ATHOL - A forensic audit of Athol's financial records concluded in December that both Sally Hansen and allegedly her husband, Charles Hansen, knowingly stole money from the city.

Sally Hansen has been charged and pleaded guilty to 15 counts of wire fraud, while her husband Charles has not been charged - yet.

"Our charge (against Sally) isn't a theft charge," explained Assistant U.S. Attorney Traci Whelan, adding the charge against Sally was for devising a scheme to use wire transfers in the commission of her crime.

Whelan said the federal government got involved in the case because Hansen was a public employee in a position of public trust.

While Charles Hansen could technically be charged as well, the federal charges would require investigators to prove that he had knowledge of or participated in the scheme to embezzle the money.

Kootenai County Prosecutor Barry McHugh said the investigation is still active and charges against Charles Hansen are still possible.

"To the extent that new information comes to light, there could charges filed against him," he said, adding he had not seen the audit until Tuesday.

"I will follow up with the auditors and law enforcement to look at the information behind their findings," McHugh said, adding if proper evidence is found to show Charles Hansen did participate in the crime, his office will prosecute.

A forensic audit was conducted last fall by Anastasi, Moore and Martin CPAs, which details how Sally and allegedly Charles Hansen were able to steal $417,879 from the city and cover their tracks in the process.

The auditors examined 2,423 financial transactions that Sally Hansen made during the five-year period she served as city clerk.

"We noted a total of 275 checks made payable to Sally Hansen and processed by Wells Fargo Bank," the audit states. "Of these checks, there were no corresponding payroll records for 142 of the checks, totaling $222,739."

They also found one cash withdrawal of $865 that was not recorded in the city's books.

"Our search also revealed 94 checks made payable to Charles Hansen, husband of Sally Hansen," the audit said. "The 94 checks issued to Charles Hansen totaled $194,275."

The audit also said the auditors relied on customer identification procedures that are routinely used by banks to verify the identity of the person cashing those checks.

"As such, we can establish that Charles Hansen did remit those checks for payment," the audit states, adding: "We could find no indication that Charles Hansen was ever employed by the City of Athol."

The auditors also said Mayor Darla Kuhman's signature had been forged.

"We examined all checks issued during the scope of our examination," the auditors wrote. "Signatures by Mayor Darla Kuhman for the 236 unauthorized checks issued to Sally and Charles Hansen displayed the same discrepancies versus those written in the normal course of business."

After examining the city's accounting system, the auditors could not find any of the 236 checks recorded in the system. Instead they discovered a "falsified payee scheme to conceal a portion of the checks issued."

From May 2011 to January 2013, 90 checks issued to the Hansens, totaling $158,232, were recorded as various expenses and payables to 32 existing vendors.

"This scheme hid the unauthorized disbursements and greatly overstated expenses," the audit said. "Expenses to 'Repairs and Maintenance' and 'Administrative Office Expenses' were most often used. Asphalt vendors and Staples were used most frequently as payees to cover the unauthorized checks."

The remaining 146 checks and the cash disbursement were completely omitted from the accounting system, the auditors said.

"These checks were not recorded anywhere in the system, creating a false cash balance," the audit said.

Auditors said they found 30 instances where the city council and mayor were given falsified financial reports that indicated the city's cash balances were more than what was actually in the bank.

"On the reports, ID numbers are used, rather than check numbers," the audit said. "This allowed Sally Hansen to omit the unauthorized checks issued to herself and Charles Hansen."

Auditors said all of the money was stolen from the city's general checking account, and it was occasionally overdrawn because of the unauthorized payments.

"To maintain a positive cash balance in the general account, we discovered that transfers were made from the city's other bank accounts," according to the audit.

The auditors concluded their investigation with a number of findings.

"We conclude that Sally Hansen committed embezzlement in the truest sense of the word," they said. "We also conclude that Charles Hansen received cash belonging to the city and was aware that he was receiving monies belonging to the City of Athol."

The auditors recommended forwarding the audit results to the Kootenai County Sheriff's Office to pursue criminal charges against Sally and Charles Hansen.

Sally Hansen pleaded guilty to all 15 counts of wire fraud last week. She is scheduled to be sentenced on May 5 at 1:30 p.m. Hansen could face anywhere between 33 to 41 months in prison without parole and will be required to pay restitution for the $417,879 she embezzled from the city.

She will also pay the court a $1,500 special assessment fee.