Bucks County held $800K in property owner funds for years. Who is getting that cash now?

The Bucks County treasurer is cutting checks to every municipality and school district in the county, after she learned of two bank accounts that had been holding money owed to residents for nearly 20 years.

The accounts, first opened in 2003, held proceeds from tax sales. The tax claim bureau, which is the county agency responsible for these sales, regularly holds sales of properties with at least 18 months of deliquent taxes. Any money left over after the taxes, mortgage and other liens are paid is returned to the original property owner, or the next rightful owner.

If an owner can't be identified after three years — if the property owner died without next of kin, for example — that money goes to the taxing authorities, including school districts and municipalities.

But these two accounts had held tax sale money that could've been returned to property owners years ago, county Treasurer Kristian Ballerini said.

And while the money sat in the government’s coffers, the county continued to earn interest on it. A 2019 audit — the first-ever known audit of the two accounts — found more than $300,000 with no identifiable source.

Ballerini began attempting to reconcile both accounts, matching the funds to sold parcels, identifying parcels whose owners hadn't been paid and tracking down the correct recipients of the funds. The treasurer's office is now distributing the remaining unidentified funds to school districts and municipalities, with judicial approval.

The treasurer's office also created new policies to ensure that this doesn't happen again, Ballerini said.

Tracking down the unclaimed asset owners in Bucks County

The tax claim bureau had previously answered to the county finance department. (While the controller and the treasurer are independent, elected offices that act as a check on the board of commissioners, the finance department serves the board of commissioners.)

But in the fall of 2020, the same year she was elected treasurer, the county commissioners moved to make Ballerini the director of the tax claim bureau as well — moving the bureau out of the commissioners' purview, and into the treasurer's.

That's when Ballerini became aware of the problematic accounts, she said.

In putting the tax claim bureau under the treasurer, Bucks followed Montgomery County, which had done the same in 2012, after it elected its first Democrat-led board in 140 years . Similarly, Democrats had taken control of Bucks County's board of commissioners in 2020 for the first time in decades .

Commissioners Diane Ellis-Marseglia, Robert Harvie and Gene DiGirolamo did not return requests for comment, but the county issued a statement it attributed to Ellis-Marseglia.

"By entrusting the Treasurer to oversee the Tax Claim Bureau, it not only streamlined that agency, but clearly provided much needed oversight," she said. "When we were sworn into the majority in 2020, it was our prerogative to change how we did business, becoming a true bipartisan administration, and doing a full assessment of county finances and functions via our Transition Team."

Where did $800,000 come from and who did it belong to in Bucks County?

An audit would have identified the problems sooner, but there was no record of the 2003 accounts being audited until 2019, Ballerini and former Controller Neale Dougherty said. For three years Ballerini spent time in the tax claim bureau's warehouse, reviewing handwritten sale books that dated back to 1998 to determine the sources of funds that sat in the two accounts, which at their peak totaled more than $800,000.

"Fortunately, the government keeps everything, so we had it," Ballerini said.

But the records were a mess — checkbooks that should record clearly defined amounts and their recipients were being used as a check register, with a running total.

"It's as old school as it gets," Ballerini said.

She matched the checks that had cleared with property sale records until she was left with a balance that couldn't be matched to any checks.

"I would come home at night and turn the page and sigh, and my husband would say, 'Again?'" Ballerini said. "And I would say, 'It's still — I'm only on 2001.'"

Sending checks to Bucks County residents

Some of the money hadn't left the two accounts because it was tied up in litigation — more than $200,000 of it — so Ballerini hired a bankruptcy law firm to expedite those cases. Then she set about finding the rightful owners of the rest.

Ballerini called one man in Falls Township to tell him he had been owed $11,000 since 2013. On the other end of the line, she heard him pause.

"Who is this again?" Ballerini recalls him asking. Then he told the treasurer how the money would help his three young boys.

The treasurer said she felt at times like Oprah.

"You get a car! And you get a car!" she said.

But her office was still left with about $326,000 that couldn't be tied to anyone. Some of the money may have come from tax sales as far back as the 1970s, according to a petition her office filed with the Court of Common Pleas.

In the meantime, the county continued to collect interest from the money in those accounts, according to the petition.

