Auditor General probes Schuylkill County Clerk of Courts Office

Auditor General Eugene DePasquale issued a release last week saying he wants a thorough examination of the financial records and operations of the Schuylkill County Clerk of Courts office after the former clerk was indicted on mail and wire fraud charges.

DePasquale said he directed his team to move up the timeline for the audit after a state police and FBI investigation led to fraud charges being filed in July against former Schuylkill County Clerk of Courts Steven M. Lukach Jr.

“Taxpayers deserve to know that their hard-earned money is being handled properly. My team will be looking at how any money owed to the state was handled by this office,” DePasquale said. “My auditors are working closely and will share our results with law enforcement, in case any of our findings may relate to the ongoing criminal case.”

According to a criminal complaint, the former clerk allegedly took money from different court accounts to pay personal credit cards, car payments and cellphone bills.

The last audit of state funds handled by the Schuylkill County Clerk of Courts office was released in February 2015. That audit found issues with the handling of public funds and a lack of internal controls that created an environment conducive to fraud and misappropriation.

Auditors were unable to complete a standard examination after finding records in disarray. The findings in 2015 included: inadequate segregation of duties, inadequate internal controls over bank accounts, inadequate controls over manual receipts and inadequate internal controls over receipts.

“In my previous audit, I called for comprehensive changes to protect public funds. My new audit will determine the extent to which the office followed my recommendations from 2015,” he said.

The clerk of court’s office handled more than $2.8 million in receipts for various fines, court costs and fees, according to the 2015 audit which covered 2009 to 2012. The new audit will cover 2013 to 2017.

“My upcoming audit will recommend ways to better protect public funds and hold people accountable,” DePasquale said.

In July, Lukach Jr. was indicted by a federal grand jury on 20 counts of mail and wire fraud and manufacturing records to obstruct an investigation.

Federal agents arrested Lukach, 68, of Nesquehoning, on July 23, according to the U.S. Attorney’s Office, Middle District of Pennsylvania.

Lukach entered a plea of not guilty in federal court in Scranton, and was released on pretrial supervision.

If he is found guilty, Lukach faces up to 20 years in prison.

Lukach retired on April 17, 2014, from the office he had held for 27 years.

Federal authorities began investigating Lukach after irregularities were found in his 2012 records by Controller Christy D. Joy’s office in late March 2014.

Lukach is suspected of using money from the automation fund, an account fed by money from court proceedings that is to be used solely for technology upgrades in the clerk’s office, to make his own car payments and to buy lunches, personal tax software, electronics and other items for himself.

The indictment alleges that in 2013-14, county auditors with the controller’s office began an in-depth examination of the clerk’s office and discovered misappropriation of funds by Lukach.

An FBI investigation ensued and while the audit was going on, Lukach allegedly interfered with the audit by stealing mail that was sent to banks, forged records and sent the fake bank records to the controller’s office, in an effort to conceal his thefts, said United States Attorney David J. Freed.

The conclusions of a state audit, released in February 2015, revealed a lack of checks and balances in the office, “inadequate internal controls in the Clerk of Courts office that were conducive to fraud,” Joy said at the time.

“These internal control issues … create an environment that is conducive to fraud and misappropriation,” the report stated.

The findings included that all receipts were not deposited on the same day they were collected; several deposits contained multiple days’ collections; bank deposit slips were not always validated by the bank; one deposit exceeded the total office collections by $20, and the segregation of duties in the Clerk of Courts office was inadequate.

The indictment also alleges that Lukach stole funds from various court accounts for his own personal purposes, such as paying a family member’s credit card bill, paying for meals, making car payments and other personal expenses.

The case was investigated by the Pennsylvania State Police and the FBI, and is being prosecuted by Assistant U.S. Attorney Michael Consiglio.