A former member of the Mid-Sussex Rescue Squad surreptiously took nearly $95,000 from the company over a five-year period and wrote out another $10,000 in outstanding checks, according to an annual audit of the company.

“It was discovered in March of 2017 that a previous member had been making cash withdrawals from the company's bank account and using the money for personal purposes,” states an audit by Lank, Johnson & Tull CPAs of Seaford. “Revenue in the prior years was reduced to hide the missing cash.”

The audit states the former member repaid $94,500 in March 2017. Another $10,500 in old, outstanding checks were voided and added to cash for fiscal year 2015.

The Cape Gazette learned the money had been stolen following a Freedom of Information Act request for Mid-Sussex's financial statements filed with the Delaware State Fire Prevention Commission.

The former member is not identified, and there is no record that charges have been filed.

Mid-Sussex Rescue Squad treasurer Henry Colon could not be reached for comment.

A source who is a member and asked to remain anonymous for fear of retaliation, said everyone at the squad was told that they would be fired if they talked about the missing money.

Although fire companies and emergency squads are considered private corporations, state law requires each of them to submit an annual audit to the commission, said Sherry Lambertson, executive specialist with the Delaware State Fire Prevention Commission.

However, state review of these private corporations ends there.

No payroll information

Lambertson said private emergency squad corporations retain their own payroll details; no payroll details are provided to the commission.

Mid-Sussex's 2016 audit included a line item for salaries and benefits, but it provides no break down of individual salary information.

The number of people who work at Mid-Sussex is also vague.

There are 28 members listed on Mid-Sussex Rescue Squad's webpage, but there is no indication whether they are paid or volunteer. Seven people are listed as career staff for the squad. Jerry Johnson is listed as EMS chief, and Joseph Johnson is listed as chief engineer. Jerry Johnson has been on leave since May when he was charged with third-degree unlawful sexual contact and sexual harassment in connection with a 25-year-old woman who was an emergency medical technician for the squad. In court documents, the woman stated she twice emailed her concerns to the squad president, who is related to Jerry Johnson, but the president never responded.

Jerry Johnson pleaded not guilty to his charges, and a trial is scheduled in Sussex County Court of Common Pleas Tuesday, Sept. 26.

The source said Jerry Johnson, Joseph Johnson and President Raymond Johnson are all brothers. “It's known as the Johnson squad. They keep it in the family. It's their show,” the source said. Neither Jerry Johnson nor Raymond Johnson could be reached for comment.

According to the recent audit, the squad listed more than $620,000 for salaries and benefits for fiscal year 2016. As the squad's biggest expense, salaries and benefits make up about two-thirds of its $990,000 in total expenses. Other expenses include about $11,000 in administrative, about $15,000 for awards and recreation and about $12,000 for fundraising.

An IRS 990 return filed by the squad in 2014 also provided no payroll information. The IRS requires organizations that are exempt from income tax to file a 990 return. Mid-Sussex is exempt under 501(c)4 – a nonprofit organization that operates exclusively to promote social welfare.

In 2014, nine people were listed as officers under a section for compensation of officers and highest compensated employees. Each officer was listed as working 20 hours a week with no amount listed for reportable compensation. Raymond Johnson, Jerry Johnson and Joseph Johnson all were listed as officers.

The last page of the 990 states, “All compensation decisions are made by the board of directors.”

However, the board of directors is not listed on Mid-Sussex's website, the 2016 financial audit or the 990 return.

Million-dollar enterprise

Mid-Sussex Rescue Squad Inc. was formed in 1972. The company is responsible for providing emergency medical services to the residents of Oak Orchard, Riverdale and Long Neck in the southeastern part of Sussex County. The company owns and operates three ambulances and employs emergency medical technicians to provide services, according to a synopsis of the company provided by the audit.

The FY16 audit listed $1 million in revenue for the emergency squad, with revenue from insurance billings – Medicaid, Medicare and private insurance – totaling about $650,000 or two-thirds of the total. About $100,000 comes from insurance premium taxes, which are taxes levied on every fire insurance policy held by Sussex County property owners. Mid-Sussex also brought in about $78,000 from ambulance subscriptions paid by individuals at $50 a year, and about $50,000 from fundraising. Sussex County government gave the squad about $119,000, and grant-in-aid funding from the state was about $5,000.

The audit recommends that Mid-Sussex hire an administrator to handle day-to-day accounting and administrative tasks with oversight by another person. “This, along with board oversight, will create a more effective internal control environment,” the audit states.

Internal controls are needed for cash receipts and disbursements, and the board should review bank statement transactions every month, the audit states.

Other recommendations include a second member should be cross-trained to perform and understand the tasks of the treasurer. “Cross-training also increases internal control since more people understand how the system is supposed to operate, and those same people can spot inappropriate activity,” the audit states.

Audit recommendations, however, are suggestions only. Mid-Sussex is not required to make any changes.

Rep. Ruth Briggs King, R-Georgetown, said she heard nothing about missing money at Mid-Sussex.

“It's a symptom of some of the concerns I have with grant-in-aid,” she said, referring to state money given annually to nonprofit organizations. “With the degree of public money they are receiving, there should be more accountability.”

Briggs King said she intends to send a letter to the comptroller requesting an inquiry of Mid-Sussex's financial statements.

Sen. Brian Pettyjohn, R-Georgetown, said the state Auditor's Office could do a thorough review of Mid-Sussex's financials. “If there is a suspicion of wrongdoing, the Auditor's Office can get involved, and they would be required to open their books,” he said.

State Auditor Tom Wagner said his office has audited Mid-Sussex in the past regarding their finances; the last audit was about 10 years ago. “We've had those issues before,” he said.

New issues were recently brought to his attention, he said, and his office has started a preliminary investigation into Mid-Sussex. “Yes, we need to look into this,” he said.