"It sat for 20 years and nobody did a thing about it," Ballerini said. "That, to me, is appalling."

Normally, tax sale proceeds that remain unclaimed by the property owner for at least three years would go to the municipality and school district where the property was sold. But in this case, the $326,000 couldn't be linked to specific properties.

So the treasurer's office filed a petition with the Court of Common Pleas, requesting permission to distribute the money to all the county's taxing authorities after having made a good-faith effort to identify as many property owners as possible.

First, the county advertised the unclaimed assets for 60 days, per the judge's order, to give property owners one more opportunity to step forward. Now the treasurer's office is cutting the checks to school districts and municipalities. The money is being distributed equally based on 2021 millage rates.

Pennsbury School District received approximately $20,000, Ballerini said. Municipalities received much less, usually a couple thousand dollars each, she said.

Tiny Morrisville Borough School District — which has close to 800 students, the majority of whom are economically disadvantaged and from ethnic minority communities — is receiving the biggest school district check thanks to its high millage rate. The district is receiving $26,819.41.

'Material weakness': 2019 audit in Bucks County IDs issue

The controller's 2019 audit of the tax claim bureau for 2016 through July 2017 found "material weakness" in the bureau's internal financial reporting practices, meaning that there is a "reasonable possibility" that inaccuracies in statements could not be prevented or corrected.

The audit identified numerous problems with the bureau's financial processes, including software features that gave the bureau's staffers too much freedom to edit records, enabling potential errors and fraud. The bureau is now in the process of switching to a different software system; the contract for the new software was approved at Wednesday's commissioners' meeting.

But the tax claim bureau had been aware of problems with the accounts that Ballerini later worked on at least since 2016, when the office of Mike Gallagher, who served a year and a half as controller, sent a memo to Marguerite Genesio, then-director of the tax claim bureau, requesting information about the two accounts, according to court records. The controller's office then submitted a report to the chair of the board of commissioners, Charlie Martin, in 2017, which noted that nearly all of the money in one of the 2003 accounts was unidentified. Genesio, who was also a longtime Republican committeewoman and Upper Southampton supervisor, had retired two months earlier.

Gallagher, who is now a deputy chief information officer for the county, did not respond to a request for comment.

In one of the two accounts, county officials had deposited a lump sum of tax sale proceeds from 1994–2002, a period when allegations of nepotism were made against heads of the tax claim bureau and the finance department that oversaw it.

In 1993, then-Director Patricia Bachtle hired Angela Wiberly as assistant director — a new position that Wiberly's father, a county official, had recommended that the bureau create. Wiberly became director of the bureau in 1995.

The same year, it was revealed that a firm the county hired to do title searches for the bureau was run by the vice chair of the Bucks County Republican Committee, who ran her business out of the party's headquarters.

In 2000, the head of the finance department, Stanley Allen, hired the daughter of his longtime colleague and former next-door neighbor.

The daughter, Laureen Gallagher, signed the deposit opening one of the 2003 accounts. Allen signed the other.

The bureau was also facing record numbers of properties eligible for tax sale after the 1990–1991 recession, according to Morning Call and Philadelphia Inquirer coverage at the time.

Wiberly's father, Anthony Brescia, was consulted as commissioners sought to improve the bureau, which was being criticized for inefficiencies, with accounting done by hand and no one answering phones, according to Morning Call coverage from 1993. Earlier that year, a review committee had recommended that the county dissolve the bureau and reassign its duties to the treasurer's office.

The bureau didn't get accounting software until 2012, said Genesio. On her first day in 2003, the clerks kept money in piles on their desks. "I was shocked," she said. "There was just so much cash everywhere.”

The 2003 accounts, however, didn’t lay dormant after they were first opened. The tax claim bureau continued to deposit proceeds from various tax sales into one of the accounts well into the 2000s, Ballerini said, mixing all the money together without ever reconciling what was already there.

Attempts to reach Wiberly and other former tax claim bureau directors Theresa Savage and Barbara DiNoia were unsuccessful. Bachtle died last month. Attempts to reach former finance directors Stanley Allen, Laureen Gallagher and Brian Hessenthaler were also unsuccessful.

David Boscola, a former finance director and current chief financial officer of Bucks County, did not return requests for comment.

