SHENANDOAH – The Borough of Shenandoah has released the first of several investigative reports they say found widespread financial irregularities during the tenure of former Borough Manager Anthony Sajone.
The report, prepared by Joseph Yanushefsky & Company, Forensic Accountants, estimates a potential loss of $241,833.35 for the Borough. The borough says the findings have already been submitted to the Pennsylvania Attorney General’s Office and the IRS Criminal Investigation Division, both of which have opened active investigations.
Audit Uncovers Noncompliance and Mismanagement
According to the preliminary audit, the Borough’s accounting system in use through 2024 was “not in conformity with GOVERNMENT ACCOUNTING PRINCIPLES.” The investigation, initiated by current Borough Manager Mike Cadau after noticing discrepancies, revealed troubling patterns of financial mismanagement under Sajone’s administration.
Key areas of concern included:
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Unpaid taxes – Employee withholding taxes went unpaid during multiple periods, including the quarter ending September 30, 2022, resulting in an IRS notice demanding $1,843.27 in penalties and interest.
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Workers’ Compensation abuse – Two employees improperly received Borough payroll checks while collecting Workers’ Compensation. Because such benefits are not taxable, the Borough made $81,990.08 in improper tax payments. One employee, who resigned in January 2023 after securing a $120,000 settlement, continued to collect payroll checks for eight months following his departure.
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Unauthorized “Comp Time” payments – Sajone allegedly approved “Compensatory Time” payouts not covered by the Union Contract, including about $75,000 to one employee and $18,000 to the other. The report further alleges Sajone approved Comp Time payments to himself, despite his exempt status.
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Life insurance lapse – The Borough’s group life insurance policy was canceled in December 2020 due to non-payment of premiums. Sajone attempted to reinstate coverage in 2022 by misclassifying retirees as active employees. Following the death of a retired worker in 2023, his widow was denied benefits by the insurer and ultimately received $10,000 from Borough funds without Council’s approval. The report states that other payments are also being investigated and one has not been settled. In total, the Borough estimates $65,000 in losses tied to canceled retiree coverage.
In addition to the matters tied to Sajone, Borough officials confirmed further audits are underway into the Sewer Authority and the sale of the Municipal Water Authority.
The Borough has filed a claim with Travelers Insurance, its bond insurer, in an effort to recoup the identified financial losses. Officials emphasized that releasing the investigative reports publicly is part of Shenandoah’s pledge to ensure “full transparency, accountability, and stewardship of public trust.”
The announcement was released jointly by the Borough Council, the Borough Manager, Special Counsel, and the Borough’s forensic accountant.
"The Borough aims to ensure that taxpayers, residents, and community stakeholders are fully informed about actions being taken, irregularities discovered, and next steps toward restoring
trust and operational integrity." a press release stated.
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** Disclaimer: This article is based on information provided in an official release and report from the Borough of Shenandoah.