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Jun 16, 2009 7:14 PMPublication: The East Hampton Press

Hults's confessions appear to implicate McGintee

Jun 16, 2009 7:14 PM

Former East Hampton Town Budget Officer Ted Hults was Christmas shopping at Macy’s in New York City in December 2006 when he received a phone call from Town Supervisor Bill McGintee informing him that the town would not be able to make payroll.

That call set off a chain of events that ultimately led to Mr. Hults’s arrest on seven felony charges on Thursday, June 11, according to a confession that he gave to Suffolk County District Attorney Thomas Spota’s Government Corruption Bureau on May 15, the day he resigned.

Mr. Hults told authorities that he had suggested to Mr. McGintee during that conversation that the town could use money from the Community Preservation Fund to fill the budget gap, and the supervisor agreed.

That confession, and another sworn statement dated June 8, did not make clear why the supervisor was informing the budget director of the shortfall instead of the supervisor being informed by Mr. Hults.

In his statement, Mr. Hults said that he later met with Mr. McGintee and then Town Attorney Laura Molinari in the town supervisor’s office, and Ms. Molinari advised both men that CPF money could not be transferred or loaned to any other town accounts. Both men agreed to go ahead with the plan against her advice, Mr. Hults told investigators.

Ms. Molinari would not comment on the matter, citing her role in the investigation and her role as an attorney.

After the resignation of the town’s former accountant, Joe Pizzo, in July 2007, Mr. Hults took over responsibility for most of the town’s accounting. He said in his confession that in August of that year, he began to remove what would eventually amount to nearly $8 million from the town’s Community Preservation Fund in order to cover deficits in the town’s general fund.

Mr. Hults’s improper use of the Community Preservation Fund has been scrutinized since it first came to light in March 2008. Shortly afterward, the DA’s office first issued subpoenas for the town’s CPF records.

At a press conference at Mr. Spota’s office in Hauppauge on Thursday, both Mr. Spota and New York State Comptroller Thomas DiNapoli explained in detail the charges against Mr. Hults and the results of a new audit of all five East End towns’ use of Community Preservation Fund money.

Mr. Spota was quick to point out that Mr. Hults has been cooperating with investigators who filed the charges in Town Justice Court as a complaint instead of pursuing a grand jury indictment, an indication that the district attorney might be entertaining a plea bargain. Mr. Hults, who appeared before the court with a legal aid lawyer on Thursday, did not enter a plea to the felony charges and pleaded not guilty to two misdemeanor charges of official misconduct.

“It is very clear in the law. Hults and McGintee were told by the town attorney that the Community Preservation Fund is to be used only to acquire open space and farmland,” said Mr. Spota.

Mr. Hults’s motives were apparently not for personal gain. Mr. Spota was quick to point out that he has not been accused of embezzling any money. Instead, he said it appeared to be a concerted political effort to keep the tax rate artificially low and still provide a large array of town services despite the skyrocketing costs of employee benefits and other town expenses in a year when Mr. McGintee was seeking reelection.

“He did this not for personal financial gain but for political advantage,” said Mr. Spota of Mr. Hults. “It would create significant political problems” for the town supervisor if the true state of the town’s finances were revealed at that time, he added. “The cover-up was worse than what preceded it.”

Many questions still abound regarding Mr. Hults’s use of CPF money. Though only two of the nine charges filed against him—one felony charge of defrauding the government and one misdemeanor charge of official misconduct—are related to his use of CPF money, the CPF audit conducted by Mr. DiNapoli’s office also raises other questions about the town’s CPF practices.

The state comptroller and the district attorney have been working together on the case for more than a year, according to representatives from both agencies who appeared at the press conference.

According to Mr. DiNapoli, the town transferred at least $1.5 million from the CPF to the general fund as reimbursement for expenses that were supposedly related to the CPF fund. CPF law allows towns to use up to 10 percent of their CPF budget for management and stewardship of lands purchased through the program.

Mr. DiNapoli said that his office was not provided any documentation of what that $1.5 million was used for, giving him no way to know whether the charges were legitimate or not.

“What is clearly not permissible is use of the Community Preservation Fund for anything else,” said Mr. Spota.

The majority of the felony charges against Mr. Hults stem from his attempt to cover up the condition of the town’s finances in statements attached to the issuance of town bond anticipation notes in the summer of 2007, according to the charging documents.

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it is time to end the Community Preservation Fund otherwise known as yet another tax on residents. By this time all the old boys have enriched their friends and now they are dipping into it for political deception: "keeping tax rate artifically low" so they could keep on spending without consequences. Simply put this engorged fund is too much of a temptation for these dim, greedy politicos to keep their hands out of.
By Phanex (83), Southampton on Jun 12, 09 2:57 PM
what a dope.
By hamptons surfer (79), southampton on Jun 13, 09 7:04 AM
Another example of "Debt being mainlined to suckers". A national problem.
By Undertow (64), Southampton on Jun 13, 09 7:35 PM
I never gave much consideration to the Community Preservation Fund either way, Phanex, at least not until I found out (the hard way) that Southampton Town targeted my property and my grandfather's for open space preservation. Now I'm compelled to agree with you. The sooner CPF is abolished the better.
By William Haley (7), East Quogue on Jun 14, 09 3:58 PM
what a dumb headline. does a bear...etc
By montauk resident (41), montauk on Jun 15, 09 9:26 AM
Why was there a deficit in the general fund in 2006 in the first place??? hmmmm...
By cat (18), Riverhead on Jun 15, 09 10:52 AM
This comment has been removed because it is a duplicate, off-topic or contains inappropriate content.
By pinga (90), hamptonbays on Jun 15, 09 8:20 PM