Armed with not much more than a sneaking suspicion, two finance clerks in Shelton City Hall triggered an investigation that eventually saw their boss charged with stealing more than $900,000 from taxpayers over 11 years.
The clerks’ former supervisor, Sharon Scanlon, was the city’s assistant finance director.
Scanlon, 48, was charged last month with first-degree larceny and 56 counts of first-degree forgery. She made her first appearance in front of a judge Tuesday in Derby. It lasted less than a minute. Her case was transferred to Superior Court in Milford, where more serious criminal cases are heard.
Her attorney said afterward that Scanlon intends to plead not guilty at her next court date.
The state police affidavit authorities used to charge Scanlon was released Tuesday, giving the first public glimpse into the case against the long-time municipal employee.
According to an account given to investigators by Wendy Gally, a clerk in the city’s finance department, she and another clerk, Pat Carlson, were looking for a file on Scanlon’s desk last June when they noticed a city check made out for $7,825 — and nothing else written on it.
A little research showed the check had been voided, Gally told police. So she and Carlson wrote the check number down and decided to follow up on it.
The bank records came about a week later. The check had been made out to Scanlon.
And that was just the beginning.
Gally allegedly told police she and Carlson “discovered that there were checks written to Sharon Scanlon going back at least three years.”
They put the information they found together and brought it to Louis Marusic, who was Shelton finance director at the time — and Scanlon’s boss.
The two clerks wanted their names kept out of any probe that was coming — and they didn’t want to deal directly with Shelton Mayor Mark Lauretti.
“We were not comfortable giving this information to the Mayor because Sharon and him appeared to be great friends,” Gally told investigators, saying it appeared that Scanlon had Lauretti “wrapped around her finger.”
“We asked Louis not to get us involved when he reports that Sharon was stealing from the city because we were scared and did not want to be labeled as snitches,” Gally’s statement to police went on.
According to the affidavit, they weren’t the only whistleblowers reluctant to take credit — Marusic turned the information over to the city’s auditor, David Cappelletti, asking the auditor to “keep his name out of this matter,” Cappelletti later told police, according to the affidavit.
Marusic has since been replaced as finance director. Last month he declined to comment on the case until it’s resolved.
The 13-page affidavit, written by Trooper Shawn Sequeira of the Connecticut State Police Central District Major Crime Squad, concludes Scanlon took about $914,000 from taxpayers.
“The results of this investigation have further shown that the accused wrongfully appropriated approximately $914,153.50 from bank accounts belonging to the City of Shelton beginning in the year 2001 and continuing through July 2012,” the document says.
State police arrived at that number after a five-month investigation revealed deficiencies in the city’s system of checks and balances.
Mayor Mark Lauretti said Tuesday the internal controls that failed to detect Scanlon’s alleged misdeeds have since been addressed.
Lauretti Reacts
Reached by phone Tuesday, Lauretti bristled at the suggestion he was Scanlon’s patsy.
“I’m not sure that any employee would be that much in the know to be able to make that much of an allegation,” Lauretti said. “We had a close working relationship like I do with a lot of department heads. I find that kind of curious, that representation.”
Asked how Scanlon’s theft could have gone on for so long without being discovered, Lauretti said: “I guess we probably have to talk to the finance director or the auditors.”
The mayor said reforms have been put in place at the finance office since the theft came to light.
“Without getting into a lot of details, it was a closed process before, unbeknown to me,” Lauretti said. “There’s some duplication of efforts now that are being put in place.”
The changes mean more oversight, but Lauretti said no system is completely perfect.
“I don’t think anybody can be 100 percent confident,” he said. “You’re dealing with people put in a position of trust.”
The Probe
The Scanlon case was first referred to state police in August by Milford Superior Court State’s Attorney Kevin Lawlor.
After talking with Shelton police, the city’s auditor, and gathering bank records and other evidence, investigators interviewed Gally and Carlson at City Hall.
“Sharon was a laid back boss with very little managerial skills,” Gally told investigators Sept. 18, according to the affidavit. “She would spend a large amount of her time on the Internet.”
“It seemed like Sharon was close to the mayor and it appeared that she had the Mayor of Shelton wrapped around her finger,” Gally went on, saying Scanlon received special privileges, such as flexible work days.
After recounting to police how she and Carlson discovered Scanlon’s alleged thefts, Gally went on to say that she “never suspected” Scanlon.
