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Sunday, August 29, 2010

Lowville, New York files suit against its bank

As expected, the town of Lewis has filed a lawsuit against its bank claiming it was culpable in the embezzlement of more than $250,000 by the town's ex-bookkeeper."The loss of monies incurred by Plaintiff was due to the negligence and bad faith on the part of the Defendant, Community Bank," according to a state Supreme Court lawsuit filed Thursday in the Lewis County clerk's office.Utica attorney C. Louis Abelove, who is representing the town in the case, on Wednesday also filed a lawsuit seeking repayment of $250,348.28, plus interest and legal fees, from Melissa L. Wagner-Dano and her husband, Douglas J. Dano.
The town is seeking reimbursement of the stolen money, plus interest and legal fees incurred, according to both lawsuits.And, according to Mr. Abelove, town officials aren't too particular about who would pay them back."We think the town should get its money back," he said. "If any of the parties want to step up to the plate and pay the town, the town will be happy to receive it."Ms. Wagner-Dano, 34, in April pleaded guilty in U.S. District Court, Syracuse, to wire fraud, admitting that she embezzled $400,000 to $1 million from January 2007 through November 2009 from the town, the Oneida-Lewis Dairy Cooperative and the Boonville Farm Cooperative.She could receive up to 20 years in federal prison and a maximum fine of $250,000 at her sentencing Sept. 21. Restitution also is expected to be ordered by the federal court, although civil judgments could offer a better chance of recouping the money.The town has seven accounts at the Community Bank branch in Boonville, including savings, checking and capital-project funds for both general and highway, as well as a trust and agency fund for payroll, the lawsuit states."Community Bank N.A. has fully cooperated with the authorities, and we are referring all inquiries to law enforcement," Hal Wentworth, a spokesman for the DeWitt-based bank, wrote in an e-mail to the Times.Ms. Wagner-Dano, between November 2008 and December 2009, transferred funds between accounts of the town and the two cooperatives, for which she also served as bookkeeper, "for the ultimate purpose of committing these funds to her own use," the suit states.However, the town alleges that most of its funds were drained after April 2009, when Ms. Wagner-Dano established an Intuit QuickBooks software payroll program for the town. She then signed up for online banking through Community Bank, falsely listed the two cooperatives as town employees, made online money transfers from other town accounts to the payroll account, "paid" the cooperatives and withdrew the money from their accounts, the suit states.The town claims that in order to avoid detection, she directed the bank to stop sending paper statements to the town and instead "send e-statements to her Internet account to keep the Town Supervisor from reviewing them."Given its long history with the town, the bank should have known that the extensive transactions were unusual and that the cooperatives were not town employees or regular business partners, the lawsuit states.The town claims bank officials also should have known that it hadn't authorized online bank transfers or ever before used them and that the supervisor and deputy supervisor are the only ones authorized to sign checks from its bank accounts.
As town bookkeeper, Ms. Wagner-Dano prepared payroll checks for the signature of the supervisor and created balance sheets and financial reports but was not authorized to sign checks or approve expenditures, the lawsuit states.

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