Munhall's former borough manager, for months at the center of a controversy over the dire financial straits the municipality found itself in at the start of the year, was arrested Tuesday and charged with overpaying himself more than $230,000.
Matt Galla, 44, who quit his job suddenly in June and left the borough to piece together its financial records after three years without required audits, faces four counts of theft by deception, according to a criminal complaint filed by a detective with the Allegheny County district attorney's office.
"[Mr. Galla], who had the responsibility for payroll, was in the position to intentionally omit payroll reports, destroy and/or falsify certain payroll records to disguise certain payroll fraud schemes such as overpayments of payroll to himself and under-withholding of Social Security and federal income tax on his fraudulently inflated pay," Detective William Miller wrote in the complaint.
From 2010 until his resignation June 17, 2013, Mr. Galla, who started working in Munhall in 2009 as a part-time clerk but rose to become borough manager, overpaid himself by $230,784.70, based on numbers compiled from Internal Revenue Service forms, bank statements and other external pay records, the complaint says.
When an interim borough manager, Tim Little, took over, he found that Mr. Galla's personnel file records were gone and the file was empty, except for "a 2008 W-4 form, a passport copy and 1-2 other papers," the detective wrote.
Jim McGraff, a borough employee who picks up trash at the borough office, told an investigator that in the two weeks before Mr. Galla's departure, he noticed "a lot of extra daily shredded material to pick up."
And Donna Mercuri, Munhall's tax collector, told Detective Miller that she repeatedly advised Mr. Galla that he needed to have the financial audits completed. It was a task he consistently avoided, the complaint alleges, including in June 2012, when Mr. Galla "told Mercuri that he was putting the audit off until after vacation and then took an approximate six-week vacation to California and Las Vegas at a time when he was to be off work only two weeks."
Because Mr. Galla, who later said the absence was because of his sick mother and "foot problems," was the only person who could do payroll, there was a delay in getting it done, including emergency dispatchers who were not paid for six weeks, the complaint says.
When Ms. Mercuri took her concerns about the uncompleted audit to then-council President Joe Ballas, Mr. Ballas said the borough manager told him it had been completed.
In an interview, Mr. Ballas, who is no longer president but remains on the council, said he was in and out of the hospital for various surgeries during that time and relied on Mr. Galla's word and papers he brought him to sign that were supposedly related to the audit.
"I don't like making excuses," Mr. Ballas said. "He told me everything was taken care of ... We went 'round and 'round. ... It seems like it was all a lie."
Mayor Ray Bodnar also told investigators Mr. Galla lied to him on three separate occasions about the audits. The failure to have them done cost Munhall about $354,000 in regional sales tax money for part of 2013 and 2014. The borough was considering layoffs in January and sought a private loan to keep the government running but was bailed out by residents paying their tax bills early, officials have said.
Mr. Galla has claimed that the audits never happened because he refused to sign off on what he considered illegitimate books and that council members approved all compensation, though the complaint says no members of council or the mayor said he was entitled to receive overtime. Mr. Galla has said he was told to shift required pension contributions that were never made to the general fund -- another sore subject given that the state auditor general is looking into Munhall's pensions -- and alleged that Munhall was rife with workers' compensation fraud and bid-rigging. He claimed he had documentation to support his claims and allegedly made similar remarks to Ms. Mercuri.
"[Mr. Galla] told her on the Friday before he quit that he was tired of having to kiss up to everyone around the borough and that he has something on everyone so that they should not mess with him," the complaint says.
Mr. Ballas and other council members have denied Mr. Galla's accusations and want to put the episode in the rear-view mirror.
"A lot of accusations have been thrown out -- a lot of falsehoods. ... A lot of people wanted his lies to be true," Mr. Ballas said. "I want to put it behind us, too, but I want to do it the right way. We have to find out what happened and why it happened. I want to make sure things are made right."
Mike Manko, a spokesman for the district attorney, said Mr. Galla was taken to the Allegheny County Jail on Monday because he could not post his $100,000 bond. Jail staff said he was still going through the booking process Monday night.
According to the California Franchise Tax Board, Mr. Galla has two active tax liens that totaled $28,324 when they were placed.
John Barrett, a spokesman for the board, said he could not disclose how much Mr. Galla still owed, noting that the amount could have either increased because of interest or decreased because of payments.
"Either way, the lien is not released until it is paid in full," he wrote in an email. "I cannot divulge anything other than the fact the liens are still active."
Robert Zullo: email@example.com or 412-263-3909. Twitter: @rczullo. First Published April 1, 2014 3:58 PM