Former Plymouth Finance Director Arrested, Accused Of Embezzling $804,000
Plymouth Town Hall
PLYMOUTH — When federal authorities investigated whether former finance director David Bertnagel embezzled more than $800,000 from federal aid intended for the town, he claimed he was merely drawing down his pension ahead of time, prosecutors said.
Bertnagel, who was arrested Tuesday, wrote more than 200 unauthorized checks to himself between 2011 and 2014, and spent hundreds of thousands of dollars to make mortgage payments, fund home improvements and buy an extensive collection of coins, stamps, Hummel figurines, Anna Lee dolls and other collectibles, according to prosecutors.
The government alleges that he embezzled more than $800,000 during his three years in local government.
Investigators took the 41-year-old Bertnagel into custody at his Thomaston home on Tuesday morning and charged him with theft from a local government receiving federal funds, a crime that carries a penalty of up to 10 years in prison.
Deirdre M. Daly, the U.S. attorney for Connecticut, said in a statement that Bertnagel also failed to file an income tax return in 2011, and omitted the alleged embezzlement income from his 2012 and 2013 returns.
The FBI, the IRS Criminal Investigation Section and the U.S. Postal Service investigated, along with the U.S. Department of Housing and Urban Development and the Department of Health and Human Services. At least half of the missing money appears to have come from grants provided by those agencies, according to the case file against Bertnagel.
Bertnagel was released on $250,000 bond after appearing before U.S. Magistrate Judge Donna F. Martinez in Hartford. Efforts to reach Bertnagel on Tuesday were unsuccessful; a phone listed for the home that he shares with his mother had been disconnected.
Bertnagel was paid between $81,000 and $95,000 as a salary during his three years as municipal finance director. When a staff member discovered money was missing, Mayor David Merchant questioned Bertnagel in October, asking him why, if the money was an advance on a pension, it had been paid through the town's payroll fund. Bertnagel replied "I made a mistake," according to Merchant.
The town suspended Bertnagel Oct. 31.
The FBI began investigating soon afterward. When Special Agent Ron Offutt interviewed him in November, Bertnagel admitted writing checks to himself, but said he was getting early pension payouts through a deal that had been approved by former Mayor Vincent Festa and his assistant, the late Ted Scheidel, according to an affidavit Offutt filed. Festa denied that account, and Bertnagel couldn't produce a copy of the contract, the affidavit says.
Offutt noted that Bertnagel had worked for the town for only three years, but that Bertnagel estimated the value of his pension would be $804,000 by the time he eventually retired.
Two days later, Offutt's affidavit says, an attorney for Bertnagel showed prosecutors a document that supposedly was the contract for the pension payouts. But Festa denied seeing it before, and prosecutors noted that it was a photocopy and not an original, and concluded that Festa's signature might have been printed with electronic-signing equipment that Thomaston used, the affidavit says.
Offutt reported in his affidavit that Bertnagel converted more than $182,000 in checks into cash by using ATM withdrawals and money orders, and spent nearly $102,000 to pay down his mortgage, about $124,000 on collectibles, almost $137,000 for home renovations, and more than $149,000 to credit card companies —including about $35,000 in interest and late fees. Roughly $9,000 was invested in stocks and just under $20,000 went to penalties and fees at Thomaston Savings Bank.
Plymouth payroll clerk Kim Thompson told the FBI in November that the town's accounting software had a vulnerability that allowed a user to generate a group of checks, print them and then delete all records before transactions were posted, according to Offutt's affidavit. Offutt said that such a problem could be detected when the town reconciled payroll forms and its bank statement, but that Bertnagel had been in charge of reviewing bank statements.
Bertnagel had been a finance department employee in Bristol before he took the Plymouth job. Bristol Mayor Ken Cockayne said the city met with auditors after Bertnagel was suspended by Plymouth, and determined that its books are in order. Cockayne said the city has enough checks and balances in its financial system to avoid a similar problem.
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