Blandford announces criminal investigation against former tax collector

The case is now an active criminal investigation with the Attorney General’s office

Blandford FinCom Photo Courtesy: The Westfield News

BLANDFORD, Mass. (The Westfield News) – The town’s Finance Committee gave a special presentation to members of the community at Tuesday’s Board of Selectman meeting on the findings of a review of the town’s finances that began in 2011.

Josephine Sarnelli
Westfield resident and forensic accountant Josephine Sarnelli is helping the town of Blandford “to dig out from under an avalanche” of financial mismanagement, according to town officials. (Photo by Amy Porter)

The review, conducted primarily by an outside consultant, found that former tax collector and Blandford resident LeeAnn Thompson had misappropriated an estimated $276,000 in residents’ tax payments. It also found that Thompson had personal real estate taxes, excise taxes and water bills paid for by other people’s taxes. The town is pursuing both civil and criminal charges against Thompson in an active investigation by the Attorney General’s office.

Blandford Finance Committee chair Linda Smith said at the start of the meeting that the findings were nine years in the making, and were the result of a lack of oversight, and the attitude “that our officers will do their job.” She also said town officials missed warnings in financial reviews that pointed to increasingly alarming discrepancies during the years of 2003 to 2011, when Thompson served as the elected tax collector and had her own bank account.

The investigation started after Thompson’s departure in May of 2011, and the town’s new tax collector, June Massee, requested a turnover audit. Thompson has since moved away. Town officials hired Westfield resident Josephine Sarnelli, a CPA specializing in forensic accounting, to do the audit.

Sarnelli, who picked up the presentation from Smith, told the residents at the meeting, “Your problem is not unique.” She also said she has invested a great deal of time in the town since 2011, when she immediately started to notice certain irregularities in the financial statements.

“I had an uncomfortable feeling,” Sarnelli said. Among her early findings was a significant shortfall in the bank account versus the collections recorded on the computer, no bank reconciliations to be found, and no bank statements for the years of 2009-2010. She said there were also long delays between processing payments and depositing checks, which forced the treasurer to resort to short-term borrowing.

At the time, Sarnelli recommended that the town close the tax collector bank account, and provide a clear separation of duties between the collector and treasurer, the latter who she said should have been “doing the money keeping.”

Blandford also underwent a financial management review by the Department of Revenue (DOR) in August of 2011 that made twenty specific recommendations, and admonished the town for poor financial practices and a lack of oversight. Among the recommendations were to convert the collector and treasurer from elected to appointed positions, and to hire a town administrator. At the meeting on Tuesday, Adam Dolby, chairman of the Board of Selectman, announced that the town has hired Angeline Ellison of Sturbridge to serve as town administrator.

Following a series of turnovers in treasurers, Sarnelli was called back in 2015 to assist in the FY2015 closing for the town. She said she has done this work for other towns many times. While reconciling the cash balances to the bank, she found that the general ledger had a lot more cash listed than was in the bank. She also found no listing of taxpayers that was reconciled with the general ledger.

She also found no cash deposits, which contradicted a survey mailed to residents asking whether they made cash payments, among other questions. The survey found there were a significant number of people that paid cash with no receipts. Some paid multiple times with no receipts. The survey also found that residents had cancelled checks for payment of taxes which were never credited to them as paid.

New Blandford town administrator Angeline Ellison
At Tuesday’s meeting, Blandford introduced Angeline Ellison as the new town administrator. (Photo by Amy Porter)

Her conclusion was that Thompson, while Tax Collector, engaged in a fraud called “lapping,” in which current receipts cover prior shortfalls, and cash payments from taxpayers are diverted. Sarnelli called it an “ancient technique of stealing.”

The case is now an active criminal investigation with the Attorney General’s office, which has all of the evidence from the town, including missing bank statements, copies of deposits and cancelled checks which have been matched with payments. The town has also filed a civil lawsuit against LeeAnne Thompson and her husband Kevin Thompson for $40,000 for outstanding taxes and water bills that had been paid for from misapplied funds.

“After this evening, we hope you have a better understanding of what we are doing,” Smith said, adding the town is “not out of the woods yet.” She also told the residents that it is not the town officials job alone, saying the accountability falls on the residents of the town as well for not paying attention.

Board of Selectman chairman Adam Dolby added that Sarnelli has proven to be an invaluable resource to Blandford. “I can’t say enough about her. She is helping us dig out from under an avalanche,” he said.

Copyright 2016 The Westfield News

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