Wednesday, April 16, 2014
The company that publishes the Portland Press Herald is accusing its former chief executive of misusing more than $500,000 in company money.
Richard L. Connor
Richard L. Connor, who ran MaineToday Media from June 2009 until he left for undisclosed reasons in October 2011, gave himself unauthorized salary increases, according to a letter released to company employees Wednesday by Lisa DeSisto, MTM's current CEO. Connor also used company funds to pay for personal expenses, including credit card bills, a new SUV and vacation home rentals, DeSisto said.
In the letter, DeSisto disclosed that Travelers Casualty & Surety Co. has paid MaineToday Media $537,988.68 -- minus a $50,000 deductible -- under the company's employee theft insurance policy, to recoup money that the company says Connor took for unauthorized personal use. The payment took place in December.
"It has taken several independent forensic accounting reviews and almost a year, but today I'm sharing the results of those reviews with you," DeSisto wrote. She said the insurance money would be reinvested in the company.
In an interview Wednesday, Connor said he is being wrongly accused. He said he tried to clear up financial questions with MaineToday Media before his departure, but that the company wouldn't cooperate. Most of the expenses that MTM claims were misused were legitimate, Connor said, and he's prepared to work with Travelers to sort things out.
"They're wrong, and they're lying," he said of the details disclosed in the letter. "It's going to get resolved, and get resolved in my favor."
In her letter, DeSisto also raised "the possibility of further legal action on these issues," but in an interview she declined to elaborate.
Tom Fitzpatrick, an attorney representing MaineToday Media, didn't rule out legal action but said the company wants to "move on and put Rich Connor behind it." Fitzpatrick said the company decided to seek recovery through its insurance policy, rather than court action, because it seemed to be a more reliable way to recoup money.
But it remains possible that the matter could result in some form of litigation.
Connor isn't disputing that he spent the money, but he is denying that most of it was spent for unauthorized personal use, said Peter Bennett, a lawyer representing Connor. Bennett said his client is contesting the "spin" put on the charges.
"We have contemplated taking action because we believe there are people out there unfairly trying to destroy Rich Connor's reputation," Bennett said. He didn't elaborate on what action might be considered.
The company's disclosure, and Connor's denials, raise fresh questions about how the 150-year-old newspaper business that became Maine's leading media company found itself on the brink of bankruptcy in 2011, when it was forced to make deep staff cuts and was unable to pay some of its creditors.
While details are in dispute, Fitzpatrick said it's clear that the company was in "extreme economic distress" during a period that Connor allegedly was misusing a large sum of company money.
Asked if the $537,988.68 paid by Travelers represents a full accounting of the alleged misused money, Fitzpatrick said it's the amount that the insurance company identified under its definition of employee theft.
"Travelers has no dog in the hunt," Fitzpatrick said. "They determined he took $537,988.68 that didn't belong to him."
In her letter to employees, DeSisto listed the expenses that made up the entire loss and resulted in a payment of $487,988.68 to the company after accounting for the deductible. The expenses were:
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