LAWRENCE COUNTY Treasurer probe rocks government

Treasurer Gary Felasco is being blamed for the $1 million budget deficit.
NEW CASTLE, Pa. (AP) -- The county government here has a public image problem and, at the very least, the treasurer's office has an accounting problem.
Lawrence County has laid off more than 100 employees and raised taxes by 25 percent in recent months. But county Commissioner Steve Craig is more direct in diagnosing the county's ills, blaming it on Treasurer Gary Felasco.
"He's a bum. He's got no business being in public office," Craig said.
Craig and two other commissioners have been at loggerheads with Felasco for nearly a year in a dispute that has spawned a state grand jury investigation over what Craig says is a story of sex, money, power "and a little bit of intrigue."
Tax-free zones?
The commissioners blame Felasco for a $1 million budget deficit that prompted tax increases and layoffs. But because Felasco is a fellow elected official, they can't just suspend or remove him from office despite these revelations:
UThirty-nine properties owned by Felasco, staffers or others were put on a special list exempting them from some or all property taxes. Properties can't be put on the list without court orders from bankruptcy or other judges, which weren't issued. No one will say who listed the properties.
UFelasco used county-owned cell phones for personal business, including arranging meetings of a sex club, in which people were invited to "adult-oriented" parties over the Internet.
UDrafts of a countywide audit of 2003 finances -- and another targeting Felasco's office -- list irregularities including the misuse of $1 million worth of liquid fuels that cost the county $12,000, and $44,000 in tax receipts that are unaccounted for.
"Perhaps there's a reasonable explanation for it -- perhaps not," said county Commissioner Dan Vogler, a Republican.
State prosecutors confirmed they are investigating Felasco's office, but won't elaborate. Craig, a Democrat like Felasco, said at least four treasurer's staffers have been subpoenaed.
Felasco denies wrongdoing
Felasco has put his property back onto the tax rolls and paid his back taxes. He also surrendered the cell phones -- though Craig says Felasco still owes the county about $4,000 in cellular bills -- but otherwise denies wrongdoing.
"My only comment at this point is we're working on a response to the audits," said Felasco. "They've had almost a year to come up with their findings. We received the information two weeks ago ... and are still going through it."
Mary Ellen Jessel, an 88-year-old county resident, helped form Concerned Citizens for Good Government because of problems in Felasco's office. But she thinks the commissioners should do more to get rid of him.
"I had felt that our commissioners certainly could have done something, at least suspending him, until all of the auditing and investigating has been done," she said.
Vogler said only the state legislature can remove elected officers through impeachment proceedings, a rarely used and protracted process at which area lawmakers have balked. State Supreme Court Justice Rolf Larsen was the last public official removed from office that way, in 1994, and his related legal challenges lasted until 2003.
The other option is to revoke Felasco's bond, the insurance policy that covers the county should Felasco or someone in his office lose or steal money. County solicitor John Hodge has advised the commissioners not to try that until the audit results are final, which could take months.
Audit uncovers problems
Attorney Edward Leymarie, who serves as Felasco's solicitor, suggests things won't come to that.
"We're trying to understand what happened, too," Leymarie said of the audit findings. "Mr. Felasco doesn't handle any of the money in that office, purposely, because he doesn't want to be accused of stealing money. He doesn't think anyone on his staff is stealing money. He thinks there's an accounting problem, and we're trying to figure out what it is."
Instead, Leymarie says the commissioners are exaggerating the problems. "They spent $75,000 to find out they have a $40,000 problem," Leymarie said, referring to money unaccounted for by the forensic audit of Felasco's office.
Craig said that audit cost just $41,000, and that every penny was well spent.
"You know what? I'd spend $75,000 to discover $1 missing in that office," Craig said. "I'd spend whatever to restore public confidence in that office."

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