Ex-treasurer charged with theft of Fire Company No. 3 funds

Dale Hughes

Dale D. Hughes, a lawyer, former town councilman and nonprofit executive, and longtime treasurer of Woodstock Fire Company No. 3, was arrested on October 11 and charged with embezzling more than $200,000 from the fire company over a recent five-year period.

Hughes served as treasurer of Company No. 3 from 1997 until 2011, when he was elected vice president of the company. According to State Comptroller Thomas DiNapoli, whose office conducted an audit and investigation of the company’s finances, Hughes endorsed 83 checks made payable to cash, for a total of $200,385, from 2006 to 2011, depositing much of the money into his personal bank accounts.

During the same period, said the comptroller, Hughes embezzled an additional $21,000 in cash proceeds from approximately 30 pancake breakfast fundraising events held at the Company No. 3 firehouse on Route 212 in Lake Hill. Those funds could not be traced through bank records because the former treasurer collected cash donations at the door, according to DiNapoli.

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In what the comptroller described as an effort to “cover his tracks” after the financial irregularities were discovered, Hughes replaced $169,759 of the $200,385 in traceable missing funds through a series of undocumented deposits into the fire company’s account, leaving $30,626 still missing as of July 3, 2012, when the comptroller’s staff completed its fieldwork. The outstanding total does not include the Pancake Breakfast proceeds.

Following his arrest, which took place around 9 a.m. on October 11 at his home in Lake Hill, Hughes appeared in handcuffs at Woodstock’s Town Justice Court, where he was arraigned on a charge of second-degree grand larceny, a Class C felony that is punishable by five to 15 years in prison. The handcuffs were removed during the arraignment.

The defendant was remanded to the county jail in lieu of the $5,000 bail set by town justice Richard Husted, who presided at the arraignment. Hughes subsequently raised the bail and was released from jail on October 16.

He appeared for a hearing at the Woodstock court on October 17, at which time Judge Husted informed him that he was ineligible for representation by the county public defender, which provides legal representation to indigent clients. He is scheduled to appear again in Woodstock court on November 28 and state whether he will retain counsel or proceed without a private attorney.

Hughes politely declined to answer questions from Woodstock Times, citing the advice of his current attorney, J. Michael Bruhn Jr. of the public defender’s office.

Subsequent legal proceedings are likely to take place in county court, where felony cases are usually adjudicated. In response to a question at the news conference, Carnright deemed it “unlikely” that the charge would be reduced.

Hughes, 64, who was a member of the Woodstock Town Board from 1992 to 1997 and the executive director of the Woodstock Land Conservancy from 1992 to 2005, did not respond to an October 16 phone message seeking comment on the allegations.

 

Oversight failure

DiNapoli and Ulster County District Attorney Holley Carnright announced the findings of the audit and investigation, which are detailed in a 23-page report, at an October 12 news conference at the county courthouse in Kingston.

The comptroller’s report not only delineates Hughes’s alleged theft of funds, but also sharply criticizes the fire company’s executive committee for failing to oversee the company’s finances as required by its bylaws. “The fire company handed the fiscal reins to this individual and he responded by fleecing the public,” said DiNapoli in a statement accompanying his report. “The lack of basic financial oversight allowed this fraud to continue unabated for five years. It is imperative for company officials to put systems in place to protect public dollars and prevent future abuse.”

Fire company officials became aware of financial irregularities only in May 2011, when a $10,000 check for the purchase of a new fire truck bay was returned for insufficient funds, prompting the audit and investigation by the state comptroller.

(Coincidentally, the comptroller’s office was conducting a routine audit of the Woodstock Fire District, the governing body for the local fire department’s five companies, when Company No. 3 officials reportedly sounded the alarm about the company’s finances.)

A longstanding member of Company No. 3, who asked not to be identified, said that on several occasions he urged the executive committee to exercise financial oversight — not because he suspected wrongdoing, but simply as a matter of proper procedure — only to be rebuffed by committee members who expressed respect for and trust in the lawyer who served as their treasurer.

Woodstock councilman Bill McKenna, a volunteer firefighter who was a member of Company No. 3 from around 1997 to 2010, during which time he also served as a director of the company, said that he had supported his colleague’s requests for oversight when they were directed to the executive committee. McKenna is currently a member of Fire Company No. 1.

“The unfortunate events involving our former Treasurer are regrettable,” said a statement issued by Company No. 3. The statement added that the company is financially stable, that no loss of tax dollars had resulted from the alleged embezzlement, and that the company was “proud to continue our tradition of dedicated service.” In a letter that appears in the comptroller’s report, Company No. 3’s current president, Robert Meci, states that the company agrees with the findings of the audit and will undertake corrective action as required by the comptroller.

 

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