POULSBO — Former Municipal Court Administrator Deborah Dally was arrested this week after admitting to embezzling money from the city since 1996.

Dally was fired from her position on Dec. 27 after a State Auditor’s Office report confirmed that she had likely been siphoning money from the city’s coffers. The city filed a report with the Poulsbo Police Department, which turned the investigation over to the Kitsap County Sheriff’s Department.

Dally was arrested Feb. 4 after admitting to Sheriff’s detectives that she had indeed taken the money.

The auditor’s office has not yet come up with an exact amount that was taken, but Finance Director Donna Bjorkman said it is most likely a “six figure” number.

Bjorkman told the Poulsbo Finance Administration Committee this week that detectives had said Dally admitted that when she was hired with the city in 1996, she was going through a divorce and needed money. Dally began taking money from payments made for citations and hid the action by changing clients’ records to show they had chosen community service over paying their fines. After the divorce, she simply continued the action until she was caught in late 2002.

The procedural weakness in cash receipting that likely allowed the embezzlement to continue for so many years unnoticed has been rectified.

Bjorkman said Dally is expected to plead guilty and therefore a court case is unlikely.

The city’s investigation into the matter is over, however, there is still plenty of work to be done.

Casual laborers have been added to the municipal court staff so that a court clerk’s schedule could be adjusted to deal primarily with finding all of the falsified documents.

“They’re doing great, they really are,” Bjorkman commented of the municipal court staff. “They’ve been through an awful lot of upheaval, especially since it was someone they all trusted.”

Bjorkman and Judge Jeff Tolman are also meeting monthly to assess the situation.

Once it is determined how much money went missing, the city’s bonding company will reimburse it for the lost funds. The city will then have to reimburse all of the other government agencies that receive percentages of such fines.

“That’s one of the biggest problems. It’s not only city money,” Bjorkman explained.