Karen Guillet was operating something of a Ponzi scheme in the Oxford Tax Collector’s office for at least six years, town officials said during testimony at Superior Court in Milford Friday.
Checks and cash for tax payments would come into Guillet’s office — but wouldn’t necessarily get applied toward the account of the person who paid.
Instead, Guillet floated the payments to other accounts in an elaborate scheme to hide missing cash, officials said Friday during testimony at a probable cause hearing in the town’s civil lawsuit against Guillet.
First Selectwoman Mary Ann Drayton-Rogers and Finance Director James Hliva testified during the two-hour hearing, outlining how the town found out about the missing money and how Guillet was allegedly hiding it.
“We claim that the tax collector has taken money,” said town counsel Fran Teodosio. “There is a tremendous amount of anomalous action.”
The hearing was held to determine if there was probably cause to attach Guillet’s assets to the case — and if so, how much?
Judge Arthur Hiller ruled in favor of the town’s request to attach her assets in the amount of $699,000 — triple the amount of cash the town claims is missing from the town’s tax collections since 2007.
Guillet was not present at the hearing. The state police are investigating the allegations of missing money, but no criminal charges have been filed against Guillet.
How Did The Town Find Out?
The investigation started in December 2009 — when a town hall employee came to Drayton-Rogers with an old check and two deposit tickets found in the tax collector’s office.
The check was suspicious because it should have been deposited. Instead, it was still in the office, apart from other tax collections, Drayton-Rogers testified.
So Drayton-Rogers had Teodosio mail the check and two deposit tickets to the town’s bank, Naugatuck Valley Savings and Loan, to get more information.
The bank wrote back: “We have no record of this deposit or deposit slip,” Drayton-Rogers testified.
Drayton-Rogers then had the town’s auditor review records from the tax office, which resulted in a list of “questionable deposits,” Drayton-Rogers said.
At that point, Drayton-Rogers scheduled a meeting with Guillet in her office.
‘I Guess I Took It’
Drayton-Rogers met with Guillet first on Jan. 7, 2010, where she told Guillet that “fraud had been confirmed” by an auditor.
They scheduled a meeting for Jan. 13 to review the auditor’s report, Drayton-Rogers said. The town’s finance director, auditor and Drayton-Rogers’ administrative assistant were also at the meeting.
The group focused on a particular deposit from Nov. 10, 2009, which appeared to be missing $3,093.42 in cash.
Drayton-Rogers said she asked Guillet three times where that cash went.
The first time, Guillet answered that it wasn’t in the bank, Drayton-Rogers testified.
The second time, Guillet said the money wasn’t in her office.
“And the third time I asked, she said: ‘I guess I took it.’” Drayton-Rogers said.
At that point, Drayton-Rogers told Guillet to hand in her keys, and had her escorted out of the building. On her way out, Drayton-Rogers testified, Guillet allegedly said “I’m glad it’s over with.”
Guillet was placed on administrative leave that day, and later resigned her post.
After Guillet was put on leave, residents in town started coming forward with delinquent tax payment notices for taxes they had already paid.
In most cases, the residents or businesses had receipts or returned checks for their tax payments, Finance Director James Hliva said.
Drayton-Rogers formed an ad-hoc committee to look into the complaints and investigate other discrepancies in the tax collector’s records.
“The starting point we used was the listing of taxpayers who had been issued delinquency notices, and they came back to us with proof of payment,” Hliva testified.
Hliva, who was on that ad-hoc committee, said the group started looking into only the delinquency notices with the largest dollar amounts, based on the influx of complaints. The total dollar amount of complaints — $671,768. That’s the amount the town noted in its lawsuit against Guillet.
Hliva said that more delinquent notices have come forward to the town since the suit was filed — including a taxpayer who complained this week.
The ad-hoc committee had to take several steps to investigate the discrepancies.
First, they took each canceled check from the taxpayer back to Naugatuck Valley Savings and Loan, Hliva said. The committee then asked the bank to see all the checks deposited in the same batch.
Then they compared those checks with records kept on the tax collector’s computer for the same day as the deposit.
They discovered the checks deposited did not match the checks that had come into the tax office during that day. And they didn’t match the taxpayer accounts that had been marked as paid that day, Hliva said.
The kicker — the amount of cash taken into the tax office was often much higher than the amount of cash deposited at the bank. In one specific example highlighted during the hearing, $9,255.58 in cash was taken into the Tax Collector’s office, but only $858.54 was received at the bank.
“Checks were being taken from different deposits to make up for the cash shortage,” Hliva testified.
It was done so the total deposit amount appeared to match the amount taken into the Tax Collector’s office that day, Hliva said.
“Like a Ponzi scheme?” Judge Hiller asked.
“Exactly,” Hliva answered.
The hearing was held to determine if probable cause existed to attach Guillet’s assets.
Guillet’s attorney, Dominick Thomas, said that based on Guillet’s statement to Drayton-Rogers — that she had taken the $3,000 cash — he knew that probable cause exists.
“Based on the testimony, there’s no doubt in my mind the court is going to find probable cause to an amount,” Thomas said. “The sole question here is the amount.”
Click play on the video at top to hear Thomas talk about the hearing Friday outside of court.
Thomas objected to discussions about checks because the allegations against Guillet are that she took cash. When Teodosio tried to enter into the record a report from the ad-hoc committee outlining its suspicions, Thomas again objected.
“I don’t think it’s relevant to the claims anything was taken,” Thomas said. “The document just says that for a period of time, there was something wrong with the computer.”
Thomas said he will spend time now researching the same checks and deposit slips that the town has been looking through for the past year, as the case moves forward.