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Funds forever lost, officials fear

TIMES STAFF WRITER
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WEST LEYDEN — Officials from the town of Lewis and local dairy cooperatives are fairly certain they will never recoup nearly $1 million stolen by Melissa L. Wagner-Dano.


"How does someone pay back that kind of money?" said Lewis Supervisor Dawn M. Zagurski.


She and others are working with federal officials — and, in the town's case, pursuing civil litigation — to attempt to recover some of the stolen money to lessen the hit on taxpayers and farmers already coping with difficult fiscal conditions.


"We're just waiting for (federal investigators and prosecutors) to do their work," Michael Kraeger, president of the 18-farm Oneida-Lewis Milk Producers Cooperative. "Hopefully, they're working to recoup as much as possible."


Mr. Kraeger said members of his cooperative have been passing along information and rumors concerning Ms. Wagner-Dano's actions to federal officials in hopes that they may be able to seize her assets.


Ms. Wagner-Dano, 34, Fish Creek Road, West Leyden, pleaded guilty in April in U.S. District Court, Syracuse, to wire fraud, admitting that she embezzled up to $1 million from January 2007 through November 2009. She could receive up to 20 years in federal prison and a maximum fine of $250,000 at her sentencing Sept. 21.


Sources have told the Times that she spent the money on a lavish lifestyle that included remodeling her home and buying horses and competition trucks.


Federal prosecutors have said the losses were estimated to total about $927,000 to three groups: the Oneida-Lewis cooperative ($642,540.67), the town of Lewis ($250,614.67) and the 39-farm Boonville Farm Cooperative ($33,861). Defense attorney George F. Hildebrandt, Syracuse, is attempting to verify the amount before sentencing.


In an April story in the Utica Observer-Dispatch, Mr. Hildebrandt said Ms. Wagner-Dano has taken full responsibility for her actions. He did not return several calls seeking comment for this story.


With the town of Lewis's reserve funds depleted, officials have started budget discussions much earlier than usual in anticipation of a difficult process, Mrs. Zagurski said.


FOLLOW THE MONEY


The Danos had been members of the Oneida-Lewis cooperative, and Ms. Wagner-Dano's family — including two sisters who are state troopers — is respected in the area.


She had served as town bookkeeper since 1998 and was the elected town clerk from 2000 through 2005, when she stepped down for an unsuccessful run for the District 10 seat on the Lewis County Legislature.


Ms. Wagner-Dano also had extensive knowledge in the specialized fields of milk pricing and dairy accounting, having worked for the Oneida-Lewis cooperative since 1999 and the Boonville co-op since 2006.


And she used that knowledge to start stealing money from farmers.


Ms. Wagner-Dano began skimming money in January 2007 from the Oneida-Lewis cooperative, then from November 2008 to December 2009 she transferred funds, without authorization, among various checking accounts in an attempt to avoid detection, court documents state.


She took much of the cooperative money by altering figures for milk fat and other solids in the member farms' milk, sources said. While average milk prices are set by the federal government, milk with a relatively high level of milk fat and solids is worth more.


Ms. Wagner-Dano apparently undervalued individual farmers' milk, resulting in smaller milk checks. Then, the milk was sold to processors using the higher component levels, and she apparently pocketed the difference.


Ms. Wagner-Dano in April 2009 set up an Intuit QuickBooks payroll program for the town and, using fictitious payroll accounts, transferred money from the town's account to the dairy cooperatives' accounts, then withdrew that money, according to the U.S. attorney's office. She reportedly wrote checks from the Oneida-Lewis Milk Producers Cooperative payable to Melissa Dano and signed them as Melissa Wagner.


Ms. Wagner-Dano signed up for online banking through Community Bank, falsely listed the two cooperatives as town employees, made online money transfers from other town accounts to the QuickBooks payroll account, "paid" the cooperatives and withdrew the money from their accounts, the town's lawsuit states.


Ms. Wagner-Dano also tried to avoid detection from the Boonville Farm Cooperative board of directors by claiming in an Oct. 29 letter that "unauthorized transfers" from its bank account happened because her computer system crashed, according to court documents.


KNOWN IN COMMUNITY


The family's standing in the community has caused some residents to be reluctant to discuss the case.


"They've always lived well, and I didn't know where the money was coming from," said a local farmer, who requested anonymity. But he added, "She was a neighbor and a friend in the cooperative, so everybody trusted her."


But there is another reason officials from the victimized organizations are declining to discuss where the money went.


"We don't want to jeopardize what we're trying to go after," Mr. Kraeger said.


Sources suggest that at least some of the money might still be at local banks. A Community Bank spokesman would say only that his company has cooperated with authorities and is referring all inquiries to law enforcement.


But those sources also believe much of the money was used to support Ms. Wagner-Dano's truck-pulling hobby, the purchase and care for expensive horses and other animals, extensive remodeling of the Danos' home and farm on Fish Creek Road near West Leyden, and acquiring other amenities.


Ms. Wagner-Dano's husband, Douglas J. Dano, has been superintendent for several local truck-pull events, and the Danos reportedly owned several trucks and other equipment.


Ms. Wagner-Dano in November apparently sold at least one truck, at an asking price of $55,000, on a diesel truck competition forum.


The Danos also sold some gypsy horses about that time, according to an Internet posting from the Tennessee farm that bought them. A quick Internet search showed prices for gypsy horses ranging from $7,500 to $15,000.


CIVIL LAWSUITS


While the dairy cooperatives are relying on federal officials for restitution, Lewis town officials recently filed separate state Supreme Court lawsuits against the Danos and Community Bank seeking repayment of $250,348.28, plus interest and legal fees.


The Danos in January 2009 took title to their Fish Creek Road residence, at which they had lived for many years, from Ms. Wagner-Dano's parents, Richard D. and Deborah L. Wagner, Lee Center, for $170,000 and established a mortgage with the Wagners, according to Lewis County land records. However, in late December, the Danos transferred title back at no cost, and the mortgage was discharged.


The 220-acre property, including several barns, is assessed for $170,000. However, it has not been used as an active dairy operation for the past few years, and the Danos reportedly are living near Mr. Dano's family members in the Oneida County town of Ava.


The town is asking the court to annul the property's transfer back to Ms. Wagner-Dano's parents, order the Danos to account for all machinery, equipment, vehicles, farm animals and any other personal property that they sold or transferred over the past three years and restrain them from selling or disposing of any property or assets in their names.


The town also is suing its bank, claiming that bank officials should not have allowed Ms. Wagner-Dano access to town accounts and should have alerted other town officials when unusually large money transfers were taking place.


In its lawsuit against the bank, the town claims that to avoid detection, Ms. Wagner-Dano directed the bank to stop sending paper statements to the town and instead send e-mail statements to her Internet account.


That ultimately led to Ms. Wagner-Dano's downfall, as Mrs. Zagurski eventually was able to secure a copy of the statements and noticed large unauthorized expenditures. Following the discovery, Mrs. Zagurski said, she contacted the Federal Bureau of Investigation, which conducted a nearly six-month investigation.


Mrs. Zagurski also notified leadership at the Oneida-Lewis cooperative, which has several members in the town of Lewis.


That means some citizens lost money as farmers and as town taxpayers.


"It's unfortunate that some of the people in our town got affected twice," she said.

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