A city worker at the centre of a growing fraud investigation was responsible for collecting rent money from farmers' market vendors who chose to pay in cash, CBC Hamilton has learned.

On Saturday, the Hamilton Spectator reported that Michael Hawrylyshyn, an accounts receivable coordinator, had been dismissed in connection with the disappearance of about $1 million over a nine-year period.

The case of fraud has led to the firing of a single employee, whom the city has not publicly identified. Police are investigating, and no charges have been laid.

CBC Hamilton was not able to reach Hawrylyshyn on Saturday. When a reporter called his Ancaster home, a woman, who would not identify herself, picked up the phone.

Hawrylyshyn and his family, she said, would not be speaking to the media.

"We're not commenting, but we're all behind him."

Mike Zegarac, the city's acting head of finance, told CBC Hamilton earlier this week that the suspected theft is related to the transfer of cash between its service providers and the city.

City brass, he said, discovered the discrepancies this spring, while they were in the process of encouraging vendors who normally pay in cash to supply cheques instead.

The money didn't come from one particular site, Zegarac said, but a series of notices issued to stallholders at the Hamilton Farmers' Market suggests that the city-run service may have been one of those affected.

Market vendors asked to aid in fraud probe

Market vendors received two letters this week asking for their help in a police probe into the fraud.

"Recently the City advised that a long-term employee was found to have committed theft from the City of Hamilton," said market manager Donna Lee Macdonald in a June 27 statement.

"If any Market vendor is contacted by the police to assist in their investigation, we encourage you to cooperate."

Vendor Jon Van Der Nol pays his rental fee to the city in cash. It was Hawrylyshyn, he said, who came by to pick up the instalments.

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Jon Van Der Nol says he pays the rent for market stand he manages to the city in cash. (Cory Ruf/CBC)

"He went out of his way to collect the money on Saturdays," said Van Der Nol, manager of British Baked Goods.

Hawrylyshyn, he said, collected the money starting about three years ago.

Before then, the responsibility fell to "maintenance guys" from city hall.

Van Der Nol said he was issued receipts each time he paid, and keeps them in his records.

"I'm a bear for saving receipts," he said.

Ethilda (Tilly) Johnson also pays the rent for her stall, which sells Caribbean-style foods, in cash. She said she gave it to man named "Mike," but didn't know his surname.

CBC Hamilton cannot confirm whether rent money Hawrylyshyn collected from market vendors was handled improperly or whether those funds have been linked to the $1-million dollar case of fraud.

Additionally, city officials wouldn't confirm Hawrylyshyn's dismissal and are no longer speaking on the case.

"[S]eeing as the police investigation has begun and is ongoing, we have very little more to say and will not be commenting on the employee fraud matter," wrote Mike Kirkopoulos, a spokesperson for the city, in an email on Saturday.

Few vendors pay rent in cash

'Ours is always, always done through post-dated cheques. How can you run into problems that way?'

—Sue Misale, market vendor

Rental fees for market spaces vary and depend on a stall's size and location. According to city documents, a basic 100 sq. foot stand costs $250.90 per month, or $3010.80 per year. Many stands are double or triple that size, and the city charges vendors a premium for better "frontage."

CBC Hamilton wasn't able to determine how many stallholders pay their rent in cash. And Macdonald said she couldn't comment on the investigation, and referred the issue to the city's manager office.

However, a survey of about 10 vendors revealed only two who pay the city in cash.

"Ours is always, always done through post-dated cheques," said Sue Misale, co-owner of Sam the Produce Man. "How can you run into problems that way?"

Most vendors, she said, prefer to pay rental fees in the same manner.

'Shocked'

The suggestion that the Hamilton Farmers' Market may be one victim in a $1-million case of fraud has many vendors stunned.

"I'm shocked," said Johnson, whose Tilda's Tropical Delight has been a fixture of the market since the early 1970s. "Honestly, you don't know who to trust these days."

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Shane Coleman, president of the stallholders association, says he's expressed concerns in the past about the market's financial situation. (Cory Ruf/CBC)

Laura DiLauro, a stall owner since February, said "it was just shocking and disappointing because we don't want any bad publicity for the market."

The investigation also raises questions about the actual state of market finances. It has run deficits in the ballpark of $200,000 per year for the last half-decade. And the city has put out a request for proposal to find a private operator to take over the market, but has yet to find a serious bidder.

Shane Coleman, president of the stallholders' association, said the fraud probe puts into doubt whether the market's financial situation was as bad as it was made out to be.

He said he expressed concerns about how the market's finances were being handled as early as 2009, when it stopped offering customers free one-hour parking. In an attempt to find other ways to save money, Coleman asked to see financial records for the previous four years.

"I just knew there was creative accounting going on," he said.