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Does Vermont Really Have An Embezzlement Problem?

Illustration of a hand holding a dollar sign between thumb and forefinger.
Brave Little State's question-asker, Shaun Obarski, wanted to know why Vermont has such a high rate of embezzlement. But, does it? Answering that simple question became its own complicated story.

This month on Brave Little State, VPR’s people-powered journalism podcast, a question about embezzlement in Vermont — and a myth about stone walls and woodland fairies.

Brave Little State is a new monthly show where you ask the questions, you decide what VPR investigates and then you work with us to find the answers.

Our first question this month came from Shaun Obarski, of Winooski:

"What's with the high occurrence of embezzlement cases in Vermont?" - Shaun Obarski, Winooski

Shaun moved to Vermont about 10 years ago.

“And it seems almost monthly, you see a story on the news of, it tends to be a little old lady in some rural part of Vermont that is charged with embezzlement,” Shaun says. “It tends to be animal shelters, or some kind of community location, and it always just kind of struck me as odd.”

Shaun is from Toledo, Ohio, where he says violent crimes more frequently make the news.

Credit Angela Evancie / VPR
Shaun Obarski, of Winooski, says he feels like the media are constantly covering stories about embezzlement stories in Vermont. "Is there really a higher occurrence [of the crime] in the state?" he asks.

“I wondered if it was due to slower news days in Vermont, so it gets pushed towards the top, or if there really is a higher occurrence in the state,” he says.

And that’s what we wondered too. Does Vermont really have a super high rate of embezzlement? And it turns out that just answering this simple question — how bad is it, really? — became its own, complicated story.

The Marquet Report

If you’re like Shaun, and you’ve read news stories about the prevalence of embezzlement in this state, you’ve probably seen a quote from a guy named Chris Marquet.

Marquet is a private investigator, and the CEO and founder of Marquet International, a security consulting firm. He’s also the author of the Marquet Report on Embezzlement, which takes stock of embezzlement crimes across the country.

The report has gotten a good amount of press in Vermont, because it frequently identifies our state as being the most “at risk” for big-ticket embezzlement. That’s thanks to a (complicated) trademarked equation called the "Embezzlement Propensity Factor."

“It’s a mathematical amalgam of different factors,” Marquet says. “One being the population of the state relative to the nation, together with the amount of loss in that state relative to the whole country. So you look at that one ratio and you're combining it with another ratio, which involves taking a look at the number of cases in the state compared the the United States as a whole, and using the total amount of losses compared to the whole as well. So you combine these factors together, and you get what I'm calling the 'Embezzlement Propensity Factor.'"

The Marquet Reports have assessed embezzlement crimes, annually, from 2008 to 2013 (the 2013 report was published in 2014). Chris Marquet says he hopes to release the next report in the next few months. In the years the report has covered, Vermont has been one of the five states most frequently ranked as being at a high risk for embezzlement, along with Florida, Missouri, Montana and Virginia.

“Vermont has one of the highest [Embezzlement Propensity Factors],” Marquet says. “It several years has topped the list. Others, it’s been in the top 10.”

Not great news for the Green Mountain State.

"Vermont has one of the highest [Embezzlement Propensity Factors]. It several years has topped the list. Others, it's been in the top 10." - Chris Marquet, author of the Marquet Report on Embezzlement

But remember, we’re talking about a ratio, not just the total number of cases, or the total money lost.  In the 2013 report, Vermont came out as the most “at-risk” with seven embezzlement cases and over $2 million in losses. By comparison, New York had one of the highest overall losses from embezzlement — over $13 million — but one of the lowest embezzlement propensity factors, due to other numbers in the ratio.

But maybe you’re still thinking, "Wait, seven cases in Vermont? That’s it?" That’s it. Because the report only considers cases that involve $100,000 or more.

“It doesn’t take into account all the lesser embezzlement cases, and you can imagine, how many cases are going on where it’s $10,000, $5,000, $500? You know, small numbers,” Marquet says. “I think it’s staggering. So yes, we’re looking at the tip of the iceberg.”

Marquet’s findings have appeared in lots of local news stories, including on VPR. Marquet has talked to the University of Vermont's business school and the Vermont Government Finance Officers’ Association. In a way, he’s helped shape the story that Vermont tells itself about embezzlement.

But it turns out there’s a pretty high-ranking state official who is skeptical of his numbers.

“I have a problem with his methodology,” says Vermont State Auditor Doug Hoffer. “I've been a data guy for a long time. And you know, you can't do proper analysis without good data.”

