Pamela Dellis' job was to get refunds to taxpayers. Instead she was charged with creating nearly $2 million in bogus refunds that she split with family.

Last update: March 7, 2011 - 4:34 PM

http://www.startribune.com/local/117544238.html

A former auditor with the Minnesota Department of Revenue pleaded guilty Monday to fraud and money laundering. Her motive: "I do have a gambling addiction," Pamela Marie Dellis told the judge.

Dellis' job was to get refunds to taxpayers. Instead she was charged with creating nearly $2 million in bogus refunds that she split with her sister and niece.

Dellis, 58, of Lindstrom, Minn., her sister, Nancy T. Sondrall, 55, of Brooklyn Center, and her niece, Laurie R. Sondrall, 28, of Minneapolis, all pleaded guilty for their roles in the scheme.

Dellis' job as an auditor was, in part, to process legitimate tax overpayments. But she allegedly created more than 200 false refunds -- in the form of checks and electronic funds transfers -- worth more than $1.9 million that she then had sent to her sister and niece. They, in turn, would take the money out as cash or cashiers' checks before splitting the proceeds with Dellis.

State records show that Dellis was first hired by the Minnesota Department of Revenue in September 1981. The alleged scheme took place from before Jan. 12, 2005, through Sept. 17, 2010, according to the charges.

Gov. Mark Dayton issued a statement after Dellis was charged requesting that the legislative auditor conduct a detailed examination of the department's internal controls "to ensure that this kind of criminal fraud against the state of Minnesota cannot be committed again.

''I am mindful of the warnings the legislative auditor has issued previously that the management of certain state agencies lacks the necessary oversight and controls to prevent the misuse of public money."

According to the charges, Dellis reportedly concocted false entries and records at the Department of Revenue to create the impression that fictitious taxpayers were owed refunds. She then allegedly used variations of her sister's and niece's names to create refund checks and transfers -- all to make the scheme more difficult to detect.

U.S. District Judge Joan Ericksen will sentence Dellis, her sister and her niece at a later date. Dellis faces up to 20 years in prison for her crime. Nancy and Laurie Sondrall face up to 30 months in prison, according to sentencing guildelines.