports are publicly available, and any member of the public, including the media, can request the City to provide additional information on any item set forth in the Auditor’s report. The media has requested information on this item, and the City is working to fully respond to these inquiries. The investigation itself is a public document, as are all communications with Council concerning this matter (including this memo). Questions asked by Council at the January 20, 2021 meeting were answered publicly, not in executive session, and any further discussion of this matter with the Council will occur in an open public meeting, not in an executive session. At Councilmember Murphy’s suggestion, and consistent with our continued commitment to transparency, we will implement a policy of notifying Council at the same time we notify the Auditor of any loss of City funds.

Why was the employee not terminated?

Termination, and the risk of a wrongful termination lawsuit against the City, was discussed, but the employee’s agreement to resign (and the union’s acknowledgement that resignation was appropriate), made that decision unnecessary. The employee’s resignation eliminated the risk that the City would have to pay to defend against a lawsuit. In addition, although Chief DeMarco’s memo used the word “retired,” the employee resigned, not retired, and is not receiving retirement benefits from the City.

Why was the employee not criminally prosecuted, and who made that decision?

Prosecution decisions are entirely within the discretion of the County Prosecuting Attorney. Neither Council, nor the Mayor, nor the Fire Chief has a role in the decision whether to prosecute a crime. This matter was referred to the Snohomish County Prosecuting Attorney for potential criminal charges. The Prosecuting Attorney’s decision whether to bring criminal charges is based on established charging standards, including whether the crime charged can be proved beyond a reasonable doubt (the criminal standard of proof, as opposed to the civil standard of a preponderance of the evidence). The likelihood that the City could meet the civil standard undoubtedly affected the employee’s decision to reimburse the City in full. The County Prosecuting Attorney declined to prosecute based on their criminal charging standards.

Please feel free to contact me with any questions.

David Hall, City Attorney | Everett City Attorney’s Office also received statements from Everett Mayor Cassie Franklin and Everett Fire Chief Dave DeMarco with regards to the investigation and subsequent questions.

Statement from Mayor Cassie Franklin:

It is inexcusable for employees to exploit the City at any level. As soon as discrepancies in Everett Fire Department’s informal timekeeping system were noted, we addressed it, resolved it, and held those responsible, accountable. The employee reimbursed the city and subsequently resigned. I am grateful to Chief DeMarco and Fire Marshal Brown for their leadership and thorough and professional handling of this issue. This incident, though disappointing and disheartening, has ultimately helped us improve our internal processes and systems. The work done in this case is exactly the type of accountability I expect from all city teams, and I couldn’t be more pleased with the effort to ensure that integrity remains the core value at Everett Fire.

Statement from Everett Fire Chief Dave DeMarco:

Our community relies on the Everett Fire Department during their most vulnerable moments. The trust placed in us to serve our mission is our most sacred asset. The organization strives for perfection in all aspects of our work, but we are made up of individuals who occasionally make mistakes. The most serious of those mistakes are the ones that violate our core values and undermine the public trust… any erosion of public trust calls the very purpose of the department into question. The Everett Fire Department has absolutely no tolerance for damaging the public trust. Any report of impropriety is investigated, and when substantiated, disciplined in accordance with its severity. In this case we discovered behavior in violation of our core values and unfit for anyone wearing the badge of an Everett Firefighter. We then took exhaustive steps to ensure he was separated from the department.

Editor’s Update 10:15 AM Jan 23, 2021: Received the following follow-up comment from Everett City Councilmember Scott Murphy after publishing our story last night.

“Transparency in our city government has always been a priority for me. I was disappointed last week to learn of the employee fraud in the fire department in 2019 and was concerned that the City Council had not previously been notified. The Revised Code of Washington requires the City administration to notify the Washington State Auditors office when there is fraud or a potential loss of public funds. While the city administration did notify the auditors office of the fraud in 2019, they did not disclose the information to the City Council. I am glad to hear that as a result of my asking these difficult questions at the council meeting this week, that the administration has made a commitment to also notify the city council in the future if another fraud or possible loss of public funds was to occur again. I am also glad to see that the City attorney and administration have begun to answer some of the other questions raised by me at the Council meeting. While I recognize that some of my colleagues seemed uncomfortable with the very open and direct questions I was asking, I continue to believe that an important role of the City Council is to provide a check and balance and to ask difficult questions of the Mayor and staff when they arise. I am hopeful, that moving forward, our City Council will place a high value on transparency and providing answers to our community when there are tough issues that arise. I will continue to work hard to ensure that this happens.”

Scott Murphy, Everett City Council – 2930 Wetmore Ave., Suite 9A Everett, WA 98201 – Phone: (425) 257.8703

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