Fire Dept. Treasurer Charged with Embezzling $5.7M
The former treasurer of the Mahopac Volunteer Fire Department has been arrested and charged with stealing more than $5.7 million from the department after a cloud of suspicion surrounded him and the department for several months.
The United States Attorney’s Office for the Southern District of New York confirmed Mahopac resident Michael Klein is facing one count of wire fraud and six counts of submitting false tax returns. Klein could face up to 38 years in prison if convicted on all charges. He was arraigned last week and released on $500,000 bail to his home in Florida.
With the money he allegedly took, Klein lived a lavish lifestyle, purchasing a 55-foot Neptunus motor yacht, jewelry and a second home in Florida, according to the U.S. Attorney’s Office. Klein, who joined the department in 1998 and became treasurer in 2001, allegedly embezzled the money by writing more than 275 checks from the department’s coffers to his two businesses over a period of more than 13 years.
The stolen money went toward supporting Klein’s two businesses, Abbie Graphics and Buckshollow Emergency Equipment Corp, according to Manhattan U.S. Attorney Preet Bharara. Klein would write checks on behalf of the MVFD and deposit them into the two businesses, but entered the checks into the MVFD’s books as having been made payable to other various vendors, according to the complaint. MVFD had a contract with Buckshollow equipment for many years, as did other police and fire departments in the region.
Once law enforcement discovered possible embezzlement in fall 2015, Klein offered his yacht for sale with a yacht broker in Florida for $229,000. He rejected an offer for $175,000, but then sold it to an automobile dealer for the $136,850 he owed on a loan secured by the yacht.
“Public corruption victimizes the public generally, but here, the people of Mahopac and its volunteer firefighters have suffered specifically and directly, having lost almost $6 million that could have been used for good, but instead was allegedly squandered away by Klein,” Bharara stated.
Working on the case included the IRS, FBI, New York State Police and state comptroller’s office, with the U.S. Attorney’s office leading the way.
According to the complaint against Klein, one of the fire commissioners first noticed discrepancies in the MVFD’s financial statements around July 2015. Klein resigned late last year from the department as the investigation deepened. In a letter to the Carmel town board, it notified them of Klein’s departure, but asked them to reserve thanking him for his service, which is usually customary for retiring members.
Klein’s attorney, Jeremy Saland, could not be reached for comment, but in a published report claimed Klein actually initiated the investigation with the Putnam District Attorney’s Office and has been cooperating.
“While everyone is fallible, it is Mr. Klein who on his own accord went to the DA’s office and ultimately the US Attorney’s office to initiate the investigation and continue his cooperation with law enforcement,” Saland said in a statement. “Mr. Klein has taken and will continue to take the steps as best he can to assist the same community he admirably served during his years as a firefighter to move forward while also addressing the accuracy of the charges pending against him.”
Relief and even joy was sensed around the fire department and town hall following news of Klein’s arrest.
Fire Commissioner Chuck Lewis said the department is “extremely happy” that Klein has been nabbed by the feds. Calling the department a “family,’ Lewis said it was “traumatic” for some members that a person they trusted could deceive and steal from them.
“Hopefully he’ll be put away for quite a while for what he did,” Lewis said.
Lewis said he last spoke with Klein a couple months before the allegations of embezzlement came to light in the fall. Once fire officials started questioning department financials, Klein never provided reasonable answers and eventually stop showing up to meetings, Lewis said. Before the embezzlement was discovered, Lewis and other fire department officials were under the impression that Klein’s two businesses were successful and that’s how he was living his lavish lifestyle.
Carmel Supervisor Ken Schmitt also expressed happiness with Klein’s arrest and appreciation toward the federal authorities for working the case. Schmitt said new safeguards put in the fire protection contract between the town and MVFD hopefully prevent a repeat of what Klein allegedly did.
The town board cut MVFD’s proposed funding by $500,000 last budget season. In 2015, the department got $2.1 million, which Schmitt said was possibly the most it ever received.
“The whole thing is very sad,” Schmitt said, “But I think the fire department has acknowledged that changes needed to be made going forward. They understood that, they realized that and we have a good working relationship with the department and appreciate everything the volunteers do for the town.”
Both Lewis and Schmitt said they were mindful that some of the money allegedly taken by Klein could be recovered, though as Lewis said, “We’re not optimistic about what we’re getting back, but we hope we get something back.”
