Klamath Fall Herald and News

Aug. 1

Perhaps we should look at the bright side of the Oregon Department of Revenues $2.1 million bit of sloppiness. And its this: Oregon taxpayers are only out about $150,000 along with the cost of a state-provided attorney, and when Krystle Marie Reyes gets out of prison in 5 1/2 years, shes supposed to pay that back. Her chances of actually doing it? Wed guess about zero.

Meanwhile, the Department of Revenue, which is the state agency that oversees collection of income and other kinds of taxes, has disciplined four of its personnel, including demoting one of them, and taken formal disciplinary action against the other three. Its also changed its procedures.

In a press release from the state agency last month, Director Jim Bucholz said, Several internal controls werent working as they should. Were making immediate changes to our processes so we can be confident this wont happen again.

The fact is, though, that if the procedures that were in force at the time had been properly followed the $150,000-plus hit on public funds wouldnt have taken place. The issue is far more a criticism of the culture within the state agency than how good its internal rules and regulations are.

In addition to a review of the immediate problem, along with other large tax refunds during the past three years, the agency and the Department of Justice said the review doesnt show any indication employees were in collusion with Reyes.

An account of the theft in The Oregonian said that in January, Reyes filed a $3.5 million tax return that claimed the $2.1 million refund. Because of its size, a state computer flagged it. So far, so good the system worked up until then.

The return was set aside for a fraud review, which supposedly requires three department employees. But then, according to an affidavit filed in Reyes court case, none of the responsible department employees actually looked at the file before a $2.1 million Visa debit card was issued to Reyes.

The law caught up with Reyes after she reported the debit card lost or stolen and had already spent $150,000. In other words, the state is lucky or it would have been out $2.1 million instead of just $150,000.

All of the details havent been made public for fear of giving other lawbreakers hints on how to break into the system.

This doesnt appear to have been a high-tech hacking attack, though. Nor is this one of those computer-goes-wild stories in which a computer puts way too many zeros on the wrong side of the decimal point.

Even if this was more sophisticated than presented here, the solution was pretty low-tech open the folders and look at whats inside. That never happened.

We should be thankful, we suppose, the loss wasnt any worse, instead of only being enough to pay for, say, two or three school teachers for a local school district, or a few more Oregon State police officers to patrol Eastern Oregons remote stretches.

But it is pretty distressing how easy this looks like it was and how easily it could have been caught before there was any loss. And wasnt.