A forensic accountant hired by the Borough of Shenandoah has identified more than $163,000 in misspent COVID relief funding.
More than $142,000 of that spending was previously alluded to at the Borough’s November council meeting. However, the report prepared by Joseph Yanushefsky & Co., of Mahanoy City, revealed another $19,000 that improperly spent.
Yanushefsky says that $19,000 was used to zero out Shenandoah’s allocation of American Rescue Plan Act (ARPA) funds. On Dec. 31, 2024, Yanushefsky says bank statements show that $52,037.18 was moved from an account used to hold COVID relief money to the Borough’s General Fund.
After that transfer, $19,000 was moved to a Police Forfeiture Fund. Yanushefsky says this was not an allowable use of ARPA funding.
That brings the total of allegedly misspent ARPA funds in Shenandoah to $163,522.41.
According to previous reports on Coal Region Canary, Shenandoah received two tranches of ARPA funds, in 2021 and 2022. They totaled $499,800.70.
At last month’s Borough Council meeting, Borough Manager Mike Cadau outlined two other payments that reportedly went against the rules for spending ARPA funds: $52,000 to settle a lawsuit and $92,000 to reimburse insurance checks.
Yanushefsky’s report provides more details on those alleged misallocation of funds.
The $92,000 (actually, it was $92,022.41) was placed in a Fire Escrow account. Shenandoah maintains this account and it allows the Borough to withhold insurance money after a fire until a property owner repairs the damaged building.
Once those required repairs are made, Shenandoah is supposed to pay the property owner from the Fire Escrow account.
Yanushefsky also says that Shenandoah used $52,000 in ARPA funds to settle a lawsuit with the Shenandoah Valley School District. That lawsuit alleged that another former Borough Manager, Joe Palubinsky, failed to split money the Borough got for low-rent housing (Payment In Lieu of Taxes, or PILOT funds) with the school district and Schuylkill County government.
While Palubinsky attempted to pay a portion of the debt in January 2020 using a “starter check” of roughly $46,700, which he allegedly signed on behalf of two other required signatories, the Borough still owed approximately $135,000 for the years 2001 through 2015, Yanushefsky writes in his report.
Although the lawsuit accused Palubinsky of taking “purposeful actions” to deprive the School District and County of owed revenue, documents note that the ultimate fate of the original unremitted funds remains unknown.
For his report – the fifth in a series released by Shenandoah Borough officials in recent weeks – Yanushefsky says he analyzed documents related to a bank account created to hold COVID funds and every entry on statements connected with that account.
He also reviewed canceled checks and a compliance report related to the use of ARPA funds, which was completed by former Borough Manager Tony Sajone. Yanushefsky says he consulted with current Borough Manager Mike Cadau before publishing his report.
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