As far as Doug Hoffer is concerned, Chris Marquet doesn’t have good data. Hoffer says only looking at cases above $100,000 doesn’t paint an accurate picture. Sure, including smaller cases could make Vermont’s numbers look worse — but of course the same goes for other states.

As for the Embezzlement Propensity Factor, Hoffer says any equation that relies on GDP and population puts smaller states at a disadvantage. He says it skews the numbers.

“GDP and population, we are so small. And in fact … I ran some numbers, because I was curious about what would happen if you changed the numbers for Vermont...”

Hoffer says that in Marquet's equation, a single large incident — such as the embezzlement of $1.6 million from the Hardwick Electric Department, which came came to light in 2011 — could catapult Vermont to the top of the rankings.

“It doesn’t matter what you do. If you use this formula, Vermont is always going to be in the top five or six,” Hoffer says.

"It doesn't matter what you do. If you use this [Embezzlement Propensity Factor] formula, Vermont is always going to be in the top five or six." - State Auditor Doug Hoffer

Chris Marquet disagrees.

“That's just not right, he says. “Because now you have less and less cases, those ratios are going to be lower. The number is going to go down … I’m trying to balance the two pieces: the number of cases, and the relative economic losses in the state.”

And Marquet’s 2013 rankings do show a mix of small and big states that are at a high risk for embezzlement. Montana and South Dakota are in the top 10, but so are Texas and Virginia. Our neighbor New Hampshire? The 2013 Marquet Report actually deemed it one of the states least at risk for embezzlement.

Marquet says he actually caught wind of Hoffer’s critique a few years ago, and tweaked his equation to improve it. And he’s happy with how it is.

“I think any formula can be criticized. You know, it's, nothing's ever going to be 100 percent accurate. Again, this is meant to be an approximation.”

As for the $100,000 cutoff for cases in the Marquet Report, Chris Marquet says it’s pure pragmatism.

“The reality is, you know, we have to draw a line somewhere. We can draw the line at $50,000, but that would have made the body of data so massive that we would never get the report done.”


Of course, embezzlement does happen in Vermont, and Doug Hoffer recognizes that. He says it’s a serious crime. Not just here, but in all states.

“Now having said that, we may well be an outlier,” Hoffer says. “I just don’t believe it based on this data.”

The Marquet Report is self-published; it’s not peer reviewed. We wanted to know if other Vermont officials had a take on it. We reached out to Vermont’s former state auditor, Tom Salmon — he had no comment. Attorney General Bill Sorrell didn’t have a direct critique of the report, but he said in a small state like ours, high-profile cases can skew not just statistics, but also public perception. And he said he’s looking forward to the next Marquet report, because he expects embezzlement in Vermont will have gone down.

Just one more thing about Auditor Doug Hoffer. In 2014, he critiqued the Marquet Report in a memo that he filed with the state. And in this memo he acknowledged something crucial about other sources of national embezzlement data — places we might look to corroborate Chris Marquet’s data.

They don’t exist.

“Unlike many other types of crime — certainly violent crime, which the FBI tracks, because it’s reported nationally to them," Hoffer says, "I don’t believe anyone is collecting this data.”

Data struggles

This was kind of a tough pill to swallow, because our question-asker Shaun was all about the numbers. When we asked him how he thought we should start our reporting, here’s what he said:

“We would probably want to see how many cases that we’ve seen in the last 10 years or so, and then compare that on a per-capita, and look at national averages. Maybe dollar amounts, too? My anticipation is we would see higher numbers than the national average here. So that’s how I would start.”

Easier said than done, Shaun. But here’s what we can do:

The Vermont Crime Information Center keeps track of all the embezzlement incidents that are reported by the state police and local agencies. These are all cases, not just cases above $100,000, like Chris Marquet tallies. And from 2004 to 2014, Vermont had a range of 61 to 126 incidents per year. The thing about these numbers is there’s no way to know whether the case led to charges, or even an arrest.

Then there are the federal cases. We got a count of those going back to 2013, thinking we’d be able to pick up where Chris Marquet left off in his last report. We ultimately failed in our efforts — but the U.S. Attorney’s office here in Vermont has prosecuted 12 cases since 2013. The thing about these numbers is they also included cases like securities fraud and investment fraud and other types of fraud that might not be coded as embezzlement in other counts.

As for dollar amounts, the state tracks different ranges of dollar amounts, and everything above $50,000 gets lumped together. This means it’s hard to track the really big cases.

The U.S. Attorney’s office wouldn’t provide dollar amounts for their cases, or any other identifying information we could use to research the cases on our own.

Also, the recent numbers for state-level offenses may be off.

“There is a gap in our collection of these numbers,” says Dr. Robin Weber, the director of research at the Crime Research Group in Montpelier. “And part of that just has to do with some logistics on law enforcement side.”

