William “Bill” Nichols Jr., charged Tuesday with misappropriating public money, accumulated so much power in decades of overseeing Williamsport’s government that few questioned him, according to a statewide grand jury presentment.
As the city’s finance director, Nichols eventually gained control of the popular Hiawatha riverboat and three public agencies, including River Valley Transit. Then, he used his positions to prop up the riverboat, misappropriate more than $500,000 and cover up what he did, the presentment says.
If someone questioned his behavior, he ignored or tried to confuse the person with lengthy, sometimes nonsensical explanations that came off as “filibusters.” If a questioner persisted, Nichols bullied by shouting or becoming aggressive, according to the presentment.
Nichols, 71, of Williamsport, did not directly pocket any misappropriated money, according to the state Attorney General's Office. Special agent Kevin Schofield charged him Tuesday only with theft by failure to make required disposition of state transportation grants and tampering with public records to hide his illegal misbehavior.
Nichols waived his preliminary hearing before a Dauphin County magisterial district judge and faces a preliminary arraignment in Dauphin County Court on Nov. 8.
The grand jury blamed Williamsport city officials for allowing Nichols free reign over so many agencies for so long.
“The City of Williamsport failed to adequately segregate these duties and allowed Nichols to serve in these roles over such a long period of time that, in essence, he served as his own boss with very little effective oversight,” the presentment says. “Mayors came and went, and City Council members came and went, but Nichols was the constant in Williamsport for four decades.”
Because of Nicholas’ “vast institutional knowledge and power within the city dating back to the 1980s, mayors and City Council often deferred to him and rarely questioned his budget proposals or financial management decisions,” according to the presentment.
Nichols wasn’t fired until after Mayor Derek Slaughter assumed office in January 2020.
The attorney general’s office and the Federal Transit Administration have investigated the city, River Valley Transit, the city’s public bus system, and the city parking authority since.
Slaughter declined to comment on the charges, but said he has taken many steps to revitalize the city’s finances, including a computerized accounting system and reorganizing city government. The city created a separate authority to manage River Valley Transit in 2022.
Nichols accumulated power
The city first hired Nichols in 1978.
Over the years, he took on multiple posts. Besides city finance director, by 1984, he managed River Valley Transit, Williamsport’s public bus agency. River Valley Transit owns several properties in Williamsport, including Trade and Transit Centre I, Trade and Transit II, the Church Street Transportation Center, a public compressed natural gas fueling station and the Peter Herdic Transportation Museum.
River Valley Transit also oversaw the Williamsport Parking Authority.
Nichols spanned eight mayors as River Valley Transit general manager. Between 2004 and 2008, Mayor Mary Wolfe appointed him city director of administration, further enhancing his power. Mayor Gabriel Campana, who served between 2008 and 2020, eliminated that job.
By 2018, Nichols earned more than $145,000 a year in all his posts, though only $7,400 from Hiawatha directly, according to Hiawatha’s tax return for that year.
Propping up Hiawatha
Riverboat supporters created a non-profit organization, Hiawatha Inc., to oversee it in 1994. Nichols was among its first board members.
In March 1994, Nichols asked the Williamsport City Council to authorize River Valley Transit to manage the non-profit. The council declined, but did consider another one.
Nichols' later proposal called for annual donations from the Williamsport/Lycoming Foundation and the Williamsport/Lycoming County Chamber of Commerce.
“Given the city's own budget constraints and overall financial condition, subsidy for the Hiawatha should not be considered," Nichols’ new proposal said, according to the presentment.
The council only agreed to provide “in-kind” city contributions, which amounted to lesser work by the streets, parks and recreation departments.
That didn’t stop Nichols from active involvement in Hiawatha’s day-to-day operations and dragging the city into that, according to the presentment.
He solicited donations for the tourist attraction from almost every city vendor and business he worked with, according to the presentment.
Through River Valley Transit, Nichols also controlled the nonprofit’s finances, payroll and check issuance.
One of the Hiawatha’s most significant regular expenses was insurance on its hull, the boat part immersed in water. Instead of donations, sponsorships and ticket revenue, the insurance premium was paid through the city’s River Valley Transit, according to the presentment.
Nichols ordered River Valley Transit finance employees to submit altered invoices so the city would pay the Hartman Agency, Hiawatha’s insurance company.
The employees whited-out the words “Hiawatha,” “hull” and account numbers that began with “H-I-A-W-A” from the invoices, according to the presentment.
If the invoice was digital, they would place a white text box over the words "Hiawatha" and "hull," according to the presentment.
If an employee mistakenly sent an unaltered invoice to the city, Nichols reprimanded the employee.
River Valley Transit’s chief financial officer, unnamed in the presentment, testified she altered three invoices and identified others who did, too.
Between 2014 and 2019, the city paid 19 altered insurance invoices totaling $122,909.33.
In other instances, Nichols authorized paying Hiawatha employees through the city instead of the riverboat’s account. River Valley Transit used DePasquale Staffing Services, LLC to temporarily staff the transit company and the Hiawatha. The agreement did not specify how the employees would work.
Nichols used a majority of the employees for the Hiawatha’s operations, sales and maintenance. The grand jury found Hiawatha employees’ salaries assigned to the trade centers’ budgets instead of the Hiawatha’s.
Finance employees could have paid employees through the Hiawatha account. Nichols directed them otherwise.
Between 2015 and 2019, River Valley Transit paid $39,141.57 for Hiawatha maintenance staff and crew.
