UPDATED 4:15 p.m. and 5:22 p.m.
PIERRE, S.D. (KELO) — Lonna Carroll has been found guilty Thursday afternoon.
A Hughes County jury found Carroll guilty on two charges of aggravated grand theft and grand theft for stealing more than $1.7 million from the South Dakota Department of Social Services.
It took the jury a little more than an hour to reach its verdict. Sentencing will be at a later date.
Carroll could face big penalties — as much as 25 years in state prison and a $50,000 fine on the charge of aggravated grand theft for stealing more than $500,000, and as much as 15 years and a $30,000 fine on the grand theft charge for stealing more than $100,000.
Her court-appointed lawyer said after the verdict Thursday that he likely will appeal the convictions to the South Dakota Supreme Court.
Carroll has been in the Hughes County jail since her arrest in Iowa last July because she’s been unable to post $50,000 bond. Deputies drove her back to jail immediately after the verdict.
12:25 p.m.
The prosecution said Thursday morning it had no more witnesses to call in the criminal trial of a former South Dakota Department of Social Services employee accused of stealing more than $1.7 million over a 13-year span from the state Division of Child Protection Services.
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But Lonna Carroll, the defendant many had wanted to hear give her side of the story, didn’t take the witness stand, either. Instead, her defense attorney called a single witness, Logan Aukes, a CPA from Sioux Falls, who testified that practices in the child-protection division while Carroll worked there weren’t up to modern internal-control standards.
After the defense rested shortly before 10 a.m., the jury was allowed to leave the courthouse until closing arguments were to begin shortly after 1 p.m. After jurors had left, defense attorney Tim Whalen asked Circuit Judge Christina Klinger to acquit Carroll.
Judge Klinger denied the request, saying that the state’s prosecutors had presented sufficient evidence for a jury to reach a verdict. Whalen had argued that the charges should have been filed in federal court, because the alleged thefts involved federal funds, but the judge said the state provided evidence that the money was the state’s.
Whalen also claimed the state should have charged Carroll with embezzlement, rather than theft. Judge Klinger disagreed with that as well. “The state has discretion on charging. It chose theft,” she said.
Before Aukes could testify, the two sides disagreed on whether the defense could present evidence that the state knew about the alleged crimes before the first week of February 2024. Whalen has consistently objected throughout the trial that the seven-year statute of limitations had expired on many of the earliest alleged thefts.
“Now how am I going to prove it wasn’t discovered?” Whalen asked. “All you had to do was look at it (an internal records system) and see somebody’s taking money.”
Judge Klinger said there wasn’t any South Dakota case law yet on the seven-year discovery requirement regarding forgery or theft. That law, which was last amended by the Legislature in 1978, goes on to say, “The failure of discovery, if more than seven years has elapsed at the time of prosecution, shall in all cases be pleaded and proven in the same manner as other elements of the offense.”
Whalen wanted the judge to apply California case law, but the judge said she wasn’t going to use another state’s precedent for a South Dakota law that hadn’t yet been tested in its own state’s courts. The judge said Aukes wouldn’t be allowed to testify as gross negligence by child-protection staff regarding Carroll.
“The discovery issue is not what they (CPS) should have seen,” Judge Klinger said in announcing her decision. She added however that Aukes could talk about internal controls within CPS. “Discovery is discovery. The tools to discover it is allowable,” she said.
Aukes is manager of the Sioux Falls office for Iowa-based Williams & Co. He was hired by Carroll’s attorney to engage in a forensic accounting review that looked at three things: What happened, how did it happen, and could it have been prevented. He described internal controls as a system of checks and balances that prevent people from doing wrong things.
CPS had controls in place but they weren’t followed in regard to Carroll, Aukes said. She had authority to initiate requests for withdrawals from the bank accounts of children who were in the division’s care, as well as authority to approve those requests, and authority to approve payments of those requests.
Carroll allegedly used those permissions to steal $1,777,665.73 from 2010 until her retirement in March 2023. On more than 210 occasions, Carroll allegedly then immediately withdrew the money put into those accounts at American Bank and Trust in Pierre and spent the cash, mostly on clothes.
Aukes said segregation of duties among various people within an office is the first line of defense. Whoever initiates something cannot be the one to approve it, he said, and three or four people should be assigned throughout the process.
He also said it would have been better had two people, rather than one, should pick up the checks, and they shouldn’t be anyone who had made the request or approved it. In this case, he said the checks should have been made out to the child’s account, with the department as guardian, rather than to American Bank & Trust.
State Attorney General Marty Jackley cross-examined Aukes and aggressively questioned him. The first point Jackley hit was the amounts involved.
“You were hired to do accounting in this case, weren’t you?” he asked Aukes.
“We were never asked to ascertain the dollar amount or anything like that,” Aukes replied.
Aukes acknowledged he didn’t take issue with anything that the state Department of Legislative Audit found in its special review of Carroll’s transactions. Nor did Aukes take issue with the dollar amount. He also agreed that Carroll was allowed to initiate and approve requests without any secondary review.
The Family and Child Information System that CPS uses was put in place in about 1998, when Carroll already worked there. “Is it possible Lonna Carroll gave herself permission?” Jackley asked, raising that specific point for the first time during the trial.
“Based on what I know in the current day, anything is possible,” Aukes answered. He added, “Yes, it’s possible. Is it likely? I can’t go so far as to say.”
Jackley used the cross-examination of Aukes to drive home for the jury that the amounts Carroll was charged with stealing were legitimate. Jackley asked Aukes whether he came across anything in his review that suggested discovery occurred before February 2024. Aukes said he came across things that raised suspicion but then said, “There’s no evidence published in my review that would indicate that.”
Jackley questioned him about the child-protection division’s practices while using the questions to criticize Carroll’s multiple authorities to initiate, approve and okay payment. Aukes answered that the division’s implementation of the checks and balances fell flat.
“They weren’t followed by Lonna Carroll and weren’t followed by CPS staff, correct,” he told Jackley.
Jackley asked Aukes about Carroll “intercepting” checks. “That’s a huge problem, isn’t it?” Jackley said.
“Yes,” Aukes answered.
“I don’t have any other questions,” Jackley said.
