Auditor: Mid-Sussex Rescue misappropriated $120,000

The Delaware State Auditor’s Office released a report March 28 revealing almost $120,000 in unauthorized cash and other payments made by the former treasurer of Mid-Sussex Rescue Squad  - the former wife of the squad president, a man who remains active with the squad.

Speaking in only the third press conference he has held in his 29 years as state auditor, Thomas Wagner said his office has investigated Mid-Sussex three times for questionable finances.

“We’ve had financial issues there,” he said. “Policies and procedures were, relatively speaking, nonexistent. The guidelines they used could be confusing. It’s a function I’ve seen unfortunately too many times up and down the state.”

The audit notes more than $112,000 in unauthorized cash withdrawals by the squad treasurer, who was unidentified other than she was married to squad President Raymond Johnson at the time. The audit also states she used a debit card to pay more than $1,800 in utility bills for the couple and about $400 for a car payment in Johnson’s name. She wrote one $5,000 check to herself and three more checks totaling $5,000 to cash. One $5,000 check for cash was signed by both the treasurer and Johnson, the audit states.

Two checks each for $1,300 and one for $1,250 were unsupported payments to a former career chief supervisor and EMS chief; Jerry Johnson, Raymond's brother, was the emergency medical services chief before he was charged in May 2017 with groping a part-time employee at the Long Neck station. Jerry Johnson later pleaded no contest to third-degree unlawful sexual contact, and he was given probation before judgement.

In total, Wagner said there was more than $119,000 in misappropriated finances.

In August 2017, The Cape Gazette first reported a former member of the Mid-Sussex Rescue Squad surreptitiously took nearly $95,000 from the company over a five-year period and wrote another $10,000 in outstanding checks, following a Freedom of Information Act request for Mid-Sussex's financial statements filed with the Delaware State Fire Prevention Commission.

An annual audit prepared by Lank, Johnson & Tull CPAs of Seaford said the former member was using cash for personal purposes.

“Revenue in the prior years was reduced to hide the missing cash,” the Lank, Johnson & Tull audit stated.

The audit also stated the former member repaid $94,500 in March 2017. Another $10,500 in old, outstanding checks were voided and added to cash for fiscal year 2015.

Wagner said the squad recovered about $109,000 from the former treasurer before they began investigating. He said the audit has been sent to the Attorney General’s Office.

“Overall, we found a lack of adequate and clearly written policies and procedures, proper segregation of duties and oversight of financial activities,” Wagner said. “These factors led to insufficient maintenance of supporting documentation and review of expenditures. The close personal relationships within the board also created conflicts of interest, as well as the omission of arm’s-length transactions.”

Attending the press conference in the auditor’s Dover office, Gerald Burbage, a former audit supervisor for the state, said he helped with the 2016 annual financial review when the squad discovered more than $109,000 had been misused. He said he notified the Mid-Sussex board and the board immediately contacted the member and squad attorney. “The board signed an agreement and the member returned all $109,630. The return of the funds to the squad insured that no financial harm was done to the squad, state or county,” Burbage said.

He said employees are upset about what’s happening. “That we’re being made a spectacle of,” he said, adding there are other Sussex County emergency service companies that have misappropriated funds.

“Mid-Sussex recovered every penny,” he said, referring to the $109,630, not the nearly $120,000 missing according to the most recent audit.

Burbage said he continues to serve as a financial advisor to the squad, and the squad is on sure financial footing now. “I believe that it is,” he said.

This isn’t the first time Burbage has helped the squad with finances. From 2004 to 2010, he said, he was paid to do the squad’s finances. When he left in 2010, he said, an unpaid volunteer was brought in to handle the squad’s $1.3 million budget, which includes about $500,000 in salaries.

“It’s a small business,” he said.

Burbage said the squad is in the process of interviewing individuals to take care of the squad’s finances.

He said an unpaid volunteer should not handle the squad’s finances.

“Many do not have the skills needed for the job,” he said.

Burbage said Johnson intended to stay on as president until the audit was complete, but he may resign soon. “He probably will step down,” he said.

The squad’s board usually meets the second Tuesday of the month, but meetings can change depending on people’s schedules, Burbage said.

Legislation waiting for governor’s signature

Rep. Daniel Short, R-Seaford – a volunteer firefighter who has also served as fire chief – had strong words against Mid-Sussex’s financial impropriety.

“This is the third incident. I’m not so sure that three strikes you’re not out,” he said. “We cannot allow and tolerate what I call people stealing money.” His House Bill 243 has been passed by both House and Senate and now awaits Gov. John Carney’s signature.

Short said he expects Carney to sign the bill, which gives the Delaware State Fire Prevention Commission more teeth by allowing them to mandate an audit of a fire or emergency service organization if financial questions arise. In response to a question about how the new legislation is different from annual financial reports required by the fire commission, Wagner said previous legislation allows groups to provide unverified numbers instead of a professional audit.

“The legislation looked good, but really didn’t have a whole lot of teeth to it, and unfortunately there were a couple of companies that did not live by the rule of what people expected,” Wagner said.

New legislation will take a more proactive role outlining best practices for how an organization handles finances, he said. Organizations that do not comply could lose grant-in-aid money and be fined $100 a day not to exceed $5,000.

“There are now penalties involved if you’re not abiding by this,” Wagner said.