“Sharon always talked of how she struggled with paying bills such as her kid’s college tuition,” Gally said, according to the affidavit. “I have no idea what Sharon spent that money on.”
But Gally said she had noticed irregularities in the finance office.
“One thing that bothered me is that I always wondered how our Accounting Department’s money never balanced on paper and at the end an adjustment would always be made without real justification,” she told investigators. “I never understood how past auditors never caught this and the audits would go through without a problem.”
In October, police met with Carlson, who for the most part corroborated Gally’s account of how the thefts were discovered.
In addition, the affidavit says that investigators “discovered that the files retained at the Shelton City Hall did not reflect the authentic bank statements” from the bank.
Most of the checks Scanlon drafted she falsely recorded as voided, or with a fake name, in the manual check logs at City Hall, the affidavit says — but then those checks were ending up being deposited by Scanlon.
And though she removed most of the returned checks from City Hall files when they would be sent back by the bank after being deposited, the affidavit says a search revealed that Scanlon “inadvertently missed several of the separate cancelled checks made payable to her that were found in the files.”
A review of the city’s manual check logs by state police “discovered entries indicating voided checks and or fictitious vendors, when in fact the checks were made payable to and endorsed by the accused,” the affidavit says.
The city employee who had been responsible for maintaining and reconciling the city’s bank accounts, according to the affidavit?
Scanlon.
Next Steps
Scanlon’s first court appearance Tuesday was procedural in nature.
She signed a form notifying her that the case against her is being transferred to Superior Court in Milford, then left the courthouse with her lawyer, William Dow III.
Outside, Dow said Scanlon will plead not guilty in Milford later this month.
“When we appear on the 26th of February, we’ll enter pleas of not guilty and address the charges there,” he said.
Dow said he hasn’t yet read all of the details contained in an affidavit charging Scanlon in the theft.
“I’ve skimmed a couple pages of it,” Dow said. “It really requires some study.”
Watch the video below for more comments from Dow.
In addition to the criminal charges against Scanlon, the city also filed a lawsuit against her last year.
She resigned as assistant finance director Aug. 23, after Lauretti threatened to fire her.
The city’s lawsuit is pending. In September a judge put a $348,416 lien on Scanlon’s Crescent Drive house.
Gally, Carlson and especially Marusic should be ashamed of themselves. As public employees they have an obligation to report theft from the taxpayers. Immediately.
These people were primarily concerned about looking like snitches? This is what is wrong with many public employees. They have forgotten that their first obligation is to the taxpayers, not to themselves.
Maybe that is why the stealing went on so long. But it still doesn’t explain why there was a complete lack of the kind of segregation of duties that would have prevented this from occurring or how in God’s name neither the Finance Director nor the Auditor could miss this over the course of a decade. The base incompetence is astounding.
Not in-the-know enough to make a deep judgement, but to me it seems Gally and Carlson DID do the right thing by bringing the issue to the attention of Marusic, who brought it to the attention of the city’s auditor, David Cappelletti, who apparently brought it to police
But the competence of Mr. Cappelletti appears severely deficient, considering there is alleged to be years of theft under his nose. It seems he should be fired, but the larger question remains: how are all the towns of the Valley so afflicted with theft by town hall officials? What are the qualification standards applied to the hiring of all these auditors missing it? Are they all really free of any liability when derelict or incompetent? What is the point of paying them at all?
My point was the mentality of City officials who did not want to be seen as being a snitch. This was criminal activity. They have an obligation to report things on the record. As for the missing checks and balances the responsibility lies with the Finance Director whose job it is to ensure that there is a separation of duties, e.g.; the person with access to checks is not the one signing the checks or verifying the register, etc. How he can allow the office to force balance is inconceivable. As for the auditor, I believe Mr. Cappelletti is new and is the one ultimately responsible for unearthing the theft during the audit, but an auditor is not a forensic accountant; he is really only testing procedures and a relatively small number of random transactions. An auditor is really just giving an opinion on the books as presented by the finance operation and presenting recommendations and concerns for implementing better policies and practices.
900k over 10 years, anyone else have a problem with that level of supervision
Mrs. Gally and Mrs Carlson did exactly what they were supposed to do once they uncovered what was going on. As for Supervision, Mrs Scanlons direct Supervisor was Mayor Mark Lauretti and only Mark Lauretti. As this situation moves forward the facts will be presented and we will all find out where the break downs occurred. As for the two women being afraid to be called snitches, its not about that, its about feeling the wrath and vindictiveness of Lauretti!!