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Carrier covers half of embezzlement losses

May 22, 2012

WOONSOCKET – A Chicago-based insurance carrier has covered more than half of the $389,000 the city had claimed as a financial loss due to embezzlement.
Axis Insurance Co. recently paid the city $200,000, the maximum its policy allows for claims of employee theft, said Finance Director Thomas M. Bruce III.
The company paid the city after a weeks-long review of financial documents at City Hall and the results of a forensic audit by the accounting firm, Braver PC. The audit is also the basis for the criminal case against former Municipal Court Aide Rachel Arruda, the woman police say is responsible for the theft.
A 32-year veteran of City Hall, Arruda, 62, was arrested in October and now faces felony charges of embezzling and fraudulent conversion in Superior Court. She’s free on personal recognizance and is due back in court for a pre-trial conference on July 17, according to the judiciary’s web site.
She was one of two city employees arrested for embezzlement within the span of a month last fall. On Sept. 9, Michelle Giguere, a treasury clerk on the job for seven years, was arrested for pilfering some $7,000 over a period of roughly two years. Giguere is charged with fraud, embezzlement, computer tampering and other charges. She’s due back in Superior Court for a pre-trial hearing on June 11.
On the advice of its agent, Keough Kirby Associates of Woonsocket, Bruce said the city did not file a claim for the losses allegedly caused by Giguere. He said the city was advised that its premium might have become prohibitively expensive had it pursued multiple claims of employee theft simultaneously.
“Our strategy was to go after only the big one,” said Bruce. “The effect of a multiple claim could have affected our risk level substantially.”
Though Arruda was employed as municipal court aide since 1987, the criminal charges represent only losses traced to her activities for seven years leading up to her retirement in August 2010. City officials and police say that during that period, Arruda exploited weaknesses in the city’s accounting controls to drain money from the pool of funds the court collected in the form of traffic fines.
The municipal court’s computer system is now linked to that which tracks other municipal accounting functions. Lori Berthiaume, a former public safety dispatcher, has since been hired as the municipal court clerk. Also, Bruce said the clerk is no longer allowed to take in or tally up collections alone. Jessica Desrochers, a longtime purchasing agent at City Hall, sits in on the weekly court sessions and assists in recording the collections after the hearings are over.
Arruda began working at City Hall in February 1978 as a temporary worker under a now-defunct federal grant program. She became a permanent employee in July 1981, when she was promoted to accounting clerk, then bookkeeper and municipal court aide. In addition to working at City Hall, Arruda had long worked as a volunteer organizer for Autumnfest, but her ties to the steering committee were severed shortly after she was arrested on Oct. 12.

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