PIERRE, S.D. (KELO) — State government auditors have documented how a now-former employee of the South Dakota Department of Social Services allegedly stole more than $900,000 from a program meant to help protect children.
The South Dakota Department of Legislative Audit says it found proof using state and bank records that Lonna Carroll, formerly of Pierre, added her name or initials to at least 85 deposits from the state Division of Child Protection Services into accounts of American State Bank and Trust in Pierre over several years and then withdrew the money the same day.
The special review by Legislative Audit was triggered after a meeting with top officials from the state Division of Criminal Investigation on February 27. DCI operates as an arm of the Attorney General’s office.
At the meeting, Legislative Audit received a document prepared by the state Department of Social Services about irregular activities discovered by DSS employees during a review of accounts after personnel changes. The Division of Child Protection Services is part of DSS.
After additional meetings on February 29 and March 5, Auditor General Russell Olson decided there were special reasons to conduct a special audit of certain DSS books and records.
On July 18, the auditor general delivered the report, summarizing results of the special review to the governor, the state social services secretary and the members of the Legislature’s Executive Board and the Legislature’s Government Operations and Audit Committee.
On that same day, state Attorney General Marty Jackley announced the indictment of Carroll on two criminal charges of aggravated grand theft.
Jackley told reporters that Carroll stole an estimated $1.8 million from the state Department of Social Services over a 13-year period while she worked in the Child Protection Services office. State government records show that Carroll’s hourly wage at the time of her retirement in 2023 was $21.09.
Regarding the special review, Auditor General Olson in his cover letter wrote that the report would be treated as a public record. He also provided this caveat: “Due to various records retention policies, very few records were available for the period of June 1, 2010, through March 6, 2017; and as a result, transactions made during this period were not included in the findings of this report.”
A Hughes County grand jury issued the indictment against Carroll three days earlier on July 15, based on closed-door testimony from one witness, state Division of Criminal Investigation supervisory special agent Matt Glenn. Afterward, an assistant attorney general requested that a warrant be issued for Carroll’s arrest.
The indictment didn’t contain details. One count alleged that Carroll stole more than $100,000 from Child Protection Services between January 1, 2010, and June 30, 2013, a Class 3 felony at the time, with a maximum sentence of 15 years in prison and a $30,000 fine.
Another count alleged that Carroll stole more than $500,000 from Child Protection Services between July 1, 2013, and March 24, 2023, a Class 2 felony that carries a maximum sentence of 25 years in prison and a $50,000 fine.
Carroll reportedly was living in Algona, Iowa, at the time of her arrest. She was extradited to South Dakota and remained in jail because she couldn’t post the $50,000 bond. She made her initial appearance in Hughes County circuit court via teleconference from jail on July 22. That day, the judge appointed attorney Timothy Whalen of Lake Andes as Carroll’s defense counsel. Her formal arraignment is now set for August 27.
Whalen has not responded to a voicemail message left at his office on Friday morning.
The Legislature’s Government Operations and Audit Committee met on July 31 and agreed it would devote one day, possibly two in October to assess how the situation happened and whether changes need to be made. Auditor General Olson and State Auditor Rich Sattgast were in the audience during the legislators’ 10-minute discussion.
In his July 18 report, the auditor general said the special review was intended to accomplish three objectives:
“Determine if the transactions, that a former DSS employee was involved with, to American Bank and Trust were proper and to determine if any other DSS employees appeared to be involved with these transactions.
“Determine if there were any other irregular transactions that could be identified and, if so, determine the validity of such transactions.
“For transactions that were determined to be potentially improper, fully document the transaction cycle with all available supporting records.”
The report said Legislative Audit staff made three findings.
For the period from March 7, 2017, through February 2019, the report said that state and bank records showed “35 checks being printed by the State of South Dakota’s Office of the State Auditor. In all 35 cases the canceled checks were endorsed to DSS Child Protection Services (Child Protection Services, Child Protection or CPS) and contained an additional endorsement of the initials ‘lc’. In 34 cases there were bank statements provided that showed the funds being deposited into various local bank accounts in DSS’s name at American Bank and Trust and then on the same day those funds were withdrawn.”
For the period from March of 2019 through December of 2022, state and bank records showed “46 checks being printed by the State of South Dakota’s Office of the State Auditor. In all 46 cases the canceled checks were endorsed to DSS Child Protection Services (Child Protection Services, Child Protection or CPS). For 45 of the canceled checks, an additional endorsement had been made in the form of former DSS employee Lonna Carroll’s name or initials. These checks were deposited into various local bank accounts in DSS’s name at American Bank and Trust, and then on the same day the funds associated with those deposits were withdrawn in the form of cash.”
The third finding dealt with closure of accounts at the bank. “In July of 2021, five local bank accounts in the name of SD Child Protection Services at American Bank and Trust were closed. The name of a former DSS employee, Lonna Carroll, was noted on the bank debit slips. The total amount withdrawn, which was in the form of cash withdrawals, was $2,940.72.”
Altogether, Legislative Audit found irregular transactions totaling $939,849.50 linked to Carroll.
She remained in the Hughes County Jail as of Friday morning.
The full Legislative Audit report can be found here.
