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Theft of Cayuga Youth Trust Fund Leads to Investigation, Audit

New York State Inspector General Catherine Leahy Scott released her results in regards to theft of funds from the Cayuga Nation youth trusts.
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New York State Inspector General Catherine Leahy Scott released the results of the Inspector General’s (IG) office in regards to the theft of funds from the Cayuga Nation of Indians youth trusts on March 1. In January 2015, at the Erie County Court Kim Thomas-Muffaletto pled guilty to grand larceny, a Class D felony, for stealing $19,993.63 while in her position of Director at the Native American Service Bureau for the New York State office of Children and Family Services (OCFS) as a result of the investigation.

Over the course of seven years, Thomas-Muffaletto systematically stole funds from trusts designated for Cayuga Nation minors – 14 accounts from April 2007 until January 2014.

The Cayuga Nation receives these funds from the obligations of the Treaties of 1789 and 1785. There are also interest payments the OCFS pay into these accounts which are paid out in a per capita basis.In February of 2013, the Cayuga Nation-operated trust took control of the accounts from OCFS. Shortly after Cayuga Nation took control the IG’s office received an anonymous complaint about transactions on the accounts and Thomas-Muffaletto being the sole administrator. An investigation was launched from the Inspector General’s Office on the OCFS. It found that the additional funds provided by the Cayuga Nation were never reported. The funds taken from the Cayuga youth’s trust accounts were used by Thomas-Muffaletto to pay for personal expenses, such as car payments, insurance and a family member’s traffic fines as well as their college tuition. There were zero internal controls over these accounts per the report. The OCFS allowed these trust funds to be overseen by one OCFS employee. No other trust fund accounts had this lack of oversight.

“This corrupt State employee was able to steal nearly $20,000 meant for children’s futures because of lax oversight at the agency charged with safeguarding those funds,��� Scott said in a news release.

The IG’s office recommended that the OCFS implement internal controls with a two signature approval process on funds. That the office where Thomas-Muffaletto used to work was audited from her entire time as an employee at Native American Services starting in 1991. Inspector General Catherine Leahy Scott also recommends that the OCFS conduct an audit and review of the Native American Service Bureau along with all related accounts. This review is to be completed and handed over to the IG’s office by June 1, 2017.

Thomas-Muffaletto was ordered to pay restitution and received five years of probation. She resigned following her arrest.

RELATED: Former NY State Official Admits to Stealing From Cayuga Indians

The Cayuga Nation when reached by phone declined to comment on this story.