AMESBURY – The second of two former fire lieutenants accused of stealing thousands of dollars by collecting overtime pay they didn't earn was arraigned Thursday in Newburyport District Court.
Craig Deguio, 47, of Amesbury pleaded not guilty to a single count of larceny over $1,200 and was released on personal recognizance pending trial. He is due back in court Dec. 9 for a pretrial hearing.
Court records allege the former Amesbury Fire Department shift commander submitted paperwork that falsely showed he earned $2,414 in overtime pay between fiscal 2016 and 2018.
In July, Scott Cloutier, also a former Amesbury fire lieutenant, admitted to a Salem Superior Court judge he collected $29,600 in overtime pay he didn't earn and was sentenced to five years of probation.
Cloutier also was ordered to reimburse the city and perform 200 hours of community service. Cloutier was terminated from the Amesbury Fire Department and is expected to forfeit the rest of his pension.
Amesbury Firefighters Local 1783 President David Carpentier called Deguio "a retired member of the Amesbury Fire Department" who has filed retirement paperwork with the city.
"We have no comment" Carpentier replied when asked about Deguio's arraignment.
In an emailed statement Thursday, Mayor Ken Gray said, “The abuse of overtime represents a betrayal of public trust and a theft of taxpayer money, and we have no tolerance for this type of behavior. I’m pleased that those responsible are being held accountable by the justice system."
The investigation of Deguio and Cloutier began in early May 2018 when firefighter Chris Lesage was reviewing overtime slips submitted by firefighters. He noticed that Cloutier submitted slips for shifts Lesage felt hadn't been worked.
Lesage brought the slips to then-Local 1783 President Iain McGregor and other officials with the union.
McGregor and others confronted Cloutier with their concerns, but he denied any wrongdoing, according to court records. McGregor then spoke with his attorney and placed the overtime slips in Cloutier's locker. Fire Chief Ken Berkenbush was never informed, the court record said.
"All of this information was allegedly widely known throughout the department and kept from the fire chief," Donovan's report reads.
A week later, a whistleblower within the department alerted Berkenbush, who relayed the news to Amesbury Police Chief William Scholtz and the mayor's office.
Police Lt. Detective Kevin F. Donovan led the investigation. In his report, he wrote, "It should be noted that none of the lieutenants or the executive union board notified the chief."
Cloutier was quickly placed on administrative leave and told to leave the Fire Department. He did so without retrieving the overtime pay slips from his locker.
Months after their suspensions, McGregor told a Daily News reporter that no one in the union, nor the accused firefighters, had been told why the suspensions were issued.
"Nobody will talk about it," he said in August 2018.
McGregor did not return a phone call Thursday seeking clarification of his role in the investigation.
In their investigation of the payroll records, the Essex County District Attorney's Office, state police and the Amesbury Police Department began reviewing overtime pay slips over 10 pay periods and found irregularities involving two other firefighters, Deguio and Lesage. Both were placed on administrative leave as the investigation continued.
Lesage was quickly cleared of any wrongdoing and reinstated to the force.
Police obtained a warrant and searched Cloutier's locker. They found 305 suspicious overtime slips totaling $29,604 submitted in fiscal 2017 and 2018.
The investigation also determined Deguio submitted 25 suspicious overtime slips totaling $2,404 over a period of three fiscal years, according to Donovan's report.
In his statement Thursday, the mayor criticized union leadership for not flagging the pay irregularities to police at the time.
"In May of last year, Chief Berkenbush and I immediately implemented changes in procedures and policies that put an end to this practice after it had apparently been covered up for years," Gray said in the email. "I’m extremely disappointed that union leadership did not immediately report these actions to the fire chief last year, but I look forward to putting this issue behind us as a community.”
Staff writer Dave Rogers can be reached at email@example.com. Follow him on Twitter @drogers41008.