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Madison Councilman Larry “Happy” Saunders — who was not serving on the council when multiple financial issues were identified via audits of city finances — makes a point during the city’s regular session on Jan. 4.

MADISON — The City of Madison provided an update on the audit being conducted by the West Virginia State Auditor’s Office during its regular session on Jan. 4.

“They are still in the process of talking to the four individuals involved, and before they give you a rundown, they are going to talk with them and see what their attorneys have to say,” said Police Chief Chet Burgess. “That is before they give you an exact … there may be things out there that they admit to that we don’t know about.”

According to city officials, approximately $150,000 initially was identified as missing from city coffers through multiple revenue streams, including garbage collection. That same audit also showed the city was in debt to the federal government. It is still unclear and could not be confirmed whether additional missing funds have been identified by investigators.

In January 2020, the Coal Valley News reported that the city owed up to $622,000 in federal taxes dating back to 2016. Included in the tax debt is approximately $346,000 in federal income withholding and another estimated $200,000 in FICA deductions that were never paid. The funds were supposed to have been withheld from the paychecks of the city’s 18 employees and forwarded to the IRS.

In July, the auditor’s office’s General Council and Director of the Public and Integrity Fraud Unit Steve Connolly told the CVN the investigation had been extended and would ultimately reach as far back as 2012.

The city has hired legal representation to serve as a communicator with the IRS and is still in the process of obtaining a lift of liens on over $800,000 worth of city properties. City officials say they have made regular $5,000 payments, among others, to the IRS since the debt was identified and are awaiting a status update regarding clearance of the property lien and the debt and associated interest and fees.

Connolly was appointed special prosecuting attorney for the case regarding missing funds in November.

“I’ve met with the new Prosecutor (Donna Taylor) and she welcomed our investigation and requested that I remain the special prosecutor on the case,” Connolly said via text message on Jan. 5. “The grand jury has been moved from January to February. If the cases aren’t resolved before grand jury, the investigation findings will be presented at that time.”

Madison City Council meets at 7 p.m. on the first Monday of each month at the council’s chambers beside the Madison Civic Center at 261 Washington Ave. Call 304-369-2762.

Reporter Phil Perry can be reached at pperry @hdmediallc.com or at 304-307-2401.

Reporter Phil Perry can be reached at pperry@hdmediallc.com or at 304-307-2401.