While the tax claim bureau until 2020 was a commissioner-related agency under the finance department, the controller is a row office, operating outside the board of commissioners.

"The whole point of having the controller as an independent elected offical is having them do all of these audits," said Rob Loughery, who served as commissioner until 2020.

Judge Raymond McHugh, who was the controller for more than a decade until he became a judge in 2015, said that his office was in regular communication with the tax claim bureau about transactions, but didn't formally audit the bureau. McHugh said his office would check annually what accounts the bureau had opened, but "if they said they put $250,000 in, we didn’t certify those amounts or look at any of their records."

"You need to have information in order to do an audit," and ultimately, he said, "the controller wasn’t given the opportunity to do it."

The controller can compel the tax claim bureau to provide information via subpoena, said Neale Dougherty, a former controller who submitted the first known audit of the two accounts in 2019. Dougherty prioritized audits when he took office, he said; his office published at least five audits in four years.

But he wasn't surprised that "there hadn't been an emphasis on auditing" before he became controller.

"The controller’s office is expected to conduct a number of audits, but there isn’t the funding for it," Dougherty said.

Genesio said she'd asked two staffers at the controller's office repeatedly why they were never audited, though she never formally requested an audit. "It would make me feel better if somebody could sign off on everything,” Genesio recalls telling them. "We were taking in millions of dollars."

Neither of the staffers recall Genesio asking for an audit, the controller's office said.

Without audits, it was more difficult to identify problems: The county controller’s comprehensive annual financial report, which is less detailed than an audit, was awarded for excellence in financial reporting every year from 2012 – 2022 .

But the controller's office couldn't both audit and correct the bureau's records, because that could create a conflict of interest, said longtime Deputy Controller Kim Doran.

Fixing its record-keeping fell to members of the bureau itself. Past directors would chip away at the unidentified funds, Doran said, but "it dated so old and there were so many missing records."

For example, all of the check stubs for one of the 2003 accounts were missing, Ballerini said.

One of the 2003 accounts was opened the month Genesio was hired. Then-Director Theresa Savage used that account to hold proceeds from long-ago tax sales that had never been distributed because "the research had never been done," Genesio said.

The 2019 audit noted that the bureau was understaffed, which could have contributed to their weak protocols. A 2022 audit under the current Controller Pamela Van Blunk also found that staffers doubling up on responsibilities caused problems.

Genesio said the tax claim bureau's staff was cut soon after she became director, around 2010. "When I started we had 11 or 12 people," she said. "Then eight, and then six."

“You have to pick and choose when you’re only given so much of a budget," said Van Blunk. "That's how county government works."

The county's general fund balance decreased in 2011, according to the comprehensive annual financial report, due in part to less revenue from the state. Pennsylvania was facing a revenue shortfall in the wake of the Great Recession.

Charlie Martin, who was a commissioner when the 2019 audit was released, said he only learned of the tax claim bureau's piles of mystery cash when the treasurer showed up with a check last month at Centennial School District, where he's now a school board director.

He did not recall seeing the 2019 audit; normally, commissioners received audits by email, Martin said, but serious problems would be brought to their attention.

The 2019 audit did not rise to that level, according to Dougherty.

Changing record-keeping policies in Bucks County

The treasurer’s office has made several changes to prevent a tax sale proceeds backlog from happening again, Ballerini said. Now, the proceeds from each tax sale, which are held a few times each year, are kept in separate accounts that can be zeroed out and closed when all of the funds are disbursed.

The business manager tracks all of the funds, Ballerini said, and reconciliations are approved by the first deputy.

The tax claim bureau used to mail checks to the address of the sold property a year after it was sold, Ballerini said. Now, checks will be mailed to the former property owner's current address.

"It was a mess," she said, "and it'll never become a mess like this again."

But her office isn't the only one with paper records.

When she called the superintendent at Centennial School District, he knew immediately what they'd spend the money on — he'd just received a quote for digitizing all of the district's files. Martin, the Centennial school board member and former commissioner, agreed that the district’s records should be digitized, noting that they're currently in boxes in the administrative building.

"It looks like the old county courthouse,” he said.

Reporter Jess Rohan can be reached at jrohan@gannett.com

This article originally appeared on Bucks County Courier Times: Bucks County held $800K in property owner funds for years. Who is getting that cash now?