Insurance settlement in Kennett

The insurer for Kennett Township’s former auditing firm will pay the township $735,000 in a dispute related to the $3.2 million embezzlement by the former township manager.

The Kennett Township board of supervisors unanimously approved adopting a settlement, in which both sides “without admitting or conceding any liability or wrongdoing … have determined that it is in their best interests to resolve this dispute,” according to a statement read by Supervisors’ Chairman Richard Leff at Wednesday’s meeting.

“The township and Barbacane (Thornton, & Co., a Wilmington, Del.-based firm) had a bona fide dispute regarding potential claims arising out of Lisa Moore’s embezzlement of township funds and Barbacane’s auditing of the township,” Leff said. “The parties attended two days of private mediation to resolve that bona fide dispute.”

Kennett’s supervisors met in an executive session earlier Wednesday to discuss litigation.

With the settlement, Kennett Township will have recovered $3.442 million, according to current township Manager Eden Ratliff. He estimates the township still has about a million dollars in net expenses related to the embezzlement.

“The board of supervisors has had a number of expenses they’ve taken on in the recovery efforts, in the investigation process in 2019, in the prosecution process in 2020,” Ratliff said, citing $1,288,725.71 as “both investigation and recovery amounts” for Blank Rome, EnvisianStrategic, and Marcum LLP.

In May 2019, a month after the embezzlement was discovered, the supervisors voted to hire Marcum as its forensic accounting firm and EnvisianStrategic as its communication consultants. In September 2019, the board hired Blank Rome as its recovery attorneys.

Ratliff also cited $240,475.79 in “mismanagement cleanup” expenses, such as the costs related to cleaning up the township pension fund, and fines owed to the IRS for fraudulent reporting and late filing, among other things. Those expenses were “not necessarily fraud,” adding that while they weren’t included in the total embezzlement amount, “they are things that shouldn’t have happened.”

The $1 million in net expenses is recoverable, according to Ratliff.

Township resident and former supervisor Whitney Hoffman said at Wednesday’s meeting she was glad to hear about the settlement.

“This was a long time in coming,” she said. “I remember the first meeting with Barbacane that we sat down to have a discussion about issues that had arisen, and I’m glad that this has all been resolved.”

She added that recovering as much as Kennett has “is actually pretty rare. The amount of money, and the fact of where we are, is really laudable to the experts.”

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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