Diaz ordered not to destroy any records

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copyright the Chronicle August 9, 2017

by Elizabeth Trail

 

NEWPORT — Former Coventry Town Clerk and Treasurer Cynthia Diaz has been ordered not to destroy any more town records or documents and to hand over any still in her possession.

“Defendant has admitted under oath to having destroyed at least some electronic documents,” Orleans Superior Court Judge Robert Bent said in a written order issued on August 3. “To be clear, defendant may not destroy any document or file.”

He ordered Ms. Diaz to turn over all written and electronic town records in her possession by August 20 in preparation for another hearing on August 25.

In court on August 1 for a hearing in the town’s civil suit against her, Ms. Diaz admitted to throwing away a thumb drive containing town financial records after she left office.

“Generally in litigation, we don’t destroy documents,” Judge Bent told Ms. Diaz at the time. “It leads to questions … it shifts the question to the person who destroyed it.”

Ms. Diaz’ management of the documents in her keeping has been a recurring theme ever since forensic accountant Jeff Graham’s audit last year shone the spotlight on irregularities in Coventry’s financial records.

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Diaz says she threw thumb drive away

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copyright the Chronicle August 2, 2017

 

by Elizabeth Trail

 

NEWPORT — Former Coventry Town Clerk and Treasurer Cynthia Diaz said in court on Tuesday that she has destroyed at least one thumb drive, possibly the one the select board and auditor Jeff Graham have been looking for.

Ms. Diaz was in Orleans Superior Court for yet another hearing in the civil suit that the town filed against her last December. The suit asked, among other things, for the return of town records in Ms. Diaz’ possession.

“I was no longer in office, I didn’t need it any more,” Ms. Diaz told Judge Robert Bent when he asked about the fate of the removable computer storage that she is alleged to have used to carry work back and forth from the Coventry town office to her home computer.

“I threw it away,” Ms. Diaz said. “It was mine, and I was no longer employed by the town.”

“Generally in litigation, we don’t destroy documents,” Judge Bent told her. “It leads to questions … it shifts the question to the person who destroyed it.”

Initially, it didn’t sound like Ms. Diaz was talking about the same drive that the select board has been hunting for the past year or more.

Ms. Diaz said that all she had on the drive was an Excel spreadsheet and the template she used to create receipts, adding that she overwrote the information as she recorded new transactions that came through the office.

“It wasn’t a running spreadsheet,” she said.

Judge Bent interrupted her to put her under oath.

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Coventry gets its checks back

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copyright the Chronicle July 26, 2017

 

by Elizabeth Trail

 

NEWPORT — In a ten-minute hearing on Monday, Orleans Superior Court Judge Robert Bent ordered a local bank to return about $5,100 in town money that former Coventry Town Clerk and Treasurer Cynthia Diaz deposited in an account she opened on June 14.

“We have our money back,” Coventry Select Board Chair Mike Marcotte said by phone on Tuesday.

Community National Bank, which is also where the town of Coventry keeps its money, froze the funds as soon as they were deposited and notified the select board.

But bank officials couldn’t return the money to the town without a court order.

On July 7, attorney Paul Gillies, who is representing the town in its ongoing civil suit against Ms. Diaz, filed a motion with the Orleans Superior Court’s Civil Division.

In the motion, Mr. Gillies says that Ms. Diaz opened an account called the “Cynthia Diaz tax escrow account” on June 14. She deposited three checks.

The checks were written by former town attorney Bill Davies from the town’s tax escrow account, which he maintained until earlier this year.

They were payable to “Cynthia Diaz, Treasurer.”

“Ms. Diaz’ actions were unauthorized, as she was no longer holding town office at the time she deposited the checks,” the town’s motion says. “Her creation of a new fund was in violation of the statute that requires agreement with the select board for any investments.”

The motion goes on to explain that Ms. Diaz’ positions as town clerk and treasurer were vacated under state statute on June 9, after she was unable to raise the bond required of all public officials.

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In Coventry, Diaz is out, Barlow is in — at least for now

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copyright the Chronicle June 14, 201

by Elizabeth Trail

 

COVENTRY — After a week of dramatic twists and turns, David Barlow has been appointed to serve as what Coventry Select Board members called a “temporary interim” town clerk and treasurer.

He will serve until the select board can review applications and appoint someone to do the jobs until March, when Town Meeting voters will fill the jobs for the two years remaining in former Town Clerk and Treasurer Cynthia Diaz’ term.

At midnight on Friday, the clock ran out on Ms. Diaz’ chance to line up the bond she needed in order to keep her job. Under state law, the positions were automatically vacated.

It seemed like the end of the road for the embattled town clerk and treasurer, who has been re-elected again and again despite years of questionable audits and complaints about her bookkeeping.

But just hours before Friday’s special select board meeting, the Orleans County Sheriff’s Department served select board Chair Mike Marcotte with a complaint alleging that the May 24 special meeting hadn’t been properly warned.

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The Coventry case Diaz bond revoked, has ten days

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copyright the Chronicle May 26, 2017

by Elizabeth Trail

 

COVENTRY — Town Clerk and Treasurer Cynthia Diaz has ten days to come up with a $2.5-million bond or lose her job.

