Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Municipal Finance topic
No spam. Unsubscribe anytime.
Gray officials disclose suspected fraud and $1.25 million fire truck expenditure; FBI contacted
Summary
Council leaders announced multiple finance irregularities — including a $1.25 million fire truck purchase, missing funds, ambulance write-offs and a $104,000 fraudulent invoice — and said local and federal authorities are investigating; staff and council said reforms and possible outsourcing of finance functions are under consideration.
Council leaders opened the Jan. 12 meeting with a detailed announcement about suspected financial irregularities and fraud in Gray’s municipal accounts.
Chair Mike Johnson told the council and public that the town paid roughly $1.25 million for a fire truck, a purchase that was commissioned after a 2019 audit had been interpreted by the former town manager to indicate an additional $1.5 million was available. "In June it was discovered that those funds did not exist and had already been spent," Johnson said, adding that the board had not been informed at the time. Officials said three options are under review for the truck: retain it as-is, return it with an estimated loss of about $100,000, or refinance a portion and seek recovery of funds once the investigation concludes.
Council members also disclosed more than $140,000 in ambulance write-offs that had not previously been reported; staff said some of that amount has been recovered. Officials described a separate fraud in which a compromised vendor (the town of New Gloucester) had its accounts altered and sent Gray a fraudulent invoice for roughly $104,000; the town’s funds were wired and immediately swept by the fraudster. The town’s insurance coverage for this sort of loss was described as $50,000.
"We are actively working with local law enforcement and the FBI," Johnson said; the council said the ongoing nature of investigations limits what can be shared publicly. A staff computer assigned to the former town manager was reportedly factory-reset and forensic recovery attempts were unsuccessful.
Councilors said they plan near-term operational changes to reduce risk, including improved warrant practices, examining technology and software used in finance, and exploring outsourcing of some financial functions. Finance committee members said they are reviewing best practices and vendors to recommend to council, and that any company proposals that present a conflict of interest will be handled with transparency and recusal (a council member disclosed an employment relationship with one firm under review and pledged to recuse from any vote).
Residents used the public-comment period to press for greater transparency and stronger internal controls, urging immediate changes such as in-person verification for vendor banking changes, multiple required signatures on large disbursements, and public access to warrant documents and bank reconciliations for oversight.
Councilors said the FY24 audit workshop is scheduled and that staff will bring forward contract and policy recommendations for council consideration in coming weeks.
