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Jul 22, 2009 2:12 PMPublication: The Southampton Press

Police deficit the result of town officials' mismanagement, report says

Jul 22, 2009 2:12 PM

Five straight years of fiscal mismanagement by Southampton Town officials—not the police department—resulted in a budget deficit in the town’s police fund that reached as much as $8 million before settling at $4.6 million at the end of 2007, according to FTI Consulting, the firm hired last July to conduct a forensic audit of the fund for 2003 through 2007.

At the close of 2003, the police fund had a $3 million surplus, but by the end of the following year it was gone, according to FTI Senior Managing Director Brian Ong, who revealed the firm’s findings to the Town Board on Friday.

Between 2003 and 2007, the fund consistently operated in the red, ultimately reaching an $8 million shortfall, thanks in part to a budget that neglected to allow for police overtime and retirement payments. The deficit was pared down to $4.6 million in 2007 when $3.4 million of the town’s general fund surplus was used to make up some of the difference.

But, according to Mr. Ong, the Town Board never passed a resolution approving the loan. Therefore, according to town officials, the transfer might have been illegal. Even if it was legal, it was not sound fiscal policy, Mr. Ong said. “Considering the magnitude of the transfer, there should have been a Town Board resolution,” he said.

Who authorized the $3.4 million transfer, and when, had been a mystery—until Wednesday morning, when Town Supervisor Linda Kabot and Comptroller Tamara Wright said they discovered that it had been traced back to Albrecht, Viggiano and Zureck, the town’s auditors at the time it occurred, in May 2008.

According to Ms. Kabot and Ms. Wright, Tom Campbell, a longtime employee of the comptroller’s office who left the department around the time the former comptroller, Charlene Kagel, left office in February 2008, had agreed to come back on a part-time basis to help close out the 2007 books. At the direction of AVZ auditors, they said, Mr. Campbell performed a bookkeeping maneuver known as a “book and reverse,” entering the $3.4 million transfer from the general fund, backdating it December 31, 2007, and then reversing the transfer in a transaction backdated to January 1, 2008. The transfer was to “adjust for overdrawn cash balances” in the police fund, Ms. Wright said. In the past, such shortfalls had been made up with tax revenue received late in the fiscal year for the following year, but tax revenues at the end of 2007 did not provide enough to cover the negative cash balance in the police fund, she explained.

So, to close the books with a zero balance, AVZ directed Mr. Campbell to essentially make a transfer on paper from the general fund, spanning the two fiscal years, Ms. Wright said, adding that town officials learned about it after talking with Mr. Campbell this week.

The problem is that such a maneuver might be illegal, Ms. Wright said on Wednesday, adding that the town is investigating the transaction and AVZ’s involvement, and the fact that AVZ had signed off on the town’s books knowing about the maneuver. Ms. Kabot suggested it was part of an ongoing “Pandora’s box” of accounting errors that have been uncovered in recent months.

Mr. Heaney knew about the police fund going into the red in 2003, but he did not inform the Town Board of that until December 2005, Ms. Kabot claimed. “Addressing the deficit would have meant raising taxes, and he didn’t want to do that during an election year,” Ms. Kabot said, referring to Mr. Heaney’s last successful bid for reelection.

Ms. Kabot said she has instructed Town Attorney Dan Adams to investigate the legality of the loan. In the meantime, New York State Assemblyman Fred W. Thiele Jr., a former town supervisor himself, said that throwing $3.4 million of general fund money at the deficit without passing a resolution was, indeed, a breach of state law.

“While the supervisor is the chief financial officer of the town and responsible for crafting and submitting a budget, final authority over the budget rests with the full Town Board,” Mr. Thiele said.

The legal ramifications of the $3.4 million loan, if there are any, are unknown at this time, according to Dennis Tompkins, director of communications for New York State Comptroller Thomas DiNapoli’s office. But considering that Mr. DiNapoli recently signed off on a state audit of the town’s books, Mr. Tompkins said anything is possible and any finding discovered by state auditors that rises to a criminal level would be turned over to Suffolk County District Attorney Thomas Spota for action.

“We would defer anything that warranted it to the district attorney, just as we did in East Hampton,” Mr. Tompkins said, referring to an investigation of the town’s finances that led to the recent indictment of the town’s financial officer.

Speaking to the potential legal consequences, Ms. Kabot said, “It’s 
going to get darker and dirtier before
it gets lighter.”