The Vermont League of Cities and Towns (VLCT) paid up on the town’s $500,000 claim on Wednesday, May 24, but said it will no longer cover Ms. Diaz on the town’s insurance.

Under state law, Ms. Diaz will have ten days to come up with a bond on her own. If she can’t, the select board can declare the positions Ms. Diaz holds vacant.

All town clerks, treasurers, and delinquent tax collectors in Vermont must be bonded. In recent years, VLCT has provided insurance to member towns to cover the loss of any money entrusted to officials in lieu of the traditional bond.

In its claim, the town documented losses of $876,383 based on the report of forensic accountant Jeff Graham, who recently completed an exhaustive audit of the town’s finances.

According to a May 23 letter to the select board from Frederick Satink, VLCT’s manager of underwriting, safety and health promotion, VLCT found that “Ms. Diaz failed to faithfully perform her duties as prescribed by law.”

The decision was “based on Mr. Graham’s findings as to the cash-handling practices of the town treasurer,” the letter says.

VLCT’s policy covers the town both for “faithful performance” and for employee theft.

If the loss is found to have been caused by theft, that portion of the town’s coverage would also be canceled as far as Ms. Diaz is concerned, Mr. Satink’s letter says.

Coverage for other Coventry town officials and employees remains in force.

The actual claim that Coventry submitted was for $500,000, the maximum that VLCT will pay for a single incident. After subtracting the town’s $1,000 deductible, the check was for $499,000.

The town is still out of pocket for the rest of the $876,000 that Mr. Graham said he found to have been collected from taxpayers and never deposited. The select board has also spent almost $300,000 on the Graham and Graham audits and ongoing support in its civil suit against Ms. Diaz over the money Mr. Graham says is missing.

And Mr. Graham said he has calculated that Coventry has lost close to $200,000 in penalties and interest. That means it has lost or spent an estimated $1.3-million, Mr. Graham said in February.

Vermont law gives the select board the authority to set the amount of a town official’s bond.

A few years ago, in a very different situation, the Irasburg Select Board used that authority to force a town clerk to resign.

But months ago, Mr. Marcotte decided that Coventry wasn’t going to go down that road.

“People in Irasburg are still angry about that,” he said then. “We’re going to wait and see what the insurance company decides.”

Now VLCT has decided the matter. The only question for the select board was how big a bond Ms. Diaz should be required to carry.

On May 24, the board directed town attorney Paul Gillies to set a minimum $2.5-million bond requirement. That number is based on the amount of money in Coventry’s checking account.

“I’m worried about the next ten days,” town resident Leo Piette said at the May 24 meeting.

As soon as Mr. Marcotte, representing the select board, signed VLCT’s “proof of loss” document at Wednesday’s special meeting, any further losses caused by Ms. Diaz weren’t covered by the town’s insurance.

“As of today, the bond no longer exists,” Mr. Marcotte said.

The money in the checking account includes funds that Ms. Diaz has been asked repeatedly to move into reserve accounts.

“The clerk-treasurer has refused to follow our warrants to move that money,” Selectman Scott Morley said. “And that’s cause for concern.”

“The board’s job is to do everything in its power to protect the town’s money,” Selectman Scott Morley said.

The board has taken a number of precautions to be sure the town’s money is secure. Two signatures are now required to move money or write checks.

 

contact Elizabeth Trail at

[email protected]

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Auditor says roughly a million missing in Coventry

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copyright the Chronicle March 22, 2017

 

by Elizabeth Trail

 

COVENTRY — Between $876,343 and $1.43-million has gone missing in Coventry over a six-year period, according to new figures from auditor Jeff Graham.

Selectmen said at their meeting Monday that they are preparing to file an insurance claim for $876,383 for losses that occurred between 2009 and 2016.

According to forensic accountant Jeff Graham, that’s the most conservative estimate of how much tax money was collected but not deposited by Town Clerk, Treasurer, and Delinquent Tax Collector Cynthia Diaz.

But by using the numbers that Ms. Diaz herself presented in town reports for the same years, Mr. Graham said, the actual amount of missing money could be as much as $1.43-million.

In fact, Mr. Graham said he has evidence of checks received that bring the total closer to Ms. Diaz’ figures than to his lower number.

But without documentation to show what the checks are for, he doesn’t plan to include them in the claim. And he hasn’t included the 8 percent penalty and monthly 1 percent interest applied to delinquent properties, even though Ms. Diaz has said publicly that she always charged those fees, he said.

In a way, it’s a moot point.

The town’s insurance policy, which reimburses for losses through fraud, will only pay up to $500,000.

The difference comes out of the pockets of Coventry taxpayers. So does the estimated $360,000 in fees that have been paid to Graham and Graham for the auditing firm’s work over the past two years.

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Coventry will hire delinquent tax collector

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copyright the Chronicle March 8, 2017

 

by Randi Morse

 

COVENTRY — Arsenic-heavy water and the power of the select board — that was the main meal during Coventry’s Town Meeting on Tuesday.

