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Audit: Oversight poor

| Friday, May 30, 2008

A highly critical audit alleges the Washington Township Municipal Authority's haphazard oversight opened the way for two employees to misappropriate thousands of dollars in cash paid by customers and to pay themselves more than $100,000 in unauthorized overtime.

The audit of the Fayette County authority uncovered "compelling evidence" that the two employees - former office manager Judy Arrow and clerk Laura Snyder - misappropriated authority money by failing to deposit money for water bills that customers paid in cash. Both women were suspended from their jobs last year. Arrow was fired. Snyder retired.

Snyder also was a member of the authority board, from which she resigned after rumors circulated about agency finances.

The audit by The Nottingham Group, of Pittsburgh, was commissioned by members of the seven-person authority board, and the results were received this week.

James Fellin, a certified public accountant and fraud examiner with the firm, recommended a more extensive audit be conducted to determine exactly how much money might be missing. In addition, the audit suggests authority officials meet with Fayette County District Attorney Nancy Vernon and state police to ask for a criminal investigation.

Vernon could not be reached for comment.

The authority provides water service to 3,000 residents in Washington Township and nearby Allenport and Roscoe.

Though Arrow and Snyder were the authority's only employees, Snyder said board members sometimes assisted customers who came to the office to pay their bills.

"Board members waited on people," Snyder said.

Snyder declined further comment. "I can't comment on something I don't know anything about," she said.

Arrow did not respond to a request for comment.

Dee Fisher, chairwoman of the authority, did not respond to a request for comment Thursday.

Robert Campbell, a member of the board, wants a more extensive audit. He joined the board last year.

"I personally don't think the audit went deep enough," Campbell said.

"They should force the board to resign. Somebody didn't do their job properly. I think the board should be charged with malfeasance. They can kick me off, too, and it wouldn't hurt me a bit."

Joe Walko, another director, refused to comment. Mike Zadrozny and Tom Canigiani didn't respond to requests for comment. Thelma Russell could not be reached for comment.

Fellin said he found incomplete accounting records, payroll irregularities, unexplained accounting entries and missing money during the period that Arrow and Snyder worked for the authority.

Among the findings:

  • In 2006 and 2007, Arrow or Snyder received $7,200 in cash payments that weren't deposited "and misappropriated them."

  • Billing records for 329 customers are missing.

  • Three bills marked "paid" were found in Snyder's desk after she left the authority, but auditors could not find corresponding invoices.

  • $3,000 was spent on sweeping the authority's office for hidden recording devices, but Fellin could not find any documents authorizing the expenditure. The New Jersey expert who performed the work refused to cooperate in his investigation, Fellin said.

  • Arrow and Snyder "improperly paid themselves tens of thousands of dollars during the time of their employment" and "evidence indicates that these funds were misappropriated by Snyder, Arrow or both."

    The audit criticizes former authority Chairman Melvin Weiss and Treasurer Ron Sotta for failing to oversee management of the authority.

    Weiss said he was chairman "in name only" and was saddled with personal problems during his tenure that prevented him from keeping tabs on authority operations.

    "I wasn't there much," he said. "I was taking care of my wife, who has Alzheimer's. That was my priority. There were other board members who should have spotted something."

    Sotta, who served as treasurer for a decade, said his job "was more or less a title."

    "All I did was sign checks when I was there. It was not a full-time position. I would have no way of knowing if anything was wrong," Sotta said.

    Fellin said directors failed to annually audit financial records from 2003 to 2005. If they had, the financial problems could have been stopped, he said.

    Fellin said Weiss allowed Snyder to begin collecting $109.16 a month in pension benefits, despite questions about her role in the misappropriation.

    "It is hard to comprehend why he would sign off on Snyder's benefits when there were so many red flags and unanswered questions regarding Snyder's actions as an ... employee," he wrote.

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