by Don Keelan

As much as I would prefer the Legislature to focus on Vermont’s existing crisis in health care, education, and housing, I have a suggestion for Vermont Attorney General Charity Clark. 

The AG might consider legislation that would grant amnesty to embezzlers and fraudsters who are currently defrauding Vermont businesses, nonprofits, government agencies, and the elderly. 

The proposed legislation would, for those involved, remove the risk of prison time if they come forward within a predetermined period to admit and cease their illegal activity.

The embezzler would be required to make restitution, refrain from any financial employment activity for five years, and pay the Vermont income taxes assessed on their ill-gotten gains. How the Internal Revenue Service would deal with the self-confessed is outside the scope of this proposal.

Fraud and embezzlement are known in Vermont. It and an amnesty proposal have been covered in these columns for over 20 years and continue to be, as noted in the following alleged incidents reported last year. This is what we know; what we do not know could be much greater: 

-Tunbridge Fire Department, $186,000 stolen.

-Executive Director of the Vermont Council of   Special Education Administration, $76,000 stolen

-North Country Hospital, $163,000 stolen.

-Central Vermont Economic Development Corporation, $70,000 stolen.

-Duxbury Property Management Business, amount not disclosed.

-Eden Valley Mental Health Clinic, $200,000 in Medicaid fraud covering 250 false claims.

The latter alleged fraud was the subject of a civil settlement obtained by the Attorney General’s office and highlights the massive fraud currently unfolding in Minnesota.

Minnesota is larger than Vermont, but like Vermont, it is willing to spend hundreds of millions on social programs. Also, like Vermont, the Minnesota legislature and administration channeled significant funding to nonprofit organizations, some with little or no operational track record.

What is occurring and has been for some time can be traced to three factors: billions of dollars authorized either by Washington or, state government, and accompanied by little or no oversight (financial internal controls). We should not be surprised that potential fraud is close at hand. 

The WSJ’s Jan.3 and 4, 2026, editorial states it more succinctly, “with so much money and so many programs, this vast system is an open vault for scammers—especially when politicians are loathe to police fraud because doing so might be called ‘racist’ or ‘anti-poor.”’ 

The other factor, and one that is particularly relevant in Vermont, is trust. Trust that the person(s) in charge of an organization’s funds will do the right thing has been one of the most common denominators in the unraveling of embezzlement or fraud in Vermont.

It is as if we are intimidated or embarrassed to inform the person handling an organization’s funds that we would like verification. They shouldn’t ask, “Don’t you trust me?” Of course, we do, as long as there is verification, should be the response.

 I cannot report on how other states handle convicted embezzlers or fraudsters. The Vermont judicial system has historically treated such criminal activity as nonviolent, meaning no one was physically harmed. The convicted person(s) serve a few months in prison (if at all), little restitution is required, and, in most cases, no state income tax evasion charges are filed against the accused.

So why the proposal for amnesty? For a number of embezzlers, their behavior is akin to addiction, and they want to stop but cannot, at least on their own accord. They need help. The other reason is to determine whether embezzlers or fraudsters, who are currently stealing from organizations, would halt their actions if offered an incentive.  

For legislators and administrators, fraud could be partially prevented by requiring, for each grant or other funding, that the receiving organization describe how it will implement internal and external financial controls over the funds. Most grants include a clause requiring the organization to allow government inspection upon request.

Unfortunately, in Vermont, the AG’s office, the AHS office, and the State Auditor’s office do not have the staff to inspect/audit the billions disbursed each year in Vermont.

To repeat, when you have massive amounts of funding, no oversight, and insignificant interest in results, the possibility of potential negative outcomes is ever-present.

The author is a U.S. Marine (retired), CPA, and columnist living in Arlington, VT.