Over 140 people, including those covering the proceedings from WCAX and PBS, filled the small Coventry Village gym in the town offices building likely anticipating a lot of debate due to the ongoing drama surrounding Town Clerk Cynthia Diaz. Ms. Diaz has been involved in numerous controversies in the past nine years, and recently a forensic audit was done, and it appears a substantial amount of money is missing from town coffers.

There was not, however, much debate about Ms. Diaz, likely due to the multiple informational meetings that the select board opted to have prior to Town Meeting. Even though Ms. Diaz wasn’t the main topic of conversation, there was plenty to discuss.

The first matter of business was to see if the town would give the select board the power to hire someone for the position of collector of delinquent taxes. That post has been voted on by town members and held by Ms. Diaz. Some of the concerns about her involve how delinquent taxes appear to have been handled since she has been in charge of them.

“I’ve been to most board meetings since moving here,” said Dave Barlowe. “I’ve read the reports and a lot of issues in this town are because of the improprieties, alleged, of the delinquent tax collector. It’s very important that this situation be straightened out right now, not 12 years from now. Let the board have the authority to hire someone who is highly qualified to fix this problem.”

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Coventry voters grill selectmen

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copyright the Chronicle February 22, 2017

 

by Elizabeth Trail

 

COVENTRY — Early on a Saturday morning seems like an unlikely time to draw a crowd for an informational meeting with the select board.

But close to 30 people showed up at the community center here on February 18 for a public question and answer session about the recent audit and the town’s missing funds.

“I know there have been a lot of questions,” selectman Scott Morley said in his brief opening remarks, as early-rising residents sipped coffee or nibbled on doughnuts and muffins provided by the board.

Asking those questions now will prevent chaos at Town Meeting, he said.

For close to an hour and a half, the crowd peppered Mr. Morley and fellow selectman Brad Maxwell with questions and comments. Chairman Mike Marcotte wasn’t able to get to Saturday’s meeting but plans to be at the next two sessions.

The questions generally fell into three groups: the cost of the audit, why the problem had gone on for so many years, and what can be done about it.

Mr. Morley said he was uncomfortable with the word “embezzlement” that a number of people at the meeting used to describe the missing money.

“That hasn’t been proven,” he said several times. “We aren’t using those words.”

But after the meeting he acknowledged to people who asked that the State Police and the FBI are actively investigating the case.

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Coventry Selectmen will air town’s problems

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copyright the Chronicle February 15, 2017

 

by Elizabeth Trail

 

COVENTRY — The selectmen here are planning a series of public meetings over the next three weeks to talk with town voters about their problems with Town Clerk and Treasurer Cynthia Diaz, and their concern about missing town funds.

The idea is to let people ask questions and talk to the select board informally before the March 7 Town Meeting. The first meeting is planned for Saturday at 8 a.m.

An audit by Graham and Graham is the most recent in a series over the past 12 years that have identified missing money in Coventry. It’s the first to demonstrate that a significant number of cash tax payments were collected but never deposited.

The amount so far comes to about $64,000 over the two years covered by the audit. Previous auditors also believed that there were significant amounts of money missing.

“People have questions,” Selectman Scott Morley said at Monday night’s meeting. “And they want more of an open dialogue, more back and forth than they can have in a select board meeting. I think that’s legitimate.”

The Coventry voters in the back of the room on Monday night seemed to support the idea.

“What with fake news and all that, we don’t know what to believe,” said town resident Martha Sylvester.

Ms. Sylvester wasn’t the only one to urge the select board to go ahead with the public meetings.

“I think it’s going to put the board in better standing at the Town Meeting,” Skip Gosselin said.

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Diaz pleads the Fifth, then testifies

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copyright the Chronicle February 1, 2017

 

by Elizabeth Trail

 

NEWPORT — Immediately after she took the witness stand in Orleans County Superior Court on Monday, Cynthia Diaz invoked the Fifth Amendment.

“Hadn’t you better hear the questions first?” Judge Howard VanBenthuysen asked Ms. Diaz, who appeared in court without an attorney. “Some of them might be to your benefit to answer.”

The Coventry town clerk, treasurer, and delinquent tax collector was back in court to answer a motion for contempt. It was filed on behalf of the town by attorney Paul Gillies after she allegedly failed to meet a December 30 deadline to turn over all original town documents in her possession.

Ms. Diaz brought a thumb drive and a foot-thick stack of papers to court on Monday but that didn’t even come close to being what the town of Coventry believes is missing.

After a lengthy recess to allow Mr. Gillies, forensic accountant Jeff Graham, and 
Coventry Selectman Scott Morley time to look over the documents, Mr. Gillies pronounced them “insufficient.”

“The missing records we asked for would fill a six-foot by six-foot square about six feet tall,” Mr. Graham told Judge VanBenthuysen, “not the small pile she brought to court today.”

“Are these all the town documents you have?” the judge asked Ms. Diaz.

“All the original town documents, yes,” Ms. Diaz replied, stressing the word “original.”

Judge VanBenthuysen ordered Ms. Diaz to hand over all town records in her possession, whether she considered them original or not.

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