Former state employee accused of stealing $1.8 million from Child Protection Services

The South Dakota Department of Social Services in Pierre. (John Hult/South Dakota Searchlight)

An Iowa woman who formerly worked for the South Dakota Department of Social Services is accused of stealing an estimated $1.8 million from the department’s Division of Child Protection Services over the course of 13 years.

Lonna Carroll, 68, of Algona, Iowa, is charged with two felony counts of aggravated grand theft. She was arrested Wednesday in Iowa and is awaiting extradition to South Dakota. Her bond has been set at $50,000.

South Dakota Attorney General Marty Jackley announced the charges on Thursday at a press conference in Sioux Falls. He said the investigation began in February of this year “when the Department of Social Services Child Protection saw an irregularity in some of the financial transactions.” 

“The Governor’s Office and the governor specifically cooperated and informed us immediately,” Jackley said. 

He said the stolen money was intended for foster care and other child protection service-related matters.

Allegations explained

According to Jackley, Carroll made requests for financial assistance on behalf of children and was also “positioning” herself to give supervisory approval of the requests. After a request went through further approvals in the Department of Social Services and the state Auditor’s Office, Carroll “intercepted” the check, Jackley said. She allegedly deposited the checks in an account for the child’s benefit, but then withdrew the money and put it in her personal account.

Court documents filed so far in the case reveal no further details.

Video of Attorney General Marty Jackley’s press conference announcing the charges.

Jackley said the theft occurred from 2010 to 2023. State employee records show Carroll made $21.09 an hour when she retired in March 2023. 

A reporter at the press conference asked about Carroll’s use of the stolen money. Jackley said investigators in theft cases typically examine motives, such as potential gambling addictions or other habits. 

“And what I can say at this time is my understanding is there will not be a strong likelihood of recovery for restitution,” Jackley said.

The state Division of Criminal Investigation and Department of Legislative Audit led the investigation.

An initial court appearance for Carroll has not yet been scheduled in Hughes County court in Pierre. The maximum sentence for the first count is 25 years in prison and a $50,000 fine. The maximum sentence for the second count is 15 years in prison and a $30,000 fine.

Jackley declined to answer questions about how the allegations reflect on state government.

“The question of whether or not it’s good government or not and proper oversight, that’s not criminal,” he said. “Those are questions for the persons in charge of that agency and the South Dakota Legislature.” 

Department official, legislators react

The Department of Social Services said employees discovered suspicious financial activity, reported it, and staff have cooperated 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,” Department Secretary Matt Althoff said in an emailed statement. “As this is an ongoing criminal case, DSS cannot comment further.”

State Sen. David Wheeler, R-Huron, a member of the Legislature’s Government Operations and Audit Committee, said the matter deserves attention from lawmakers.

“A theft of public funds of this magnitude raises serious questions about the internal controls that were in place,” Wheeler told South Dakota Searchlight. “It will be important for the Legislature to review what happened and ensure that appropriate protections are in place.”

Another member of the committee, Sen. Tim Reed, R-Brookings, pledged to ask fellow members to “move forward with an investigation during our July 31st meeting.”

“GOAC should investigate how this happened, learn what changes have been implemented to avoid reoccurrence, and review internal audits procedures,” Reed said.

EDITOR’S NOTE: This story was updated at 2:50 p.m. Central time with additional information from a press conference and at 6:50 p.m. Central time with the addition of comments from state Sen. David Wheeler and state Sen. Tim Reed.

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