Coventry's Missing $800,000 Puts Town Employee's Job On The Line

Jun 2, 2017

A long-running drama may be coming to a close in Coventry, where the town clerk who also serves as treasurer has been under an insurance and criminal investigation for how she's dealt with the town’s books.

Cynthia Diaz has spent 12 years as Coventry's clerk, treasurer and until recently, delinquent tax collector, and town officials say that in that time more than $800,000 has gone missing.

Last week, a deputy sheriff served Diaz with notice that she's no longer covered by insurance as Coventry's elected town clerk and treasurer, and she has a deadline looming to find another insurance company to cover her.

VPR spoke to Robin Smith, a reporter who's been covering this story for the Orleans County Record.

This transcript has been edited for clarity and brevity. Listen to the full interview above.  

VPR: These allegations against Diaz are not brand new. How did things get to this boiling point?

Smith: “It's been an ongoing problem. The town, like many towns, is required to have an audit every year, and when they tried to have an audit they couldn't get it resolved because the books just didn't balance.

“They finally have gone for what they called a forensic audit. They had to pay nearly $300,000 for that to get to the bottom of what happened to the money that the town's been collecting over the years.”

We're talking about more than $800,000 here — how can that much money in a small town like Coventry just go missing?

“In a town of 1,000 people, you'd think that it would show up pretty quick, but in reality, Coventry is the host to the state's largest landfill, and the income from that landfill on an annual basis is more than the money that the town spends on its municipal equipment and bills.

“And so they have many millions in investments. And so over time it shows up, but annually another town would start running deficits very quickly and it would come to a head very quickly.”

Have officials in the town asked Diaz to produce any relevant documents that could account for some of this missing money?

“That's been the ongoing challenge, and the reason why the forensic audit was so difficult was that they had to actually contact taxpayers and find out if they had documents to prove that they paid their taxes.

"[Auditors] suspect that hundreds of thousands of dollars in tax money that people owed just wasn't paid, that she acted like a Robin Hood for many people, which accounts for why she kept getting reelected into office." — Robin Smith, Orleans County Record reporter

“There just weren't records provided by her [Diaz] to show that the money came in, how much came in — some things were just stamped 'paid in full,' but not how much [and] when.

“They suspect that hundreds of thousands of dollars in tax money that people owed just wasn't paid, that she acted like a Robin Hood for many people, which accounts for why she kept getting reelected into office.

“But not everybody was able to benefit from that, which is why this year she's no longer delinquent tax collector. The town gave the authority to the selectmen to appoint somebody to that position.”

Last week you reported that the Vermont League of Cities and Towns’ PACIF insurance company withdrew its bond that covers Diaz. Why did they do that and how much was that bond for?

“[Diaz], like other town officials , handles money, so the selectmen required that she have a bond for a half million dollars.

“And what happened was, after the forensic audit, they determined that more than $800,000 had gone missing. So they filed the claim for that with the insurance company at VLCT, and they paid the half million dollars to the town, minus a $1,000 deductible, and withdrew the coverage from Diaz.

“Once she lost that coverage, that set the clock ticking on her having to find another insurance company to cover her.”

And how much will she have to be covered now by this potential new insurance company?

“The board required a minimum of $2.5 million. That's how much money they have in the general fund, and they believe that that's how much they could be at risk, because she's the treasurer and has some authority over that money.”

And if she can't find an insurance company to cover her for that amount, what happens to her?

“Well, under state law, her elected term of office would be determined to be vacant and that basically means the selectmen can say, ‘Well, after 10 working days that she is no longer in office,’ [and] they would presumably, like, lock the door and lock her out.”

Have you spoken with Diaz about this?

“She has commented on again off again over the course of this investigation.

“She has not commented so far on this latest development. So I don't know yet whether she is actively seeking a bond or wants to challenge [the selectmen] in court over this. I don't know what's going to happen next with her.”

What is the practical effect, if any, of these missing funds on Coventry itself?

“There's a lot of people who've supported her over the years and feel that the selectmen have been opposed to her since she was elected.

"It's clear that the townspeople have decided that enough is enough. [There's] been a lot of money spent to try and figure out what's going on, and they'd kind of like to clear the deck and move on."

“She's had some history of mishandling money personally. She got in trouble with the IRS for not declaring money and it was a misdemeanor.

“These are things that have caused people to be supportive, but there was a huge turnout at town meeting this year and there were very few people who supported her.

“It's clear that the townspeople have decided that enough is enough. [There's] been a lot of money spent to try and figure out what's going on and they kind of like to clear the deck and move on.”

Correction 11:43 a.m. Any earlier version of this story misspelled 'Coventry' in the headline.