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Here we go again !!!!!!!!!!
By Local dad (51), North Sea on Jul 18, 09 8:28 AM
politics = undertaking a study to find out that mismanagement was the cause of the deficit.
By hamptons surfer (79), southampton on Jul 18, 09 8:54 AM
Ms. Kabot & Ms. Graboski are stretching it a long way to credit Dennis Suskind with the forensic audit initiative when Anna Throne-Holst's resolution to hire FTI was passed in July 2008, several years after Mr. Suskind left office. They ignore the record, which is that Ms. Throne-Holst was calling for this from January 2008 when she first joined the Board. Ms. Graboski, who is normally more restrained, is way out of line with her "grandstanding" charge. It's hardly granstanding to say, "This ...more
By Turkey Bridge (1979), Quiogue on Jul 18, 09 10:07 AM
Over and over we hear nothing but complaints from those who were in a position - Kabot and Graboski - to know something smelled rotten for a very long time. Now in order to avoid responsibility it seems natural to them to attack anyone who called their bluff and found the hidden truth. So to say that Ms. Throne-Holst is grandstanding is only a shadowy way to avoid having the blame put where it belongs. Yes, someone(s) was asleep at the switch and still don't want to admit they were culpable for ...more
By foodie (74), Remsenburg on Jul 18, 09 1:25 PM
2 members liked this comment
Forget about the jockeying for position of the Ladies of the Board as to who was the first to ask for oversight of the fiscal mess at Town Hall, and remember that many citizens and civic groups have been calling for a very long time for accountability, and transparency about monies paid out, sweetheart deals, accelerating salaries, useless positions -- and pleading for information about how money was squandered and misused at Town Hall. Only to be stonewalled by the Cheshire cat antics of Richard ...more
By Phanex (83), Southampton on Jul 18, 09 1:43 PM
1 member liked this comment
ATH did call for the forensic audit and it's mentioned in every newspaper article making sure because its election time(as she states above) that she gets the credit. (OK we get it) It was a 5-0 vote so all of the town board agreed it was necessary. In no way was Graboski out of line she's allowed to say what she feels it seemed like grandstanding ATH did not seem upset at what Graboski said even ATH agreed it's about getting the record straight.

BTW during most of those years of this ...more
Sep 24, 09 2:00 PM appended by MrRight
ATH did call for the forensic audit and it's mentioned in every newspaper article making sure because its election time(as she states above) that she gets the credit. (OK we get it) It was a 5-0 vote so all of the town board agreed it was necessary. In no way was Graboski out of line she's allowed to say what she feels it seemed like grandstanding ATH did not seem upset at what Graboski said even ATH agreed it's about getting the record straight.
By MrRight (22), bridgehampton on Jul 18, 09 2:00 PM
MrRight is wrong about several things.

First, the mere fact that the Town Board voted unanimously to support Anna Throne-Holst's resolution on a forensic audit does not put the four other Board members on the same footing as her. Ms. Throne-Holst started calling for a forensic audit in January 2008 and they didn't, and it took them until July 2008 to be convinced of its necessity.

Second, Nancy Graboski's grandstanding comment was out of line for the reason I stated above, and ...more
By Turkey Bridge (1979), Quiogue on Jul 18, 09 5:32 PM
Turkey Bridge has the chronology and the facts right on this.
By number19 (111), Westhampton on Jul 18, 09 6:25 PM
Well get ready HERE WE GO AGAIN.
What about the full page add by Full of Krap Kabot
She could not run a bathroom
She would screw up the round and square paper
WHAT A JOKE
By sjd (420), Westhampton Beach on Jul 18, 09 7:12 PM
Turkey
No one is trying to take the credit away from ATH but the blame game you are playing here is incorrect and just not true.
Kabot was on the board during the time you stated that the democrats were kept in the dark. I’m saying she was kept in the dark as well, as you stated no one knew.

As you stated the Supervisor is the Chief Financial Officer of the town and it was the then supervisor’s responsibility. The blame should fall on them.

Let me tell you something Turkey ...more
Sep 24, 09 8:19 PM appended by MrRight
No one is trying to take the credit away from ATH but the blame game you are playing here is incorrect and just not true. Kabot was on the board during the time you stated that the democrats were kept in the dark. I’m saying she was kept in the dark as well, as you stated no one knew.
By MrRight (22), bridgehampton on Jul 18, 09 8:19 PM
Mr. R... says, "As you stated the Supervisor is the Chief Financial Officer of the town and it was the then supervisor’s responsibility. The blame should fall on them."
So according to what you are say Anna Throne-Holst was smart enough to call for and demand a forensic audit as a council woman but Kabot, and Nuzzi for that matter, did not recognize the sad state of affairs while they were council people.

Thank goodness for ATH!!

I hope that the voters have noted this and ...more
By SHNative (554), Southampton on Jul 18, 09 9:44 PM
Mr. R... says, "As you stated the Supervisor is the Chief Financial Officer of the town and it was the then supervisor’s responsibility. The blame should fall on them."
So according to what you are say Anna Throne-Holst was smart enough to call for and demand a forensic audit as a council woman but Kabot, and Nuzzi for that matter, did not recognize the sad state of affairs while they were council people.

Thank goodness for ATH!!

I hope that the voters have noted this and ...more
By SHNative (554), Southampton on Jul 18, 09 9:44 PM
I am stunned that Skip Heaney is not getting well-deserved blame over this. He was the supervisor during most of this period and the supervisor is the one chiefly responsible for fiscal state of affairs.
It would appear that if Malone wins the primary and the general election that Skip will be back in the driver's seat in our town.
If this gets too hot, Malone will probably try to distance himself from Heaney. But let's face facts, he is Heaney's candidate. Linda certainly isn't.
Can't ...more
By baywoman (165), southampton on Jul 18, 09 10:39 PM
SHNative
No one is denying the fact that it was ATH’s idea, passed by all the Town Board members.

