Valley News – ValleyNet, operator of internet service provider ECFiber, says contractor stole money

Posted: 7/20/2022 11:40:11 PM

Modified: 20/07/2022 23:39:51

SOUTH ROYALTON – ValleyNet, the entity that operates Upper Valley internet providers ECFiber and LymeFiber, has been the victim of “certain financial irregularities” in which an outside contractor allegedly stole money from the organization , the company announced on Wednesday.

Neither the identity of the contractor nor the amount of money was disclosed, but ValleyNet said the incident “will not materially impact our financial viability and pose no risk” to the ECFiber’s service or ability to repay debt.

“It won’t impact customers,” said Stan Williams, CFO of ValleyNet and one of the founders of ECFiber.

ValleyNet, a non-profit organization, has a contract to operate fiber-to-the-home Internet networks with ECFiber, which serves about 7,000 subscribers in east-central Vermont, and another contract with LymeFiber, which serves about 400 homes. in Lyme.

Launched in 2008 with nearly two dozen member cities organized into a telecommunications district, ECFiber has been hailed by advocates as a model for bringing high-speed internet service to rural Vermont.

But rapid growth, funded by nearly $62 million in municipal bonds issued by ECFiber to build 1,600 miles of fiber optic networks, strained ValleyNet’s 30 employees, and in June the company announced that it was “restructuring” and entered into an agreement with Great Works Internet, a Maine-based Internet service provider, to take over day-to-day operations.

ValleyNet said the financial irregularities were uncovered by the “newly strengthened management team” put in place under the new operating agreement as part of an effort “to bring a higher level of professionalism and internal company controls.

ValleyNet expressed hope that they could recover the money.

“We are in the process of filing actions to secure accountability, and we hope this process will ensure that we can recover the funds that have been withdrawn,” ValleyNet said in the press release, adding that “all bank accounts and internal accounting data has been secured”. and controls have been put in place to prevent further incidents.

ValleyNet’s chief financial officer said the company blamed itself for what happened.

“Our internal controls haven’t kept up with our level of growth,” Williams said in an interview with the Valley Newsconceding that ValleyNet “made mistakes by not hiring additional accounting staff sooner or performing audits” because officials were “strapped financially to make ECFiber profitable, which we did”.

The missing money was discovered “within the last month or two when reviewing ValleyNet’s tax returns” and “bank reconciliations,” Williams said. ValleyNet is working with state and federal authorities on the investigation, and Williams said he expects more details to emerge as the investigation progresses.

Typically, financial crimes are investigated by the FBI and prosecuted by U.S. federal prosecutor’s offices, as happened when a director of a western payroll company of Lebanon was accused of stealing $1.2 million from clients in 2019 and the former manager of Lebanon Elks Lodge was charged. alleged check-kiting scheme involving lodge bank accounts earlier this year.

Williams described the money that was withdrawn from ValleyNet “a large amount that has been accumulated over the years”, but an amount nonetheless that is “not significant considering the size that ECFiber has now become. It is not enough to jeopardize the operations of any of our related entities.

Contact John Lippman at [email protected]