Payroll fraud hits Vernon for $158,000

Township hopes to recover funds from company charged in scheme, By Jennifer Knocha Vernon — The public isn’t letting go of the Ameripay fraud, even though the township is confident that the damage will be slight. Patrick Rizzuto, a former president of the township’s board of education, brought the issue up again at last week’s Town Council meeting, asking how the shortfall from the fraud is going to be handled. “Vernon, hopefully, will not lose any money, hopefully,” responded Mayor Austin Carew. “There are two payments that were made in April, for $77,000 and $81,000. Then the federal government froze all of their assets in May, and we are hoping those payments got frozen with those assets.” Carew anticipates that the township will recover the money in the bankruptcy proceedings and said he is confident that Township Manager Melinda Carlton and Payroll Supervisor Pennie Roland acted in the best interests of the town. The trouble with Ameripay first came to light in May, when the owners of the company, Paul Bultmeyer of Upper Saddle River and Arthur Piacentini of Saddle Brook, were arrested on wire fraud charges after a long-term investigation by the Securities Exchange Commission (SEC). The company, which had been handling both the payroll and employee withholding taxes for Vernon, had its assets frozen by the federal government, leaving Vernon and many other municipalities, as well as Sussex County, in the lurch. Ameripay’s owners had been using money given them by their payroll clients to fund an unregistered securities company, Sherbourne Financial. In the meantime, their clients began getting letters from various federal agencies saying that their withholding taxes hadn’t been paid. The federal government has taken over the affairs of the companies, and a potential buyer of the assets had been found, but that arrangement has since fallen through. Now, the future of the companies, and their clients’ funds, is in question. Residents ask why? Rizzuto was among several residents at the meeting who wanted answers. He prodded the council on how the town plans to deal with the shortfall if the funds aren’t recovered in the bankruptcy hearing. The answer on that came from Township Manager Carlton: “If we are not quickly successful in recovering the funds, it will be spread out over three to five years via a state financing program.” She was emphatic that the township will not issue bonds to cover any losses. But Rizzuto wasn’t done with the council. “This town is suffering from a lack of confidence. You need to begin to establish some type of rapport with the community and develop some confidence in the council.” He suggested that no money should be spent for the remainder of the year without the approval of the council, not even by the manager. “If they haven’t bought it by now, then they don’t need it,” he said.

Timeline Jan. 1, 2009: Vernon Township begins using Ameripay to handle its payroll, on the recommendation of Sussex County, which also was stung by this scandal. Previously, the township was using Paychex. May 2009: Ameripay’s owners are arrested for fraud, following a long-term investigation by the SEC. Today: Vernon is hoping to recover $158,000 — that represents the payroll taxes for a two-week period after the government froze Ameripay’s assets.e