ROYALTON — A Northfield, Vt., man is accused of embezzling more than $590,000 from ValleyNet, the nonprofit that operates ECFiber, and using the money to buy real estate in other states, according to a lawsuit filed in Vermont State court.

ValleyNet has filed a lawsuit against John Van Vught alleging that, over a period of seven years when he worked as a contract accountant for the company, Van Vught, 72, diverted money from ValleyNet’s bank accounts at Northfield Savings Bank into his own pocket and which was only uncovered when a new finance director joined the company.

Meanwhile, the family of Van Vught — who had been previously accused with stealing money from a former employer in 2003 — have told authorities that they do know his current whereabouts, according to court documents.

The most recent embezzling allegations, contained in a lawsuit filed in Washington Superior Court in Montpelier in July but initially sealed, came the same month ValleyNet announced it had discovered “financial irregularities” allegedly committed by an unidentified outside contractor that resulted in an unstated amount of money siphoned from the company.

The civil lawsuit for the first time publicly identifies both the alleged perpetrator and the amount of money stolen.

ValleyNet has said that it would seek to recover the money and that the incident is not expected to “materially impact” the company’s financial viability or risk the ability of ECFiber to make interest payments on its debt, which totals more than $60 million that the company has borrowed to finance expansion of a fiber optic network to nearly two dozen member towns.

Van Vught worked under contract as an accountant and bookkeeper for ValleyNet beginning in 2010 and, from 2013 to 2022, transferred a total of $593,724.76 from ValleyNet accounts into his own personal bank account, according to an affidavit of Clifford Rankin, who began working as director of finance for the company in November 2021, filed as part of the lawsuit.

Rankin said he discovered the unauthorized transfers Van Vught had allegedly made from company accounts into a Van Vught personal account when Van Vught had gone on vacation last May and Rankin took over payroll and paying vendors.

Rankin grew concerned when he asked to see formal bank reconciliations, but Van Vught told him they “had never been done.” Then when Rankin ordered Van Vught to do conduct the reconciliations, Rankin “found several errors and omissions,” according to Rankin’s affidavit.

Those red lights led to Rankin discovering that Van Vught “had been transferring Valley Net funds … to his account through electronic transfers and checks signed by him for years in assorted small amounts, then omit recording transactions in QuickBooks to cover up the missing funds,” Rankin said.

In the lawsuit, ValleyNet is alleging Van Vught committed fraud, unjust enrichment, breach of fiduciary duty and RICO violations because proceeds from the alleged embezzlement were used in “the purchase of real estate in other states,” the lawsuit claims.

ValleyNet has said that it notified law enforcement authorities about the alleged embezzlement, although no criminal charges have yet been brought against Van Vught in U.S. District Court in Vermont, the usual venue for financial crimes, according to federal court records.

“We are in the process of recovering a substantial amount of the funds,” Stan Williams, CFO of ValleyNet and one of the founders of ECFiber, told the Valley News on Wednesday, Williams declined to say more, referring question to ValleyNet’s attorneys, who did not return respond to messages for comment.

A Northfield accounting manager named John Van Vught was charged with embezzling $49,000 over a six-month period in 2002, the Times Argus in Barre reported at the time.

Van Vught, 51 in 2002 and an accounting manager at TDS Telecom, was arraigned in Barre District Court and charged with writing checks ranging from $4,000 to $6,000 in cash to himself and drawn from a TDS Telecom account, the newspaper reported. Van Vught told investigating police that he had taken the money from his employer because he had overextended his finances and had planned to repay the money before the missing funds were detected.

John Van Vught was identified as chief information officer at ECFiber in an offering memorandum to raise $8.5 million in bonds in 2018. In the document, Van Vught is described as a “consulting outside administrator to outside firms” who previously “was as CFO of Burlington Telecom for 8 years following 12 years as regional accounting manager for TDS Telecom.”

Attempts to locate Van Vught in order to serve him with a court summons have been unsuccessful, according to court records.

“The defendant … has taken off,” Jon Valsangiacomo, attorney for Anne Marie Vught, John Van Vught’s wife, said during a court hearing on July 26, according to a recording of the hearing held remotely. (Anne Marie Vught, arguing she was not a party to her husband’s alleged embezzlement, was seeking her bank account to be unfrozen, which the judge later granted.)

“He’s gone, presumably, if the allegations are true, with the money that is alleged to be taken,” Valsangiacomo said.

A week earlier, on July 19, when a Washington County sheriff deputy went to serve Van Vught with a court summons at his residence on Messier Hill Road, she was informed by his wife “that John Van Vught took his passport, and (his wife) does not believe he will be returning home,” deputy sheriff Emily Grant said in an affidavit supplied in the court record.

Moreover, Anne Marie Vught told the deputy that the couple’s daughter had reported John Van Vught as a “missing person” to Vermont State Police on July 6, but the deputy affirmed in her affidavit that “after an extensive search I was unable to find any information to support this claim.”

State police spokesman Adam Silverman said Wednesday that state police had no record of a missing person report filed on Van Vught.

“No one has any knowledge where Mr. Van Vught can be found?” Judge Robert Mello asked in the July 26 hearing.

Repeating the statement made by his client to the sheriff’s deputy when the deputy attempted to serve John Van Vught with a court summons, Valsangiacomo said the family had reported him missing to state police and checked hospitals but couldn’t locate him.

“The only thing they heard from him is that he sent some unexecuted power of attorney, which is useless, from New Mexico in the mail,” Valsangiacomo said. “Then they heard from a hotel in another part of the country but he never checked in.”

“He just left,” Valsangiacomo said. “Literally, just left.”

Contact John Lippman at jlippman@vnews.com.

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