From January to June 2019, Brandon Batham, as the “Director of Party Operations” used his position to fraudulently obtain or misuse for personal gain at least $18,560.49 from Party coffers.
The largest amount obtained came from a pattern of payroll fraud. As the administrator of the Party’s automated payroll transactions, Batham gave himself an unauthorized raise beginning with the March 15, 2019 payroll disbursement, totalling $2,783.28 between then and June 30. Beginning in February 2019, Batham also began to issue himself unauthorized additional paychecks and “bonuses” between official pay-periods — totalling $12,845.83. All told, payroll fraud amounted to $15,629.11.
Additionally, beginning in January 2019, Batham began to misuse the party debit card to pay for personal items, to file for reimbursement of purchase of personal items, and to file false mileage reimbursement statements. The Party has been able to identify $2,931.38 in fraudulent payments, with a number of additional items still under investigation totalling approximately $500.
In his position as Director of Party Operations, Batham did not have signing powers on the party accounts. However, he was responsible for accounting functions, preparing checks for signature, processing payroll, and other automated payments.
Under the Vermont Democratic Party structure, the Executive Director is explicitly responsible for oversight and management of day-to-day spending and financial operations, including reviewing documentation for expenditures and signing checks. Unfortunately, this did not happen effectively during the first four months of 2019, so the safeguards were not used to prevent these events.
During much of the spring and early summer of 2019, the Party Chair and Treasurer repeatedly asked the Executive Director and Operations Director Batham for more detailed financial statements of accounts, but these requests were ignored or deferred with promises to produce them soon.
When State Party Chair Terje Anderson took on the role of acting Executive Director in May of 2019, he pressed Batham for direct access to financial records, including the ability to access both the online banking and payroll accounts. Batham delayed acting on these instructions, making excuses for why it was not possible, being absent from the office for extended periods, or promising imminent action that went unfulfilled. In early July, Anderson forced Batham to sit down and review access information for each of the party’s various accounts (both financial and administrative), but access to some of them was still delayed until after Batham’s departure.
On June 30th, Batham presented a mileage reimbursement form that aroused Anderson’s suspicions. Anderson immediately began reviewing past expense forms, and discovered fraudulent transactions going back to January, totalling $2,931.38.
Upon discovery, the Party Vice-Chair Tess Taylor, Treasurer Billi Gosh, and attorney were informed. Documentation was carefully gathered, and on July 17, 2019, the Chair, Vice-Chair, and Party attorney met with Batham. During the meeting, Batham was presented with a five page memo detailing the findings, informed that he was being placed on unpaid leave, and told to either resign immediately or be fired. Batham admitted that he had taken/misused those funds, resigned, and pledged rapid repayment of $2,931.38. Batham was also told he needed to identify any additional funds that he had wrongly obtained/used, which he agreed to do.
The payroll theft was discovered approximately two weeks later, when the Chair was able to access the payroll accounts and examine those records. The Vice-Chair and Treasurer were immediately informed, legal advice was sought, and within four business days, a criminal complaint was made with the Montpelier Police Department detailing every known count of embezzlement and fraud, accompanied by extensive documentation. The Party had planned to make a public announcement that day, but heeded the request of investigators to defer any public discussion pending the investigation.
The legal system will make determination of the evidence and consider whether criminal charges will be laid. The Vermont Democratic Party will continue to cooperate completely with the investigation and prosecution of the case. We will also explore all possible avenues to legally recover the stolen funds.
We will, as required by law, be filing amendment campaign finance reports with the Federal Elections Commission detailing these abuses.
Internally, a number of steps have already been taken to prevent fraud, and additional actions are underway for the coming months.
The system for check signing and payment authorization was immediately changed. Treasurer Billi Gosh now signs all checks and is informed of any expenditure over $100.
Reimbursement forms now require additional information and documentation to ensure they are valid.
We have hired a new Executive Director who will begin in September — a professional with extensive expertise in the management of political party funds.
The Party will contract with an external firm that will bear responsibility for accounting, payroll, human resources, and campaign finance reporting.
Access to, and notification of, party financial records will be expanded to additional Party Officers and a monthly review of all financial transactions will be jointly conducted by staff and Party Officers.
The Budget and Finance Committee will undertake a complete review of financial procedures and safeguards to ensure compliance with best practices.
Finally, an independent external auditor will be hired to review the Party’s finances for the previous three years. This will be used both to identify any previously undiscovered wrongdoing and to flag weaknesses in financial controls that need to be corrected.