Public Safety Commissioner Thomas D. Anderson and Tax Commissioner Kaj Samsom said a tax examiner employed by the Department of Taxes has been arrested by the Vermont State Police on suspicion of embezzling more than $15,000 from the state of Vermont by altering a single taxpayer’s return information in fall 2018.
Chelsea Hoadley, 26, of Greensboro Bend, an employee of the Tax Department since February 2016, was arrested today and has been cited to appear Thursday, Jan. 17, 2019, in the Criminal Division of Vermont Superior Court in Barre to answer four counts of embezzlement and four counts of identity theft. Each count of embezzlement (13 V.S.A. § 2537) is punishable by up to 10 years in prison and $1,000 in fines. Each count of identity theft (13 V.S.A. § 2030) carries a potential penalty of up to three years in prison and $5,000 in fines. The Vermont Attorney General’s Office is handling the prosecution of Hoadley.
The case was investigated by the Vermont State Police in conjunction with the Vermont Attorney General’s Office following a report to law enforcement by the Vermont Department of Taxes on Dec. 7, 2018. The investigation was triggered when the director of risk management at NorthCountry Federal Credit Union in South Burlington flagged suspicious activity on an account and notified the Tax Department. The Tax Department immediately placed Hoadley on leave when the investigation began.
Tax Commissioner Samsom emphasized that no data breach occurred, and no taxpayer dollars or data were at risk.
“Within hours of receiving the call from the bank, we had reviewed the transactions and referred the matter to the Vermont State Police,” Samsom said. “This was not a data breach, and no taxpayer data or funds were or are at risk. Vermonters need not be concerned about their data or the integrity of our system.”
Samsom added: “Fraud prevention is a partnership with banks, other agencies and the IRS, and in this case, the system worked as designed in detecting this activity, thanks to the quick action of the bank and Tax Department employees.”
The Vermont State Police investigation revealed that Hoadley altered the 2012 and 2015 tax returns of an individual she knew. There is no evidence to indicate the taxpayer was aware of or involved in Hoadley’s conduct.
Bank records show four improper electronic deposits characterized as tax refunds to a NorthCountry FCU account controlled by Hoadley: on Oct. 30, Nov. 5, Nov. 21 and Dec. 6. The total amount of the deposits was $15,773. Evidence from the credit union shows that the funds were used to pay online bills, and that Hoadley wrote and endorsed eight North Country FCU checks to herself totaling $10,000 during the time period in question and deposited the checks in an account at the Vermont State Employees Credit Union.