PIERRE, S.D. — A former state employee who oversaw vehicle titling in the Motor Vehicles Division for South Dakota has been accused of creating fake titles and then using those to obtain fraudulent loans from banks.
Sandra O’Day allegedly used her position to create titles for non-existent boats, ATVs and recreation vehicles in order to carry out the scheme. But O’Day is not around to answer the allegations: She died earlier this year, leading to family members discovering irregularities in their mother’s finances and prompting them to alert the Department of Revenue, which oversees motor vehicle division for the state.
The Division of Criminal Investigation (DCI) launched an investigation into the allegations earlier this year — the second such investigation into fraudulent conduct by a state employee in a position of trust just this year.
The Dakota Scout spent weeks investigating the allegations into O’Day, confirming them in interviews with former colleagues, relatives and sources familiar with the investigation. Besides defrauding lenders, she’s accused of misusing her elderly mother’s finances in a pattern of behavior that lasted nearly a decade.
Over the course of about 35 years of employment in South Dakota state government, O’Day rose to the rank of revenue supervisor, a position where she monitored the state’s vehicle title program and coordinated with county treasurers.
It was from this position, and through another illegal act, that O’Day gained unfettered access to her parents’ finances.
According to sources, O’Day obtained power of attorney over her elderly mom by forging two of her colleagues’ names on a form required to obtain that authority, in or around 2015. From there, O’Day created fake titles for nonexistent RVs, boats, and ATVs. That likely contributed to her more easily avoiding detection because recreational vehicles are not included in a national database of vehicle information numbers (VIN) the same way that daily drivers like cars and trucks are.
The bogus titles were then used to get bank loans. Under the scheme, she is estimated to have pocketed around $500,000, according to a source familiar with the investigation.
“Everyone was shocked,” a former employee speaking on the condition of anonymity told The Scout. It’s a sentiment that many who worked around O’Day — who went by Sandy for short — and who attended her retirement party shared.
A bout with cancer forced her to retire from state government in October 2023. She ultimately succumbed to the disease, dying in February.
Only after O’Day’s passing did the alleged misdeeds come to light. Members of her family told The Scout they began to sniff out issues when they noticed money missing from their mother’s bank account. That led them to determine that O’Day had stolen it, and also taken loans out against vehicles that her mother owned.
O’Day’s family says they reported their findings to the Department of Revenue, concerned there could be other problems. That’s when the state discovered the illegal titling scheme and reported it to DCI, according to O’Day’s family members.
Attorney General Marty Jackley – who alluded to a probe involving a state office during an interview with SDPB Tuesday – told The Scout in a statement there is an ongoing investigation, but declined to get into specifics about details or what state agencies were involved.
It’s unclear if the state will be required to pay out a settlement to impacted financial institutions. Many of the banks impacted by the activity have obtained counsel and are communicating with state authorities about the investigation and recuperation.
A lifelong Pierre resident, O’Day was survived by her two sons and husband, Michael. Michael died by suicide in May, sometime after being interviewed by DCI.
More oversight failure in state government
The incident within the Department of Revenue is the latest example of state government entities failing to implement checks and proper oversight within their offices, say some observers and lawmakers. Jackley is currently prosecuting former Department of Social Services employee Lonna Carroll, who faces felony charges for stealing nearly $1.8 million in government funds intended to support foster care children. Somehow, Jackley alleged in announcing the indictment, Carroll obtained the ability to request and approve her own funding vouchers.
⌊ South Dakota Lawmakers Want Answers In Department of Social Services Embezzlement Case⌋
Though O’Day is different from Carroll in that she didn’t steal money directly from the state, the conditions that led up to the purported crimes gave her the opportunity to establish the fake titling scheme.
One person with management experience at the Department of Revenue said that around the time before O’Day began creating fake titles, oversight processes had changed, potentially allowing her to avoid getting documents reviewed. Coupled with a period of extremely high turnover, the environment was ripe for O’Day to establish the scam.
The Department of Revenue declined to comment and denied an open records request for documents related to the incident, citing a statute that allows records that are the subject of a law enforcement investigation to be shielded from the public.
Beyond DCI, the incidents have been on state policymakers’ radar since at least June. It was then that the Board of Internal Controls — tasked with implementing and monitoring intra-department checks — heard from a Department of Revenue official about the “five control failures” within the Motor Vehicles Division.
“Our agency became aware of a situation in our Motor Vehicles Division,” a spokeswoman for the department told the committee, which is chaired by Bureau of Finance and Management (BFM) head Jim Terwilliger and includes State Auditor Rich Sattgast among its membership.
None of the committee’s seven members asked any questions about the failures during the meeting. BFM did not respond to questions from The Scout about whether members were briefed ahead of time on the Motor Vehicles Division’s failures.
For O’Day’s family, especially her mother, the betrayal and failure to stop it cut deep.
“The state obviously needs a better checks and balance,” a relative of O’Day told The Dakota Scout. “If they read documents they signed and notarized, this wouldn’t be happening.”