Weber says some critical agencies are having trouble sharing their data with the state.

“So, there is a whole swath of data that's missing. But we know that it's missing, and the state is working to correct that.”

According to Weber, the data gap has been going on for a year and a half.

Ultimately, when it comes to state data, short of taking a bunch of time to build a brand new data set, it’s difficult to get a solid grasp of the number of cases and the total money lost to embezzlement.

Elusive national numbers

To get a sense of the national numbers, we called up Gerold Cliff. He’s the research director at the National White Collar Crime Center.

Cliff says there’s just no place to find good national data.

“It's not easy to get,” Cliff says. “White collar crime statistics in general are very, very, very difficult to come by anything that could be considered accurate.”

Cliff says the FBI actually does track embezzlement, but “they don’t differentiate by state. They only give a total number.”

That means we can’t see how we measure up to, say, Maine. The FBI also counts arrests, which are very different from convictions. Plus:

“The FBI doesn’t force state and local law enforcement to participate — [though] most do.”

"White collar crime statistics in general are very, very, very difficult to come by anything that could be considered accurate." - Gerold Cliff, National White Collar Crime Center

Voluntary reporting. So, if you don’t feel like telling the FBI about all the embezzlement in your state, you don’t have to.

Cliff said something interesting when we spoke. He said he’d never heard anyone talk about Vermont’s embezzlement problem until we called him to set up an interview.

“I had not heard anything like that until we spoke,” he said. “You know, I then went to look for other references to it.”

And what came up in his search? The Marquet Report.

“It’s about the only real source out there that differentiates on a state-by-state basis,” Cliff says. “I don’t know if authority’s a good word. I would say it’s probably the best source.”

And it all comes full circle.

Why the obsession?

So, the numbers are messy — and there aren’t a lot of them. Embezzlement does happen in Vermont — but other than our possibly questionable “Propensity Factor,” it’s really hard to say if there’s actually more or less of the crime here than any other state.

So, why does embezzlement get so much attention here?

“You know, our most common crimes in the state, sadly, are domestic violence and DUI, and embezzlement rarely breaks the top 10,” says Dr. Weber, of the Crime Research Group.

“Embezzlement gets a lot of news coverage, because it involves a violation of public trust, and that’s hurtful to the community,” Weber says.

"Our most common crimes in the state, sadly, are domestic violence and DUI. And embezzlement rarely breaks the top 10." - Dr. Robin Weber, Crime Research Group

Trust. For a lot of people, this is a fundamental element of life in a small, rural town. And in a big city. Really, anywhere — and there’s a kind of collective damage when that trust is broken.

“It’s the trust, and then you have to look at who the victims are, and the victims are the public in a lot of cases,” Weber says. “You know, there were the high profile embezzlement cases that involved town managers or town clerks, so that’s people’s property taxes. That’s people’s livelihood that has been taken from them.”

There’s something kind of universally shocking about an embezzlement story — especially in Vermont, where we pride ourselves on community. Of course, you can’t measure a state’s trust levels any more than you can measure, say, embezzlement across states.

But maybe these stories aren’t about the numbers. They’re emotional and destabilizing. And they have unexpected characters.

“Anyone from rich or poor backgrounds — I certainly didn’t grow up poor,” says fraud speaker Tom Hughes.

Credit Andy Duback / AP
Milton resident Tom Hughes, who has served time in state and federal prison for embezzlement, now talks to accountants, law enforcement and college students. He's pictured here at the Governmental Accounting and Auditing Symposium in 2011.

Hughes has served time in state and federal prison for carrying out embezzlement schemes in both Vermont and Maine. He now talks to accountants, law enforcement and college students “about what goes through the head of someone who’s inclined to steal money.”

“Anyone is capable of doing this,” Hughes says. “People who are truly up against it with a financial emergency at home, most of them are still not going to steal money to fix it. It crosses so many lines — I tell business owners, you will not see this coming.”

Embezzlement stories make good headlines. As reporters, we will confess that our curiosity is much more readily piqued by a press release about an embezzlement than one about a DUI.

And is there also a kind of morbid curiosity that gets stirred up by an embezzlement story?

When our question-asker Shaun joined us to interview Tom Hughes, here’s one of the questions he asked:

“You mention choosing your victims opportunistically. Did you ever find yourself choosing a victim out of spite? Maybe a client that you didn’t like or care for as much?”

“I had a client like that,” Hughes responded. “He was a fairly successful guy in the business he was in. And I resented the way he talked to me. He would throw out the MBA buzz words, to show what a good command he had of it. He was a wonderful guy, but he just had this, I didn’t like his attitude. I stole … Well, it’s funny, when he finally discovered the crime, he said, 'I got another accountant, you stole $2,500 from me.' I said, 'You need another accountant. I stole $8,300 from you.'”

