Town treasurer's arrest shakes Vermont community

[April 11, 2011]  IRA, Vt. (AP) -- Even in a state where small is the norm, Ira is small.

It has 447 people, no downtown, no post office, no school and miles of dirt roads. The town government's annual budget is only $212,000.

So when people here found that mild-mannered town Treasurer Donald Hewitt was accused of cooking the books, it was big news. When they learned the extent of it -- more than $400,000 allegedly embezzled over about 30 years -- it was even bigger.

"It feels like he stole $1,000 from each one of us," said Town Clerk Candy Slack.

Hewitt, 59, held the elected, part-time post from 1977 to 2009 and operated it from an office in his home. Authorities say he wrote checks to himself from the town equipment and cemetery funds, pocketed residents' property tax payments and marked as "paid" his taxes and those of others who hadn't paid them.

"Everyone trusted me," he told a state committee investigating ways to prevent such thefts.

Hewitt admitted to the thefts when confronted by police, resigned from the job and apologized to townspeople at Ira's annual Town Meeting Day gathering in 2010.

"I know I've done wrong," he said, the Rutland Herald reported. "I've cheated others. I'm sorry I did it."

Hewitt, who has agreed to plead guilty to one count of wire fraud and could face 20 years in prison, couldn't be reached for comment for this article. A message left at his son's home wasn't returned. His attorney, public defender Alison Arms, didn't return calls seeking comment.

Initially charged with embezzlement in state court, his case has since been taken over by federal prosecutors. Hewitt is to plead guilty Monday in U.S. District Court in Brattleboro.

He isn't the first Vermont public official recently accused of such thefts in recent years. There has been a rash of cases with similar circumstances.

An expert in white-collar crime says the common threads in such cases are the involvement of a trusted individual, specific expertise and individual transactions small enough to stay below the radar.

"One thing is, you're able to do it because you're doing it a little bit at a time," said Peter Cordella, chairman of the criminal justice department at St. Anselm College in New Hampshire. "It's not gigantic. People aren't going to notice it."

Last month, a committee led by Vermont State Auditor Tom Salmon asked the state legislature for permission to send questionnaires to towns, school boards and non-profits about their internal cash controls, in a bid to beef them up.

Hewitt didn't live lavishly. The money, it seems, went to pay his personal expenses.

That's what he told members of the town Select Board, who started pressing him about bill payments in early 2009. Among the red flags: a lawsuit filed against the town by school officials in Rutland -- where Ira children go to school -- alleging non-payment of their tuition.

"He wasn't really sure on the amount, but he had bills to pay," said Select Board Member Mark Coderre, recounting conversations the Board members had with Hewitt. "He paid for his bills with the money. Didn't know how much or where the money had gone, other than to pay his bills."

Almost as mystifying was how the town never noticed the money was missing.

"That's a good question," said Assistant U.S. Attorney Gregory Waples.

According to a forensic audit performed for the town:

• Hewitt regularly embezzled town funds dating to the 1980s, and was in the habit of writing checks to himself for $3,150 -- about the amount of his annual salary -- on a sometimes monthly basis.

• School district taxes collected by the town were not paid to the school district on a timely basis.

• Periodically, he repaid funds, "usually as cash was needed to pay authorized disbursements."

• Transactions were omitted, payments concealed and disbursements delayed to vendors who submitted invoices.

Since the revelations, the town has tightened its controls to prevent such problems in the future.

Now, bank statements and town mail all go first to the Town Office and then the Select Board for review. No town records are kept in officials' homes, and the treasurer now attends all Select Board meetings, according to Coderre.

The town's insurer, the Vermont League of Cities and Towns Property and Casualty Intermunicipal Fund, paid the town about $347,000 last year to cover the losses, though town attorney Robert Woolmington says that doesn't cover all of the town's losses.

"The town has in no way been made whole," Woolmington said.

Less tangible is another loss -- Ira's trust in its town officials.

"This really shakes at the core of that," said Cordella. "It's a collective psychological damage, and it's really significant."

As for Hewitt, his plea agreement says he could get 20 years, $250,000 in fines and be ordered to pay restitution.

"He does need to be punished," said Coderre. "Do I want to spend any more of my money (imprisoning) Donald Hewitt? I do not. But I do not want to see Donald Hewitt get away scot-free, with his hand slapped, either."

[Associated Press; By JOHN CURRAN]

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