Hundreds of people turned out Tuesday night to demand answers from the Kennett Township supervisors about why it took so long to discover the former township manager’s alleged embezzlement of more than $3 million.
The Red Clay Room was standing-room-only for the almost four-hour-long meeting. Many in the audience called for the supervisors to resign and questioned why no one had discovered the embezzlement and fraud earlier.
“Are all of you going to resign?” asked Leon Spencer, the former Kennett Borough mayor who served as moderator for the question-and-answer portion of the meeting. “It seems like you should resign right now.”
“I would submit you’re not qualified to run this township as a business,” said Wilkinson Drive resident Louise Johnson when she asked her question of the board.
“What about the supervisors’ abject failure of leadership?” asked Penns Manor Drive resident Nigel Thijs, one of 13 people who asked questions Tuesday night.
The supervisors, in their statements to the crowd at the start of the meeting, explained the steps they had taken once they were notified of suspicious withdrawals from the township financial accounts, and their feelings of discovering a once-trusted employee and friend had betrayed them.
“She betrayed the trust of everyone,” supervisors’ Chairman Scudder Stevens said. “Each of us as supervisors is well-aware that what Lisa did was horrible. We believe it is our job and responsibility to fix this terrible mess.
“There will be more changes and improvements in the months to come.”
Supervisor Whitney Hoffman told the audience the supervisors had “done everything and dropped everything to try and do right by the township.”
Besides hearing from the supervisors and new township Manager Eden Ratliff, the audience also heard from Joseph Poluka, an attorney with Blank Rome LLP who will be pursuing recovery of the money allegedly embezzled by Moore; as well as Ricardo Zayas, a partner with the forensic accounting firm of Marcum.
Among other things township residents learned at the special meeting:
- Lisa Moore allegedly refused to let anyone but herself open mail like credit card bills, bank statements, and letters from the IRS;
- The supervisors discovered unpaid withholding taxes due to the IRS;
- Moore surrendered her passport as part of the bail conditions;
- The township’s insurance policy to cover against fraud will likely cover about a third of the total losses;
- Supervisors found out only recently that the losses were more than $3 million;
- The supervisors have spent about $350,000 this year on lawyers and accountants related to the investigation;
- Supervisors never saw management letters after the audits because Moore allegedly never gave them to the board;
- Prior year budgets and financial statements were allegedly falsified; and
- Allegations that Moore used a township credit card in 2008 to make personal purchases couldn’t be verified as many of the financial records before 2013 were destroyed or incomplete.
Supervisors’ Vice Chairman Richard Leff said that they kept finding more and more issues the more they looked into what had happened.
“There was a pattern of lies and deceit,” Leff said.
Supervisor Whitney Hoffman described the aftermath of Moore’s alleged embezzlement as “one domino after another” as supervisors continually discovered problems they said they had no idea about.
Zayas talked about Marcum’s approach to the forensic audit, saying investigators turned to “third-party records” to fill in holes left by what he called the township’s incomplete and inaccurate financial records.
“This investigation is continuing,” said Zayas. “We need to continue and follow up on potential recovery actions.”
Marcum’s investigation ran simultaneously with the criminal investigation by the Chester County District Attorney’s office. When asked if the $3.2 million in losses was likely to grow, Zayas said there could be additional money that would impact a civil case.
“There are some additional transactions that for civil recovery we would consider adding to it,” he said, adding he suspects that amount would be in the thousands.
Poluka, who deals with white-collar investigations for the law firm of Blank Rome, said his goal is to recover as much money as possible for the township. He stressed that he was working for the township, and by extension the residents.
He explained that there were two ways they could seek to recover the money – through restitution in the criminal case, and by bringing a civil case.
The first “bucket” of available money would be Moore herself, Poluka said. The second “bucket” of money would be through insurance, such as a $1 million insurance policy the township has.
The final “bucket” would be by pursuing “civil recoveries against any other institutions and individuals.
“There are sources of recovery,” Poluka said. “We just have to get it.”
New township Manager Eden Ratliff told the audience that a challenge facing the township now is figuring out how much should be in the various financial funds because previous financial reports and budgets were manipulated.
“The budgets have been inaccurate to the tune of millions of dollars,” Ratliff said. “The township has been deficit spending for years.”
Any money recovered from Moore would be placed in the township’s reserve fund, he said.
“What happened is heartbreaking, but it’s not the end of Kennett Township,” Ratliff said.
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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