Town of Vestal Board Member Stephen Donnelly is stepping down amid multiple legal claims over the failure of his business.
Donnelly said he is resigning because he’s moving and is not allowed to serve as councilman while residing outside of Vestal. His last day as councilman will be April 15.
He filed for bankruptcy last year after his construction company, Atlas James Construction, went out of business. Donnelly told WSKG he is moving, in part, because of the bankruptcy, but also that the resignation was not because of his financial situation or the lawsuits filed against him.
“The bankruptcy caused a lot of issues for me, including losing my own home,” Donnelly said. “I don't have a way to still serve my constituents in Vestal if I'm not a Vestal resident.”
Donnelly is facing multiple claims in U.S. Bankruptcy Court and in Broome County Supreme Court.
In one filing, Chemung Canal Trust, an Elmira-based bank, accuses Donnelly of fraudulently representing his assets to extend a credit agreement.
The bank alleges that Donnelly falsely represented his finances and assets to extend a line of credit, including that he had “stocks and bonds” valued at $500,000 and a $350,000 life insurance policy. All in all, the lawsuit claims Donnelly overstated his personal assets “by at least $850,000.”
Donnelly said claims that he falsely represented his finances and assets are untrue. He said the life insurance policy statement in his application was a mistake, and that his stocks and bonds included stocks in his company, which he said were more valuable at the time.
“I didn't have the critical knowledge to run a construction company. I shouldn't have run it,” Donnelly said. “I'm not saying that there was nothing that was done wrong. But to say that I'm some sort of a fraud, to me, is absolutely ludicrous.”
He said the bank is alleging he acted fraudulently because it does not want to have its debt discharged in bankruptcy court and lose money.
“And quite frankly, my attorney's position is, as is my position, that if they had any concerns, which they didn't at that time, they should have asked me for documents, which I could have easily provided,” he said.
Donnelly and his company were also sued in Broome County Supreme Court over nonpayment of invoices with bookkeeping and materials companies, and by one customer who alleged last year they never received their deposit after the company shut down.
Donnelly, a Republican, announced in January he would not be running for reelection.
In a statement released before Donnelly announced his resignation, Democratic Town Supervisor Maria Sexton said the town board members were aware of the legal filings.
“We understand the concerns of our residents," Sexton wrote. "Mr. Donnelly was removed from all Town Committees in 2024.”