Confidential Report Gives Some Details On Derby Investigation

The report kept from the public’s view regarding the alleged malfeasance of a former Derby tax clerk is far from the Book of Revelation, but it provides some clarification on last year’s internal investigation.

The three-page report summarizes steps Derby Corporation Counsel Joseph Coppola took last year after learning former city tax clerk Katherine Kulhawik may have improperly voided cash tax payments within the city’s tax database.

The report details suspicious actions regarding cash transactions and motor vehicle tax clearances. While the report alleges cash transactions were mishandled and voided — the report does not allege funds were stolen or went missing.

At the same time, the report doesn’t give a comprehensible answer as to what may have happened to some cash tax payments. Example — the report states a resident had a receipt showing she paid Derby a $456.29 car tax bill, but that payment wasn’t reflected in a balance because it had been voided.

What happened to the cash, if, in fact, it was paid?

Derby officials have been careful to say the city “may have” suffered “damages” from the mishandling of cash and taxpayer data manipulation.

Aldermen voted in January to accept Coppola’s report as attorney-client confidential correspondence, therefore keeping it from the public.

The vote to label it as such enjoyed bi-partisan support. Officials at the time said the report contained sensitive information.

The Valley Indy attempted unsuccessfully to gain access to the document through a Freedom of Information complaint.

However, the non-profit news website eventually obtained a copy of the report.

The report follows. The article continues after the document.

Derby Confidential Report by ValleyIndyDotOrg


Kulhawik was escorted out of Derby City Hall June 25, 2012.

She eventually worked out a separation agreement with the Derby Board of Aldermen saying she “may have” mishandled cash, misapplied tax payments, deleted cash payments, manipulated data and suspended tax billing statements while she worked in the Derby tax office.

Kulhawik has since reimbursed the city $9,000. The city promised not to file a formal complaint with law enforcement after she paid a first lump sum of $5,000. Kulhawik resigned and promised not to file a lawsuit nor exercise any union rights.

The Report

According to the confidential report, Kulhawik voided payments and marked taxpayer accounts as “suspended” in the city’s tax database. The move prevented the system from automatically generating delinquent notices that would have been mailed to taxpayers, alerting them to the fact they owed taxes.

Coppola’s report states 78 transactions involving 52 taxpayers were classified as suspended, totaling about $13,600 in tax billings. The confidential report does not explain how elected officials settled on Kulhawik’s $9,000 reimbursement payment.

Coppola sent letters to the 52 taxpayers. None of the taxpayers are named in the report.

“I mailed requests to the taxpayers to request them to contact me and to obtain copies of any documents they had regarding proof of payment,” Coppola states in his report.

Just eight taxpayers responded with documents. The report doesn’t specify what kind of documents were produced.

Coppola spoke to six taxpayers but “not one of them could identify who they had received the documents from in the tax office,” according to the report.

The six taxpayers who talked to Coppola all said they paid in cash.

The report does not indicate who, if anyone, including Kulhawik, benefited from the alleged data manipulation.

“The (six) taxpayers that I had conversations with indicated that they had paid cash, but could not describe who they made the payment to other than ‘a woman in the tax office,’” Coppola states in the report.


It should be noted that Derby Aldermen held a series of executive session meetings with Coppola before voting on a separation agreement with Kulhawik. Coppola’s report was prepared after she resigned.

Theoretically, many of the open questions in the report could have been answered by Coppola verbally during the Aldermen’s lengthy executive sessions, which were closed to the public, as was the board’s right.

Car Tax Releases, Again

Derby’s tax clerk problems were revealed in 2012 after a taxpayer received a motor vehicle tax release from the tax office.

Residents take the document to the Department of Motor Vehicles to prove they paid their car taxes.

The DMV, for reasons not stated, had problems with the woman’s receipt.

The Derby resident’s motor vehicle tax release stated she paid $459.29 in cash — but no one in the tax office could find the cash.

The confidential report doesn’t offer any theory as to where the cash may have gone, other that the transaction had been “voided” in the computer database. Click here to read documents Derby released last year, at the start of its internal probe.

Derby then began looking at previous tax payments.

A “great number of voids” were found between March 26, 2012 and June 19, 2012. The majority of the “suspended” accounts were put into that category May 31, 2012.

The 78 transactions were suspended using Kulhawik’s computer ID, according to Coppola’s report.

The tax office has since taken steps to change passwords and procedures regarding the issuance of tax release stamps, the report says. The reforms are not detailed in the report.

The report states Coppola discussed his “findings with the City of Derby Police Department,” but offers no details.

Coppola advised the Aldermen to go the “separation agreement” route, as opposed to asking for a law enforcement investigation.

“Ms. Kulhawik retained legal counsel and had Union representation. In light of my findings, I recommend to the Board of Aldermen to resolve all issues, including employment rights, by way of Agreement,” the report concludes.

The report also states the Derby tax office “has instituted policies and procedures regarding data recording” that include “checks and balances which would make a similar manipulation nearly impossible to occur again without quick discovery.”

No reforms are detailed. The report doesn’t spell out what checks and balances were lacking in the first place.

Coppola’s involvement in the matter started June 19, 2012, according to the report. The investigation concluded 35 days later.


There have been accusations of impropriety within tax offices locally in Ansonia, Derby and Oxford. A finance scandal is brewing within Shelton City Hall, too. Formal police complaints to state troopers were made in Oxford and Shelton.

Based on a reading of Derby’s confidential report, Derby’s scandal most closely resembles improprieties discovered in Ansonia’s tax office in 2012. Both involved motor vehicle release forms, documents that are easy to manipulate if no one is checking.

In Ansonia, the city’s tax collector was giving motor vehicle tax release documents to people who hadn’t paid their car taxes. Those who benefited included city employees and the tax collector’s mother.

However, Ansonia’s investigation was made public, with more details than Derby’s confidential report.

A copy of Ansonia’s report can be read in its entirety here.

Ansonia police reviewed the city’s “fact-finding report,” but opted to have an outside agency actually investigate.

The city passed its report to a prosecutor in Milford to see if criminal charges were warranted. None were filed.

In addition, Ansonia Aldermen held a series of public meetings to discuss what happened, how it happened, and how to prevent it from happening again.


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