AUGUSTA — The Maine Human Rights Commission found Monday that a former Old Orchard Beach town employee suffered discrimination and retaliation for reporting financial irregularities.

The commission recommended that Kelly Roy and the town seek conciliation – an agreement that satisfies the concerns of both sides.

Without comment, it supported an investigator’s finding that Roy was retaliated and discriminated against after she reported her concerns to her supervisor in early 2012.

Roy, who was the office manager for the Public Works Department, filed a complaint with the state on May 30, 2012, saying the retaliation came after she raised concerns about financial activities that she believed were unlawful.

Roy voluntarily left her position with the town earlier this year. Town officials denied all of her claims.

Roy could not be reached for comment Monday. Interim Town Manager Robert Peabody would not comment because he had not yet reviewed the commission’s ruling.

Roy began working for the Public Works Department in February 2010.

She was asked in July 2011 to take on additional duties in the Finance Department that included processing accounts payable and payroll. She got a pay raise when she took on those duties.

Roy wrote a letter to her supervisor in the Public Works Department on Feb. 29, 2012, saying she had “grave concerns” about financial irregularities in the Finance Department. She also resigned her from duties in the Finance Department.

“She decided she needed to protect herself and the town by removing herself from the situation,” her attorney, Alexander Spadinger, told the commission.

In her memo, Roy said the town’s purchasing policies were being violated, child support payments were not being applied properly through payroll, bills were not being paid on time, the town’s contributions to retirement funds were not being made, and Form 1099 tax statements were not being issued properly.

Roy told Michele Dion, an investigator for the Human Rights Commission, that she was subjected to “discriminatory actions and threats” after writing her memo.

Roy told Dion that she was threatened with firing or reduced work hours, and was required to use a time clock when others in her department were not.

Glenn Israel, an attorney for the town, said there was no evidence to support a whistleblower claim. He said it was a situation in which an employee was having trouble with her boss and decided “the best defense is a good offense.”

Israel said the finance director had written a memo to then-Town Manager Mark Pearson two days before Roy sent her memo, outlining many of the same concerns that Roy expressed in her letter.

“These issues were not a secret. Everyone in town knew about these issues,” Israel said.

The town did not take any adverse action against Roy after she made her claim, Israel said. Pearson — who was fired by the Town Council in March — met with Roy to address her concerns, he said.

The financial irregularities that Roy reported were outlined in a preliminary audit report given to town councilors late last year. Bruce Nadeau, a senior accountant for RHR Smith & Co., which did the audit, told the council in December that the town had “significant issues” that had existed for some time and were being addressed by Pearson.

The Town Council is expected to receive a report on the audit Tuesday night.

Dion, the investigator, said she found Roy “very credible” when Roy claimed she did not know about the finance director’s memo.

“I think it was a small town having some large problems,” Dion said.

Financial issues have been part of the ongoing political tension that led to Pearson’s firing and the potential recall of all seven councilors in an election on June 11.

Pearson, who worked for the town for about a year, publicly pushed for more financial oversight, though some councilors said he was part of the problem.

Councilors also said they were concerned about a complaint filed against Pearson by a town employee, but did not specify whether it was Roy and her complaint to the Human Rights Commission.

Gillian Graham can be contacted at 791-6315 or at:

ggraham@pressherald.com