BETHANY BEACH — The town announced Friday the termination of its police chief and a captain after an internal investigation.

Officials said they became aware of the potential misuse of federal and state grant funds of overtime by police department personnel in mid-August.

“A preliminary assessment by the town of this misuse indicated possible criminal conduct, and the matter was referred to federal and state law enforcement authorities for their review. That review is ongoing,” officials said in a statement.

The statement said an investigation “has resulted in the dismissal of Police Chief Michael Redmon and his immediate subordinate, Capt. Darin Cathell. The investigation also clearly determined that no other police department personnel have been involved in the misuse of overtime funds.”

Officials offered no further comment.

Patrick Foley is listed as the police department’s officer in charge on the Bethany Beach website.

Spokespersons for the Delaware Department of Justice and Delaware State Police said Tuesday that the case is a federal matter.

The U.S. Attorney’s Office for the District Delaware declined comment Tuesday.