- Associated Press - Saturday, May 3, 2014

SCRANTON, Pa. (AP) - With lax financial controls and scant oversight, volunteer fire companies in Pennsylvania operate in an environment that tempts some who preserve property and save lives to pilfer public money and private donations.

Criminal charges involving embezzlement of volunteer fire company funds are on the rise nationally. Observers say the way Pennsylvania volunteer fire and emergency medical services have historically been structured allows opaque operations that undermine essential institutions protecting small- and medium-size towns.

Such charges - and the insurance claims that follow - known as “fidelity claims,” are on the rise, said William Jenaway, an educator with VFIS, a York-based specialty insurer serving more than half the nation’s volunteer fire companies. The crisis is even worse than the headlines suggest. The missing amounts reported to authorities are usually a fraction of what has been stolen by individual perpetrators over time, Jenaway said. Like any other crime, for every one caught, there are many more getting away with it or yet to be discovered.

“What we see is the tip of the iceberg,” he said. “Whatever is found missing is a fraction of what is taken.”

Theft and embezzlement from volunteer fire companies has always been a problem, Jenaway said. Decades ago, such matters were handled internally, with the offender dismissed from responsibilities and agreeing to quietly pay restitution. Today, dollar amounts are greater and fire companies report the thefts, which leads to serious criminal penalties and insurance claims.

Nearly all these cases could be avoided, or at least discovered much sooner, by adopting proper basic financial controls within the organization, said Jenaway, whose job is to educate VFIS clients to reduce risks.

Circumstances have emerged to make volunteer fire companies not only vulnerable to theft, but less than enthusiastic about Jenaway’s call to action.

The clannish nature of volunteer fire companies allows leadership to be concentrated among families, lifelong friends or neighbors, setting the table for misplaced trust or even conspiracy.

To remain relevant and effective, volunteer fire companies focus on training opportunities and recruitment, rather than financial management and controls. That often leaves the books neglected. In Pennsylvania, volunteer fire companies handle millions of dollars in public funds and donations but are legally treated as private membership groups with little oversight.

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Saving life and property is as essential as community service gets. For that reason, volunteer fire companies often receive both state and local taxpayer dollars and raise private donations from the residents and businesses in the communities they serve. Even the smallest companies with one truck and a small fire hall can easily have assets exceeding $1 million. In rural areas, fire halls become community centers and meeting places.

As private memberships, volunteer fire companies can close their meetings to the general public. Across the state, volunteer departments are fighting in local courts and working with legislative allies to keep their finances from public view. They hope to amend the state’s Right-to-know law to exclude them.

The state Office of Open Records has consistently declared that volunteer fire companies are subject to the Right to Know Law. Going into effect Jan. 1, 2009, the law expanded the definition of “agency” to include any organization, public or private, providing an essential governmental function. As a result, fire companies’ records are presumed public.

Volunteer fire companies are defined as public agencies under other laws, such as the Pennsylvania Governmental Immunity Statute, which limits liability and damages from lawsuits.

Challenged by firefighters, some Open Records office decisions were reversed on appeal to local courts in York and Tioga counties, leaving a situation where volunteer fire companies’ records are presumed public in all counties but two.

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