By Stephen J. Kotz
Former East Hampton Town Budget Officer Ted Hults was arraigned on nine criminal charges, including seven felonies, before East Hampton Town Justice Lisa R. Rana on the morning of June 11. He is cooperating with investigators as the probe apparently focuses now on Town Supervisor Bill McGintee.
According to court documents, in sworn statements to investigators, Mr. Hults said both he and Mr. McGintee were aware of illegal transfers made from the Community Preservation Fund to the town’s general fund, despite the town attorney’s warning that such transfers would be illegal.
The charges stem from a year-long investigation of the town’s finances by Suffolk County District Attorney Thomas Spota’s Government Corruption Bureau.
All of the charges involve either the improper transfer of CPF money or the preparation of false or misleading documents related to the town’s efforts to borrow money. None of the charges allege that Mr. Hults embezzled any money or obtained any personal gain though his actions.
Mr. Hults, who had yet to hire his own lawyer, appeared in court represented by legal aid attorney Robert Coyle, as Christopher McPartland, the Government Corruption Bureau chief, listed the charges against him. He entered not guilty pleas to the misdemeanor charges but was allowed to abstain from entering pleas on the felony charges. He did not speak to reporters.
He was released on his own recognizance after Mr. McPartland told the judge that he was cooperating with the DA and is due to appear back in court on July 30.
“The people have a strong case,” said Mr. McPartland, citing two sworn confessions from Mr. Hults and extensive interviews with town officials. After the proceeding, Mr. McPartland said he expected others to be charged in the probe.
Although Mr. Hults’s statements implicate Mr. McGintee, no charges have been filed against the supervisor.
Mr. Hults and Mr. McGintee have been at the center of a scandal over the state of the town’s finances. East Hampton is likely to face a deficit of at least $18 million by the end of this year, even though the town had a surplus of about $11 million when Mr. McGintee was sworn into office in 2004.
At a press conference outlining the investigation and announcing the results of the New York State Comptroller’s audit of the town’s Community Preservation Fund on Thursday afternoon, District Attorney Thomas Spota said his office was continuing to investigate Mr. McGintee.
“I am absolutely concerned about the conduct and actions of the supervisor,” he said. “Our investigation is continuing and that’s where I’ll leave it.”
“I don’t think it will be too long,” Mr. Spota replied when asked when officials would announce whether or not they planned to make additional arrests. The district attorney would not comment on whether other town officials besides Mr. Hults and Mr. McGintee were being investigated, although he did say that it appears that the improprieties took place without the knowledge of the members of the Town Board.
Mr. Hults was charged with a felony count of defrauding the government for transferring a total of approximately $8 million from the town’s Community Preservation Fund to the general fund beginning in December 2006 when the town could not meet its payroll.
He was also charged with a total of six felony counts for securities fraud, filing false instruments and falsifying business records related to the town’s effort to borrow a total of $12.3 million by issuing bonds in June and August 2007. According to the complaint, Mr. Hults made at least two “material misrepresentations” in filing documents required to issue bond anticipation notes, including that then Town Attorney Laura Molinari had reviewed the documents when in fact she had not. Ms. Molinari later resigned over the matter.
Mr. Hults also allegedly stated that the town had a surplus of $171,573 in its general fund, when it actually had a deficit of more than $900,000 at the time it was trying to borrow the money.
He also faces two misdemeanor charges of official misconduct, one related to the CPF transfers and one related to the town’s bond effort to float bonds.
DA spokesman Bob Clifford on Thursday afternoon said Mr. Hults could face from 16 months to four years for each of the felony charges and up to one year for each of the misdemeanor charges.
Reporter Beth Young contributed to this story.