Pa. city manager steals thousands of taxpayer dollars unsupervised

This story originally appeared on Spotlight PA.

On a spring day in March 2020, as Pennsylvania teetered on the brink of the COVID-19 lockdown, an anonymous letter arrived at State Police offices.

The letter, signed “Concerned Citizens,” outlined potential wrongdoing by Herm Suplizio, the politically connected manager of DuBois, a small city about two hours northeast of Pittsburgh.

Suplizio, the letter asserted, was directing money from a nonprofit he oversaw to DuBois, where he controlled nearly all government operations — an unusual move that raised questions about its legality.

Now, Suplizio, 62, faces sweeping corruption charges. The Office of Attorney General announced in late March that Suplizio had been arrested for stealing more than $600,000 from public accounts over which he had signatory control. Investigators with that office also allege Suplizio then lied on his tax returns to snag a bigger refund from the government.

The overall scheme was so elaborate, according to the AG’s office, that investigators with extensive backgrounds in organized and financial crimes were brought in to untangle what charging documents describe as a web of money moving in and out of accounts, with little oversight or accountability.

Now, this city of about 7,400 people is left to wonder: If Suplizio is convicted, how could such a large theft occur in a place so small without anyone noticing?

“I want to know what rock that you guys live under,” Ron Trzyna, DuBois’ city manager from 2000 to 2005, told the City Council at its meeting the week after Suplizio’s arrest.

Lawyers for Suplizio did not respond to several requests for comment. He faces 15 criminal counts, including theft and conflict of interest. Among them are six felony charges, each carrying a maximum sentence of seven years in prison.

In a surprising twist, a key court document in the case against Suplizio is sealed. The document is traditionally made public once charges against someone are announced and provides more detail about a case.

Attorney General Michelle Henry’s office refused to explain the reason for sealing the presentment, even though Suplizio has been officially charged with crimes. Instead, it issued a public statement on the case and then produced an underlying document detailing the charges only after Spotlight PA specifically requested it.

Deep roots

“Best place to work, best place to live.”

So goes the motto for the City of DuBois.

DuBois is surrounded by Sandy Township, which got its name from Sandy Lick Creek, a natural divider of the city flowing from east to west. Early settlers developed the area’s resources — lumber, coal, and rich soil — through the growth of railroads and manufacturing mills. Today, health care, retail, and schools support the local economy, with Penn Highlands DuBois hospital ranking as the biggest employer in Clearfield County.

The city is only one of a handful in Pennsylvania that has adopted an optional form of government known as the “council-manager plan.” It gives an appointed city manager a wide swath of powers over the day-to-day operations of the government.

DuBois’ City Council appointed Suplizio to the city manager’s job in 2010, according to court papers, a position that comes with an annual salary of more than $80,000. He had the power to appoint the chief of police, and decided which employees received raises or bonuses.

So strong was his authority, that the city’s mayor reported to him.

He was also a trusted associate of people with power and wealth.

In 2020, the top Republican in the state Senate, Joe Scarnati, announced his retirement and hand-picked Suplizio to be his successor. “I have personally worked with Herm Suplizio for over 20 years and I know him as a man of his word who cares deeply for our area,” Scarnati, who did not return a request for comment, said in an essay at the time.

Scarnati, a prolific fundraiser, used his political committee to shower Suplizio’s ultimately unsuccessful campaign with tens of thousands of dollars in campaign contributions. So did a former political committee chaired by Peter Varischetti, a member of a politically prominent Western Pennsylvania family that runs a nursing home chain, among other businesses.

Varischetti did not respond to a request for comment.

Scarnati launched a lobbying firm with another member of the Varischetti family after he left public office. DuBois is now one of his firm’s clients — a contract that, under DuBois’ form of government, had to be negotiated by Suplizio.

Even before he became city manager, Suplizio had deep roots in DuBois, serving as a volunteer firefighter and fire chief as well as the mayor for a decade.

When he announced his run for the state Senate, his supporters cited his work in obtaining millions of dollars in state grants and private dollars to revitalize DuBois. From late 2015 to the present, for instance, the city received more than $7.5 million in grants from Pennsylvania’s Department of Community and Economic Development, state records show.

In addition to serving as city manager, Suplizio was the executive director of the DuBois Area United Way, earning an annual salary of $30,000. The charitable organization announced Suplizio’s resignation and the appointment of a new director in the week following his arrest.

He was also, according to the charges, deeply involved in organizing the DuBois Volunteer Fire Department’s premier annual celebration: Community Days.

