Deborah Sue Knapp listens to her attorney during an appearance in Lewis County Superior Court.
This was updated at 8:59 p.m.
By Sharyn L. Decker
Lewis County Sirens news reporter
CHEHALIS – If the allegations turn out to be true, the former director of the Lewis County Historical Museum routinely issued herself payroll draws and used the museum debit card to pay personal expenses at places such as a furniture store, a grocery store and even to pay her home’s electric bill – totaling more than $137,000.
Chehalis police and the Lewis County prosecutor both say they expect to find more wrongdoing as two more years of financial records are reviewed.
Deborah Sue Knapp, 52, of Chehalis, was handcuffed and wearing green and white striped jail garb as she appeared in Lewis County Superior Court this afternoon.
Knapp is charged with 10 counts of first-degree theft.
She was arrested yesterday at the end of an investigation into revelations the museum’s endowment fund of more than $460,000 was drained in less than four years. Knapp was hired in July 2006.
“I’m shocked at how much,” museum member Susan Gonzales said after the hearing.
Gonzales said she was not entirely surprised when Knapp’s arrest was announced because everyone knew a police investigation was underway. But she finds it implausible one person could have made off with all that money alone, she said.
“I thought there would be more people (arrested),” Gonzales said. “How could the board not know this was happening?”
The Chehalis woman finds herself in the unique position, she said, of considering Knapp a friend, and also a tenant who has left her rent unpaid in recent months.
Last month, after museum members learned there was no money left in the endowment fund, four officers on the 13-member board were replaced, the accounts were closed and the museum was shut down temporarily. Police were asked to investigate.
The current criminal charges cover the years 2008 through this year. The investigation into 2007 and 2006 is still underway.
Knapp attempted to keep her face turned away from news cameras and spectators in the Chehalis courtroom as attorneys read the charges and discussed bail.
Lewis County Prosecutor Jonathan Meyer called them “egregious facts” and a violation of trust.
“We expect additional charges,” Meyer said.
Meyer asked for bail of $50,000 noting Knapp and her husband have moved in a motor home in Centralia, suggesting she is a flight risk.
Defense attorney Bob Schroeter pointed out his client is someone who has been an integral part of the community and requested an unsecured bond.
Judge Richard Brosey agreed Knapp could be released if her husband co-signed a $25,000 unsecured note.
Knapp’s husband, daughter and other family members were in the courtroom, but declined any comment.
According to charging documents, Knapp was paid a salary of $43,000 a year and did not receive overtime pay or so-called comp time.
Her responsibilities included overseeing the day-to-day operations of the museum in downtown Chehalis and supervising three part time employees and the volunteers.
Prosecutors allege Knapp routinely obtained “draws” from her employer but failed to account for them in subsequent paychecks. They go on to allege she wrote many of her own payroll draw checks without any one else’s knowledge, and many times listed them in the check register as voided although she cashed them.
For example, one of the theft counts alleges that in January and February 2008, she received more than $5,000 in payrolls draws in addition to her regular salary. It continued until Oct. 28, 2011, allegedly, adding up to more than $44,000.
“Knapp was questioned by law enforcement regarding the payroll draws she obtained and initially denied knowing she was overpaid, but later acknowledged she knew she had been overpaid,” prosecutors wrote.
Charging documents go on to describe it appears Knapp was using the museum debit card to pay personal expenses at Aaron’s Furniture, AGIA Insurance, Wal-Mart, Rite Aid, K-Mart, Walgreens, Safeway, Staples and Lewis County PUD.
Prosecutors wrote it appears she used the card to pay her power bill on Fineview Road for the previous two years.
The personal debit card amounts total $92,000 over the last four years, according to prosecutors. The total figure is still under investigation, according to charging documents.
No other individuals associated with the museum are suspected to be involved, according to police.
New museum board president John Panesko said on his talk radio show this morning nobody other than Knapp ever looked at the original records – the bank statements.
This afternoon Panesko said that was his understanding, and he could not explain how the board treasurer could have compiled her reports to the board without those records – even as she was also the paid part-time bookkeeper.
The dual-role is something the new board officers have eliminated, along with implementing several other layers of security relating to money, according to Panesko.
“No one who was involved in finances before is involved in it again,” he said. “Just for safety.”
He expected a decision to terminate Knapp would be made at next week’s board meeting, he said.
The museum has been operating with only volunteers, but Panesko said they expect next month to bring back the part-time curator and bring in a part-time director.
“We don’t now who that is yet,” he said.
The museum is open and its incoming revenue roughly matches its expenses now, according to Panesko.
“We have enough money to operate, now that we’ve plugged the leak,” he said.
Knapp’s opportunity to make her plea comes on Jan. 12.
Her income and assets are such she was assigned a court-appointed attorney, Ken Johnson.
Read “Police asked to investigate finances of Lewis County Historical Museum” from Wednesday November 16 2011 for background, here