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Arruda arrest stuns judge

October 14, 2011

WOONSOCKET – Municipal Court Judge Lloyd Gariepy worked alongside court aide Rachel T. Arruda for 24 years but he says he had no idea she was embezzling large sums of money generated from traffic fines, as state police allege.
Gariepy said he had nothing to do with processing fines – that was Arruda’s job – and she gave every outward indication of doing it an honest fashion.
“The judge has no management control, he has judicial control,” said Gariepy. “There was no outward indication that she was betraying the public trust that was placed in her for the handling of money.”
Arruda, 62, of Woonsocket, is free on personal recognizance pending a hearing in District Court on Dec. 14 after being arraigned on one count of felony embezzlement at the Lincoln state police barracks Wednesday. State police say she pilfered $389,000 from the Municipal Court between 2004 and 2010.
But Mayor Leo T. Fontaine bluntly asserted Thursday that he believes the sum to be just a fraction of what Arruda may have embezzled. While Arruda had been the municipal court aide since the inception of the court in 1987 before she retired in August 2010, the city’s auditors focused on financial documents generated by the court only as far back as seven years because it’s impossible to find bank records any older to corroborate local ledgers.
“Our auditors identified suspicious transactions going back further but from a legal standpoint we have to be able to prove that and bank records are an important part of that,” Fontaine said.
State Police Detective Commander James O. Demers said Arruda surrendered without a lawyer at the Lincoln barracks Wednesday before she was booked.
Demers acknowledged that the Arruda probe focused on only the last seven years because of the limitation on bank records, but he cast doubt on the notion that significantly more money may have been involved.
“We think that’s it,” Demers said of the $389,000 figure. “We believe this really started from 2004 on. We were able to focus on a few things prior to that and we’re unable to find any evidence of money unaccounted for before that time.”
No one really knows what Arruda allegedly did with the loot, but friends and co-workers say she liked pampering herself with nice cars, clothing, jewelry and salon visits. She lived with her legally adopted granddaughter in a tastefully appointed North End home and drove a “Dale Earnhardt” signature series Chevy.
It was the second case of City Hall embezzlement in as many months – the result, officials say, of tighter accounting controls that have arrived during Mayor Fontaine’s first term. Michelle Giguere, a seven-year treasury clerk, was arrested for felony embezzlement Sept. 9 amid accusations of manipulating the books to hide the theft of $7,000 since 2009.
Arruda had been employed by the city for over 30 years, starting off as a grant-funded temp in 1978 and working her way up through the finance department to become municipal court aide in 1987, the year the General Assembly granted Woonsocket permission to run one of its own local courthouses. The court, which convenes in City Hall one day a week, collects about 90 percent of its revenue from traffic fines, often in the form of cash transactions over which the aide has sole custody, officials say.
The judge and the court aide, a position currently held by Lori Berthiaume, are the court’s only employees.
But Arruda was more than just a well-known worker at City Hall – she was a popular face in the community owing her to her longstanding association with Autumnfest, the annual civic bash featuring food, carnival rides, and a big parade to cap it all. Arruda was the parade chairman this year, with her role featured prominently in the media and the Autumnfest Web site.
Since her arrest, some city officials have been fielding questions about whether the Autumnfest Steering Committee’s treasury has been compromised.
“We didn’t look at Autumnfest,” Demers said. “We did not get that complaint.”
Finance Director Thomas M. Bruce says the city asked the state police to launch the City Hall corruption probe when “suspicious activity” was detected on the municipal court’s books, after Arruda retired. Arruda’s duties involved reporting the court’s receipts to two different computer systems – one for City Hall operations, and a second that handled only the combined operations of the police department and municipal court.
Often, said Bruce, the balances provided for City Hall fell short of those logged on the court’s computer.
Bruce, who is credited with uncovering the theft, said officials were concerned that Arruda was underreporting the court’s receipts on city records, so they called in the accounting firm Braver PC of Providence to perform a forensic audit. The charges lodged against Arruda were based almost entirely on the company’s findings, state police and city officials say.
Demers said it’s possible there may be larger municipal embezzlements on record, but he couldn’t immediately recall one. By any yardstick, he said, “This is a pretty big number.”
Indeed, if the allegations against Arruda are true, it means she was stealing, on average, an amount equivalent to roughly twice her annual salary for six to seven years. Arruda was earning about $31,500 a year when she retired.
Though Gariepy believes it would be unfair to do so, he realizes it’s possible he may face some political blowback from the Arruda case when a newly seated City Council considers his reappointment for another two-year term later this year. A full-time lawyer, Gariepy readily acknowledges the scandal may cost him his $7,600 a year judgeship, a position he calls “a public service.”
“It’s a sad day,” he said. “There’s nothing about it for anybody to be happy about.”

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