State investigators said Thursday that the former top administrator at Saegertown’s Quality Living Center “exploited deficient internal controls” to steal at least $850,000 from the facility’s patients.

And, state Auditor General Jack Wagner said in a news release that day, the management of QLC should continue working to overhaul the facility’s operating procedures to prevent such fraud from happening there again.

Robert Engelman, QLC’s current chief administrator, said Thursday that the facility began implementing the department’s recommendations immediately following the investigation into embezzlement of funds by Deborah A. McKinley between 1999 and 2006. The department’s top recommendation was that the QLC board should distribute the facility’s financial responsibilities among different staff members to establish a stronger system of checks and balances.

Charges against McKinley, 44, formerly of Conneaut Lake, were filed following a joint investigation by Pennsylvania State Police, Crawford County District Attorney’s Office and state Department of Auditor General. She was sentenced in April to serve 10 to 25 years in a state prison and to pay a total of $852,000 in restitution, fines and costs for the thefts.

Investigators previously reported finding $879,905 missing from the center’s allowance account between 1999 and 2006. That account contained residents’ Social Security, Supplemental Security Income and other checks, according to Crawford County District Attorney Francis Schultz.

Investigators also found falsely endorsed and cashed checks, and determined $72,020 in cash payments received from residents from 2003 through 2005 were never deposited in center residents’ accounts, Schultz has said.

QLC, operated by a nonprofit board and licensed by the state Department of Public Welfare, is located at the old county home and houses around 90 residents — most with SSI or Social Security as their only source of income. Crawford County has a contract with QLC to provide annual subsidies to it because the facility took the place of the old county home when it closed.

Investigators have said there’s no evidence of anyone else having been involved in the embezzlement.

“I have nothing but compliments for the auditor general’s office for how complete their investigation was,” said Engelman. “We’ve acknowledged (past procedural flaws) and have done a plan of correction. ... I’m confident the things (officials) have asked for are in place.”

Wagner said he commends QLC’s board and staff for assuring his recommendations are being implemented. He added his office will be following up “at the appropriate time” to make sure the implementations have occurred, and recommended county officials do similar reviews when considering future funding requests from the facility.

“It is my hope that the board will learn from this unfortunate set of circumstances and become more proactive in detecting the warning signs of fraud so that the residents of this facility will enjoy all the benefits they deserve,” said Wagner.



RECOMMENDATIONS FOR TIGHTENING UP FINANCIAL SECURITY

Pennsylvania Auditor General Jack Wagner has advised the management of Quality Living Center in Saegertown to continue tightening its financial controls to prevent fraud from happening there again.

Deborah A. McKinley, the facility’s former top administrator, was found guilty earlier this year of stealing at least $850,000 from the facility’s patients between 1999 and 2006. She was charged following a joint investigation by Pennsylvania State Police, Crawford County District Attorney’s Office and state Department of Auditor General.

Along with dividing financial responsibilities among staff to establish a stronger system of checks and balances, Wagner also recommended QLC establish:

–– Written procedures for processing cash receipts, accounts receivable, banking activities and security of funds;

–– Procedures for an individual who is independent of day-to-day accounting to receive and review the unopened bank statements prior to reconciliation;

–– Monthly reconciliations between the facility’s personal allowance account and the summation of its resident financial records;

–– Procedures prohibiting the pre-signing of blank checks;

–– A review of deposits into the facility’s corporate account to ensure that residents’ funds aren’t commingled with corporate funds; and

–– Unannounced reviews of the accounting records by the facility’s board.

Robert Engelman, QLC’s current chief administrator, said the facility began implementing the department’s recommendations immediately following the investigation of McKinley.

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