This article by Tim Camerato was published by the Valley News on Oct. 24.
NORWICH — Town Finance Director Donna Flies ignored instructions to stop making unauthorized payments from municipal accounts, resulting in the loss of almost $250,000 in an email scam this summer, according to a report released by the town on Thursday.
Longtime Town Treasurer Cheryl Lindberg confronted Flies after flagging suspicious transactions in mid-August, telling the finance director that payments from Norwich accounts require the approval of its five-member Selectboard.
However, Flies continued to send large sums of money to an email scammer impersonating Town Manager Herb Durfee, according to the 19-page report written by the Lebanon-based firm Burgess Loss Prevention Associates.
Flies later told investigators she assumed emails requesting money were from Durfee, even though the mail address used in the scam differs greatly from his town-issued account. Flies also maintained “she was supposed to do what her boss told her to do,” the report said.
“Flies said the only thing she was guilty of was making stupid mistakes,” wrote William Burgess Jr., the firm’s president, who was contracted to write the report by Norwich’s attorneys.
The report marks the first time officials are publicly naming Flies as the employee who fell for the scam, which saw $249,720 taken from town coffers between Aug. 6 and Aug. 23.
Police are investigating.
While the report largely blames Flies, whose salary started at $64,165, for failing to detect the scam or question the transactions, it also faults town officials for failing to confront her.
Had “any one of several different people been more inquisitive,” they might have sooner prevented the town from losing thousands of dollars, said the report, which went on to say that officials still appear to have responded “appropriately.”
Burgess interviewed 15 people to compile the report, which lays out the events surrounding the scam in chronological order. In it, he paints a picture of an overworked and potentially underqualified Flies.
Flies, who could not be reached for comment on Thursday, took over the position from longtime Finance Director Roberta Robinson, who provided four weeks of on-the-job training before retiring on June 28. Still, municipal employees told investigators Flies was facing pressure, partly because the town’s fiscal year ended on June 30 and also because property tax payments were due Aug. 16.
Brie Swenson, the town’s recreation director, said Flies often mentioned she was overworked since her hiring in June “and did not feel ready for the job, was not keeping up” and needed an assistant to help with the workload, the report said.
On Aug. 6, Flies received an email signed by a “Herbert.”
“Hi Donna, Did you receive my previous email with an attached Invoice which I kindly requested you to process?” the email said. “Let me know if you didn’t receive it so I can resend it again. I am currently meeting, kindly Get back to me.”
Flies replied that she hadn’t received an email from Durfee, who was on vacation at the time, and the scammer replied they would check their sent folder while also asking what the deadline would be that day for a wire transfer. Flies completed a payment for $35,820 that day, followed by a $38,740 payment after receiving another email from the scammer on Aug. 12.
Flies told investigators that because Durfee was on vacation, she thought the address might belong to his personal email.
And even after Durfee returned to Tracy Hall, Flies did not look at the email address, saying “she saw the name Herbert Durfee on the email and acted on instructions,” the report said.
Durfee is known to sign emails with either his nickname, Herb, or full name Herbert A. Durfee, III.
Both payments were made to a Donald S. Jefford Jr., of Norwich, who doesn’t appear to exist and cannot be found in the town’s assessing database.
Lindberg, the town treasurer, first saw the payments while reviewing municipal accounts on Aug. 14. She emailed Flies to ask who Jefford was, to which Flies responded that he was a man who invoiced the town for services in May and June.
When Lindberg sent an email asking whether the payment is on the warrant to be approved by the Selectboard, she didn’t receive a response. She then sent an email to Finance Committee Chairman Omer Trajman expressing concern before writing back to Flies.
“Payments MUST be approved by the Selectboard before being paid,” Lindberg wrote to the finance director. “Was this some special situation on this because Herb (Durfee) should know the rule paying out money and having a warrant issued BEFORE a payment is made.”
Lindberg didn’t receive a response.
The next day, Lindberg went to Tracy Hall and told Flies that no money could be paid unless it’s put on a warrant and approved by the Selectboard.
“Well, when my boss tells me to do something, I have to do it,” Flies responded, according to Lindberg’s account in the report.
Lindberg, who worked as a professional accountant and has held the elected treasurer’s position for 23 years, had previously expressed concern about Flies’ work, characterizing it as “sloppy, with poor accounting practices,” according to the report.
Lindberg began attempting to warn town officials soon after her interaction with Flies, first raising concerns with Selectboard Vice Chairwoman Claudette Brouche and then Chairman John Pepper, who was vacationing in Canada. Selectboard members ultimately decided to wait to see if the transactions were on the Aug. 28 warrant before acting.
Meanwhile. Flies made a $88,680 payment to the scammer on Aug. 19, followed by a $86,480 payment on Aug. 23, according to the Burgess report.
On Aug. 28, Pepper called for an executive session of the Selectboard after the payments failed to appear on the town warrant.
Mascoma Bank wrote to Lindberg the same day saying that Dallas-based Comerica Bank had flagged two payments from Norwich to one of its customers.
Lindberg briefed the Selectboard on the transactions that night, which was the first time Durfee and Police Chief Jennifer Frank were informed of the situation. They confronted Flies the next day.
“Pepper, (Selectboard member John) Langhus and Lindberg said when they first looked at the emails they knew it was a scam,” the report said. “When Flies was told it was a scam, they used the words shocked, surprised and devastated to describe Flies reaction.”
A criminal investigation began shortly after, and Flies was placed on administrative leave.
It’s not clear whether Flies, who is still listed as finance director on the town’s website, remains on leave. A Becky Grammer signed the Selectboard’s financial warrant ahead of its Oct. 23 meeting.
Questions about the report emailed to Durfee were not returned on Thursday.
Town officials said earlier this month that Comerica Bank had returned $79,765 of the funds sent to the scammer. Meanwhile, the criminal investigation was taken over by the U.S. Attorney’s Office.
Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.