The much-anticipated two-day event held in June marks the anniversary of the 1888 Great DuBois Fire, which destroyed much of the city and led to the creation of the volunteer fire company. Festivities include food, games, fireworks, live music, and a parade.

It was one of the many hats Suplizio wore, according to the attorney general’s office, that gave him access to bank accounts flush with taxpayer and private money he would use to pay his personal expenses.

According to investigators, Community Days was underwritten both by the city and private donations. Four accounts were used to collect cash or pay for services involving the festival, but they weren’t controlled by the fire department or monitored by city officials.

Law enforcement officials said Suplizio routinely withdrew money from those accounts, diverting tens of thousands of dollars into personal bank accounts, or using them to pay his credit card bill and even to make political contributions — including $3,000 to Scarnati.

Suplizio also used some of the cash from those accounts to reimburse himself for work-related expenses, according to the attorney general’s office; he would then claim those expenses as unreimbursed on his personal taxes to lower his taxable income.

Between April 2014 and June 2019, for instance, the AG alleges Suplizio tapped one of the Community Days-related bank accounts, called the Parade Committee account, to write 15 checks to his Visa credit card account totaling just over $131,000.

Nine of those payments, totaling just over $74,108, were for personal expenses charged to his credit card. Investigators didn’t detail specifically what they say the money bought, but said his personal charges generally included vacations, utility bills, and department store purchases.

The attorney general’s office claims Suplizio also tapped DuBois’ general fund account, as well as the local United Way’s bank account, on the same day in 2014 to make two cash transfers, totaling just shy of $6,000 to his personal savings account.

Neither transfer, investigators said, was associated with an expense reimbursement request by Suplizio.

From 2014 to 2021, Suplizio also received reimbursements from the United Way for mileage and cell phone charges amounting to $2,580 per year, according to the AG; he also was reimbursed for mileage and cell phone charges from DuBois. In both instances, he claimed those amounts as unreimbursed business expenses on his taxes, “essentially triple dipping,” the affidavit of probable cause that describes evidence gathered by investigators in Suplizio’s case said.

Law enforcement officials allege Suplizio separately pocketed thousands of dollars from city contractors.

One example: DuBois sold its water to various companies drilling for natural gas around the city. One of them, EOG Resources, entered into a contract to buy water from the city. But when investigators subpoenaed the company for the contract, they were surprised to learn there wasn’t an official contract. Instead, there were one-page letters from the city, signed by Suplizio, memorializing phone conversations about how much the city would charge per gallon for water.

From 2004 to 2015, EOG made 22 payments, including three checks over $1 million each, according to the AG. Those large checks were made out to the City of DuBois, but stamped and deposited into an “unknown account,” investigators said.

Five payments from EOG were allegedly made directly to Suplizio. The attorney general’s office said copies of the checks note that they were payments for equipment Suplizio was selling to the company, which investigators said amounted to a conflict of interest: He was benefitting personally from a company that he was also negotiating with in his day job as city manager.

Another company, Advance Disposal Systems, had a contract with the city for waste disposal, and paid a quarterly $15,000 administrative fee, by check, to the city for handling its billing, according to the attorney general’s office. Those checks were placed in accounts affiliated with the Community Days event.

But when investigators reviewed several years’ worth of budgets for the event, they said the payments from ADS were penciled in as being much lower, in the $1,000 range.

They also discovered that ADS began paying the quarterly administrative fee six years before the city began handling the company’s billing.

In reality, law enforcement officials wrote in charging papers, those administrative payments were “simply a way for Suplizio to receive ‘kick-backs.’”

ADS was bought by another company, Waste Management, in late 2020. In an email, Waste Management spokesperson Erika Deyarmin said the company is “reviewing our contract with the City of DuBois and has no comment at this time.”

Checks and balances

In theory, checks and balances are baked into the city’s system for tracking finances.

The city’s treasurer and onetime controller, Lisa LaBrasca Becker, and the city’s finance officer, DeLean Shepherd, both testified before a grand jury empaneled by the attorney general’s office to hear evidence in Suplizio’s case. They provided a roadmap for how money coming in and out of city coffers is accounted for.

Bills for city-related expenses pass through the city controller, who reviews them and stamps any corresponding checks and receipts, according to the affidavit. In DuBois, the controller (who is paid $100 every month) does not have an office, and instead receives a call or text when bills need to be reviewed.

The City Council also looks over those expenses and approves them. The finance director then prints the checks, and the treasurer signs them.

