A longtime former employee of Okaloosa County’s Water and Sewer Department is charged with grand theft and aggravated white collar crime in connection with a scheme to exchange water taps for cash. Investigators say the defendant deprived the county of more than $223,000 over a nine year period and in return for her deception, the employee is believed to have received cash kickbacks from at least one builder.
57 year old Kathy Nelson of Mary Esther was arrested today following a five month investigation by the Okaloosa County Sheriff’s Office. The charges also include communications fraud and unlawful compensation for official behavior.
Billing irregularities in customer accounts overseen by Nelson came to light at the Water and Sewer Department in April, and a preliminary in-house audit revealed she had not collected at least $57,000 in water and sewer Capacity Expansion Charges, commonly referred to as “taps”, between 2013 and 2017.
The audit revealed Nelson entered fictitious information, invalid receipts, and altered documents in the customer service database to make it appear the proper charges were paid by three construction companies when in fact they were not.
Nelson was fired on May 4th and the information was turned over to the OCSO for a criminal investigation.
A forensic audit by the Okaloosa County Clerk of Court, Inspector General, turned up billing irregularities in 83 accounts linked mostly to the same three contractors.
One witness says the day Nelson was suspended from work she phoned her and asked her to retrieve an envelope full of cash from the defendant’s office and bring it to her home. The witness refused and the cash was never located. Another witness claimed to be present on an occasion where cash was exchanged. A third witness reported she overheard the defendant discussing how she perpetuated the scheme. Investigators determined of the 83 billing irregularities revealed in the forensic audit, at least 56 showed probable cause for criminal charges, whereby Nelson did not collect proper tap fees or cost of construction fee, depriving Okaloosa County of more than $116,000 between August 2011 and April 2017.
In a separate scheme, investigators say Nelson transferred site specific taps to non-contiguous properties in violation of Okaloosa County ordinances, mostly benefitting the same three builders to the tune of more than $107,000 between April 2008 and February 2017.
The investigation is continuing.
Navarre Newspaper reminds our readers that Kathy Nelson is presumed innoncent until found guilty in a court of law.
