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October 12, 2012

 

DiNapoli: Treasurer Stole $200,000 From Woodstock Fire Company

Charged by Ulster County District Attorney Carnright

The former treasurer of Woodstock Fire Company No. 3 embezzled more than $200,000 over a five year period, according to an audit released today by State Comptroller Thomas P. DiNapoli. As a result, Dale D. Hughes, Jr., 64, was arrested and charged by Ulster County District Attorney D. Holley Carnright with grand larceny in the second degree. Hughes was arraigned before Woodstock Town Court Justice Richard Husted and remanded to the Ulster County Jail in lieu of bail.

The audit and investigation by DiNapoli's office revealed that Hughes endorsed 83 checks totaling $200,385 that were made payable to cash. Auditors estimate the former treasurer pocketed an additional $21,000 in cash proceeds from various pancake breakfast fundraisers.

"The fire company handed the fiscal reins to this individual and he responded by fleecing the public," said DiNapoli. "The lack of basic financial oversight allowed this fraud to continue unabated for five years. It is imperative for company officials to put systems in place to protect public dollars and prevent future abuse. I want to thank Ulster County District Attorney Carnright and his staff for their diligent work in ensuring this wrongdoer was held accountable."

"This is yet another example of good government at work," said Carnright. "If Comptroller DiNapoli's staff had not been available to conduct this audit, it would have cost the taxpayers of Ulster County thousands of dollars to hire a forensic accounting firm. Their efforts were vital to my office's criminal investigation."

Hughes served as the fire company's treasurer from 1997 to 2011. The company, located in the Town of Woodstock in Ulster County, elected a new treasurer in 2012. Hughes currently serves as company vice president.

During the audit and investigation, DiNapoli's staff found Hughes routinely failed to provide monthly written reports of disbursements to the fire company's executive committee and that company expenses were approved for payment by the committee without reviewing available invoices.

Investigators traced much of the stolen money to Hughes's personal bank accounts. When documents were requested by DiNapoli's staff, Hughes altered bank and vendor records in an effort to conceal his theft. Hughes cashed $12,975 worth of checks in 2006; $61,565 in 2007; $32,130 in 2008; $66,500 in 2009; $16,565 in 2010; and $10.650 in 2011, according to the audit.

The fire company's executive committee – which consists of the company president, vice president, treasurer, secretary, chief officers, and three directors – was unaware of the fraud until May 2011 when a payment of $10,000 for a new fire truck bay was returned for insufficient funds.

After Hughes was questioned by fire company officials about the bounced check, they contacted the Comptroller's office about the situation. The former treasurer then attempted to cover his tracks with a series of undocumented deposits into the fire company's account. These include:

  • A wire transfer made on May 24, 2011 into the fire company's checking account in the amount of $50,000 from the account of Hughes' sister.
  • Deposits made to the company's checking account from Hughes' personal checking account totaling $68,600 on three separate dates: June 3, 2011 ($60,000), June 20, 2011 ($5,000) and August 31, 2011 ($3,600).
  • A check for $51,159, dated August 1, 2011, from the Hughes' checking account used to open a certificate of deposit in the fire company's name.

It is estimated that Hughes, a resident of the Town of Lake Hill, replaced as much as $170,000 of the missing funds as of July 2012.

DiNapoli's office made a number of recommendations that, if implemented, would safeguard fire company finances. Specifically, the company's executive committee should:

  • Provide oversight of financial transactions, approve individual invoices and properly monitor the treasurer's activities.
  • Review bank records to ensure that transactions match approved disbursements.
  • Prohibit checks being made payable to cash.
  • Review all checks that were made payable to cash and take steps to recover any funds not used for legitimate fire company purposes.
  • Establish procedures to ensure that all funds received from fundraisers are properly accounted for and recorded.

Officials with the fire company agreed with the findings of the audit. Their response is included in the audit.

For a full copy of the audit report visit: http://www.osc.state.ny.us/localgov/audits/firedists/2012/woodstockcompany3.pdf


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