South Dakota's Audit Flagged the Gap Behind a $1.78M Theft

South Dakota's statewide Single Audit Report for fiscal year 2023⧉ -- the Department of Legislative Audit's annual review of every federal dollar the state spends -- tested 60 Temporary Assistance for Needy Families (TANF) emergency-assistance claims processed through the Department of Social Services' Family and Child Information System, known as FACIS.▸ Auditors found 53 of the 60 had no record on the system that more than one person had authorized or paid the claim. FACIS's own manual requires supervisor approval before payment; the audit found the system let the same person who entered a claim also approve it, with no further review, and kept no documentation of who had approved what. It is not a small program: FACIS processed about $7.2 million in TANF emergency assistance claims that year alone. The same underlying gap -- one person, both ends of the transaction -- is the gap prosecutors say a Department of Social Services supervisor named Lonna Carroll used to steal $1.78 million from accounts set up for children in state custody, over roughly 13 years.

The Department of Legislative Audit was not a bystander to that theft.▸ According to the Attorney General's own sentencing release⧉, Carroll's case was investigated jointly by the state Division of Criminal Investigation and the Department of Legislative Audit -- the same office that wrote Finding No. 2023-004. The audit report itself, a statewide compliance document, does not name her case; what it does show is that the office responsible for catching exactly this kind of gap had already documented it, in writing, for the same fiscal year her scheme was running.

Carroll was a Child Protection Services supervisor, which meant she could request emergency funding to assist a child in DSS custody and, in her supervisory capacity, approve that same request.▸ According to Sioux Falls Live's report on her sentencing⧉, after a disbursement cleared additional sign-offs from other DSS supervisors, the state auditor, and sometimes the state treasurer, Carroll would intercept it, deposit the money into one bank account, immediately withdraw the same amount in cash, and redeposit that cash into a different account. Prosecutors identified more than 570 transactions built on that pattern, running from 2010 to 2023.

The audit's finding came with the Department's own written response: DSS says it separated claim-initiation from claim-approval duties in FACIS, restricting approval authority to CPS staff who don't also enter claims, and updated the system in fiscal year 2024 to log which staff member approved each claim and when -- information FACIS had never recorded before.▸ According to DRGNews's report on the case⧉, Attorney General Jackley said the discrepancy first came to DSS's attention in October 2023, within a week of that new record-keeping system going live; the matter was referred to the Division of Criminal Investigation four months later, in February 2024. Thirteen years of undetected transactions surfaced within days of the state closing the exact hole its own auditors had just described.

A Hughes County jury convicted Carroll in April 2025 on two felony counts of Aggravated Grand Theft.▸ Attorney General Marty Jackley's office announced⧉ her sentencing on July 1, 2025: 10 years with 5 suspended on the first count, 3 years with 1 suspended on the second, served consecutively -- 13 years total, 7 active, 6 suspended -- plus $1.78 million in restitution and court costs. "This jury conviction and sentence confirm that public trust is not for sale," Jackley said. "Stealing from federal and state programs is a serious crime that undermines the integrity of state government employees." Months earlier, discussing the case, Jackley had already told reporters what the restitution order mostly represents on paper: "It's highly unlikely any of the nearly $2-million will be recovered."