SHAMOKIN - The City of Shamokin, which has incurred major financial problems in recent years, now has another huge debt to pay.
It must pay back $504,495 to the state Department of Economic and Community Development (DECD) and U.S. Department of Housing and Urban Development (HUD) for misappropriations of funds dealing with the Community Development Block Grant (CDBG) program in 2003, 2004 and 2005, and the HOME Program in 2003.
If the city fails to pay back the money, it could lead to the loss of liquid fuels money, community development block grant funds, pension money and other state and federal funds.
City clerk Steve Bartos, who discussed the issue with council members Tuesday night during a special meeting, said the debt is connected with former Shamokin city clerk and treasurer Brian Jeremiah, 51, of Shamokin, being charged with misappropriating more than $8,000 in federal grant money from HUD.
He said the city properties that were involved in the CDBG and HOME programs include 818 E. Cameron St., 553 N. Second St., 716 N. Franklin St. and 718 N. Franklin St., which were sold July 21, 2006, March 30, 2005, May 24, 2007, and July 7, 2006, respectively.
Mayor George Rozinskie and Councilmen William Strausser, Michael Snyder, R. Craig Rhoades and William Milbrand initially said they didn't know where the city will get the money to pay the debt. But later in the meeting, Milbrand suggested funds could possibly be obtained from money generated from a fee council is seeking from Shamokin-Coal Township Joint Sewer Authority to guarantee a loan for an upgraded and expanded sewer plant.
Solicitor H. Robert Mattis said the city must make its first payment toward the debt by July 1. He noted money from the general fund or debt service cannot be used toward the payment.
Bartos said he and the mayor have developed an action plan with the city's financial consultant, Daryl Peck, of Concord Public Financial Advisers, to repay the money.
5 years of payments
Under the plan, the city would pay $50,000 in 2012, 2013, 2014 and 2015, before making a balloon payment of $304,495 in 2016.
Bartos said he's hopeful the plan will resolve most, if not all, of the questioned and ineligible costs.
In a letter written to F. Edward Geiger III, director for the Center for Community Development, Harrisburg, Rozinskie stated, "The city will try its best to conduct its own review and obtain records that may assist in lowering this payment. Should the city be able to find appropriate documentation to this effect, it will be submitted to your offices for review and a determination if it meets the criteria to satisfy any findings identified by your audits."
Bartos said city officials were first notified in June 2009 that it owed a debt to the state and federal government. After a thorough investigation by DCED into the misappropriations of funds, the city was informed Oct. 15, 2011, exactly how much money it owed.
Investigation
Jeremiah was sentenced in March 2011 in federal court in Williamsport by Magistrate Judge William Arbuckle III to serve two years probation and make restitution to HUD.
In addition to receiving probation, Jeremiah, who entered a guilty plea in federal court on Oct. 14, 2010, was ordered to make $8,100 restitution and pay a $1,000 fine and $25 special assessment fee. The defendant wasn't sentenced to any jail time.
Jeremiah was charged in October 2010 with misappropriation of the federal grant money, which was earmarked for rehabilitating homes and making them available for low-income residents through the Home Investment Partnerships Program (HOME).
Federal attorneys reported in an indictment that Jeremiah used the grant money and income derived from the home sales to rehabilitate commercial properties under the auspices of the Shamokin Redevelopment Authority, for which he served as executive director, and also cut two checks to himself. They allege he falsified documents related to the crimes, which occurred between February and August 2006, the indictment said.
The 11-page plea agreement signed by Jeremiah on Aug. 25, 2010, prohibited him from being charged with any other crimes directly related to the investigation, with the exception of criminal tax charges.
The day after his indictment, Jeremiah was fired from his job with DCED, which worked with HUD on the HOME program and Shamokin investigation.