Dally pleads not guilty to theft charges

POULSBO — Fired Poulsbo Municipal Court Clerk Deborah Dally appeared in court last week and entered a not guilty plea to charges that she embezzled money from city coffers.

Dally, 44, a Silverdale resident, was fired from her position in the Poulsbo Municipal Court on Dec. 27 after a State Auditor’s office report confirmed that she had been stealing money paid to the Poulsbo Municipal Court. It is believed that the thefts occurred between the beginning of Dally’s employment with the city in 1996 and continued until she was found out in late 2002.

In January, the City of Poulsbo filed a report with the Poulsbo Police Department, which turned the investigation over to the Kitsap County Sheriff’s Department. Dally was arrested Feb. 4 after admitting the theft to Sheriff’s detectives. The exact amount of stolen money is not yet known, although it is believed to be in the six-figures.

Dally appeared in Kitsap County Superior Court Feb. 20 facing 10 counts of first-degree theft. A source in the Kitsap County Prosecutor’s Office said Dally plead not guilty to all 10 counts and the proceedings were continued to March 12.

Poulsbo Finance Director Donna Bjorkman had previously said she believed Dally would plead guilty to the charges since she had already admitted to her crimes. Following Dally’s not guilty pleas, Bjorkman said she still doesn’t believe the city will have to be involved in the tentative May 14 court date.

“My understanding is that she plead not guilty to give herself more time to negotiate with the prosecutor’s office,” Bjorkman commented. “I still don’t think it will go to trial. She has been so cooperative throughout the process. She didn’t deny it.”

Were the matter to end up in court, however, the impact to the city would be in the form of staff time to determine who in the city should testify.

It is believed that Dally’s ability to steal from Poulsbo’s coffers came out of a shortfall in court receipting that has now been rectified. According to a report from the State Auditor’s Office, Dally would take money paid for fines and falsify the individual’s records to show they had chosen community service instead. Bjorkman said the Finance Department now has a staff member in place who oversees each day’s receipts from the court, but who has no access to court records.

Further, any checks received from Allied One, the Municipal Court’s collection agency, have to be initialed by Bjorkman as well. Charging papers against Dally indicate more than $280,000 in checks from Allied One are unaccounted for and are believed to have been stolen by Dally.

The Poulsbo Finance Department has a long-standing tradition of excellence in its field, winning numerous awards during Dally’s tenure with Poulsbo. Bjorkman said the status of these awards remains the same despite the discovery of Dally’s actions.

“It’s one of those things that we all beat ourselves up over what if I’d done this or that, but really there’s no one to blame but (Dally),” Bjorkman said, noting that Poulsbo received clean audits every year during the time the thefts were taking place. “It’s just an instance that she put herself into to be able to steal and to cover for herself and we’ve plugged that hole now.”

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