Updated: Overflow audience demands answers in Kennett Township investigation
By Richard Gaw
Note: The following story is an updated and more complete account of the Dec. 17 meeting hosted by the Kennett Township Board of Supervisors that attempted to provide information about the theft of more than $3.2 million in township funds by former manager Lisa Moore.
By Richard L. Gaw
During a three-hour and 45-minute public meeting whose tenor fluctuated from factual and informative to hostile and confrontational, an estimated audience of more than 500 residents, officials and stakeholders who crowded the Red Clay Room in Kennett Square on Dec. 17 to hear the Kennett Township Board of Supervisors navigate through the journey of how former township manager Lisa Moore allegedly stole $3.2 million in township funds since 2013.
While the vast majority of those in attendance displayed reserve and respect for the proceedings, the meeting was repeatedly interrupted by a group of about two dozen who loudly called for the resignation of board chairman Scudder Stevens, and supervisors Dr. Richard Leff and Whitney Hoffman, and accused them of displaying an egregious lack of oversight and poor accountability in allowing Moore's activities to go unchecked for so long.
Against this verbal barrage, Stevens, Leff and Hoffman painted a picture of Moore as both a trusted employee and a lone culprit who was complicit in a mountain of deception that violated township safeguards and deceived her colleagues, township officials, outside service vendors, state and township auditors and the township's oversight committee – from the time she assumed the title of township manager in 2010 to the time of her dismissal in May of this year.
“As the township supervisors on whose watch this happened, we realize that the buck stops here,” Stevens said. “It is our job to do everything possible to fix this mess, and this meeting tonight is just one part of the rebuilding process that began eight months ago.
“The news that has unfolded over the last eight months has had a huge impact on all of us throughout the township, and not in ways that any of us would have ever wished for.”
The panel also included presentations by forensic accountant Ricardo Zayas of Marcum, LLP; Joseph G. Poluka, an attorney with BlankRome's investigations department; and township manager Eden Ratliff, who estimated that the township has already paid $350,000 to help in the fraud investigation.
Moore, who was placed under arrest on Dec. 10 by the Chester County District Attorney's Office, was charged by the DA with 115 felony crimes and 26 misdemeanor crimes after an eight-month-long investigation revealed that she masterminded a financial shell game with township money since 2013, and used it to fashion a life of extensive travel, luxurious gifts and retirement benefits.
She posted an unsecured bail in the amount of $500,000, surrendered her passport, and is now in Puerto Rico awaiting her preliminary trial, which is likely to begin next spring.
The meeting was divided into three key components – “What Happened?,” “What's Being Done to Fix the Damage?” and a two-hour Q & A session that tested the emotions of both those who asked the questions and those who answered them. Throughout introductory remarks by Stevens, Leff and Hoffman, they jockeyed between the findings of the District Attorney's Office and the Chester County Detectives – contained in a 43-page police criminal complaint issued on Dec. 10 – and how the township supervisors scrambled to regain the management of the township.
Leff gave detail that included digging into records and computers related to the investigation, changing bank account numbers, upgrading computer software, putting other financial safeguards into place, working with township staff, making payroll, sending letters of correspondence to township residents, conducting the overall business of the township, and stopping suspicious transactions – presumably by Moore – that were already in the works.
“This took weeks of work and stopped the bleeding, but there was much more bad news yet to come,” Leff said. “Unfortunately, we quickly found case after case where work we had asked Lisa to do, which she had told us was done, was never done. We found a pattern of lies and deceptions that shocked us each day. The more we investigated internally, the more problems we uncovered.
“It became clear that Lisa Moore had created and maintained an intentionally confusing and complicated financial process which enabled her, allegedly, to commit fraud and embezzle funds over many years.”
‘…A colleague and friend to many had betrayed us all’
Leff said that the board discovered that Moore did not permit any other township employee to open any form of township mail – such as bank and credit card statements, bills and IRS letters – but when the supervisors began to open the township’s mail after firing Moore on May 17, they discovered a flagrant misuse of the township's credit card and unpaid withholding taxes with overdue fines.
“We were heartbroken and outraged at the same time,” Leff said. “Our trusted employee, a colleague and friend to many, had betrayed us all.”
Hoffman then walked the audience through a detailed presentation that listed several methods Moore used to allegedly embezzle the large amount of money – undetected by other township officials or staff – since she first took $15,243 in unauthorized payroll back in 2013.
Allegedly, Moore created a rubber stamp of Stevens's signature and used it on checks to ourselves.
Allegedly, she made scores of unauthorized payroll distributions to herself.
Allegedly, she prepared a fake memo that gave her permission to pay herself for overtime, which as a salary-exempt employee she was not entitled to.
Allegedly, she submitted fake bills to vendors, and when those bills were paid and the checks came in, she would enter the computer software and change the vendor's name to her name.
Allegedly, she used township credit cards to purchase items for herself, such as jewelry, trips and theater tickets.
Allegedly, she concealed credit card statements and other documents.
Allegedly, Moore gave herself access to township systems, but did not safeguard those systems, as advised by the supervisors.
