WESTFIELD – The city’s insurance company is paying funds stolen by an employee of the Collector’s Office.
The insurer is sending a check for $110,278 which former employee Susan Duffy admitted to stealing during her trial in U.S. District Court in Springfield between 2008 and 2011.
Duffy, as part of the plea agreement entered in December, 2012, wrote a first-person account of how the scheme worked for three years. Duffy was hired, under the name Susan Hall, in 2005, and in 2008 began to skim property and excise tax and utility bill payments from the Collector’s Department. The plea agreement in which Susan Duffy explains how the scheme worked, very similar to a Ponzi scheme,
Duffy said she found a way to manipulate that system beginning in 2008. To “conceal my theft of cash, I posted checks received on the ‘checks’ adding machine on a given date, but did not post the corresponding bill on the ‘bills’ adding machine tape until weeks later for the bills to be posted as paid. By not posting the corresponding bills until a future date, I concealed the theft of cash receipts given that the Tax Collector’s Office computed cash receipts by subtracting the total for the checks adding machine from the bills adding machine tape at the end of each business day.”
Duffy said that on several occasions she received a large payment, then “posted portions of those checks to the accounts of tax payers from whom I have stolen their cash payments in order to conceal my theft.”
Duffy gave an example of a 2011 payment by Westfield State University of $82,317.91 that she used to credit tax and utility accounts from which she skimmed money.
It was one of those large payments, $50,000, that was posted as delinquent by the city, while the taxpayer had proof that the payment had been received, that tripped the investigation of an “irregularity” within the department, leading to an internal audit and, subsequently, criminal investigation by the Westfield Police Department and Internal Revenue Service criminal investigation division.
The plea agreement requires Duffy to enter into payment plans to reimburse the city for the stolen $110,278 and to recoup the IRS a total of $30,800 based upon the calculation of the additional income tax Duffy should have paid for her ill-gotten gains between 2008 and 2011, when her employment with the city was terminated.
Mayor Daniel M. Knapik said this morning that the city will notify the U.S. District Attorney about the insurance payment, who may request Judge Michael A. Ponsor to modify Duffy’s sentence which requires she repay the city. That sentence could be restructured to require Duffy to repay the city insurance provider.
“The insurance company has paid the claim, so the bottom line for the citizens of Westfield is that we got the money back,” Knapik said.
Duffy will appear in court on March 27, 2013 to be sentenced on two counts for the embezzlement charge and for filing a false income tax return in 2010 at a hearing slated for 2 p.m. in Springfield.
