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Norwich set to recoup nearly all $250,000 lost in email scam

Valley News Staff Writer
Published: 11/7/2019 10:10:08 PM
Modified: 11/7/2019 10:09:57 PM

NORWICH — The town will recoup almost all of the money it lost to an email scam that siphoned nearly $250,000 from municipal coffers this summer.

Norwich’s insurer, the Vermont League of Cities and Towns, will cover $168,955 of the losses, Town Manager Herb Durfee announced Wednesday.

Dallas-based Comerica Bank, which flagged a suspicious account involved in the scam, promised last month to return $79,765 of the money. Together, the payments leave Norwich out $1,000, the cost of its insurance deductible.

“That’s good news,” Durfee told the Selectboard during its regular meeting Wednesday evening. “It certainly allows all of us to take a little bit of a breath.”

The VLCT agreed to its insurance payment as a result of a report released last month that detailed the events surrounding the scam.

The 19-page report, written by the Lebanon-based firm Burgess Loss Prevention Associates, found that former Town Finance Director Donna Flies made unauthorized payments in defiance of orders from officials.

Flies continued to send large sums of money to an email scammer impersonating Durfee despite warnings from Town Treasurer Cheryl Lindberg, the report found.

Flies, who was placed on paid administrative leave in August, no longer works for Norwich, Durfee said.

He said Flies’ departure came “last Monday” but didn’t say whether she resigned or was fired.

Flies, whose salary was $64,973, told investigators she assumed emails requesting money were from Durfee and maintained “the only thing she was guilty of was making stupid mistakes,” according to the Burgess report.

A phone message left for Flies on Thursday afternoon was not returned.

Durfee said the town’s finance office is making do with temporary help.

Longtime Finance Director Roberta Robinson came out of retirement to help for several weeks, he said. And Cynthia Stoddard, of the New England Municipal Resource Center, is now overseeing the finance office.

Stoddard, the former town manager of Putney, Vt., spends a few days every week handling high-level accounting while temporary employee Becky Grammar is responsible for day-to-day operations.

Durfee said he intends to post openings for both a finance director and assistant position, but he signaled that Grammar is a promising candidate for one of the jobs.

Meanwhile the VLCT recently issued a report calling on Norwich officials to update the town’s financial policies and employee training procedures in the wake of the scam.

Wade Masure, a senior loss control consultant at the VLCT, visited the town on Oct. 24. He identified six problems in the report ranging from insufficient training for new employees to out-of-date financial policies.

Masure’s recommendations include the creation of a whistleblower policy for employees who suspect fraud, more cybersecurity training and new procedures to ensure all staff are familiarized with policies when they’re hired.

All of the recommendations should be acted on by Dec. 23, the report said. Otherwise, the town could be deemed ineligible for some equipment grants.

“I basically need to do those,” said Durfee, who added the town is already working toward some of the goals. “If we more or less adequately address them, then we can continue to get (VLCT grants).”

Selectboard members said Masure’s visit was positive but wished he had conducted a more in-depth review of the town’s response to the scam.

Selectboard Vice Chairwoman Claudette Brochu said she hoped the investigation would have asked everyone about their role in the events. For instance, she was never asked why she didn’t do more after learning of the financial irregularities.

Brochu told colleagues she stepped back upon learning that Selectboard Chairman John Pepper was informed.

“But in hindsight, I shouldn’t have done that,” she said, adding that she probably should have gone to police.

The Selectboard on Wednesday ultimately decided to schedule a special meeting to discuss the financial scam and how the town can act on the reports they’ve received so far.

Tim Camerato can be reached at or 603-727-3223.

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