Green Bay, Wis. (Aug. 21, 2003) -- A Wisconsin accountant charged with malpractice testified this week that his accusers' security lapses -- not poor financial oversight -- allowed a $370,000 embezzlement scheme to go undetected.

According to a story in Gambling Magazine, Bill Ritchay, a lead accountant with the firm Shinners, Hucovski and Co., said that the Sokaogan Chippewa Community started having problems tracking casino revenues when the tribe's internal controller quit in 1995.

He blamed the resulting vacancy for creating a breakdown in internal controls and the eventual theft by a group of corrupt leaders who once held high posts within the northern Wisconsin Indian tribe.

Ritchay said that during a 1996 audit the firm, which is now part of Appleton-based Schenck, he noticed that a project was running nearly $400,000 over budget and immediately notified tribal leaders and sought a status report on the project.

Claiming the accounting firm didn't thoroughly investigate those discrepancies and report them to state regulators, the tribe filed a lawsuit against the Green Bay firm in 2001, alleging $1.8 million in damages.

The tribe's attorney, Brian Smigelski, said the $370,000 embezzlement scheme cost the tribe an additional $1.43 million in losses when government regulators forced the casino to shut down in 1997 and 1998.

Smigelski said the financial documents that led FBI agents to charge former tribal planner DuWayne Derickson with embezzlement should have raised red flags for the accountants.

Ritchay said if he had contacted state regulators as Smigelski proposed, the firm could have been sued for breaching its duty of client confidentiality. In addition, Ritchay said he could have faced professional sanctions for wrongly disclosing client information.

-- WebCPA staff

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