Former comptroller of Diocese of Steubenville faces legal action

Funds had been misallocated between 2004-2016

STEUBENVILLE -- Legal action is being taken against the Diocese of Steubenville's former comptroller.

Bishop Jeffrey M. Monforton said today the former comptroller was David Franklin.

Forensic auditors from Schneider Downs in Pittsburgh completed a report after a two-month investigation of the diocese's finances and reported findings to the Bodman Law Firm of Detroit, which reported back to Monforton.

The misallocation of funds took place between 2004 and 2016. Financial irregularities were discovered during the restructuring of the diocesan financial offices after a new chief financial officer was hired last fall.

"Payroll taxes were withheld from employee's checks, but the money was not sent to the appropriate taxing authorities," the bishop said. "The money that would have been used to pay employee withholding taxes was instead apparently used for other diocesan purposes."

The diocese has put the Holy Name Cathedral renovation project on indefinite hold while getting its finances in order.

The diocese has paid back $3.5 million to taxing authorities, including $3.1 million to the IRS and an additional $400,000 to state and local taxing authorities.

"The money used to pay the taxing authorities came from liquidating unrestricted diocesan assets," said Monforton.

The bishop said Franklin made it appear to the diocesan finance council that the diocese was operating in the black every year when, in fact, it was losing money for 12 years.

Fiscal austerity measures have been implemented, Monforton said.

He said the former diocesan chief financial officer during those years, who also served as vicar general, did not exercise appropriate administrative oversight with the finance office.

Monsignor Kurt Kemo stepped down Friday as vicar general for health reasons. The Rev. James Dunfee from St. Agnes parish in Mingo Junction began serving as vicar general Monday. Kemo remains pastor of Blessed Sacrament Church in Wintersville.

The diocese restructured its finance office in 2017, hiring a new chief financial officer.

Monforton said new controls have been implemented, including the use of a third-party payroll processor, requiring two signatures on every check issued by the diocese and independent audits, which began in 2017, will continue annually.

For more on this story, see Friday's print edition of the Herald-Star and continue to visit www.heraldstaronline.com for updates.