Cash handling costs Pinal fair boss his job

The Pinal County fairgrounds director was fired this week for a pattern of loose cash handling at various high-dollar events, county officials say.

Terry Haifley, the fair director, was terminated after the conclusion of a criminal investigation launched last winter determined funds from events at the fairgrounds were unaccounted for.

A second fairgrounds employee, Karen Rash, was notified this week that the county intends to fire her after a report from the Arizona Department of Public Safety implicated her in stealing money from the office cash box. Rash is covered by county civil service rules and can protest her termination, according to Joe Pyritz, county spokesman.

Haifley is not a covered employee and has no right to challenge his firing, Pyritz said.

It will be up to the Pinal County Attorney's Office to determine whether to file criminal charges against Haifley or Rash.

The investigation into irregularities at the fairgrounds began after a whistle-blower's tip from inside the department, according to DPS records. The tip was forwarded to the sheriff's office, which asked DPS to conduct an independent investigation.

Haifley admitted to DPS investigators that he shuffled cash from one account to another to pay to staff fair events. The tactic circumvented the county's restrictions on how much he could pay outside personnel, according to his statement to investigators.

Rash, meanwhile, told DPS officers that she drained hundreds of dollars from petty cash accounts used to set up parties and other small events at the fairgrounds. She also said she falsified documents sent to the county's treasury to conceal the true amount of money collected at various fairground events.

"So sometimes you just did things that you knew - you knew they were wrong. But you did 'em anyway," Rash told DPS investigators, according to a transcript of her interview.

Rash also said she had taken out several loans from payday loan stores.

Haifley defended Rash's diversion of funds from the petty cash accounts once it was discovered. He explained to other fairground staff that Rash didn't steal. She used "bad judgment" and should pay the money back, he said in his interview with investigators.

Meanwhile, Haifley's staff said he asked for false receipts in order to low-ball the reported amount of money he was receiving from fairground vendors.

A regular vendor at the fairgrounds was reported to have paid Haifley $5,000 in cash, according to the DPS report. No receipt to the vendor was recorded at the time "because he didn't ask for one," Haifley told investigators.

Around February, Haifley asked his staff to write a receipt for $4,000. Several employees said they refused the request because they knew the amount was erroneous.

An activities assistant at the fairgrounds told investigators she knew what vendors paid Haifley and that he routinely underreported the amount of cash transactions.

In a March interview with investigators, Haifley said he needed a special account he controlled to hire people to run booths. The reason, he explained, was that he paid employees more than was allowable under the county's procurement rules.

Haifley said he pulled money from the $5,000 vendor account, and then reimbursed the account later with his own personal funds. Investigators said that many of the fairgrounds financial transactions were hard to track because of a general lack of paperwork.

Haifley said that his supervisor, Manny Gonzalez, an assistant county administrator, was aware that he shuffled money to make fairground functions operate smoothly. Haifley had been warned in 2001 by the county's finance director that the fairgrounds was not making timely deposits to the county treasury. Even after the complaint, the problem had not been corrected.

Investigators pointed out in their report that Haifley received a positive performance review from Gonzalez in 2007. Gonzalez did not return a phone call seeking comment.

Meanwhile, Rash told investigators the lack of financial controls made it simple for employees to walk away with money at the fairgrounds.

"There (are) no safeguards," she said. "It's too easy."

Pinal County was rocked by an embezzlement scandal in 2005 when then-County Manager Stan Griffis was found to have taken hundreds of thousands of dollars from county coffers. Weak accounting oversight by the county was cited as a problem in that investigation.