June 21, 2018
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Trash talk: Show us the money or we’ll sue, 28 communities tell EMDC

By Mario Moretto, BDN Staff

ELLSWORTH, Maine — Twenty-eight municipalities in the Penobscot Valley region are demanding the return of $51,000 taken from from two inactive bank accounts by Eastern Maine Development Corp. in February.

Penobscot Valley Refuse Disposal District, which regrouped in November after 13 years of inactivity, has given EMDC until Dec. 14 to return the money or face litigation, according to a letter sent to the Bangor firm on Dec. 4 from Dan Walker, an attorney with Preti Flaherty.

Representatives from EMDC have said in recent interviews they are willing to work out a deal to return the funds to the group of 28 towns and cities — which includes Bangor, Brewer, Bucksport, Old Town and Orono, among others — now that the group has re-formed.

“We’re thrilled that they [PVRDD] have reconstituted themselves so we can make proper arrangements,” said Michael Aube, president of EMDC on Friday.

The refuse disposal district was a precursor to the Municipal Review Committee Inc., a nonprofit organization that represents 187 Maine communities that deliver municipal solid waste to Penobscot Energy Recovery Co. in Orrington. In 1999, PVRDD became inactive, but it did not officially disband.

“A conscious choice was made, where its function had been eclipsed by MRC, to go into dormant mode but not formally dissolve,” said Greg Lounder, the executive director of MRC and district administrator for PVRDD.

Lounder said the group didn’t want to disband because refuse disposal districts have more authority than MRC, such as the ability to issue bonds and claim eminent domain. The 28 communities wanted the option to reconstitute the organization, if necessary.

Before the district became inactive, Lounder was an EMDC employee who was contracted as PVRDD’s administrator. EMDC was also contracted as the refuse disposal district’s bookkeeper. Lounder said when the the group became dormant in 1999, he was instructed to “keep an eye” on its money — a general fund with about $10,000 designated as seed money should the district regroup, and a $41,000 fund meant eventually to be distributed to the member municipalities.

Lounder said Friday that when he checked in on the money in February, he learned the cash had been transferred to EMDC.

The refuse disposal district maintains EMDC never should have taken the money, but Aube says it didn’t have much of a choice. KeyBank had notified EMDC, a signatory on the accounts, that due to inactivity, the funds would soon be handed over to the Secretary of State as unclaimed property. Because PVRDD no longer had any board members or staff, there was no one to consult, he said. So EMDC took the money.

“No one could produce anything that suggested this money was their resource,” Aube said. “So we closed those accounts and moved them into our operating system. … Now that they’re reconstituted, that solves the problem.”

After Lounder found out the money was gone, he contacted all the members of PVRDD, which elected new representatives to the board and met for the first time in 13 years on Nov. 29 to discuss how to get the funds back.

It was then they decided to authorize Lounder to go after the money in whatever way he saw fit. On Dec. 4, PVRDD’s attorney sent notice to EMDC that the group might pursue litigation if it didn’t receive the money by Dec. 14.

Aube said the whole to-do was caused by a lack of documentation. There wasn’t any written directive about the accounts, or about Lounder’s responsibility for the money. Lounder admits that his instructions to monitor and disburse the funds were spoken, but said it should have been obvious that was still responsible for the money.

“I had been walking into that bookkeeping department for 20 years,” he said. “I don’t see how on earth it wouldn’t occur anyone at EMDC, when questioned about funds in an account with the name ‘Refuse Disposal District,’ to send me a one-line email to see what I knew.”

EMDC’s attorney, Erik Stumpfel, said that while his client is prepared to pay the municipalities, there will need to be an agreement in place to protect EMDC from further claims to the funds. He said Lounder’s employer, Municipal Review Committee, could also have an interest in the trash cash.

“We believe the board has a right to the funds, but we don’t want to pay them out if there is another party that may have a claim,” he said.

Aube said he looks forward to putting the issue to bed.

“The lesson to be learned from this sort of thing is that we really should memorialize these things in writing,” he said.

Follow Mario Moretto on Twitter at @riocarmine.

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