Deborah Knapp leaves the courtroom without comment after pleading guilty to four counts of first-degree theft.
By Sharyn L. Decker
Lewis County Sirens news reporter
CHEHALIS – Deborah Sue Knapp said very little today when she admitted stealing thousands of dollars from the Lewis County Historical Museum while she worked as its executive director.
Today’s hearing in a Chehalis courtroom was brief.
Knapp, 53, pleaded guilty pursuant to a deal in which she will pay restitution in exchange for a recommendation to the judge she serve 12 months in jail, which she could do on work release if she’s able to find a job.
What her actual sentence will be, will be up to a judge when Knapp returns to Lewis County Superior Court on the afternoon of May 3.
How much she stole and the amount she could be ordered to repay has not yet been agreed upon by attorneys on the two sides.
Knapp was arrested at the end of 2011 after revelations the non-profit’s endowment fund of more than $460,000 was gone and its other accounts were in the red by about $14,000
The four officers on the 13-member museum board were replaced and the new board president said at the time the books hadn’t been in balance since 2008. Knapp was hired as the director in July 2006.
Knapp’s lawyer said it’s hard to assess exactly how much his client is responsible for, but that it is much less than originally alleged.
“She did not steal all of it, or even most of it,” Chehalis attorney Ken Johnson said.
Lewis County Senior Deputy Prosecutor Will Halstead said he believes he could prove it was at least $137,000.
Part of the plea agreement required that Knapp pay $20,000 of the restitution by today, and that was done. The money was a loan from extended family of Knapp’s and was deposited with the county clerk’s office, Johnson said.
Johnson said his client moved to Clark County shortly after the case was filed. She and her husband are living in a mobile home and scraping by, he said.
The hope is she can find employment before her sentencing date, so she can serve her time with the Clark County Jail on work release, according to Johnson.
“She’s doing the best she can, she’s also had health problems,” he said.
Halstead said this is one of those cases in which the defendant needs to go to jail, but his office also wants to help the museum.
“If she goes to prison for a year or two, she’s not going to be making restitution payments,” Halstead said. “And after she got out, she would be paying back $25 a month.”
Prosecutors allege Knapp basically doubled her salary for a period of time, obtaining “draws” that weren’t subsequently accounted for, writing her own payroll draw checks without anyone else’s knowledge and many times listing them in the check register as voided.
Her salary was $43,000 per year. Her responsibilities included overseeing the day-to-day operations of the museum in downtown Chehalis and supervising three part time employees and the volunteers.
She used the museum’s debit card to pay personal expenses, including her power bill on Fineview Road for at least two years, according to prosecutors.
Among the odd debit card purchases were items for her daughter’s wedding and flowers for former prosecutor Michael Golden’s campaign, according to Halstead.
“It’s heart breaking, the breach of trust,” said Julie Zander, a museum board member for one year after the scandal came to light.
Zander, former museum board member Edna Fund and its new board president Peter Lahmann were among almost a dozen spectators who sat behind the prosecutor in the Chehalis courtroom this afternoon.
In the benches on the defense side, were just a small handful of women.
The modified charges state that Knapp wrongfully obtained more than $5,000 in each of four years, ending with 2011.
Judge Nelson Hunt read aloud Knapp’s brief statement admitting to four counts of first-degree theft and asked for her plea on each count.
Four times, Knapp simply answered “guilty”.
Although authorities had said they would continue delving into financial records going back to when Knapp was hired, that wasn’t done, leaving any misappropriations during 2006 and 2007 unknown, according to Halstead.
Lahmann, the apprenticeship coordinator for the Laborers Union, took time off work to be in court. He started in the position of museum board president in January.
“What can I say, it is what it is,” Lahmann said. “There’s no joy here, it’s just the legal system in action.
“Hopefully we can get the museum back on track. We have a good board, good volunteers, a good director. It’s a small organization.”
The museum, which resides in a former rail station on Northwest Front Way, remains open, although it did close its doors for a period in late 2011.
Lahmann said he thinks there are 10 or 12 individuals on the board now, but they are in the midst of rewriting the bylaws.
