ValleyNet, which operates internet service provider ECFiber, says the contractor stole money

Editor’s Note: This story by John Lippman first appeared in the Valley News on July 21st.

ValleyNet, the company that operates Internet providers ECFiber and LymeFiber in the Upper Valley, has been the victim of “certain financial irregularities” in which an outside contractor allegedly stole money from the organization, the company announced Wednesday.

Neither the contractor’s identity nor the amount of money was disclosed, but ValleyNet said the incident “won’t materially affect our financial viability and pose no risk” to the service or ECFiber’s ability to repay debt.

“There will be no customer impact,” said Stan Williams, ValleyNet’s chief financial officer and co-founder of ECFiber.

ValleyNet, a not-for-profit organization, has a contract to operate fiber-to-the-home Internet networks ECFiber, serving approximately 7,000 subscribers in east-central Vermont, and another contract with LymeFiber, serving approximately 400 homes in Lyme, New Hampshire, supplied.

Founded in 2008 with nearly two dozen member cities organized as a Telecom District, ECFiber has been hailed by advocates as a model for bringing high-speed Internet service to rural Vermont.

But rapid growth, funded by nearly $62 million in municipal bonds issued by ECFiber to roll out 1,600 miles of fiber optic networks, has strained the 30-strong ValleyNet, and in June the company announced it was a “Restructuring” and reached an agreement with Great Works Internet, a Maine-based ISP, to handle day-to-day operations.

ValleyNet said the financial irregularities were discovered by “the newly strengthened management team” deployed under the new operating agreement as part of an effort to “bring a higher level of professionalism and internal controls to the company.”

ValleyNet expressed hope that it can recover the money.

“We are in the process of filing lawsuits to ensure accountability and we trust this process will ensure we can recover funds withdrawn,” ValleyNet said in the press release, adding that “all bank accounts and internal accounting data have been secured.” and controls have been put in place to prevent further incidents.”

ValleyNet’s CFO said the company blamed itself for what happened.

“Our internal controls have not kept pace with our growth,” Williams said in an interview with Valley News, acknowledging that ValleyNet “made mistakes by not hiring additional accounting staff or conducting audits sooner” because managers were “under pressure.” “ were financial to make ECFiber profitable, which we did.”

The missing money was discovered “over the past month or two in reviewing ValleyNet tax returns” and “bank reconciliations,” Williams said. ValleyNet is working with state and federal agencies on the investigation, and Williams said he expects more details to emerge as the investigation progresses.

Generally, financial crimes are investigated by the FBI and prosecuted by the US Attorney’s Office, as happened when a payroll company manager in West Lebanon, New Hampshire, was accused of stealing $1.2 million from clients and the former manager of the Lebanon Elks in 2019 Lodge was charged with stealing in an alleged check-kiting scheme involving Lodge bank accounts earlier this year.

Williams described the money taken from ValleyNet as “a large amount accumulated over the years” but still an amount that “is not significant given the size that ECFiber has since reached. It is not enough to jeopardize the operations of one of our affiliates.”

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