Misappropriated funds case at Gumboro Fire Co. characterized as ‘atypical’

Tom Wagner

R. Thomas Wagner

DOVER — Authorities are reviewing a state audit showing the theft of $81,000 by a former volunteer fire company bookkeeper who has since repaid the money.

In a report released Tuesday, State Auditor R. Thomas Wagner said 24 checks totaling $81,000 were fraudulently written on the Gumboro Volunteer Fire Company’s bank account from July 1, 2015, to June 30, 2016.

Department of Justice spokesman Carl Kanefsky acknowledged receiving the report and said ”Our Office of Civil Rights and Public Trust is looking into the matter.”

According to Mr. Wagner, the former bookkeeper paid the company for the fraudulent transactions, plus $8,000 in salary with cashier’s checks on June 30, 2016, and July 11, 2016.

Investigation found that the bookkeeper was duped into an undisclosed scam from an outside source when expending the money.

Mr. Wagner said he’s discussed the report with the AG’s office, and described the situation as atypical regarding misappropriated funds.

“Obviously money was inappropriately taken, but there are extenuating circumstances that make this different than most cases we deal with,” he said.

GVFC spokeswoman Lorri Bradley said “We are following the recommendations the auditor set down for us and did so immediately. (The fraudulent transactions) were self-reported.”

While fire company officials learned of potential unauthorized transactions in January 2016, the auditor said the bookkeeper was not terminated until April 2016.

Mr. Wagner said his office learned of the fire company concerns in June 2016, and the process of obtaining subpoenas for bank records slowed the investigation.

“(The fire company) came to us and were extremely helpful, they wanted to fix the problems,” according to the auditor.

GVFC officials learned of the discrepancies when contacted by PNC Bank regarding the then bookkeeper’s attempt to cash a $10,000 check, the report noted.

The auditor found the fire company “did not have any written policies or procedures pertaining to its financial operations.

“GVFC officials stated they kept pre-signed checks on hand in case they were needed for payroll or other expenses when the authorized signers were unavailable.”

A lack of internal controls and the bookkeeper’s responsibility for payroll functions and reconciling the bank account “enabled the unauthorized transactions to occur and remain undetected for several months.”

The auditor’s investigation involved a check of 206 transactions totaling $146,443,41,

The repaid money is being held in a trust as an investigation continues.

The auditor encouraged the fire company to create written policies “describing the processes surrounding financial transactions including deposits, expenditures, transfers, reconciliations, and review procedures.

“GVFC should stop the practice of pre-signing checks, as this defeats the purpose of assigning check signing authority. GVFC should also ensure adequate segregation of duties exists between check writing and reconciliation of the same bank accounts.

The fire company received $531,248.81 in state funds in Fiscal Year 2016 and had 67 members as of June 27, 2016, according to the audit.

Past audits also reviewed misused funds in the Millville, Marydel and Frederica fire companies.

Reach staff writer Craig Anderson at canderson@newszap.com

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