A former state Department of Social Services employee is facing charges after officials say she embezzled $1.8 million from the department.
Sixty-eight-year-old Lonna Carroll is charged with two felony counts of aggravated grand theft.
Attorney General Marty Jackley announced the indictment Thursday morning. He said authorities arrested Carroll at her home in Algona, Iowa. She is being extradited to South Dakota.
Jackley said she embezzled just under $1.8 million between 2010 and March of 2023, when she retired from the department. That averages out to nearly $140,000 dollars per year.
Carroll is accused of taking the money while an employee for the department’s Child Protection Services programs.
“The majority of this would have generally been related to foster care," Jackley said. "So there would be a child in foster care, they may need certain things - a bed for example. The way it would works is that DSS employee says okay, this child needs a bed, they begin the request process.”
Jackley said the scheme slipped through several layers of oversight.
“The defendant was the employee making the request for assistance for a particular child. Once the request was made, she had also reached the position of being that supervisory approval,” Jackley said. “So she was the requesting person and the supervisory approval.”
Once the money was approved, Carroll intercepted the check, placed the funds in a bank then transferred the money to her own account in a different bank.
Jackley said he could not go into detail as to why the embezzlement went on so long. SDPB reached out to DSS – as well as the auditor’s office, which issued the checks – asking how the problem carried on for years. Both said they couldn’t comment on this, citing the ongoing investigation.
The embezzlement went unnoticed until February of 2024 when DSS staff performed a system check as part of wider improvements being made within the department. The department notified Gov. Kristi Noem's office. Jackley said the governor immediately reported the case to his office.
The years-long scheme persisted through three gubernatorial administrations and multiple DSS cabinet secretaries.
Jackley said there is "not a strong chance" of recovering the stolen assets, though he would not comment on how Carroll allegedly used the funds.
Noem issued a statement thanking Jackley for investigating and prosecuting the matter, adding that her administration began implementing the new processes that eventually uncovered the problem back in 2022.
“We have already and are continuing to implement additional checks and balances to prevent this," Noems said. "My administration has also undertaken the implementation of modern financial systems that will provide further controls and audit functions to safeguard taxpayer funds.”
DSS Secretary Matt Althoff said staff "cooperated completely" with the investigation.
"DSS utilizes both internal and external audits, reconciliations, and internal controls to safeguard public funds – additional safeguards have already been implemented, and we continue working to identify further prevention and detection methods," Althoff said in a statement.
According to Jackley, the charges against Carroll are split into two separate counts due to a law change in 2013 that changed how these type of embezzlement cases are prosecuted. The first count, from January 2010 through June 30, 2013, is a class three felony punishable by up to 15 years in prison. The other, from July 2013 through March 2023, is a class two felony punishable by up to 25 years in prison.
Carroll's bond is set at $50,000.
