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Mar 23, 2010 8:18 PMPublication: The East Hampton Press

East Hampton officials to meet with DA over additional CPF transfers

Mar 23, 2010 8:18 PM

East Hampton Town’s auditors have found another $8 million that was diverted from money borrowed for Community Preservation Fund purchases in 2006, and representatives from the town met with the Suffolk County district attorney’s office on Tuesday to discuss the ramifications of the new discovery.

The district attorney has been investigating the town’s finances under the management of former Town Supervisor Bill McGintee’s budget officer, Ted Hults, since 2008, and last June charged Mr. Hults with seven felony and two misdemeanor charges related to his alleged mismanagement, including the improper transfer of another $8 million from the CPF fund to the town’s general fund in 2007. Mr. McGintee has not been charged, though representatives in District Attorney Thomas Spota’s office have said repeatedly that their investigation is continuing.

Mr. Hults, whose attorney has postponed every court date since his June 11 arraignment, is due back in court April 1.

East Hampton Town Budget Officer Len Bernard said Wednesday that the town’s auditors, Nawrocki Smith LLP, discovered that the town issued $10 million through a bond anticipation note in April 2006 for CPF land acquisition, but only used $1.8 million of that money for the purchase of two small parcels of open space. He said that $2 million was diverted to the town’s general fund to cover operating expenses, and another $6 million was used to pay bills for capital projects. Mr. Bernard said that the town will not know exactly what that money was used for until Nawrocki Smith completes a forensic audit of capital projects, which has been underway since last fall. East Hampton Town had historically comingled the money in its CPF and capital accounts.

Mr. Bernard said that the bond anticipation note initially raised auditors’ suspicions because it was converted into a bond just five weeks after being issued. Typically, the short-term notes are not converted to a long-term bond for one year.

“That created enough discomfort that we felt it was important to bring it to the DA,” he said.

Mr. Bernard, an active Republican, stressed that the issue was discovered by the independent auditors and was brought to the attention of a bipartisan group including himself, Republican Town Supervisor Bill Wilkinson and Democratic Town Board member Pete Hammerle.

“Pete has got institutional memory on this,” he said. “We want to get to the bottom of this and the only way to do that is to have all five board members working together.”

Mr. Bernard said that he has made the New York State Comptroller aware of the findings, and that the comptroller’s office is sending a representative to the meeting with him, the district attorney, the town’s auditors and Supervisor Wilkinson on Tuesday.

The New York State Comptroller’s office completed an audit of the five Community Preservation Funds in the five East End towns concurrent with Mr. Hults’s arrest last year. That audit did not make any reference to the money that was found to be moved, 
though Comptroller spokesman William Reynolds said last week that the comptroller’s audit looked at 
disbursements from the CPF fund, not money that was diverted from the fund. He said that his office was not in a position to comment on third party information.

“The CPF audit cannot be completed at this time,” said Mr. Wilkinson at a Town Board work session on March 16, adding that his administration is still working to unravel where the money went and is seeking guidance from the DA’s office.

“It has gone beyond land acquisition,” he said.

Mr. Bernard said Monday that he doubted he would have more to report after the town’s meeting with the District Attorney, which was scheduled to end just before this paper’s deadline on Tuesday.

“He may tell us to keep our mouths shut,” he said of Mr. Spota.

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Everyone I know has lost faith in the DA since McGintee's expensive attorneys seem to have gotten him off the hook so far.
By disappointed (96), wainscott on Mar 18, 10 3:27 PM
Sorry but Hammerle has no memmory. If I REMEMBER correctly Pete did not remember to ask McGuilty where all this money was being spent.As deputy Supervisor he must have been aware of these goings on. He should resign immediatly and probably join Hults and McGuilty in some country club prison.
By montaukman (98), easthampton on Mar 18, 10 8:33 PM
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