Town officials outraged that former Coventry attorney handed over tax sale money to Diaz

Cynthia Diaz

Cynthia Diaz, the Coventry town clerk and treasurer, in her office at the Coventry Community Center. Photo by John Lazenby

Coventry town officials are trying to understand why their former town attorney gave their former delinquent tax collector, Cynthia Diaz, checks with the proceeds of the sale of several properties for back taxes.

Diaz, the former Coventry clerk, treasurer and delinquent tax collector in the tiny Northeast Kingdom town, has been under criminal investigation by the FBI and Vermont State Police for months. An auditor found in March that the town is missing at least $1.4 million.

Former town attorney Bill Davies, who was fired in early May, handed the checks to Diaz outside the town office on May 25, according to the Selectboard.

Selectboard Chairman Mike Marcotte said under state law, Davies was required to deliver the money to the current delinquent tax collector. Davies served as the town attorney at the time of the tax sale.

Davies also gave Diaz the paperwork documenting the sale of the properties for back taxes owed to the town. Diaz hasn’t given the town those documents, preventing officials from recording the sale, tracking the money and verifying the value of the checks, Marcotte said.

“That’s the big concern,” said Delinquent Tax Collector Kate Fletcher.

As of last Thursday, town officials said the checks had not been deposited in the town’s bank account. The sale of the properties was in 2016. The town holds the money in its accounts for about a year while the sale finalizes and then gives the money either to the original property owner if the property changes hands or to the bidder if the original property owner pays his debt and reclaims his property.

Diaz declined to comment for this story.

Davies said the town is confused. He gave Diaz the checks – there were three of them, he said, totaling about $3,500 – because state law says he is supposed give the funds to the town treasurer, not the delinquent tax collector.

The checks are written to “Cynthia Diaz, Coventry town treasurer.”

Marcotte was aghast that Davies wrote the checks, drawn from an account held in trust for the town, in Diaz’s name.

“That’s unbelievable,” Marcotte said. “If it’s not illegal to do that, there’s certainly an ethics issue there.”

The town now has issues with two people, he said. “One, the former attorney of the town. The other, the former delinquent tax collector. They both should know what they’re doing.”

Marcotte said the Selectboard will meet with its acting attorney, Paul Gillies, to decide what to do.

Mike Marcotte

Coventry Selectboard Chair Mike Marcotte. Photo by John Lazenby

Gillies, who is representing the town in a civil lawsuit against Diaz, declined to comment on the handling of the checks. So did Vermont League of Cities and Towns Executive Director Maura Carroll.

But a handbook on the league’s website lists the delinquent tax collector as the town officer charged with handling money from a tax sale.

Davies said he didn’t know about the town’s concerns until he was contacted Thursday by VTDigger. He stopped speaking with Coventry officials when he received a letter on May 15 in which the town fired him, he said.

“I don’t really care about their concerns,” he said. “They had advised me, again, effectively immediately, that I cease providing any legal advice to town officials.”

Coventry’s three-member Selectboard voted unanimously in a May 8 meeting to fire Davies and fill the vacancy with Gillies. Marcotte said Davies had been Coventry’s attorney for more than 25 years. During that time, he gave the town legal advice about how to handle allegations that Diaz had stolen money from the town. VTDigger confirmed that Davies refused to provide an audit, produced by Anne Marie Mooney in 2007, to town officials.

After Diaz took office in 2004, the Newport Police Department investigated an accusation that she embezzled from a local paving company where she’d previously worked.

The criminal charge was dropped, but the Selectboard commissioned an outside auditor to review its books. That auditor has said she was never able to complete her work because Diaz refused to provide financial documents.

The Vermont Attorney General’s Office opened a criminal investigation into Diaz in 2008 in connection to her role as clerk and treasurer. Marcotte hoped state investigators would answer the town’s financial questions. But the investigation shifted from embezzlement to tax evasion, and in 2011 Diaz pleaded guilty to two misdemeanors.

Four other auditors tried to make sense of the town’s finances, but failed like the first auditor because they were unable to get access to the files they needed to review.

“All that was happening, then nothing happened,” Marcotte said. “I don’t know if some of the board felt with the new attorney that we have, things started to move in a quicker direction than what we had previously.”

It wasn’t until March that a sixth auditor, after two years of work, found that more than $1.4 million was missing. And in May, an insurance company paid the town nearly $500,000 in response to a claim the town submitted using the auditor’s work.

Diaz was forced out of office last week. When the town’s insurance company paid the claim, it canceled the town’s policy covering Diaz.

State law requires that town officers who handle money be insured, and the Selectboard gave Diaz until Friday to find a bond for $2.5 million to obtain insurance for the town. Diaz missed the deadline and was subsequently ousted as town clerk and treasurer.

Dan Schwartz

Dan Schwartz has worked as a staff reporter at daily newspapers in Alaska, the Four Corners area and Santa Fe, New Mexico, for half his 20s. He has received numerous awards for his investigative reporting on corruption. Read more


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  • Rich Lachapelle

    There is a price to be paid for having a velvet glove criminal justice system like we have had in Vermont for the last 50+years. In the case of embezzlement, particularly involving public money, what have you got to lose? IF you get caught, You MAY have to pay back SOME of the money.

  • Paul Drayman

    “The checks are written to “Cynthia Diaz, Coventry town treasurer.”” Just curious how they know the checks were written that way. Were they the original checks from the bidders or were they checks drafted out of that trust account? Why are checks not made out to “Town of Coventry”?

    • StanRiskis

      They know they were written to “Cynthia Diaz” because the former attorney said so. He wrote the checks. The money is deposited into a bank account and held for a year. After that time, the money is either paid back to the buyer of the property if the back taxes are cleared, or to the former owner of the property if the taxes are not paid and the sale goes through. The attorney is on charge of that account. He wrote the checks out of that account to the town so he knows whose name was on the checks.

  • John Klar

    ““I don’t really care about their concerns,” says Davies. Sounds just like Bill — why care about one’s clients, anyway? He also refused to provide an audit ten years ago that might have prevented further diversion of taxpayer money? I’m sure he doesn’t really care about what people think about that either.

  • StanRiskis

    Finally outraged? They’ve been pursuing this for more than a decade. Hired four auditors. There’s been multiple police investigations. It’s not the town officials, it’s the voters who keep electing her. They deserve to pay whatever taxes end up being to cover this mess.

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