Town of Pocahontas sign ...

Bluefield Daily Telegraph file photograph ....

TAZEWELL, Va. — An Abbs Valley woman and former town treasurer for Pocahontas pleaded guilty to embezzlement Wednesday and must repay the more than $107,000 she took from the town.

Terri Lynn Phipps, 42, was sentenced in Tazewell County Circuit Court to five years in jail, but the sentence was suspended and she will be under indefinite supervision, said Assistant Commonwealth’s Attorney Katie Gallagher.

Guidelines for sentencing in embezzlement cases can be complicated, she said, and since Phipps had no previous criminal record and must be able to pay back the money the guidelines called for the probation, suspended sentence and repayment, Gallagher said.

However, she must pay the town $7,700 and the insurance company (that handled the town’s loss) $100,000, she added, and if that is not done, Phipps could still face jail time.

Two other embezzlement counts were nolle prosequi, Gallagher said, which means if Phipps violates the supervision or fails to pay back the money she could be recharged on those two counts.

Phipps was indicted on three counts of embezzlement by a public officer that occurred over an 18-month period from July 1, 2016 to Dec. 31, 2017.

“That’s one count for each six-month period,” said former Commonwealth’s Attorney Mike Dennis at the time. “It combines the sums of six-month intervals.”

She was arrested in September 2018.

Pocahontas Mayor Ben Gibson said Friday he is glad it’s over.

“As far as the town is concerned, we are glad it’s over and Mrs. Phipps admitted guilt,” he said. “The town has become a stronger place since that happened.”

Gibson also said he is also pleased she is required to pay restitution to the town.

The incident started after Gibson noticed Phipps, who had been employed by the town as treasurer since 2014, started missing “a lot of work” in October and November 2017.

Gibson said it was during this time he found some bank overdraft notices.

“I went to the bank the next day and reviewed some of the deposits the treasurer makes,” he said. “It didn’t make sense that the account would be past due. We then saw some things that concerned us.”

That prompted the town to call the town’s auditor in Abingdon to start reviewing records.

“One thing that was brought to our attention was the water accounts people had receipts for,” he said. “They had paid their bills with cash but we did not show the money going to the bank.”

Gibson said he knew the town was struggling with some financial issues, but thought it was a matter of less revenue being collected.

“In November last year (2017) we were assuming we had enough money for a bond payment,” he said, but the town had to sell a piece of property to pay it.

“When something like this happens in a small municipality … everything is impacted,” he said. “What we were being provided had been misconstrued on fake financial reports at council meetings. We would also pay bills after being told they were lost in the mail.”

As soon as Gibson first discovered the problems he contacted Dennis to start the ball rolling on an investigation.

“It came to light when people were receiving statements for bills they had already paid,” Dennis said. “But the funds had been diverted. It (the complaint) came to my office then the case was referred to the Virginia State Police because they have a forensics accountant on staff to assist.”

Virginia State Police Agent Josh Stitt, a forensics accountant, was called in to examine the town’s records and Phipps was charged and arrested.

— Contact Charles Boothe at cboothe@bdtonline.com

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