OTIS, N.M. (KRQE) – State Auditor Tim Keller says he has never seen anything of this magnitude in a New Mexico rural utility embezzlement by an individual person.

About $850,000 in cash was drawn at casinos across the southwest with a credit card issued to office manager Lori Whitaker of the Otis Mutual Domestic Water Consumers and Sewage Works Association.

“So, she allegedly took a whole lot of money from the community and unfortunately, it’s going to be very hard to get that money back,” he said. “It’s a staggering amount, no matter how you look at it.”

Formerly the Otis Water Co-op until 2006, the non-profit association serves about 4,000 residents and businesses in rural Eddy County, about five miles southeast of Carlsbad.

The association has several wells and large water tanks, as well as water towers scattered across central Eddy County.

“So, they do deal with a fair amount of cash each year,” Keller said. “But she was also stealing from essentially reserves and funds that were going to be used for future capital investments, improving water, building new facilities and that kind of thing, and that’s where she was able to take even more money from.”

Keller’s office reports that it turned over its documentation of Whitaker’s credit card transactions to the Fifth Judicial District Attorney in Carlsbad, Eddy County Sheriff and the FBI after completing the annual state audit of the association.

The FBI was notified because federal funds may have been involved in some of the fraudulent transactions.

Keller pointed to Whitaker’s cash receipts from several casinos, including Casino Apache near Ruidoso, along with several in the Albuquerque area and in Oklahoma.

Keller said cash withdrawals of up to $10,000 at a time were shown in Whitaker’s receipts.

“And it seems like she was trying to sort of you know, dig herself out, by gambling more,” Keller said. “So, if you look at it, it just kept going up and up and up to the tune of thousands per day.”

Two sisters who are Otis natives were first told about the case as they unloaded fresh potted flowers for the gardens at their mother’s family home, one of the original hookups in the old co-op.

“It makes you angry,” Arlene Veitch said. “I remember all the work that went into the old co-op.”

The sisters say before the co-op, when they were kids, water had to be hauled to their home in this parched corner of New Mexico. It was a great day when the community banded together to form the co-op.

Her sister Jeanne Barnes says the enormous embezzlement case is “disappointing, infuriating.”

“They go and gamble? That’s ridiculous,” she said.

Keller says the cash leak stopped before the association funds were wiped out.

“So, they have enough money coming in and so forth where they think they’ll be OK to sort of get through this fiscal year,” he said. “But absolutely, all those maintenance and repairs that were slated — you know those are just gonna have to wait and we’ll see if they have to raise rates or not to recoup those costs.”

Whitaker resigned as the audit began.

She reportedly first told her son, Cutter Rogers, the general manager of the association, about her actions as she resigned. Rogers is not suspected by state authorities of any wrongdoing.

Keller said this is the second embezzlement case in small New Mexico utilities this year. He recommends all rural utilities make sure that a second person has to sign off on credit card expenses each month so they can be reviewed early in the process.

“So, ideally this would have been caught after one month, that’s what should have happened,” Keller said.