Jody Farnham, a former University of Vermont employee who pleaded guilty to a federal charge of embezzlement, is scheduled to be sentenced Monday in U.S. District Court in Rutland — and court papers reveal UVM was not the first employer she was accused of taking advantage of.
According to a sentencing memorandum prepared by the prosecution, Farnham embezzled $3,000 as an employee of the Burlington School District, but the case went unreported to authorities because she paid the money back in full.
At UVM, according to court documents, Farnham embezzled at least $185,000 over a six-year period, largely by diverting tuition checks from enrollees in workshops offered by the Vermont Institute for Artisan Cheese, a university entity for which she provided administrative support. Under the plea agreement, signed in November, Farnham agreed to pay back $185,000.
Apart from the tuition payments, a review of the institute's finances by the university's Office of Audit Services found UVM purchasing card transactions, expense reports and mileage claims paid without a documented business purpose. Assistant U.S. Attorney Gregory Waples states in a court document that "the exact amount of the loss cannot be determined with absolute certainty."
Farnham, who worked for UVM from 2003 until 2013, was the institute's only administrative coordinator, the audit report stated, and she had responsibility for receiving cash payments and making purchases for the workshops.
In the government's sentencing memorandum, Waples cites Farnham's theft of "at least $200,000 from her employer" and recommends "imprisonment that does not exceed the bottom of the applicable Guidelines range." That range is 18 to 24 months.
Farnham has remained free since entering her plea.
Waples notes that Farnham "seems genuinely contrite for her crime" but also points out that "UVM is not the first employer Farnham betrayed." Prior to her employment at UVM, Farnham worked as an administrative assistant in Edmunds Elementary School, from May 1997 to May 2003.
Referring to a pre-sentence report that is excluded from the court's public record, Waples states that "Farnham previously 'resigned' from a job with the Burlington School District after she was caught embezzling about $3,000. The matter was not reported to the authorities because Farnham made full restitution — and that is probably why VIAC was unaware of that situation when it hired the defendant."
Farnham's lawyer, Robert Hemley, said Friday he would have no comment before the sentencing hearing. He said he had asked his client not to speak to the media before the court proceeding.
Burlington Sperintendent Jeanne Collins said there has been considerable turnover in the district's administrative ranks since 2003, and she could not comment on something alleged to have happened before she assumed the top job in 2005. She said that embezzlement is not condoned, and if a case had been uncovered under her watch, the allegations would have been reported.
Joseph McNeil, who was the attorney for the school district in 2003, said he had no recollection of such a matter.
In the defense's sentencing memorandum, Hemley asks for a prison term of six months, including three months' imprisonment and three months' community service. Hemley cites 24 supportive letters from friends, family and a post-UVM employer attesting to Farnham's character.
Hemley writes that the letters portray Farnham as "an accomplished, hard-working single parent who successfully raised three daughters.
"She understands that there is no excuse for the behavior which brings her to the Court for sentencing, and she makes none," Hemley's memo states. "She succumbed to the temptation to take money that did not belong to her in order to provide her daughters with comforts and necessities she could not otherwise have provided. She had little financial, and no emotional, support from her ex-husband, and she took what appeared to be an easy and available route to providing for her family."
The Vermont Institute for Artisan Cheese, part of UVM's College of Agriculture and Life Sciences, offers consulting services to cheesemakers and provided workshops in cheesemaking. As an office program support specialist, Farnham received a salary of $30,649 in 2011-12, according to UVM's website.
A UVM investigation of the institute's finances began after Tom Vogelmann, dean of the college, received an anonymous letter in July 2012 alleging "redirection" of registration funds for the workshops. An inquiry by UVM police, in collaboration with Audit Services, put the "total amount of misappropriated funds at $230,841.74." Farnham resigned in February 2013. The FBI assigned an agent to the case in July 2013.
According to the auditing report, the institute's balance sheet was in the black just one year, 2008, from 2007 to 2013. The net profit that year was $25,046. Net losses in the other years ranged from $5,552 to $96,592. The total net loss over those years was $298,499.
Asked in January why financial problems weren't detected earlier, UVM spokesman Enrique Corredera replied: "Part of UVM's mission is to foster economic development. Such activity often requires subsidizing programs that lose money but which will lead to economic growth. That was the case with VIAC."
He added that "because VIAC was experimenting with different approaches to generating revenue and because of changing market circumstances, the unit's revenue picture changed significantly from year to year. That made it difficult to spot an anomaly in the absence of a steady and predictable revenue stream."
UVM has attributed a portion of the institute's recent losses to a decline in demand for cheesemaking workshops, which were discontinued in May 2013.
Farnham is the second former UVM employee in three years to be prosecuted for diverting payments for educational workshops. In May 2012, Celine Bernier pleaded guilty in Vermont Superior Court in Newport to a charge of embezzlement under an agreement that included a prison term of at least four months.
Bernier, a UVM Extension employee, took registration fees for state conferences for tax preparers and dairy farmers. Police investigators found that she channeled $45,800 in university money to her private account. In 2011, after Bernier had been charged, extension officials said they would tighten up fiscal practices and make sure that more than one person would be responsible for handling money.
Such remedies apparently failed to extend to another wing of the university, the Vermont Institute of Artisan Cheese, where Farnham was solely in charge of the money. According to the auditors' report on the institute, covering 2007-13, "one employee was primarily responsible for all VIAC recordkeeping."
Asked what preventative measures UVM has taken, if any, Vice President for Finance Richard Cate replied in an email:
"There have been a variety of adjustments to our internal controls but the key initiative that will deal with this type of activity is the implementation of a centralized, automated non-credit registration system. We are currently reviewing responses to a RFP that will result in a January pilot and full implementation by July 1, 2015.
"This system will operate in the same manner as our for-credit system in that no one will be able to register for a class or program outside of the centralized system. Thus, the checks will have to come directly to the University in order for someone to be registered."