Valley News – Operator ECFiber says contractor embezzled $600,000; accused not found

By on November 3, 2022 0

ROYALTON — A Northfield, Vermont man is accused of embezzling more than $590,000 from ValleyNet, the non-profit organization that operates ECFiber, and using the money to buy real estate in other states, according to a lawsuit filed in Vermont state court.

ValleyNet has filed a lawsuit against John Van Vught alleging that over a period of seven years while working as a contract accountant for the company, Van Vught, 72, misappropriated money from ValleyNet’s bank accounts to Northfield Savings Bank in his own pocket and only discovered when a new CFO joined the business.

Meanwhile, Van Vught’s family – who were previously accused of stealing money from a former employer in 2003 – have told authorities they know his current whereabouts, according to court documents.

The most recent embezzlement allegations, contained in a lawsuit filed in Washington Superior Court in Montpellier in July but initially sealed, came the same month that ValleyNet announced it uncovered “financial irregularities” allegedly committed by an unidentified outside contractor who resulted in an undeclared amount of money embezzled from the business.

The civil lawsuit for the first time publicly identifies both the alleged perpetrator and the amount of money stolen.

ValleyNet said it would seek to recover the money and the incident should not “significantly impact” the financial viability of the business or risk ECFiber’s ability to make interest payments on its debt, which totals more than $60 million that the company borrowed to fund the expansion of a fiber optic network to nearly two dozen member cities.

Van Vught worked under contract as an accountant and bookkeeper for ValleyNet from 2010 and, from 2013 to 2022, transferred a total of $593,724.76 from ValleyNet accounts to his own personal bank account, according to an affidavit from Clifford Rankin, who started working as a manager. of the company’s finances in November 2021, filed as part of the lawsuit.

Rankin said he uncovered unauthorized transfers Van Vught allegedly made from corporate accounts to a personal Van Vught account when Van Vught went on vacation last May and Rankin took over payroll and payment providers.

Rankin grew concerned when he asked to see the official bank reconciliations, but Van Vught told him they “were never done.” Then, when Rankin ordered Van Vught to do the reconciliations, Rankin “found several errors and omissions,” according to Rankin’s affidavit.

Those red lights led Rankin to discover that Van Vught “had been transferring Valley Net funds…to his account through wire transfers and checks signed by him for years in assorted small amounts, then failed to record transactions. in QuickBooks to cover missing funds”. Rankin said.

In the lawsuit, ValleyNet alleges that Van Vught committed fraud, unjust enrichment, breach of fiduciary duty and violations of RICO because the proceeds of the alleged embezzlement were used in “the purchase of property real estate in other states,” according to the lawsuit.

ValleyNet said it notified law enforcement authorities of the alleged embezzlement, although no criminal charges have yet been brought against Van Vught in U.S. District Court in Vermont, the usual location of the crimes. financiers, according to Federal Court records.

“We are in the process of recovering a substantial portion of the funds,” said Stan Williams, CFO of ValleyNet and one of the founders of ECFiber. Valley News On Wednesday, Williams declined to say more, referring the matter to ValleyNet attorneys, who did not respond to messages for comment.

A Northfield accountant named John Van Vught was charged with embezzling $49,000 over a six-month period in 2002, the Times Argus in Barre reported at the time.

Van Vught, 51 in 2002 and chief accounting officer at TDS Telecom, was arraigned in Barre District Court and charged with writing checks ranging from $4,000 to $6,000 in cash to himself and drawing from a TDS Telecom account, the newspaper reported. Van Vught told the investigating police that he took the money from his employer because he had overstretched his finances and that he planned to repay the money before the missing funds were detected. .

John Van Vught was identified as chief information officer at ECFiber in an offering memorandum to raise $8.5 million in bonds in 2018. In the document, Van Vught is described as an “external consulting director to outside companies” who was previously “Chief Financial Officer of Burlington. Telecom for 8 years after 12 years as regional accounting manager for TDS Telecom.

Attempts to locate Van Vught to serve him with a subpoena were unsuccessful, according to court records.

“The defendant … took off,” Jon Valsangiacomo, attorney for John Van Vught’s wife Anne Marie Vught, said during a July 26 court hearing, according to a recording of the hearing held remotely. . (Anne Marie Vught, arguing that she was not a party to her husband’s alleged embezzlement, requested that her bank account be unfrozen, which the judge later granted.)

“He left, presumably, if the allegations are true, with the money that was allegedly taken,” Valsangiacomo said.

A week earlier, on July 19, when a Washington County deputy sheriff went to serve Van Vught with a court summons at his residence on Messier Hill Road, she was told by his wife “that John Van Vught has taken his passport, and (his wife) does not believe he will return home,” Deputy Sheriff Emily Grant said in an affidavit provided in the court filing.

Additionally, Anne Marie Vught told the deputy that the couple’s daughter reported John Van Vught as a “missing person” to Vermont State Police on July 6, but the deputy claimed in her affidavit. that “After extensive research, I found no information to support this claim.

State Police spokesman Adam Silverman said Wednesday that state police have no record of a missing person report filed on Van Vught.

“Does anyone know where to find Mr. Van Vught?” asked Judge Robert Mello during the July 26 hearing.

Repeating his client’s statement to the sheriff’s deputy when the deputy tried to serve John Van Vught with a court summons, Valsangiacomo said the family reported him missing to state police and checked hospitals. but could not locate it.

“The only thing they heard from him was that he sent an unexecuted power of attorney, which is useless, from New Mexico in the mail,” Valsangiacomo said. “Then they heard about a hotel in another part of the country, but it never checked in.”

“He just left,” Valsangiacomo said. “Literally, I just left.”

Contact John Lippman at [email protected]