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Jim Kenyon: Norwich officials silent on how much email scam cost taxpayers

  • Jim Kenyon. Copyright (c) Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Valley News Columnist
Published: 9/14/2019 10:04:35 PM
Modified: 9/14/2019 10:04:33 PM

Two weeks after launching an investigation into “unusual financial activity” involving electronic payouts from town coffers, Norwich officials still aren’t saying how much money is missing.

What’s the big secret?

It’s public money. Taxpayers have a right to know how much they’re potentially out.

It would also be handy to know how many extra speeding tickets Norwich police will have to write — if that’s humanly possible — to make up for the loss.

But Police Chief Jennifer Frank will only say that she’s conducting an ongoing investigation into a “sophisticated scam.” The FBI and U.S. Attorney’s Office are also working the case. “These things take time,” Frank told me.

Granted, it could be a difficult case to unravel. The town’s bookkeeping appears in a bit of disarray.

The Finance Department neglected to pay $614 in phone bills for July and August. After the phone company threatened to shut off service to Tracy Hall — Norwich’s main office building — the town had to get out its credit card to clear up the matter.

Frank argues that releasing basic information (i.e. how much money remains unaccounted for) could hamper the probe. The Selectboard and Town Manager Herb Durfee seem happy to play along.

It’s a good way to buy time and circumvent public scrutiny. Or, better yet, avoid the embarrassment of having to explain how taxpayers’ dollars ended up in the foreign bank account of someone claiming to be Nigerian royalty or some other internet scam.

In Norwich’s online banking blunder, there’s plenty of explaining to do.

Here’s what has come to light so far:

In late August, Cheryl Lindberg, Norwich’s elected treasurer, spotted irregularities involving money that had recently been transferred online out of the town’s general fund.

Just before Labor Day weekend, the Selectboard met twice behind closed doors. Frank was called in to investigate a possible cyber crime.

Last week, Frank said the investigation had “revealed that a town employee had fallen victim to a Business Email Compromise scheme (BEC), a sophisticated scam that targets both businesses and individuals who perform legitimate transfer-of-funds requests.”

In other words, a town employee was duped. Durfee won’t identify the employee involved, citing — you guessed it — the ongoing investigation.

But it doesn’t take Columbo to figure this one out. After the investigation began, Finance Director Donna Flies was placed on paid leave.

Flies, who lives in Williamstown, Vt., had only been on the job since July 1. She replaced Roberta Robinson, who retired after 17 years of overseeing payment of town bills and the collection of property taxes, among other duties.

How did someone who has a bachelor’s degree in accounting from American Intercontinental University — a for-profit online school based in Chicago — end up as Norwich’s finance director?

After Robinson announced her retirement plans early this year, Durfee posted the job opening online. His first attempt to fill the position, which had a starting annual salary of $64,165, didn’t attract as many top-notch candidates as hoped, Durfee said.

In the second go-round, the starting salary remained the same, but Durfee tweaked the job description. About 30 people submitted resumes, which I looked at last week.

Applicants ranged from an unemployed accountant with a degree from the National University of Bangladesh to an investment banker with a MBA from Dartmouth’s Tuck School of Business.

With the help of Robinson and Omer Trajman, chairman of the town’s finance committee, Durfee narrowed the list to four finalists. Durfee, who oversees the town’s day-to-day operations, selected Flies. On her resume, Flies indicated that she has more than 25 years of accounting experience, including with the city of Burlington.

To help Flies get acclimated, Robinson stayed on for a month. In fairness to Flies, she took over at one of the Finance Department’s busiest times of year. The first of two fiscal-year property tax installments is due in early August. On deadline day alone, the department takes in about $1 million.

After Robinson departed at the end of June, Flies was on her own. The town had gone months without an assistant finance director, which was partly due to budget constraints, Durfee told me. There was also the thought that Flies should have a say in who she’d be working with.

In retrospect, going without an assistant director for a lengthy stretch wasn’t a good move. “We didn’t have all the checks and balances in place,” Durfee said.

After Flies went on paid leave, Robinson agreed to briefly come out of retirement. (She was the one who discovered the delinquent phone bills and quickly got them paid.) At Wednesday’s board meeting, Durfee said the town will hire an interim finance director through its accounting software provider.

“At some point we will either have Donna (Flies) back or go in another direction,” Durfee told the board. (I left a message for Flies on her personal cellphone’s voicemail last week, but I didn’t hear back.)

At the board’s request, Durfee will review and provide more documentation on all online payments made in July and August.

Resident Kris Clement had another suggestion at the meeting: Why doesn’t the town bag paying its vendors online and “go back to writing checks?” she asked.

“Everything is worth considering,” board member John Langhus replied.

Does that include letting the public know sooner rather than later how much taxpayer money is missing?

Jim Kenyon can be reached at jkenyon@vnews.com.




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