Reference no: EM131257190

Bunting Assignment

Asymmetric Information

Lakewood cop accused of embezzling $150K meant for slain officers' families By Lark Turner, Seattle Times February 8, 2012

Skeeter Timothy Manos is charged in a federal complaint with 10 counts of wire fraud, a felony, for allegedly stealing from the fund intended for the families of the four officers killed in a coffeehouse shootout in 2009.

The complaint alleges the 34-year-old Manos used some of the money to take his wife to Las Vegas, where he withdrew $1,000 from ATMs and spent about $1,200 on rooms at the Bellagio hotel and tickets to a Cirque du Soleil performance.He spent more than $7,000 at Home Depot and later dropped about $1,700 on snowboarding and other outdoor gear at REI, the complaint alleges.Other purchases included a high-definition video camera, computer, stainless-steel refrigerator and a high-definition TV.Between Feb. 12, 2010, and Feb. 20, 2011, he also withdrew about $50,000 from ATMs, according to the complaint.

Manos, of DuPont, was arrested Wednesday at Lakewood City Hall. He made an initial appearance Wednesday in U.S. District Court in Tacoma and was released on his own recognizance.Manos, who according to the state retirement database made $93,347 a year, was also assigned a court-appointed defense attorney.

"It's disgusting and it makes me sick to my stomach," Bret Farrar, the chief of police for the Lakewood Police Department, said of the charges against Manos. "I've been putting criminals in jail a long time. This is just another criminal that we're gonna throw in jail and that we're gonna prosecute to the fullest extent of the law."

Manos, who joined the Lakewood department in September 2004, is treasurer of the Lakewood Police Independent Guild (LPIG), although his name was removed Wednesday from the LPIG website. He has been placed on unpaid administrative leave, according to the department.

On Nov. 29, 2009, Maurice Clemmons fatally shot Sgt. Mark Renninger and officers Ronald Owens, Tina Griswold and Gregory Richards as they sat in a coffee shop in Parkland. In an exchange of gunfire, Clemmons was wounded by Richards.Clemmons was killed two days later by a Seattle police officer.

Immediately after the shootings, the Lakewood Officers Charity set up a fund to collect donations for the families of the slain officers. As donations poured in, some were sent to LPIG, where Manos was treasurer, according to Sgt. John Unfred, the treasurer of the Lakewood Officers Charity.

At some point, Manos allegedly started skimming off the top of the donations and depositing them into a private account.A total of $3.2 million was collected on behalf of the dead officers, though about $300,000 of the funds have been placed in an account for families of future fallen officers.

"I just cannot imagine anything lower than stealing money from fallen officers' children," said Unfred, who knew three of the four slain officers."I go between hurt and anger. It takes me back to 2009, and we've kind of moved on from all that, but it brings up all of those emotions again," he said.

For more than a year, the federal complaint alleges, Manos funneled some of the donations into a bank account he set up in the name of LPIG, though apparently no one at the police-officers union or the Lakewood Officers Charity knew it existed.

Kevin Bigler, an Oregon police officer who owns Timberwolf Outdoor Products, imprinted knives for other police officers to buy in memory of the Lakewood Four, intending for the profits to go to the officers' charity. He sent the first knife he made, along with $5,000, to LPIG.But according to the complaint, both the knife and the money wound up in Manos' pocket.

"Being a police officer myself, I was shocked and very disappointed that someone would take this for their own gain," Bigler told The Seattle Times. "It was upsetting."

The alleged fraud was discovered by Jeremy Vahle, an officer who was concerned about how LPIG was handling its finances and discovered the secret bank account, according to the complaint.The head of LPIG, Brian Wurts, has been placed on paid administrative leave pending the results of the FBI investigation, to ensure he had no knowledge of what Manos was allegedly doing.Wurts did not respond to phone calls requesting a comment.

"People gave money in tight times, and they certainly didn't give it to somebody to blow in Vegas," Unfred said. "It was meant to help these children."

Manos can contest his firing. He could not be reached for comment.Manos wascharged last week with 10 counts of wire fraud, a federal felony carrying a maximum fine of $250,000 and a penalty of up to 20 years in prison.

Assignment:

Consider aspects of asymmetric information in this case

1. How does the embezzlement reflect the effects of adverse selection? What actions should have been untaken to reduce these effects?

2. How does the embezzlement reflect the effects of moral hazard? What actions should have been untaken to reduce these effects?

3. How does the embezzlement reflect principal-agent problems? What actions should have been untaken to reduce these problems?