The treasurer also tracks all money coming into DuBois’ coffers — which is supposed to be deposited initially into the city’s general fund — and ensures it’s allocated to the correct bank account. The treasurer’s office then generates a monthly report with the most up-to-date balances for each bank account, and any money flowing in and out of them. The City Council then reviews those reports.

LaBrasca Becker testified that she knew ADS had a contract with the city, but had no idea the company was paying a $15,000 quarterly administrative fee. If such payments existed, she said, she should have been made aware of them, so she could include them in her monthly reports.

The city’s auditors review DuBois’ finances annually, but the scope is limited to money flowing in and out of city bank accounts and included on those reports.

LaBrasca Becker said she had no knowledge or oversight over the Community Days bank accounts, and that the accounts weren’t included in monthly reports.

Several witnesses who testified before the grand jury in Suplizio’s case said the Community Days bank accounts were overseen by a separate “parade committee.” Court papers provide no information about who was on the committee, or how the committee approved money flowing in or out of the accounts.

These records are also largely silent on how closely city officials tracked money from city coffers that was paid to Suplizio for his expenses, except to note this: One city official testified that she could not recall an instance where Suplizio submitted any receipts when filing for reimbursement for work-related expenses.

‘Heads in the sand’

City officials have said little since the charges against Suplizio became public in March.

Just a week before Suplizio’s arrest, council members unanimously approved an extension to his contract, two years before it was set to expire in 2025. After Suplizio was charged on March 20, DuBois City Solicitor Toni Cherry released a statement on behalf of the council that appeared supportive of the city manager.

“For over two decades, Herm has served DuBois with a passion and determination that has grown its reputation and profile well beyond that of similar cities,” the statement to radio news station WPSU said. “We are committed to ensuring integrity is maintained within DuBois city government, which, we believe epitomizes Herm’s tenure as city manager.”

Suplizio remained in his city job for a few days before the City Council abruptly changed course and placed him on paid leave.

He will continue receiving his “base salary pay,” interim City Manager Chris Nasuti told Spotlight PA, but Suplizio “does not have access to the city building, systems, or networks and is not being contacted or consulted regarding city business.”

The City Council also voted to rescind the contract extension for Suplizio.

City officials are “hiding their heads in the sand and saying, ‘We didn’t know anything,’” said Trzyna, the former city manager.

Trzyna told Spotlight PA he was “not well-liked” in that position because he raised questions about fire department spending. He said he left the job in 2005 with “some ill feelings on my part.”

He believes DuBois officials had a role in enabling Suplizio’s alleged wrongdoings because oversight of city finances was essentially nonexistent.

Trzyna is concerned that the disappointing handling of the allegations by DuBois officials so far would jeopardize the city’s ongoing consolidation with Sandy Township. DuBois and Sandy Township officials have pitched the consolidation as a way to reduce overlap of government services between the two municipalities and to attract new businesses.

The consolidation was approved by voters in 2021 — with a razor-thin margin of 1% among Sandy Township voters — after three failed attempts in previous decades. Suplizio is a member of the consolidation committee and chairs the subcommittee on fire services.

“The City’s fiscal status was a driving issue in the consolidation effort, and if some of the City’s revenues were misdirected and funds misspent, we must learn how it affects the assumptions underlying the consolidation analysis,” Sandy Township Board of Supervisors Vice Chairman Kevin Salandra, a key figure in the consolidation effort, wrote in a statement.

Sandy Township called for an independent investigation of DuBois’ financial accounts and for “anyone at the City involved in this deception and impropriety to step aside.” Nasuti told Spotlight PA in an April 6 email that a forensic analysis of the city’s finances is underway with help from the Department of Community and Economic Development.

The township said it hasn’t decided “whether and under what conditions the consolidation may be called into question.”

Tension rose briefly during the March 27 council meeting, when a DuBois resident disputed Trzyna’s public comment that council members should face resignation, arguing that Suplizio is innocent until proven guilty.

“You don’t know what it’s going to be at the end, but you’re all hanging him already,” the person said.

“Herm has done a lot of good things for the city of DuBois,” Trzyna told Spotlight PA. “But I think it all went to his head and [he] said, ‘I can do whatever I want to do.’ And we as city residents and taxpayers [are] just as much at fault as the government.

“I fault them because they didn’t oversee things. But I also fault all the citizens in the city of DuBois, and myself included, that we … never questioned.”

Spotlight PA is an independent, non-partisan newsroom powered by The Philadelphia Inquirer in partnership with PennLive/The Patriot-News, TribLIVE/Pittsburgh Tribune-Review, and WITF Public Media.