Feds: State worker in $500,000 rip-off
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By Thatcher Moats Times Argus Staff - Published: February 2, 2010
BURLINGTON – A former state employee is suspected of taking nearly $500,000 of state money that was destined for needy Vermonters and diverting it into private bank accounts controlled by her and her family, according to papers filed in a Burlington federal court on Friday.
Kathy Lantagne, a 19-year veteran of the Agency of Human Services, is the subject of a federal investigation into possible embezzlement, bank fraud, money laundering, mail and wire fraud, and conspiracy, according to the court papers.
The case involving Lantagne is detailed in an affidavit that Internal Revenue Service special agent Jill Webb filed late last week. The affidavit was filed as part of a request for a warrant to search computer equipment Lantagne used in her official capacity as a supervisor within the Vermont Agency of Human Services.
Authorities have not filed an indictment against Lantagne, and U.S. Attorney Tristram Coffin would not say whether a grand jury investigation was under way.
The search warrant affidavit appears to be the first public disclosure of the investigation, which began last Oct. 22 when an accountant for the Vermont Department for Children and Families began questioning "suspicious" checks that Lantagne approved, the court documents state.
Based on those suspicions, investigators performed an audit of state checks authorized by Lantagne, the affidavit states. The audit revealed that between Aug. 2004 and Oct. 2009, Lantagne approved over 250 "suspect checks," the court records state, totaling more than $490,000.
The checks, which were made out to four different entities, were "deposited in bank accounts controlled by Lantagne and her sister," the affidavit says.
The four groups the checks were made out to Northern Property Management, CTR Enterprises and KNR Property Management, court papers state.
The IRS investigator wrote that the checks were mailed by the state to 2373 Bushey Hill Road in Newport, the affidavit says, which authorities said is the address of Lantagne's sister, Deborah Tuller.
Authorities said that Vermont Secretary of State records indicate that David and Deborah Tuller operate CTR Enterprises at that address.
An investigator reviewed a "representative sample" of the 250 checks, court documents state, which indicated that many of the checks were deposited into bank accounts controlled by Lantagne and her family.
Many of the checks were deposited in a Community National Bank account in the name of KNR Logging, which is controlled by Kathy and Richard Lantagne, court papers show.
Checks also were deposited in a Passumpsic Savings Bank account in the name of Northern Maintenance and Management, which is controlled by Deborah and David Tuller, authorities said. And still more checks were deposited in a BankNorth account in the name of Deborah and David Tuller, doing business as CTR Enterprises, the affidavit states.
According to the court papers, the 250 checks are "suspect" because they were allegedly authorized and approved by Lantagne; they were mailed to Lantagne's sister; they were deposited in bank accounts controlled by Lantagne and her sister; and the checks included duplicate payment checks for benefits previously authorized and paid by the Agency of Human Services to legitimate vendors.
In addition, neither Tuller nor the three entities who the checks were payable to provide services to the state, authorities said.
A detective from the Vermont Office of the Attorney General was probing the case in October and November, court papers show, up until the point where a judge had issued a warrant allowing the detective to search computer equipment that Lantagne had used at work. Other Agency of Human Services employees had turned the computer equipment over to the detective, Thomas Howell.
State authorities never executed that warrant and the case was transferred to federal authorities, court records state. On Dec. 15, Howell met with Webb and handed her "case-related documents and evidence," including bank records, an audit spreadsheet of the suspected checks, two hard drives and eight floppy disks, according to the affidavit.
According to the affidavit, Lantagne resigned from her job on Oct. 29, just seven days after the DCF accountant, Elizabeth Sutton, began questioning checks Lantagne had approved.
The Economic Services Division where Lantagne worked is within the Department for Children and Families, which is part of the Agency of Human Resources – the state's largest agency.
Economic Services administers benefits programs mostly for low-income Vermonters, including food and heating assistance.
Lantagne was a supervisor in the Newport office, and Steve Dale, the Commissioner of the Department for Children and Families, said she worked mostly on the Reach-up Program, which supports parents who have children.
Dale said he knew the "gist" of the case but not the details like the dollar amount investigators were looking into.
Cindy Maguire, the Vermont Assistant Attorney General in charge of the criminal division, also declined to talk about the case.
Coffin, the U.S. Attorney, would only speak generally about white collar crime and not get into specifics of the case.
He said it is ultimately up to him whether to take a case to the federal level, a decision he said often comes down to resources.
"One of the things federal law enforcement is particularly good at is white collar fraud and financial fraud," said Coffin. "We have investigative resources that are well suited to these kinds of cases."
Lantagne could not be reached for comment.
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