Loss Believed Higher in Caltrans Case : Direct Evidence of Theft Lacking Against Three Employees

Internal investigators with the state Department of Transportation expect that losses from the agency’s cashier’s office in San Diego are greater than the $13,600 discovered missing in an audit completed in May.

But Caltrans investigators don’t know how much those losses will total, the investigators still have not uncovered any direct evidence implicating two fired cashiers and a demoted department manager in theft of the money, sources said.

The investigation has been slowed, a department spokesman said, because all three employees have filed appeals with the state Personnel Board, and Caltrans auditors have been busy preparing for those hearings.

No date has been set for any of the personnel hearings.

Meanwhile, the state Board of Control on Wednesday is scheduled to consider a $23-million claim filed by one of the fired cashiers, Linda Silverthorn, who charged that state officials defamed her and fired her unjustly.

The three-member panel, composed of state Controller Kenneth Cory and two gubernatorial appointees, almost always rejects such claims, clearing the way for a full-scale lawsuit.

Silverthorn’s claim, filed by attorneys C. Logan McKechnie and Leroy A. Davies of San Diego, charges that publicity over her dismissal from the giant state road-building agency has caused her emotional distress and made it virtually impossible for her to find employment.

“Caltrans’ unjustified statements put Silverthorn in a false light in the public eye,” the claim states. “The public now believes that Silverthorn embezzled money from Caltrans.”

The claim also charged that department officials ignored “shortfalls in security procedures” called to their attention by Silverthorn, then fired her “for these very same security shortfalls.”

Department officials declined direct comment regarding Silverthorn’s claim because of the pending hearing. But Caltrans spokesman Chuck Mastin said Friday that “obviously, we think we have a strong case.”

Department officials have acknowledged in the past that investigations that led to the discovery of missing funds yielded no direct evidence of theft.

But the officials said that Silverthorn and Karen Knight, both 34, were fired because they were responsible for keeping records and making bank deposits from which funds were missing. Former Deputy District Director Michael Northeimer, 45, was demoted to right-of-way agent for inadequately supervising the cashiers, state officials said.

Caltrans officials have turned over initial investigative reports to the San Diego County district attorney’s office. But district attorney officials have said their criminal investigation would essentially remain inactive until state officials arm them with additional information.

Denny Shields, Caltrans’ chief auditor, is reportedly planning to meet with district attorney officials Monday, hoping to persuade them to become more involved in the investigation.

Caltrans officials have made a number of procedural changes in the cashier’s office since the audit discovered that money was missing. Cashiers at the agency’s district office in Old Town San Diego handle cash from rents, fees and sales of books, pamphlets and road plans.

Officials estimate that the cash flow into three separate state accounts maintained in the office exceeds $250,000 a month.