Monday, September 1, 2014

Bainbridge Township, Fire Company, Agree to Audit in Lawsuit
October 31, 2013 by Diane Ryder | No Comments

"They’re a nonprofit corporation whose sole purpose was to provide fire protection to the township. Keeping the funds makes no sense to me.” – Jim Flaiz

Both the Bainbridge Township Fire Company and the Bainbridge Township Trustees agreed to freeze the company’s assets and hire an accountant to audit its books Wednesday.

Attorneys for both parties made the agreement after the trustees filed a lawsuit Tuesday against the company for failing to account for taxpayer dollars after their contractual relationship ended on June 30.

A hearing in Geauga County Common Pleas Court Wednesday morning seeking a temporary restraining order against the fire company was averted at the last minute when attorney reached the agreement.

It will last up to 14 days to allow time for the audit of the fire company’s $230,000 held in six bank accounts, which trustees believe are taxpayers’ funds that should be turned back in to the township to be used for the fire department.

“I’m fine with that as long as you understand you may be called back in earlier than 14 days,” Common Pleas Judge Forrest Burt told the attorneys.

Assistant County Prosecutor Rebecca Schlag told Burt that, under the agreement, the fire company’s six accounts at Huntington Bank will be frozen except for up to $20,000 needed to pay for the audit, as long as the funds are considered township money.

Attorney Diane Calta, representing the fire company, said her clients agreed not to disburse any of the property it controls, such as a smart board, unless trustees give their permission.

The fire company, a nonprofit corporation that has served Bainbridge Township since 1942, has provided several functions to the township’s fire department, including calling firefighters to fires, performing training sessions and offering community outreach programs.

They have worked under a contract with trustees who paid them annually for their services out of tax money set aside for fire protection.

The group came under scrutiny several years ago when a previous board of trustees requested copies of the company’s financial records and meeting minutes, but the company took many months to provide records trustees said were incomplete.

In February, fire company officials abruptly told trustees they wanted to terminate their contract with the township when it expired in June, but remain a social organization that wanted to continue holding meetings at the fire station.

Trustees requested the company turn over its assets, including money and equipment, to the fire department.

During the last several months, fire company officials have met with trustees to work out the details of the transition from fire fompany to fire department.

At previous meetings, fire company officials told trustees they had little in assets, including a trailer used for fire training and some other equipment. They told trustees they had three bank accounts totaling less than $100,000.

According to Geauga County Prosecutor Jim Flaiz, a grand jury investigation into missing funds from a fire company clambake found, after issuing a subpoena for the group’s financial records, that the fire company had six accounts at Huntington Bank, totaling $230,000.

“They then admitted that they had those funds,” Flaiz said. “We prepared an agreement that the funds would transfer back to the township to be used for the fire department and the fire company would keep back about $20,000 to $30,000 for their scholarship fund.”

Flaiz said the agreement was prepared before the company’s contract with the township expired June 30, but before it could be signed, company officials said they would not need the scholarship funds and would also turn that back to the township.

“We thought the agreement had been reached in July, but their lawyer claimed that it had been presented to the members, who had voted it down,” Flaiz said. “Their position was to retain all the money, so we had no other option than to file a lawsuit.”

He added, “At this point, the township’s position is that the funds should come back to the township because they’re taxpayers’ funds. They’re a nonprofit corporation whose sole purpose was to provide fire protection to the township. Keeping the funds makes no sense to me.”

Flaiz said further hearings will be scheduled on the lawsuit after the audit is conducted. He said no schedule has been set at this time.

 

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