It’s funny, in an I-shouldn’t-be-laughing kind of way. For victims of these crimes, there is major financial and emotional fallout. Obviously Tom Hughes can’t speak for all embezzlers, but he says he was operating from a place of pure greed: 

“First John 2 says ‘Don't be in love with the world or the things of the world.’ And I can tell you that when I was living my old life, I was desperately in love with the things with the world. I had to have stuff, I had to travel, I had to look successful.”

Today, Tom says life in the town of Milton, with his second wife, is different.

“Today, I really couldn't care less. We're not desperate to impress our neighbors. We're not desperate to buy cool stuff. We're just content with what we have. Building something stable rather than putting on a show. And I think that's what keeps me honest.”

It’s all kind of tied up with a desire to be confident in the world we live in. Whether that’s trusting the people in our community, or being OK with who we are and what we have. It’s a delicate balance — and something that’s not easy to measure.

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Our second question this month comes to us from Rob Maynard, of Johnson. He installs maple syrup lines for sugar-makers, and once, while on a job in Jeffersonville, he noticed something that piqued his curiosity.

Rob was working near an old, dry stone wall in the woods, and at the base of the wall where it meets the ground, there were little openings at regular intervals. He asked a friend what they were for, and the friend told him that, back in the day, Irish stonemasons left the holes walls to act as little doorways so that woodland fairies could pass through them.

“It kind of sounds bizarre, a little bit out there, but this was a real thing [I saw],” Rob said. “These openings were built for a reason, and I’m just curious, is this the actual reason?”

"These openings were built for a reason, and I'm just curious, is this the actual reason?" - Rob Maynard, Johnson

First off, we’ll acknowledge right now that this article will not address the existence or non-existence of woodland fairies (sorry to disappoint).

Instead, we went the architectural route and reached out to some dry stone wall experts, who call themselves “wallers.” One master waller from England, Andy Loudon, said he’d never heard this thing about the fairy doorways before. We also reached out to the Dry Stone Wall Association of Ireland (yeah, that exists). They also had never heard of their native wallers building walls with woodland fairies in mind.

But they did refer us to a group called The Stone Trust, based in Dummerston, Vermont, which is a non-profit dedicated to the preservation of Vermont’s dry stone wall heritage.

Executive Director Brian Post said says he’s built plenty of pass-throughs in dry, mortarless stone walls before, but never for fairies.

Post has traveled all over New England, Ireland and the UK to study his trade, and he said he’s never come across this particular bit of waller folklore.

“I have not heard from any wallers or found any written information that really suggested that was done particularly for fairies,” he said. “There’s certainly a lot of other practical reasons that small pass-throughs were left in walls.”

Practical reasons: We got the same answer from the wallers in Ireland and the UK. They said these little doorways were often used to let animals through. Post says a small hole in a wall is known as a “smoot,” and might have been put there for rabbits, or drainage, or to accommodate the growth of a tree root beneath the wall.

A bigger hole is called a “lunky” or a “sheep creep,” Post said. These ovine-sized holes would allow neighboring farmers to separate out their flocks if they ever got mixed up.

Credit Jared Flynn / The Stone Trust
The Stone Trust
A wall built by participants in a Stone Trust workshop in 2014 features an arched lunky, or "sheep-creep," for animals to pass through.

But to be clear: None of the dry stone wall experts we heard from in this story had ever heard that the pass-throughs might have ever been put there for fairies.

Still, as Post points out, we can’t say that was never the reason.

“I can see it as something that was the case. I can also see it as someone joking with a flatlander, so to speak,” he said, laughing.

Credit Brian Post / The Stone Trust
The Stone Trust
A wall built by Brian Post of The Stone Trust. None of the dry stone wall experts we heard from in this story had ever heard that the pass-throughs might have ever been put there for fairies. But that doesn't mean it hasn't been done...

Brave Little State is made possible by the VPR Journalism Fund and Darn Tough Vermont. Archival audio in this month’s episode was courtesy of WCAX and New England Cable News. Our theme music is by Ty Gibbons and our editor is Lynne McCrea.

Other music in this month’s episode was licensed under Creative Commons:

Angela Evancie serves as Vermont Public's Senior VP of Content, and was the Director of Engagement Journalism and the Executive Producer of Brave Little State, the station's people-powered journalism project.
Alex was a reporter and host of VPR's local All Things Considered. He was also the co-host and co-creator of the VPR program Brave Little State.
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