Stevens said that because of the great respect that Moore earned over her time in the township, “there was no reason to suspect that she was not actually the person whom she appeared to be. Over her 26 years of employment by the township, she earned the trust of many in our community. Many of you here tonight considered her to be both friend and colleague. To me, she was a partner.
“In the end, she deceived us all. She not only allegedly stole large amounts of money, she betrayed the trust of everyone – everyone.
“She alone had access to the records, and she alone had deliberately failed to act when instructed by the supervisors to upgrade the township's financial safeguards and payroll software, to make them secure. The work that Lisa was doing to secretly manipulate the finances was shocking and shameful. It was also cleverly done. The books actually looked fine from the outside and fooled even our auditors and our consultants.”
Just prior to a 15-minute break in the session, Stevens drew jeers from the audience when he said, “I believe she [Moore] deserves 100 percent of her crimes.”
‘Are all of you going to resign?’
After a short break, the meeting resumed with questions from the audience, and by moderator and former Kennett Square Borough mayor Leon Spencer, who encouraged the audience to ask their questions in a respectful manner.
“I know the alleged,” Spencer began. “I know the person who is accused of these crimes. We had an opportunity as a borough and a township to work together on things, and as has been stated, there was a lot of trust there. I know her family. Her mother was a classmate of mine.”
Spencer then directed his attention from the audience to the supervisors.
“I have no choice but to come after all of you hard,” he told them. “Are all of you going to resign? It seems that you should all resign, right now. Some of the things we have heard here tonight suggest incompetence, and that you do not deserve to be here. What is your response?”
“So where would that leave the township?” Leff answered. “Abandoning the township now isn't what is needed. If we had resigned when this horrible incident was first learned about, there would be no meeting tonight – none of you would be here -- because there would be no investigation. There would be no idea of what happened or who allegedly did it. There would be no charges filed, and there would be no people around to fix it.
“There would be no prosecution and no recovery of funds, and there would be none of the methods and people put in place to prevent it from happening again.”
Spencer accused the board of not providing proper oversight to Moore. “How in the world could you let this happen?” he asked Stevens. “According to the information you shared with us tonight, this went on for over six years, to the tune of $3.2 million. Someone was not providing oversight, and that is a disgrace. So, I have to ask you, how could you let this happen?”
“This was a complicated and systemic scheme by a determined insider who was committed to steal and cover it up,” Stevens said, who was then interrupted by a shout of “You were the enabler!” from the audience.
“There is a reason why it was not discovered. It wasn’t discovered in the administration that existed before this one, just as it wasn’t discovered until now, in this one.”
Stevens said that the money that Moore allegedly stole was always in play – being shuffled from budget to budget – to create a three-card monte effect.
“We made every effort we could to put into place stronger and stronger controls, and the bottom line was that we were assured that those controls were in place, but it turns out they weren't,” he said. “The bottom line is that I feel exactly the same way all of the people in this room feel, and I find it terrible that any of us have to go through this. The fact is, that we discovered it, and we’re the ones who are confronting it, to deal with that problem.”
For the next two hours, all three supervisors continued to dodge fireballs in the form of questions from the audience. Most were on point and specific; others were scorched-earth vitriol.
“Are you aware of the allegations made in 2008 against Ms. Moore, which included fraudulent use of the township’s credit card and the fraudulent use of a resume that falsified her educational experience?” asked township resident Joseph Lacy.
“When I was running [for the board of supervisors in 2012], I had heard rumors to that effect, and I asked people if I could find out about it,” Stevens said. “I could never find any documentation of it, so the answer is that I do not know.”
Zayas said that through the course of the investigation, he and his fellow investigators asked township staff to provide documentation providing proof that these purchases were in fact made, but “we ended up with an allegation without any support,” he said, which he said is because all township records prior to 2012 were destroyed.
(Note: On or about Sept. 10, 2007, the Chester County Press received documentation from an anonymous source that contained copies of two invoices from Sears Commercial One, dated Jan. 19, 2007 and sent to Kennett Township, that indicate that a 42-inch plasma television, priced at $1,299.88, and a DVD player, priced at $512.98, were sent to Moore at the township, and were both paid by the township on Feb. 13, 2007.)
Township resident Victor Manning asked Zayas if the $3.2 million Moore allegedly stole is secure, “or does it have a chance to grow?” he asked.
“It’s hard to say, but there are other transactions that we would consider in a civil context but not a criminal context,” Zayas said. “Are they millions? I’m going to have to say ‘No.’”
“Are you free to estimate what they might be?” Manning asked.
“I’m going to have to say ‘No,’ because I am going to have to look at it in greater detail and then make an assessment,” Zayas replied. “My suspicion is that we’re dealing in the thousands, but the other problem is that prior to 2013, we don’t have any supporting documents.”
Spencer asked the supervisors if there was ever a time when other members of the township staff had ever shared any inclination with them that they detected possible improprieties. They all answered that they had not.
‘A Cross Between Warren Buffett and Albert Einstein’
Landenberg resident Louise Johnson then approached the podium. She described herself as the former mayor of a town of 25,000 residents and a former Exxon executive.
