KINGSTON, Pa. -- Police leaders violated municipal policy prohibiting cash payments to officers working private security details at least 160 times and lied to cover up the violations, according to a report released Thursday.
An investigation by Philadelphia-based law firm Ballard Spahr found that former police Chief Keith Keiper improperly diverted at least 31 checks from the municipal payroll system and that Daniel Hunsinger, the former assistant chief, diverted at least 111 checks since 2009.
The report says nearly $32,000 in cash compensation did not go through the payroll system and that police officers working security for Wyoming Valley West Middle School dances were directly paid cash in at least 18 instances. Officers hired in the past two years knew nothing about the policy, the report says. The report alleges that Keiper and Hunsinger paid officers "cash in an envelope" for work at events not sanctioned by the municipality.
"As a result, Keiper and Hunsinger were operating the equivalent of their own security force and the officers were potentially not covered by the municipality's worker's compensation, disability or liability insurance policies," the report says.
Mayor James J. Haggerty called the officers' alleged actions "intolerable" and "unconscionable," saying they schemed to conceal their actions.
"Our police administration took deliberate actions to circumvent the policy and took steps to conceal the fact that the policy was not being followed," Haggerty said. "By failing to provide Kingston's administration with any information regarding the outside assignments and failing to distribute the policy to the officers, yet nonetheless correctly processing payroll for some outside assignments, it appears that a scheme had been implemented so that the violations of the policy would remain undiscovered."
Luzerne County District Attorney Stefanie Salavantis said the matter appears to involve only personnel issues, which her office does not investigate.
Keiper, who was on paid administrative leave since the investigation began May 1, resigned last week, and as a result of the investigation Haggerty has accepted it effective May 29. As a penalty, Keiper had been suspended for 50 days, time that will be deducted from his accrued leave, Haggerty said.
Keiper did not return a cellphone message seeking comment.
Hunsinger previously left the department and became Forty Fort's police chief in April. As a result, Kingston municipal authorities have no power to discipline him, Haggerty said.
In an interview Thursday, Hunsinger said he was not contacted about the investigation until earlier this week. He denied a cover-up, saying the issue appeared to be a misunderstanding.
"I never saw a written policy. I do recall Mayor Haggerty saying that he didn't want specialists to do security anymore, and they did request that the money be funneled through payroll," Hunsinger said. "There's been so many policies that have started, been implemented and then just forgotten about based on past practice with the department I just assumed that the policy stopped, the practice had stopped. And I believed they were aware of it because they knew we were still working (special details)."
'We follow the policy'
The policy went into effect Jan. 29, 2009, when municipal Administrator Paul Keating, Haggerty, Keiper and Hunsinger met to discuss it, Haggerty said. It forbade police from working private security details without permission from the municipal administration and required any wages to be paid as a payroll check, specifically forbidding cash payments.
Haggerty said the policy change was motivated by needing to know where officers were working and to make sure they were covered by worker's compensation and liability insurance. The "nightmare scenario," he said, would be if someone got hurt, the municipality was sued and insurance wouldn't cover it because the officer was working as a private contractor.
"The collateral benefit of it is the tax issue," Haggerty said. "By having the cops paid through payroll, we saved them from the ethical dilemma. All their payment is tax-treated properly, so now I don't have 19 police officers sitting around going, 'Should I report it?'"
The report, which has also resulted in reprimands and education for rank-and-file officers, says that as the policy was being implemented, Keiper and Hunsinger were concerned that it would affect officers' take-home pay. As a result, the administration increased the rate it would charge to all non-municipal events by 75 percent -- from $20 per hour to $35 per hour -- to compensate for insurance costs.
But then on April 18, the report says, Keating learned the Wyoming Valley West School District's disbursement practices were under review and that Kingston police may have been paid in cash for their off-duty work.
Keiper, however, denied the allegations, saying, "We follow the policy," and assuring Keating that there was no need to be concerned police were taking cash, the report says. But the concerns were renewed the next day, when The Citizens' Voice ran a story quoting Wyoming Valley West Superintendent Charles Suppon as saying the middle school pays officers in cash and issues them receipts, the report says.
"The quote alarmed Keating and the mayor, particularly after Keiper had made contrary representations to Keating just one day earlier," the report says.
The report says the investigation revealed that Hunsinger violated the policy Jan. 30, 2009 -- the day after the policy went into effect -- and Keiper violated the policy on Feb. 10, 2009, less than two weeks later, the report says. Both men received checks from Wyoming Valley West and Wyoming Seminary, cashed them, and paid officers in cash or kept the money themselves for time they worked, the report says.
Gail Smallwood, associate director of communications at Wyoming Seminary, said the school has always paid the police department by check because it is borough policy to do so. Wyoming Valley West Superintendent Charles Suppon did not return messages seeking comment.
Hunsinger said the practice of police cashing checks and handing officers cash started before he joined the department and he and Keiper continued signing checks for cash after Hunsinger was promoted him to captain in 2005. He said he thought the administration knew the practice was continuing because they knew officers were still working the details.
"I think what happened was basically the administrator's feelings got hurt so he's seeking revenge," Hunsinger said. "I don't know why they're taking it to this extreme."
Barbara Fairchild, Forty Fort's borough manager, said she's happy with Hunsinger and that the borough would have no cause to take action unless he is charged with a crime.
The municipality's investigation began amid reports that the Internal Revenue Service was probing records related to finances at Wyoming Valley West School District.
IRS spokesman David Stewart said the agency could neither confirm nor deny any investigation.
Copyright 2013 - The Citizens' Voice, Wilkes-Barre, Pa.
McClatchy-Tribune News Service
