Questions unanswered in Kennett’s fiscal irregularities

Kennett Township supervisors continue working to resolve the current financial irregularities in the township’s bank accounts and prevent others from happening. And two separate investigations into the matter have begun.

Kennett TownshipIt’s still unknown how much money was involved and how long the irregularities were going on. Also still to be answered is how the suspicious activity was missed before being caught by the bank.

That was the message from Wednesday night’s meeting, where supervisors spent almost the first hour of their meeting answering what questions they could since informing the public last weekend and cautioning people not to speculate.

“This has been under active management by the three of us since the Thursday afternoon I got the call,” Supervisors’ Chairman Scudder Stevens told the crowd, noting that the "business of the township has gone forward without interruption."

The investigations – one by the Chester County District Attorney’s office and the other by the forensic accounting firm of Marcum LLP – are focusing on the series of suspicious transactions in the township’s bank accounts that supervisors learned of on April 25. A report on the audit could be ready by early fall, if not sooner, according to Stevens.

Stevens, Vice Chairman Richard Leff and Supervisor Whitney Hoffman have taken over the day-to-day management of the township and oversight of its staff, according to Stevens. They are also actively looking to hire an interim manager during the investigation, which Stevens described as an "involved process."

One appointment approved at the meeting was to make the three supervisors the only authorized signers on the township bank accounts and line of credit. Stevens said one of the first actions taken after they were notified about the suspicious transactions was to lock down and reauthorize all the financial accounts.

As it was before the investigation, checks of less than $2,000 require one signature, while checks more than $2,000 require two signatures. But Stevens said that everything signed since April 25 “has been done by the three of us being party to it.”

At Wednesday’s meeting, the three supervisors also formally voted to:

Ratify placing township Manager Lisa Moore on paid administrative leave and authorizing township Police Chief Lydell Nolt to “take actions toward that end”;

Hire the Kennett Township-based firm of Umbreit, Wileczek & Associates for payroll and financial management services;

Execute an engagement letter with Marcum LLP for forensic accounting services; and

Hire Carl Francis of Malvern-based EnvisianStrategic for strategic communication services. Stevens said Francis has been helping the supervisors “address the communication side of what we’ve been going through in the last three weeks,” according to Stevens.

The supervisors met in executive session on April 25, 29 and May 1-15 to discuss personnel matters related to the township manager, reported Patrick Hitchens, representing the township solicitor's office. They are also consulting with a labor attorney.

Stevens stressed that the supervisors will share “all permitted information” related to the investigations with the public. It was a point also made in the May 10 letter to residents and business owners notifying them of the suspicious transactions, and in a press release sent out to local media.

There were a number of questions Stevens said the supervisors couldn’t answer. They included the name of the financial institution, the amount of the insurance policies the township has in case of fraud, anything about the township manager other than that she is on paid administrative leave, whether the transactions originated from inside or outside the township building, and how many different financial accounts the township has.

When asked the amount of the money in question and how long the suspicious transactions had been going on, Stevens said it wasn’t clear. “It’s not finally resolved,” he said.

When asked how the suspicious transactions were missed until the bank discovered them, Stevens said he couldn’t say anything “without revealing information which is confidential to the investigation. That would have a compromising effect on the investigation.

About Monica Fragale

Monica Thompson Fragale is a freelance reporter who spent her life dreaming of being in the newspaper business. That dream came true after college when she started working at The Kennett Paper and, years later The Reporter newspaper in Lansdale and other dailies. She turned to non-profit work after her first daughter was born and spent the next 13 years in that field. But while you can take the girl out of journalism, you can’t take journalism out of the girl. Offers to freelance sparked the writing bug again started her fingers happily tapping away on the keyboard. Monica lives with her husband and two children in Kennett Square.

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