Shenandoah Borough officials have released the first in what they say is a series of investigative reports outlining what they describe as widespread financial irregularities during the tenure of former borough Secretary-Treasurer Anthony Sajone.
The report, prepared by forensic accountant Joseph Yanushefsky Jr., details a range of alleged misconduct involving payroll, workers’ compensation, pension, and insurance funds that could total nearly $242,000 in losses to taxpayers.
The forensic analysis was released publicly alongside a statement from the borough’s leadership, which includes Borough Manager Mike Cadau, Special Counsel Maria Casey, and Yanushefsky. The report is one of several ongoing financial investigations that borough officials say have been referred to both the Pennsylvania Attorney General’s Office for Criminal Law and Public Corruption and the IRS Criminal Investigation Division for review.
Those investigations are ongoing, borough officials say.
A Troubled Financial Picture Emerges
According to the report, Sajone, who was employed from April 2020 through December 2024, served as both secretary and treasurer, managing daily finances and borough revenues. The forensic review alleges that during that time, Sajone made improper payroll and insurance payments, failed to pay required taxes on time, and in some cases issued or received payments that violated state and federal law.
Yanushefsky wrote that the borough’s accounting practices “were not in conformity with government accounting principles,” and that a bond claim has been filed with the borough’s insurer, Travelers, to recover losses.
Missed Tax Payments and IRS Penalties
One of the report’s earliest findings involves unpaid payroll taxes. The borough allegedly failed to remit federal employee withholding taxes for several months in 2022, leading to IRS penalties and interest totaling $1,843. Yanushefsky noted that Sajone was responsible for ensuring timely payments to the IRS, and the oversight caused financial harm to the borough.
Improper Payments to Employees on Workers’ Compensation
The largest section of the report focuses on allegations that Sajone improperly paid certain employees full borough wages while they were already collecting workers’ compensation benefits—an arrangement that violates both tax law and compensation rules.
Forensic findings indicate that two employees, identified in the report as Frank Breznik and Joseph Michalik, received both borough payroll checks and state-issued compensation checks at the same time. The borough then paid taxes, pension contributions, and union dues on those wages as if they were regular earnings.
Yanushefsky calculated that these improper transactions cost the borough $81,990, including employer tax matches that would not have been owed had the payments been processed correctly.
According to the report, Borough Manager Mike Cadau told the forensic accountant that one employee, Joseph Michalik, admitted to giving some of his workers’ compensation checks to Sajone while continuing to receive borough pay.
Life Insurance Policy Cancellations and Unauthorized Payouts
Another significant finding concerns the borough’s life insurance program for retirees and employees. According to Yanushefsky, the borough’s long-standing group policy with Sun Life Financial was canceled at the end of 2020 due to unpaid premiums.
In early 2022, Sajone reportedly initiated a new policy through Equitable Life Insurance, but incorrectly listed retired employees as active workers to maintain their eligibility for coverage. When retired employee Ronald Luscavage died in 2023, Sajone allegedly submitted a life insurance claim identifying him as an active employee.
The insurer later rejected the claim after discovering Luscavage had retired more than a decade earlier. Nevertheless, Yanushefsky reported that Sajone authorized a $10,000 payment to Luscavage’s widow from borough general funds under the label “Life Insurance Reimbursement.”
The forensic accountant said the payment was made “without prior knowledge or approval from Borough Council” and despite the policy’s cancellation. In addition, four other deceased retirees reportedly lacked valid life insurance coverage due to the lapse, potentially leaving the borough responsible for an estimated $65,000 in benefits.
Questionable Compensatory and Pension Payments
The report also describes a separate issue involving compensatory time, or “comp time”—paid time off or cash awarded for extra hours worked. Under the borough’s union contract, this benefit was not authorized.
According to the forensic accountant, former employee Frank Breznik received more than $75,000 in comp time payments, and Joseph Michalik received more than $18,000—even while both men were also collecting workers’ compensation benefits.
Yanushefsky further found that Sajone approved and paid comp time to himself, even though he was an exempt (salaried) employee not entitled to such payments under borough policy.
The accountant also cited evidence that some employees—including Breznik—received pension payments while simultaneously collecting workers’ compensation, a practice that is prohibited.
Payments After Resignation
Perhaps one of the more glaring findings involves Breznik continuing to receive borough paychecks for eight months after his resignation on Jan. 31, 2023. The report says Breznik resigned following a $120,000 workers’ compensation settlement but continued to be paid by the borough while also drawing his pension.
Total Alleged Financial Impact
Yanushefsky’s preliminary tally of potential losses and improper payments totals $241,833.35, broken down as follows:
- IRS penalties and interest: $1,843
- Improper workers’ compensation-related payments: $81,990
- Unauthorized compensatory time payments: approximately $93,000
- Life insurance payouts and obligations: $65,000
The forensic accountant emphasized that the figures are preliminary and could increase as the review continues. Additional state and local tax filings are still being examined to determine whether other penalties may apply.
Borough Response and Next Steps
In a joint statement, the Borough of Shenandoah said the report’s release represents part of its effort to “ensure full transparency, accountability, and the stewardship of public trust.” Borough officials confirmed that the report has been forwarded to state and federal investigators for possible criminal review.
“Forensic Accountant Joseph Yanushefsky has been retained to analyze the accounting system in place as of 2024 and prior,” the borough said in its release. “Based on preliminary findings, the accounting system is not in conformity with government accounting principles.”
Borough Manager Mike Cadau and Special Counsel Maria Casey are coordinating with auditors and law enforcement to determine how the irregularities occurred and what recovery options are available. The borough has filed a claim with its bond insurer, Travelers, to recoup taxpayer losses tied to Sajone’s conduct.
Officials said additional investigative reports will be made public once approved and that the borough is also auditing the Sewer Authority and the sale of the Municipal Water Authority to ensure public assets have been handled properly.
Ongoing Investigation
Yanushefsky wrote that his investigation is ongoing and that further irregularities may be discovered. He noted that “additional areas are subject to review and may have caused the Borough financial discrepancies resulting in misuse of taxpayer funds.”
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