District attorney investigating missing Munhall payroll records
Agents from Allegheny County District Attorney Stephen Zappala's office are conducting a criminal investigation into Munhall officials and missing payroll records from 2011 and 2012.
Borough officials reportedly turned over a computer to Zappala's office for a forensic audit to look into whether tax dollars have been stolen.
The development came on the heels of Wednesday's contentious council meeting, when interim borough manager Tim Little said money potentially is unaccounted for in the borough's public works pension fund and the police pension is overfunded, but that there is no immediate indication of misappropriated funds.
Little said missing payroll records from the summer are partly to blame for a reporting issue that subsequently cost the borough funding from the Allegheny County Regional Asset District program, which provides about $367,000 a year. The borough stopped receiving funds in July, a few weeks after Matt Galla abruptly resigned as borough manager.
Galla could not be reached for comment.
“There's no indication from notices I've received from the IRS or the Social Security Administration — nor with me talking with them this week on the phone — that there's money missing,” Little said. “It's an omission of reporting.”
The discussion at Wednesday's meeting stemmed from direct questioning by angry residents. Little downplayed rumors implicating Galla and borough officials and said it is possible the entire ordeal stemmed from a simple oversight on Galla's last day.
“They had always done payroll in-house on this old computer, but the borough was going to start using an outside payroll company,” Little said. “Mr. Galla left a packet for whatever payroll company (the borough would utilize) that had the payroll reports for the first two quarters.
“Unbeknownst to Mr. Galla, he printed out that report on June 17 and the last payroll for the second quarter ended a few days later. I believe, unbeknownst to him, it did not capture that last payroll report.”
Little said the borough learned of the omission when Paytime Inc., the payroll company the borough began using, notified borough officials a few weeks later. Paytime required the entire payroll for the year to date for liability reasons pertaining to W-2 forms.
“This went on for three weeks in July,” Little said. “Paytime informed me that if we didn't have that payroll report by July 26, ‘We will cease being your payroll company.' They had no choice.”
Because Galla hadn't purchased a payroll module for the QuickBooks system he had installed, Little said the only place the missing records could have been stored was on an old computer that had been partially broken.
“Councilman (Dan) Lloyd found out that (Galla) would be able to get back into the computer if we got it to him,” Little said. “I had reservations about that, but we were between a rock and a hard place. If we didn't get that payroll, we couldn't pay people. In any event, we got the payroll report, we gave it to Paytime and we moved on.”
But Little said the borough still is missing payroll reports from 2011 and 2012, which were believed to be on the computer at one time. When the records couldn't be found, Little said the borough took it to the Allegheny County Forensic Lab — which is not an uncommon process — in an effort to recover them.
“County forensics came to the decision, and I don't know if this is totally definitive, that it's not on there,” Little said. “Should it be on there? Yeah, I think it should be. Am I going to say that Mr. Galla erased it? No, I'm not going to say that.”
In response to residents' allegations that Lloyd conspired with Galla to erase the records, Lloyd said taking the computer to the former manager was the only choice the borough had left at the time.
“That computer was broken,” Lloyd said. “It was smashed. It was in pieces. There were things hanging out of it and (Galla) thought he could get it running ... I was asked to do this. The solicitor told us there were penalties we were going to be subject to if we didn't get that payroll out and that we needed to do anything in our power to get the information we needed from the W-2 reports and former payroll reports or we weren't going to issue a payroll.”
Lloyd said taking the computer to Galla wasn't his decision.
“I feel I can say with accuracy that everyone on council asked me to do this,” Lloyd said. “What I may see on the Internet, that ‘Dan Lloyd stole a borough computer and took it to Mr. Galla's house so he can wipe a hard drive clean' is absolutely ridiculous.”
Little said the borough does have quarterly reports for 2012, which he said would suffice for an audit. But nothing has been found from 2011 and locating them would be the next step toward righting the borough's finances.
“I've got to find (the records) for 2011. Then we're off to the races as far as getting these audits done,” Little said. “Then, as I've told council ad nauseam, all this stuff has to be entered into the computer and reconciled.
“(The records from) 2011 have to be done, then 2012 has to be done. That's a lot of labor-intensive work that has to be done before the auditors even come in.”
Tim Karan is a staff writer for Trib Total Media. He can be reached at 412-664-9161 ext. 1970, or firstname.lastname@example.org.