Financial Reports - MVF The Financial Report - Follow the Money!

What do you think really happened?

According to written reports it took 460 days to discover that MVF cash funds under the care, control and custody of MVF staff were missing, misdirected, stolen and or embezzled. The event was first publicly reported by the embattled staff writer of The Gazette Sebastian Montes in its February 7, 2007 edition that a police warrant of a former MVF employee accused of fraudulently authorizing transfer of $13,684 from MVF retirement fund. Seven (7) months latter in the February 16, 2007 issue of the Village News , The Official Newsletter of Montgomery Village Foundation, Inc., reported that the “Employee theft was shocking, but audit and internal investigations averted financial loss, …the financials are clean and No funds will be lost and MVF retirement accounts and all other foundation accounts are in order” (Lois Campbell, Interim Treasurer); “Arrangements have been made to recover all of the funds, plus interest.(Keith Silliman, Interim MVF President) and “…the auditors, local police and Board of Director have worked together to make everything right”. (Pat Huson, Interim EVP). Everyone has questions but as Pat Huson, Interim EVP stated in response to Marilyn A. Cadoff, a CPA and a resident of The Points in her questions on the embezzlement “The staff is excellent, details of the loss will not be given since the case is not yet entirely closed and Ms. Cadoff can go apply for membership on the MVF Audit Committee.” Let’s list the questions and speculate about the answer.

How and who discovered this unauthorized transfer? Why did it take so long to discover that MVF funds were fraudulently transferred and take action after the discovery?
What and who knew and when did they know it?
What can we say about MVF’s financial management systems and practices?
What can we say about MVF’s Board of Directors oversight and communications of financial matters?

The “gap” between discovery and resolution

On July 11, 2006 (Day 460) the Gazette reported John R. Zakian alerted police to “the suspicious transfer, according to police reports”. How long before Zakian was aware of the situation? Heaven knows, John was a promoter and public relations type and didn’t have the skills or desire to supervise a petty cash account let along be in charge and take responsibility for a community with $ 9 million in assets and a $6 million budget. As Sebastian Montes, the “annoying” staff writer for the Gazette, wrote on August 2, 2006 Day 481, that soon after Zakian left his job as executive director of the Yonkers (N.Y.) Industrial Development Agency/Job Development Corporation (1984 to 1993) his secretary at Yonkers was accused of embezzling $350,000 and pleaded guilty to a lesser charges. Zakian told the Gazette he was the one who realized his secretary had written checks to herself and said he was unfairly blamed for failing to discover the embezzlement, which should have been uncovered in an audit. We could give John credit for “Embezzlement Reduction”, as embezzlements under his watch declined from $350,000 to $13,000 but I don’t think he uncovered the theft, he only provided the environment that encouraged such things to happen.

Not withstanding Pat’s Huson’s comments above about “details about the loss will not be given”, as reported in the Village News President’s Message column “The discrepancy was noted approximately a year later during the 2005 Audit” in April of 2006. That would mean a “gap” of at least 81 days between the “notation” of the discovery by the auditors and when Zakian “alerted police to the suspicious transfer”.

This only increases the quantity of unanswered questions about handling and condition of the financial and fiscal affairs of the Foundation as well as the creditability of those with power, duty and obligation in such matters.