[D]ocuments obtained by VTDigger show that nearly a decade ago state investigators looked into allegations that the former Coventry town clerk embezzled money from the Vermont Department of Motor Vehicles.
In December 2008, two state agencies opened separate criminal investigations into Cynthia Diaz, Coventry’s then town clerk, treasurer and delinquent tax collector.
Diaz at the time was authorized to register snowmobiles with the Vermont Department of Motor Vehicles and Vermont Association of Snow Travelers, or VAST.
Investigators looked into about a dozen instances in which Diaz accepted registration fees for snowmobiles and allegedly failed to forward the money to the state.
Diaz was removed from office last month after an auditor found that the Town of Coventry is missing at least $1 million, possibly more than $1.4 million, according to an auditor involved in the case.
Diaz handled property tax payments and delinquent taxes for the town over a 13-year period, starting in 2004. Allegations that she was stealing money from Coventry surfaced in 2006, but neither the town, nor the Vermont Attorney General’s office brought embezzlement charges. Diaz has said she did nothing wrong.
The Vermont State Police, which recently had been investigating the matter, has turned over the probe to the FBI, according to Scott Waterman, the communications director for the police.
In 2009, the Vermont Attorney General’s office and the Vermont Department of Motor Vehicles looked into allegations that Diaz mishandled money for snowmobile registrations.
The two state agencies pursued the investigations separately — and apparently without coordinating efforts.
An investigator from the Vermont Attorney General’s office interviewed nine people who gave Diaz money for snowmobile registrations. DMV officials were unable to find registrations for most of those people, according to records. They gave Diaz more than $900. Another five people who gave Diaz money for registrations also found their vehicles were not registered.
When police had issued a search warrant for Diaz’s town office, they found a log of 17 registered snowmobiles stored in the vault. A locksmith discovered earlier this month that the numbers on the vault dial had been sanded off.
The DMV investigation centers around a single victim, a man from Albany, who was included in the Attorney General’s office probe. He visited the Newport DMV around December 2008 to register his new snowmobile and hoped to claim a tax credit from his old one, for which he’d paid registration, tax and title fees to Diaz the winter before.
“I attempted to look up the (registration) number he listed and found no record of that snow machine,” a DMV employee wrote in a form requesting the investigation. “I questioned him about this, and he stated he registered it with the town clerk in Coventry on 01/25/08.”
The Albany man had paid Diaz $294 in cash for his first machine, which he wrecked weeks later, records show he told the DMV employee. He also said he paid Diaz – in cash as well — $105 to register with VAST, a quasi-governmental organization that maintains more than 4,700 miles of trails.
When the DMV employee called Diaz and explained that the Albany man couldn’t take a tax credit on his new snowmobile because she never registered it, Diaz said that she in fact had, according to records. She said she mailed both registrations, but they were returned to her.
Diaz paid the man back $294 for his DMV registration, tax and title, and the investigation was closed. It’s not clear from the records whether she refunded him the $105 he paid to register with VAST. Officials couldn’t remember.
Diaz did not return a phone call made Thursday seeking comment, but in February she addressed the allegation involving the Albany man.
“That’s the first time I’ve heard of that, first of all,” she said. “And I am a DMV agent through VAST. I complete them, I mail them to VAST, VAST mails them to the DMV. I have no idea about that one.”
VAST Executive Director Cindy Locke said her organization has no records showing wrongdoing. She said an employee who knew more about that process was out of the office Thursday. In February, Locke told VTDigger that VAST had never had a problem with Diaz.
The attorney general’s office investigation hit on similar themes as the DMV probe: People who paid Diaz in cash to register their snowmobiles later couldn’t prove to the DMV that they’d registered them at all, records show. But it also found that many people paid with checks that were never deposited.
Since 2005, the Coventry Selectboard has commissioned six auditors to scrutinize the town’s finances, fearful that Diaz, when she’d worked for the town, was diverting public funds. The auditors found the town had poor internal controls for the handling of cash and discovered a number of old, uncashed checks.
In 2011, the Vermont Attorney General’s office settled its larger case against Diaz on two misdemeanor counts of tax evasion. Officials were unable to shed any light on the part of the probe that centered on Diaz’s dealings with the snowmobilers. Assistant Attorney General John Treadwell said he couldn’t remember details from the case.
But the memory of the DMV investigator, Peter Bottino, is sharp.
In a phone interview Thursday, Bottino said that when he had investigated Diaz in December 2008 he knew nothing of her alleged embezzlement history and only focused on her dealings with the man from Albany. That was the complaint he was given, he said.
“It looked like it was an open and shut thing,” he said.
The man got his money back. Diaz promised she’d look into what happened. Case closed.
“Nobody was out anything,” he said, “at least on the surface.”
Bottino says he had only one piece of a larger puzzle. He didn’t know the Vermont Attorney General’s office had launched a broader fraud investigation into Diaz the same month he began his, he said. No one told him, he said.
Had he known what he knows now – that his was not the first criminal investigation into Diaz, that the Attorney General’s office had interviewed eight other people with similar complaints as his witness – he would have dug deeper, he said.
“I didn’t have any of that,” he said. “I didn’t even know the attorney general had investigated.”
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