LIVERMORE FALLS – Selectmen told the public Monday that about $102,000 is missing from the town’s sewer account, and that former clerk Faith Nichols has admitted taking it.
The matter has been referred to the Androscoggin County Sheriff’s Department for investigation.
The town has received $20,000 in restitution so far, selectmen’s Chairman Ken Jacques said Monday.
Selectmen also learned recently, Jacques said, that the town was notified last spring that the former sewer clerk was not bondable and that former Town Manager Alan Gove knew so, but didn’t tell selectmen.
Auditors from RHR Smith informed selectmen several weeks ago about what appeared to be problems in the town’s sewer account, Jacques said.
“When we learned the scope of the problem, we took immediate action,” Jacques said reading from a prepared statement. “The person who handled the sewer account is no longer employed by the town. We have informed the authorities of the situation, and the matter has been referred to the Androscoggin County Sheriff’s (Department). We are and will continue to pursue restitution of the missing funds to the town. To assist the town in pursuing recovery of the missing funds, we have retained the law firm of Jensen Baird Gardner and Henry of Portland.”
The town has already implemented the auditor’s recommendations on handling receipts for the sewer account and improving internal controls, Jacques said.
A representative of the sheriff’s office was not available Monday night.
Nichols of Livermore Falls resigned last month, citing health and personal reasons. When Nichols was reached Monday night, she said she was advised by her attorney, Alan Stone, not to comment. Nichols said Stone would talk to the media, but he was not available at his office Monday night.
A full audit of the sewer account has been completed, and the town’s auditor was present Monday.
Auditor Ron Smith said Monday that his firm came to do the annual independent audit for the town on or about Sept. 20 and at the end of the week they noticed some issues.
“While testing internal controls at the town we noted that the person responsible for maintaining the town’s sewer general ledger also approves then enters sewer journal entries to update and correct this general ledger,” Smith said. Proper accounting controls require independent approval of all journal entries before entering in the general ledger.
Smith also noted that the person in the position had manipulated and destroyed town records, which had gone unnoticed for a long period of time.
He also noted that while conducting the audit, it appears that documents are missing or destroyed.
Smith said the money was taken during an 18-month period, with the majority of it missing during a nine-month period.
The auditing firm, with the help of a software company, recreated the town’s records for the past 18 months beginning in February 2004, Smith said.
He also noted that many of the cash receipts were recorded, back-dated, and customer history purged from the town’s financial software after data entry. It should also be noted that many cash receipts and sewer aging reports could not be obtained from management, he said.
Smith also said management confronted the sewer clerk regarding allegation of missing funds, and “the sewer clerk has admitted to using these funds for personal use.”
The sewer clerk had nearly complete oversight of funds collected for the sewer department, Smith said.
Town Treasurer Kristal Flagg said that when she was presented information by the former clerk, it matched what was on the sheet and computer.
The sewer funds now go through the front counter so that Flagg will be able to keep track of the money, Smith said.
The town will file a civil lawsuit against the former sewer clerk and attach a lien on her home, he said, and it will also file a claim with its insurance company for coverage under a clause pertaining to dishonest employees.
The town will get its money back, Smith said.
He also noted that the money was missing from Livermore Falls and didn’t affect the town of Jay, which owns nearly half the wastewater treatment plant.
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