Bluefield Daily Telegraph, Bluefield, WV

December 19, 2012

Suspected embezzlement: Police probe underway

KATE COIL
Bluefield Daily Telegraph

BLUEFIELD —  City officials confirmed Tuesday a state police investigation is underway into the alleged embezzlement of approximately $5,000 in cash from the city of Bluefield.

The state police investigation into alleged embezzlement by the city’s chief financial officer began in November. City Attorney Brian Cochran said the Internal Revenue Service had levied three of the city’s bank accounts for penalties associated with the late payments and filings of employee payroll taxes, but the city administration was not informed. City officials met with the CFO on Nov. 19 to discuss the levy, and Cochran said the CFO resigned as a result.

Claude Crigger served as chief financial officer of the city until November.

“During this meeting, it was discovered that in April 2012 the CFO had received previous notice from the IRS that the city would incur this penalty and that the CFO failed to disclose this important information to anyone in the city administration,” Cochran said. “Although the failure to disclose this important information resulted in the city’s inability to exercise any possible appeal procedures, the city is currently and actively seeking relief from these penalties of approximately $14,000.”

Cochran said further investigation by city officials discovered approximately $5,000 had also been embezzled from city accounts.

“In connection with investigating the IRS issue, the city received additional information of possible theft of city money,” Cochran said. “Once this information was confirmed, the city immediately contacted the West Virginia State Police and requested an investigation be conducted as quickly and thoroughly as possible. On Wednesday, Dec. 14, the West Virginia State Police contacted (City Manager Jim) Ferguson and informed him that they have determined through their investigation — which included an interview with the former CFO — that the former CFO had illegally converted city money for his own personal use. The city is continuing to review all of its accounts and finances, and at this time, it appears that approximately $5,000 in cash has been embezzled.”

Presently, Cochran said the city owes no money to the federal government.

“They levied a penalty from the first quarter of 2012 where the filing wasn’t correct or wasn’t made on time,” Cochran said. “The chief financial officer didn’t tell anyone and apparently tried to fix the issue himself. The mayor, city manager and myself were not made aware of this issue until November when we found out the federal government had levied the bank accounts. The government took $14,000 out of our accounts. The bank had the money taken out automatically. We have paid everything we owed. We are current on all of our payroll taxes and everything the city owes to the government. We owe no other penalties.”

Mercer County Prosecuting Attorney Scott Ash said the West Virginia Bureau of Criminal Investigation is handling investigation into the theft of city funds. Ash said no charges have been filed at this time due to the ongoing investigation.

“We are going to wait until we have the report in hand,” Ash said. “This is a case we are giving good priority. It didn’t sound like a vastly complicated scheme. Until the report comes in, we do not know what charges might results. At this point, we know there is a lot of smoke, so we are pretty sure there is a fire.”

Meanwhile, Cochran said the city has already begun advertising for a new chief financial officer.

“The city started advertising for a new CFO in November,” Cochran said. “We have a finance staff and the three members of our finance department are doing all they can with this situation while maintaining the day-to-day operations for the city. We have a part-time interim CFO who is also working with them.”

Cochran emphasized city administrators have faith in the city’s current financial staff.

“The city has a bunch of great employees,” he said. “This is an isolated incident. We have all the faith in the world in our employees, in our finance and other departments.”

Cochran said city officials were “deeply troubled by the former CFO’s breach of his fiduciary duty and trust to the citizens of Bluefield.” Cochran said the city’s system of checks and balances is also undergoing “a thorough review” following the incident.

— Contact Kate Coil at kcoil@bdtonline.com