Former Shandaken Supervisor Peter DiSclafani was arrested Thursday, Nov. 5, after being indicted for allegedly using $50,000 in town money to fund a personal loan through a nonprofit on whose board he served.

DiSclafani, 68, was charged with third-degree grand larceny as a crime of public corruption and two counts of official misconduct, State Comptroller Thomas P. DiNapoli and Ulster County District Attorney Emmanuel C. Nneji said.

“DiSclafani allegedly took advantage of his position to loan himself town funds for his personal benefit,” DiNapoli said in a press release.

The charges are accusations, and DiSclafani is presumed innocent unless proven guilty.

The Shandaken Area Revitalization Project Committee, known as SHARP, approved his loan in May 2024, according to investigators. The town relied on SHARP to administer federal Community Development Block Grant money from the U.S. Department of Housing and Urban Development, paying the organization to manage loans under the program. DiSclafani held a seat on SHARP’s board because he was supervisor, according to the press release.

Prosecutors alleged that after SHARP approved his application, DiSclafani unilaterally transferred $50,000 from a town account to the organization without informing the Town Board or obtaining its authorization. SHARP issued him a check for the same amount two days later, they said.

An examination of SHARP’s bank account showed it wouldn’t have had enough money to write that check without the transfer from the town, investigators said.

DiSclafani denied transferring town money to finance the loan and said he spent the money on a geothermal heating system for his home.

“I didn’t do that and I couldn’t do that,” DiSclafani told The Overlook when asked about the alleged transfer.

He said he hadn’t seen the grand jury proceedings or evidence in the case and didn’t know why he had been charged.

“I don’t know if they’re trying to make a story, trying to make an issue out of nothing,” he said. “Or is there something there? I really don’t know.”

Asked whether he had knowingly done anything wrong, he said, “Absolutely not.”

DiSclafani said the loan was made to him and his wife for work on their home. He said they were seniors with low incomes and that he thought the heating system met the requirements for financing with federal housing money.

“I thought we checked all the boxes and obviously so did the SHARP committee members,” he said.

He said he didn’t participate in the committee’s vote on his loan and had no authority to move money from the town account. A bank manager had told him the fund could be administered only through SHARP, he said.

Deputy Supervisor Robert Drake, who won the District 22 seat on the Ulster County Legislature on Tuesday, said DiSclafani had told him informally that he planned to seek a loan from SHARP. Drake said he understood that the organization had also issued loans using its own private funds.

“At no point in time was that suggested to be town funds,” Drake said.

Drake said the Town Board hadn’t approved the transfer.

The town’s relationship with SHARP was already drawing questions in the spring of 2025. Minutes of the April 7 meeting show Town Board member Elizabeth Kneissl asked whether the organization was still active and why the town was paying it an annual fee.

At an April 21, 2025, workshop, town officials reported that no contract with SHARP had been found. The supervisor’s office was to keep searching for an agreement and details of the loans being administered, according to the minutes.

The board voted unanimously on May 5, 2025, to terminate the agreement within 45 days. The town had entered into that agreement by resolution in 1998, giving SHARP responsibility for administering its Community Development Block Grant funds for the 1997 fiscal year. The resolution directed the supervisor to remove SHARP’s bank access, identify outstanding loans, and arrange for ongoing payments.

Investigators said DiSclafani didn’t disclose his own loan to any board member between applying for it in May 2024 and leaving office at the end of 2025, despite being assigned to identify outstanding loans and arrange for ongoing payments. They said he made no loan payments before state auditors discovered the $50,000 transfer during an audit of the town.

The comptroller’s announcement didn’t specify how much of the loan, if any, has since been repaid.

Drake said the town ended the arrangement because SHARP was managing town loans while it wasn’t in good standing.

The IRS lists SHARP under the legal name SHARP Committee Inc. Its 501(c)(3) tax exemption was automatically revoked effective Nov. 15, 2016, for failing to file annual returns or notices for three consecutive years. The revocation was posted April 26, 2017. The record shows no reinstatement date.

SHARP’s chairman, Richard Loveless, is a former member of the town’s ethics board. He said he has served on SHARP’s board since 1999.

Loveless didn’t answer questions about SHARP’s nonprofit standing.

The most recent annual return The Overlook found for SHARP covers the fiscal year that ended June 30, 2013. Loveless signed it as president. The return described a revolving loan fund that helped low- and moderate-income homeowners in Shandaken, Woodstock, and Olive pay for home repairs. SHARP also reported managing a four-unit rental building and running a flood relief program for victims of Hurricane Irene and Tropical Storm Lee.

That year, SHARP reported $84,577 in revenue and $189,355 in expenses, including $46,335 in pay for its executive director. Its net assets fell to $423,901 from $528,679.

Supervisor Barbara Mansfield, who defeated DiSclafani in last year’s Democratic primary, described the town account as a revolving loan fund supported by a federal grant. In such a fund, loan repayments provide money for further lending.

Loveless said SHARP was active and owned two properties, including a four-unit apartment building in Phoenicia. He put the monthly rents at $615 to $900. Mansfield identified the apartment building as being on Church Street and said SHARP also owned a Main Street building used for offices.

DiSclafani, who maintained that SHARP still exists, said it hadn’t publicized its low-interest loans for residents and businesses in about a decade.

Mansfield said money was in the town’s revolving loan account, though she didn’t provide a balance. She said she had contacted the federal housing department and the state comptroller’s office to determine how the money could be used and was awaiting guidance.

SHARP was supposed to serve as the town’s housing arm, Drake said, and its inactivity during a severe housing shortage led residents to form the Catskills Alliance for Housing and Preservation to fill the gap.

“They didn’t appear to be responding to that need,” Drake said.

The alliance, founded by Vickie Starr, was exploring a purchase of the 19-unit Skyrise Apartments in Phoenicia to keep rents affordable, The Overlook reported in January.

DiSclafani said he planned to find a lawyer. Asked whether he could repay the money, he said he had spent it on the heating system the day he received it and would need to borrow again.

“I’ll have to get another loan and pay it back,” he said.

He was arraigned before Ulster County Court Judge Bryan Rounds and is scheduled to return to court Jan. 7.

Noah Eckstein is the editor-in-chief of The Overlook. Send correspondence to noah@theoverlooknews.com.