Marie Panesko, whose husband John Panesko sat as board president during the year following Knapp’s arrest, pointed out the current museum board has both new and old members.
“So there’s continuity, but a lot of new blood,” she said. “That’s important for the community to know.”
While prosecutors initially charged Knapp with 10 counts of first-degree theft and amended down the charges to four counts, the dollar loss they attribute to the former museum chief hasn’t changed.
Halstead still indicates roughly $45,000 in theft through her paychecks and $92,000 from personal use of the organization’s debit card.
His approximations of where the endowment fund went are $137,000 from Knapp’s theft, $150,000 spent to benefit the museum and $100,000 in losses to the account from a downturn in the market and penalties assessed for early withdrawals. The rest is unaccounted for, he said.
The endowment was a fund meant to be left untouched, so it could generate interest which could be spent. In January 2008, it contained $460,516. By Oct. 15, 2010, it had a zero balance.
Defense attorney Johnson said he pored through the records and could only find one withdrawal from the endowment that was properly board-authorized; it was a paving project, he said.
Johnson noted that sometimes with large thefts of money, one sees spending on big trips, new cars and such.
“That’s not what we have here,” he said, indicating Knapp wasn’t all that good with her own finances.
The two attorneys hope to come to a consensus about the amount Knapp should repay the museum by her sentencing date. If they don’t, and it goes to a hearing, the judge has the option of tripling whatever amount is determined, according to Halstead.
What’s problematic, is figuring out the debit card expenditures, according to Johnson, since there were multiple people with access to the museum debit cards.
“It’s hard to believe an organization like this would use debit cards,” he said. “How do you keep track of how much you’re spending?”
Johnson called the museum obviously poorly run and negligent in not following its own rules.
The bylaws said a committee should be organized to manage the endowment, he said. They had no committee, he said. It was supposed to take the authorization of two board members to withdraw funds from it, he said.
Johnson said his client took a certain amount of money that didn’t belong to her, and that’s what the criminal case is about, but the broader lesson is they were all operating with someone else’s money.
“They have a fiduciary responsibility to manage that money,” he said.
They didn’t have a budget, according to Johnson.
“Here’s an organization that had a paid bookkeeper and a paid (board) treasurer,” he said. “And they couldn’t seem to keep track of it.”
Johnson’s assessment is much of the endowment was used to make ends meet for the museum, which was living beyond its means.
Newly elected Lewis County Commissioner Fund is one person who was a museum board member from shortly after Knapp was hired and until this past December.
How the board was in the dark about museum finances is easier to see now, according to Fund.
The board treasurer did give reports to the board, Fund said.
“This is one of the curiosities, and I hate to dredge this up,” she said. “But the treasurer is like 80 or 78 years old.
“She would say, ‘what’s the balance Debbie? And (Debbie) would give it to her.”
Board approval was required for withdrawals from the endowment, but the requests were not made, according to Fund.
“Debbie controlled the information that went to the (board) treasurer, who was also the (museum) bookkeeper,” Fund said. “In hindsight, it was probably not a good idea to have that be the same person.”
Board meetings were held quarterly, and sometimes cancelled by the board officers, she said.
“When this all started, I thought, lessons learned,” Fund said.
Among those lessons, according to Fund, is she should have resigned from the board when she wasn’t able to be an active participant.
Fund said she and board member Dennis Dawes, began to get suspicious, and tried to get the board to agree to obtain the bank records, an idea the majority of the board rejected in October 2011.
Another lesson, according to Fund.
“Do not allow your friendships to affect checks and balances,” she said. “This is probably one of the biggest travesties to many of us; Debbie was our friend.”
Nobody but Knapp has been implicated in the losses, criminally, according to Halstead.
“I haven’t been presented with anything that would indicate anyone else was involved with the missing money, or the taking of funds,” Halstead said.
For background, read:
• “Prosecutor: Former museum director gave herself thousands of dollars in fraudulent payroll draws” from Friday December 30, 2011, here
• “Police asked to investigate finances of Lewis County Historical Museum” from Wednesday November 16 2011, here