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May 8, 2012

 

DiNapoli: Audit Finds Village Clerk Stole Funds

Wolcott Official Made Off With $68,000 in Unauthorized Payments to Herself

The former clerk-treasurer for the Village of Wolcott in Wayne County stole $68,000 from taxpayers over a four-year period, according to an audit released today by State Comptroller Thomas P. DiNapoli. The case was referred to the New York State Police who charged Melanie DeBadts with one count of grand larceny in the second degree (C Felony) and 106 counts of falsifying business records in the first degree (E Felony).

“This clerk-treasurer had a creative imagination when it came to coming up with ways to steal taxpayer monies,” said DiNapoli. “Thankfully, my office’s auditors were able to expose this fraud and, with the help of State Police, bring this individual to justice.”

The State Police in Wolcott conducted a criminal investigation which resulted in the arrest of the 35-year-old DeBadts. She was arraigned on May 9 and released on her own recognizance. DeBadts is scheduled to appear in Wolcott Village Court on June 7.

In September, Wolcott Mayor Gary J. Baker, along with the village’s accounting consultant, contacted DiNapoli’s office concerning extra payroll checks made to the former clerk during the 2010-11 fiscal year. During a subsequent review, auditors found the village’s accounting records were altered and the unauthorized disbursements were deleted. DeBadts’ scheme went undetected for more than four years due to the lack of the Wolcott Village Board in maintaining an effective control environment.

The fraudulent payments were in the form of extra payroll payments, unauthorized overtime payments, excessive health insurance buyouts, unearned leave payouts, overpayment of vital statistics fees, and payments that were inappropriately charged to the village’s records management grant.

All told, $68,479 was siphoned from the village’s coffers. This included:

  • $50, 443 in extra payroll checks;
  • $7,239 in excessive health insurance buyouts;
  • $6,780 in unauthorized overtime;
  • $2,865 payments inappropriately charged to village grant;
  • $1,062 in unearned leave payouts; and
  • $90 in overpayment of vital statistic fees.

DeBadts began working for the village in May 2007 and resigned effective September 15, 2011. As the village’s chief fiscal officer, DeBadts had custody of all village moneys, collected and deposited cash received, maintained accounting records, filed financial reports and signed all village checks. She also served as the tax collector for Wolcott and was responsible for processing weekly payroll.

DiNapoli recommended the village:

  • Ensure the village clerk-treasurer maintains adequate, accurate and timely records and reports on an ongoing basis;
  • Require and review detailed monthly financial reports, which should include cash balances, cash receipts and disbursements made during the month, a comparison of actual revenue and expenditures to budget amounts, and bank reconciliations with copies of the bank statements.
  • Adopt and distribute a Code of Ethics, as required by law; and
  • Monitor cash disbursement records to ensure accuracy.

A copy of that audit can be found at: http://www.osc.state.ny.us/localgov/audits/villages/2012/wolcott.pdf

DiNapoli encourages the public to help fight fraud and abuse. New Yorkers can report allegations of fraud or abuse of taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555, by filing a complaint online at investigations@osc.state.ny.us, or by mailing a complaint to: Office of the State Comptroller, Investigations Unit, 14th Floor, 110 State St., Albany, NY 12236.


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