Coventry’s entrenched town clerk and treasurer, Cynthia Diaz, will lose her job at midnight Thursday if she has not found a $2.5 million bond to cover her offices, officials said in a meeting Monday.
“My thought is we have to prepare for that – one way or the other,” Coventry Selectboard Chairman Mike Marcotte said.
Board members agreed the town would not take action until they discussed their options Friday.
Marcotte said state law will automatically disqualify Diaz as clerk and treasurer if she does not meet the deadline Thursday night. Once that time has passed, the board must transition Diaz out.
Efforts Monday to reach Diaz were unsuccessful.
State law requires towns to insure offices that handle public money.
The town lost its insurance policy in late May when the Vermont League of Cities and Towns paid Coventry a $500,000 claim for nearly $870,000 in missing tax money.
The payout was the maximum amount the insurer could pay Coventry.
The Selectboard demanded that Diaz find a bond to cover a $2.5 million insurance policy, equivalent to the amount in the town’s checking account. Board members are worried that those funds, too, could go missing.
Auditor Jeff Graham found that in total Coventry is missing more than $1.4 million.
Since Diaz took office in 2004, the Selectboard has tried to explain discrepancies in the town’s accounts, but five previous auditors the town hired made little progress because Diaz denied them the documents they needed. The first auditor said she suspected fraud was occurring in Coventry. Others raised similar alarms.
But without definitive findings, a portion of the town discredited the Selectboard’s concerns.
Now 13 years later, fewer people can.
Town officials say the insurance company’s payout gives Graham’s forensic accounting credibility and reinforces the Selectboard’s longstanding fears that Diaz has been embezzling for years.
Twice before, Diaz was investigated on criminal charges of embezzlement by the Vermont Attorney General’s Office and Newport Police Department. She was not convicted in either case.
The FBI is now conducting a separate probe into Diaz. At one point, she had an offshore bank account in the Bahamas and received tens of thousands of dollars in wire transfers from Panama.
The Vermont State Police is also investigating.