That wasn’t all.
Between 2014 and 2018, the Williamsport Parking Authority contributed $650,506 in management fees to River Valley Transit, according to the presentment. These fees were used to fund the riverboat.
The Hiawatha still had legitimate funding sources. Bank statements between 2014 and 2020 found corporate sponsorships, donations, patron fees and fundraising event revenues.
Ghost work for real employees
In 2011, the Endless Mountains Transportation Authority, a neighboring organization that serves Bradford, Sullivan and Tigoa counties, hired River Valley Transit for $250,000 a year to manage its bus system.
The fee was meant to cover salary-related expenses for 34 River Valley Transit employees who also worked on Endless Mountains matters.
Endless Mountains listed Nichols, River Valley Transit’s chief financial officer and planning manager and six other employees as its “lead management team.” But the grand jury identified two people placed on the payroll with no role in the authority’s management who performed no tasks, according to the presentment.
A city Department of Finance employee told the grand jury she received $300 every two weeks from Endless Mountains even though she had no additional job responsibilities.
Another finance department witness testified he received a bi-weekly paycheck of $165 and also did no work.
The witness said he confronted Nichols about the paycheck. Nichols said he had the ability to pay him more money through the Hiawatha.
Campana became aware and stopped the paychecks in 2019. Between 2013 and 2019, one employee received $63,550 and the other $70,050, a total of $133,500.
Nichols tried hard to prevent the Pennsylvania Department of Transportation from discovering he misused money meant for River Valley Transit on Hiawatha. He manipulated financial data required by PennDOT for oversight to hide expenditures, River Valley’s chief financial officer testified.
Transit agencies must submit quarterly reports with budget and financial information so PennDOT can monitor grants through a program called “Dotgrants.”
PennDOT’s Bureau of Public Transportation’s division chief testified miscellaneous expenses reported from 2014 to 2015 and 2018 to 2019 averaged 10% of River Valley Transit’s budget. Transit agencies elsewhere averaged 2% to 4%.
The miscellaneous expenses included internal and separate transit account codes that PennDOT did not see, such as the Hiawatha payments - employee salaries and insurance invoices.
The transit company used a bookkeeping method for entering transfers between accounts. The transit’s general ledger contained multiple budgets. Nichols approved the budgets separately before presenting them to the city council.
The ledger showed regular transfers of the “operating” budget into the “planning” and “TTC” (Trade and Transit Centre) accounts several times through the fiscal year.
Before 2013, auditors viewed the transfers as acceptable. But the failure to conduct a more thorough grant compliance review required by a state law allowed River Valley Transit to obscure true expenditures from PennDOT.
Nichols artificially inflated expenses and revenues, too, according to the presentment. Transfers were made to look as if they were allocating additional revenue in the planning and trade centers accounts.
This stopped in 2019 after an auditing firm, RKL, identified the improper transfers. The inflated numbers had no effect on operating grant money amounts that River Valley Transit received from PennDOT. But grant compliance became more difficult to track.
Mixing up the money
River Valley Transit used a single bank account called the “Utility Fund” that made things hard to track.
The account commingled revenue from state and federal grant funds, bonds and revenue created by rider fees, advertising, rental income from the Trade and Transit buildings, and other sources. The transit company also failed to separate accounts for individual projects or revenue streams.
The transit agency’s CFO testified she asked Nichols to open multiple bank accounts besides the utility fund. He blocked that, saying it would be too difficult “on the state level.”
The transit company opened multiple accounts after Nichols was fired.
The nasty Nichols
A transportation consultant testified Nichols could be charming at first but became “pushy,” “blustery” and threatening if questioned. He had a confrontation with Nichols in 2015 where he wanted a better understanding of the River Valley Transit/Hiawatha financial relationship.
Nichols often offered minimal information and data access. The consultant said he had no issues with access to information after Nichols left.
Employees saw Nichols as a bully, according to the presentment. His staff was never permitted to provide information to anyone without his approval.
River Valley Transit’s CFO testified everyone answered to Nichols. She referred to herself and other employees as “glorified clerks” with meaningless job titles.
Nichols instructed the CFO to manipulate numbers when he wanted. The CFO and River Valley’s planning manager used the term “fudge-it” to describe the transit agency’s budget and finances.
The planning manager, who resigned in 2020, testified Nichols was difficult and demanding. Nichols was described as affable and likable until he was questioned or given an answer he didn’t like, according to the presentment.
PennDOT witnesses from a 2015 meeting testified Nichols avoided or ignored anyone wanting information. He offered confusing answers or became angry and intimidating.
Nichols avoided emailing. Communication with him was mainly over the phone or in-person. A former PennDOT deputy secretary attested to his penchant for delaying. He failed to return calls or emails. If he responded, he used the “bully technique,” and became aggressive when confronted, according to the presentment.
The CFO said Nichols berated her for going directly to a PennDOT employee with a question. She testified he chastised her for raising “red flags” and was forbidden from direct contact with PennDOT.
The former PennDOT Director of Bureau of Public Transportation also testified Nichols yelled at her at times if his actions were questioned.
The non-consensual recording
In a separate incident, the grand jury found Nichols recorded 40 minutes of an in-person conversation with Campana without his consent in 2018. The recording included topics of general personnel, finance and project manners. Nichols is not charged with illegal recording.
On the recording, Campana pointed out Nichols controlled city finances for years.
“I don’t control them, I just report them,” Nichols responded.