“I want to compliment you on the excellent job you’ve done to remediate – and from what I have been hearing – and how you plan to make things better, since the time the discovery was made,” she said. “However, let me add that Lisa Moore has been made out tonight to be something of a cross between Warren Buffett and Albert Einstein. She is not. Some of the things she pulled were right out of the segregation of duty handbook 101 and should have been discovered long ago.
“This would never, ever, have gone on this long in a corporation with a leadership team,” Johnson added. “I am sure that you are very excellent in your fields of medicine and law (Stevens and Hoffman are attorneys and Leff is a medical doctor), but I will submit that you are not qualified to do the job of running this township as a business.”
Some in the audience continued to interrupt and mock the supervisors’ answers, while the questions and comments from residents turned to red-meat backlash allegations such as lack of oversight and irresponsible handling of township funds. They continued to press Stevens to explain the check-writing process at the township, and how Moore’s alleged indiscretions got past him. At another moment, an audience member compared the supervisors’ allowing Moore to function unchecked to allowing “a fox to watch the hen house.”
“On your watch, clearly there was a huge breach in fiduciary responsibility,” he added. “We can’t fathom the brashness of you sitting up there believing that you had no part of it.”
“I have heard painstaking attempts tonight to indicate that Lisa Michelle Moore is responsible – allegedly – for the crimes that she committed,” one resident of Penns Manor said. “While I understand that personal responsibility, what I did not hear was any attempt to address the supervisors’ abject failure of leadership. What we have heard here is a sense of the non-apology and the non-acceptance of culpability that have allowed these things to happen.”
Directing his question to Stevens, he asked, “Why did a seasoned lawyer such as yourself not question such a consolidation of power?”
“I did very specifically say to her, ‘Lisa, it does not look good that you are handling all of the financial matters of the township. You need someone else to do it,’” Stevens replied. “When I questioned her about it, she said that she had other staff in the township who were sharing that responsibility. I told her to do it, and she told me that she did it.”
‘My conclusion is that I am naïve’
The Penns Manor resident then accused the supervisors of demonstrating what he called “a clear lack of humility.” Later in the session, another resident implied that the supervisors were demonstrating a “cavalier” behavior toward the culture of the township under Moore.
“When I first began as a supervisor, the first thing I did was meet with Lisa, and she told me how we did things here,” Hoffman said. “In some ways, I feel that I trusted someone who gave every indication throughout the community that she was trusted. It’s my fault, because I trusted her, and I take full responsibility for that.
“I can’t apologize to all of you enough,” she added, fighting back tears. “I just want to make it better and we’ve been trying to do that.”
“I guess that my conclusion is that I am naive, because my experience was that [Moore] was honest and that we were able to have open discussions about any of the things related to the township and the periphery of the township,” Stevens said. “The bottom line is that we were working together, and it’s particularly painful, because she was a partner in many ways.”
Perhaps the only breath of fresh air in a large room stuffy with the fog of the investigation was Ratliff, who earlier in the evening gave a presentation that detailed the many steps the township is taking to scrub itself of Moore’s alleged fraudulence and streamline and secure its accounting systems.
“I want to make something very clear,” he told the audience. “I came to Kennett Township to be manager because I wanted to be here. You may think I am crazy, and that’s fine, but I left a great job with a great team, but not a day goes by when I regret that decision.
“I am not here just to serve the three people on the board, but the 9,000 residents of Kennett Township,” he added. “I am going to do the best I can for all of you, realizing that everyone has different interests and objectives for the township, and it’s my job to help the board sort that out.”
Poluka assured the audience that BlankRome will endeavor to recapture all – or nearly all – the more than $3 million that Moore allegedly stole.
Despite the fact that an eight-month investigation has delivered a conclusive report of its findings; that the township has begun to clean its own financial house with a series of new controls; and that the public meeting allowed them to air out “how it happened,” the township is still in the infancy of an investigation that is likely to linger over Chester County for quite some time.
Unfortunately for the township, they are just the latest victims in a spree of similar crimes that have been perpetrated to individuals, to business and to municipal governments. During his introductory remarks, Zayas addressed the question that served as the white elephant for the meeting: “So how did we get here and what are the circumstances that surround these types of events?” he asked. In finding the clues, Zayas began to read from the DA's press release, plucking out various tidbits of familiar patterns.
“The defendant was a trusted and long-time employee...” he said, reading from the release. “As manager, the defendant had oversight and access to virtually all of the township's financial operations...It was a multi-pronged scheme...Business records of the township were not always complete and contained inaccurate entries.
“These are characteristics that we encounter in virtually every investigation of this type,” he said.
“Some of us have seen this movie before,” Poluka said. “It happens. It happens with charities, with public entities and with public corporations. We're going to deal with it, and we're going to take every action possible to make sure that we can be able to recover as much money as possible.
“We’re not done,” he said at the conclusion of the Q & A session. “We have stuff to do. And we’re going to work through it.”
To contact Staff Writer Richard L. Gaw, email firstname.lastname@example.org.