Also, let’s not forget it was Kabot who got rid of Heaney, the sole person responsible for causing this problem in the first place. Kabot ran a successful primary in 2007 taking on her own party which was not popular with the Republican powers. I’m sure this was the reason she did not get the nomination this time around. For Kabot it’s not about politics it’s only about the people of Southampton.

I ...more
Sep 24, 09 8:39 AM appended by MrRight
No one is denying the fact that it was ATH’s idea, passed by all the Town Board members. Also, let’s not forget it was Kabot who got rid of Heaney, the sole person responsible for causing this problem in the first place.
By MrRight (22), bridgehampton on Jul 19, 09 8:39 AM
1 member liked this comment
The only reason Linda didn't get the nomination this year was because she's done a terrible job for the past two years.
By EastEnd68 (888), Westhampton on Jul 19, 09 1:19 PM
When can we expect a visit from the DAs office to Town Hall,,,or is fiscal mess just an hines error,,,,
By Etians rd (543), Southampton on Jul 20, 09 6:59 AM
1 member liked this comment
How is Malone "Heaney's candidate???" Where did that come from, Baywoman? Can you support that?

By Frank Wheeler (1826), Northampton on Jul 20, 09 2:12 PM
Sea-TV Town Board meetings have been the greatest comedy on television this past year. Linda's lack of couth not only towards other board members but also to the public is disgraceful. Nancy has become a puppet for Linda, and the quarreling between the ladies has made me embarrassed to live in this town.
Southampton needs to get back to smaller government, lower taxes and a pay as you go philosophy. I've had enough of the town buying up and converting nightclubs into town properties ...more
By oceanview (15), hampton bays on Jul 20, 09 8:03 PM
1 member liked this comment
oceanview
Embarrassed to live in this town.
Move!
By MrRight (22), bridgehampton on Jul 20, 09 9:01 PM
Why should I move when we have to power to change what is wrong with this town?
By oceanview (15), hampton bays on Jul 20, 09 11:07 PM
1 member liked this comment
Mr Heaney and Ms. Kagel were "balancing" the books and putting out press releases on the wonderful condition of the town's finances to keep our taxes down. With all the capital projects, the growth of town government (to need space in Hampton Bays at Jackson Ave.) and over the spending on town projects should have raised a red flag. Not one of those on the board, Suskind, Kenny, Kabot, Graboski, nor Nuzzi dared to ask Heaney questions. Didn't they understand the budget?

It has taken Linda ...more
By Bob Whyte (48), Hampton Bays on Jul 21, 09 7:24 AM
1 member liked this comment
Kabot did better than ask questions she got rid of Heaney and Kagel the one's responsible for the problem in the first place.

Vote for Linda Kabot she has what it takes to lead our Town. Change that Southampton needs.
By MrRight (22), bridgehampton on Jul 21, 09 7:50 AM
I've been a lifelong Republican. They are quickly losing my confidence, but I don't agree at all with the Democrats principle policy of giving away the store to liberal cause, especially those very capable individuals who don't work for a living and expect the world on a platter. What the Heck am I going to do at election time now...??
Who can an honest, independent thinking American Vote for in any election. Where'd ya go Joe DiMaggio?
We need a choice for government office who ...more
By JackC574 (21), Southampton on Jul 23, 09 6:49 AM
It seems pretty obvious that whoever is in charge of overseeing the police budget should have known that the numbers didn't add up. Even without being directly responsible for the accounting shenanigans, someone knew what was going on and chose to turn a blind eye to the egregious practices that covered up complete irresponsibility on the part of everyone involved; the police management, the comptroller, the board members and the supervisor. It's the same old, same old. The damage is done, so ...more
By WingMan (8), Southampton on Jul 23, 09 11:57 AM
The "illegal" tranfser happened in May 2008???
That under Kabot's watch and when Bratigam was the comptroller.
Guess we now know why he was transferred and given a $100,000 job.
What did Kabot say about open and transparant government???
Can't wait till November 4th
By Hamptonman911 (14), Southampton on Jul 24, 09 7:31 AM
Well, well, well......this big illegal transfer happend on Kabots watch? I missed that in the article! Tom Cambell came back to save the day and did the book and reverse entry long after Kabot took over ...so there will be more...maybe Kabot who is full of Krap should start stepping up (or step down) and take some responsibility. How about that 4mil she spent on the pool project and she can't build the pool, 500,000 in additional salary in the comptrollers office to balance the books, 150,000 ...more
By Hamptonman911 (14), Southampton on Jul 25, 09 9:13 AM
What about an audit of Waste Management and Highways?
Those departments have huge deficits also. Where did the money go?
By Bob Whyte (48), Hampton Bays on Aug 1, 09 8:02 AM