Shenandoah Borough Reports Financial Irregularities Estimated at $241,833

The Borough of Shenandoah has released a report detailing financial irregularities linked to its previous administration, specifically under the leadership of former Borough Manager Anthony Sajone. The report, which emerged on Thursday, indicates that ongoing forensic audits have uncovered discrepancies from as far back as 2020, with estimated losses amounting to $241,833.35.

Newly appointed Borough Manager Mike Cadau noted that the audit findings date back to early January, shortly after he took office. The examination, conducted by forensic accountant Joe Yanushefsky Jr. of Joseph Yanushefsky & Co., suggests that the borough’s prior accounting practices were “not in conformity with government accounting principles.”

The audit highlights several key areas contributing to the financial losses. Among these are unpaid taxes that accrued penalties and interest, improper payroll check issuances, and lapses in life insurance coverage. The borough is facing specific penalties amounting to $1,843.27 from the IRS for unpaid taxes that were due by September 2022.

In addition, the report alleges that certain employees received payroll checks while on Workers’ Compensation, resulting in improper tax payments totaling $81,990.08. Furthermore, the borough anticipates a loss of $40,000 related to life insurance for retired workers due to mishandled payments and misclassification of information.

A particularly concerning finding reveals that in 2023, a life insurance reimbursement of $10,000 was paid to the beneficiary of a deceased employee. This payment came from the borough’s general funds, despite the employee’s life insurance policy having been canceled in 2020.

In response to these discoveries, borough officials have filed a claim with Travelers Casualty and Surety Co., the borough’s bond insurer, in an attempt to recover the estimated losses. This report is the first of several planned releases regarding the financial irregularities. Additional reports will be published as they receive approval.

The Borough of Shenandoah confirmed that all investigative reports have been submitted to the Pennsylvania Attorney General’s Office and the IRS Criminal Investigation Division, both of which have incorporated these matters into ongoing investigations.

In addition to the current audit, the borough is also examining the financial operations of the Sewer Authority and the sale of the former Municipal Authority of the Borough of Shenandoah. As these investigations progress, further details are expected to emerge, shedding light on the financial integrity and governance of the borough in recent years.