Missing state money now put at $10 million

Revenue chief testifies; boss of suspect on leave

Tillie Fong And Betsy Lehndorff, Rocky Mountain News

Published May 5, 2007 at midnight

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The amount Department of Revenue supervisor Michelle Cawthra allegedly stole from state coffers is now up to $10 million, double the initial estimate, lawmakers learned Friday.

Cawthra's supervisor, Janet Swaney, was placed on administrative leave Friday as the investigation continued into how such a large amount could have been diverted without anyone noticing.

The new dollar amount was revealed by Roxy Huber, executive director of the Department of Revenue, during testimony before the Joint Budget Committee on Friday.

"We have been questioned by a number of people: "How could this have happened?" Sen. Abel Tapia, D-Pueblo, committee chairman, said at the start of Friday's session. "What steps are in place so that this doesn't happen again?"

Cawthra, 30, a taxpayer services supervisor, and Andrew Holliday, 41, were arrested last Saturday for allegedly diverting $5.3 million from a tax fund set up to take in revenue from individuals and small businesses who pay estimated taxes on a quarterly basis.

Cawthra allegedly used the passwords of two Revenue employees who had left the department in January and March to approve 18 money transfers to accounts controlled by her boyfriend, Hysear Don Randell, 40, and his friend Holliday.

Holliday, owner of Clothing by Andre, an upscale North Cherry Creek clothing store, was released on Wednesday after investigators found no evidence of his involvement.

Cawthra was charged with 27 counts of racketeering, theft and forgery and remains in Denver County Jail on a $10 million bond. Denver County Judge Melvin Okamoto on Friday scheduled a May 23 preliminary hearing for Cawthra.

Randell and an Ohio attorney, Kevin T. Toohig, were arrested Tuesday. Randell was charged Friday with 24 counts of racketeering, conspiracy to commit computer crime, theft, forgery and conspiracy to embezzle public property. He, too, remains in Denver County Jail on $10 million bond.

As the case unfolded this week, a prosecutor from the Denver district attorney's office said the amount allegedly embezzled could reach $8 million, depending on how many of the transfers had cleared.

But Friday, Huber cited the $10 million figure when asked by Rep. Al White, R-Winter Park, about how much money was missing and what had been recovered. Huber referred questions about the recovered amount to the Denver district attorney's office.

"Some of it has been located. Some of it, we're tracking down," said Lynn Kimbrough, spokeswoman for the Denver district attorney's office.

Huber said the department was conducting its own investigation, with an internal auditor looking at other possible funds that may be affected. However, she declined to say what specific steps the department took since the missing money came to light.

When Rep. Jack Pommer, D-Boulder, asked why the computer system did not flag Cawthra's activities, Huber said that it was an outdated system.

"It collects data, not balances," she said, adding that it was difficult to make modifications to the computer system.

Swaney had been told in April about suspicious refunds to Holliday, which Cawthra authorized, according to court documents. However, she accepted Cawthra's explanation and did not pursue the matter further, the documents said.

Tapia said the Joint Budget Committee would want updates from Huber during its meetings this summer.

fongt@RockyMountainNews.com or 303-954-5489

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