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July 20, 2007

 

State Audits Lead to Recovery of $144,000 at
Monroe County Water Authority

Audit Released Today Finds Payment That May Have
Violated State Law; Findings Referred to District Attorney

The Monroe County Water Authority paid $30,000 for consultation services with no evidence that these services were actually provided and may have entered into a contract that violated state law, according to an audit released today by State Comptroller Thomas P. DiNapoli. The findings of the audit were referred to the Monroe County District Attorney’s Office.

“Something improper happened with this contract. It appears that services were never provided and it may have violated state law. It is apparent that someone is not telling the truth,” DiNapoli said. “Even though the Monroe County Water Authority has recouped this money, the facts surrounding this contract need to be examined by law enforcement officials. On a positive note, the authority has taken steps to improve its operations.”

The audit, covering the period of January 2002 through January 2005, examined whether former Executive Director John Stanwix had a conflict of interest in an authority contract. The audit was initially expected to be finalized in fall 2006. However, during the audit, auditors discovered they needed additional time to evaluate the contract and talk with all parties associated with the contract parties who provided widely different accounts of what happened.

Potential Conflict of Interest
State law generally prohibits public authority officials, employees and agents from having an interest in contracts with the authority. On January 15, 2003, Clark Patterson Associates (CPA) entered into a contract with the authority. At this time, Stanwix was on the authority’s payroll. CPA later billed the authority on four separate occasions, totaling $30,000, for services provided by a subcontractor, Gokey Associates. Gokey Associates is owned by Stanwix.

Gokey entered into a contract with CPA on January 23, 2003. While Stanwix contends he was retired and served as only consultant to the authority at this time, auditors verified with the authority that he was still on the authority payroll.

Because of contradictory information provided by Stanwix and CPA, auditors were unable to determine whether the former executive director had a conflict of interest in the authority’s contract with CPA, or if CPA had billed for services it never provided. Both Stanwix and CPA have repaid the authority for the questionable payments, including $23,230 in salary payments made to Stanwix.

Stanwix provided auditors with a copy of his contract with CPA, which listed his services to CPA as business development and consulting for large New York State water systems, other than the Monroe County Water Authority. However, an attorney for CPA said it did bill the Water Authority for services provided by Stanwix that were “a benefit to the Monroe County Water Authority.” The bills from CPA did not contain any information on the work performed by consultants. CPA was not able to tell auditors what specific work, if any, was done by Gokey Associates for the Water Authority.

Contract Negotiations
Stanwix told auditors that he had no part in negotiating the contract between CPA and the authority and that he did not attend the January 15, 2003 meeting when the contract was approved. However, minutes of the meeting list Stanwix as present and three current employees confirmed that he was at this meeting.

In addition, Stanwix claimed that the authority’s engineering department negotiated the contract and he had nothing to do with it. Yet employees in the department said they had no involvement in negotiating this contract. Furthermore, authority records indicate that Stanwix was invited to a January 13, 2003 meeting to discuss the contract and on the same date a letter was sent from CPA’s president to Stanwix that refers to prior discussions regarding the contract.

The authority agreed with the audit findings and indicated that it expects to recover $144,316 for issues related to this contract and the comptroller’s previous audit.

In a prior audit released in August 2006, state auditors found that the authority paid six employees nearly $500,000 in unearned pay and benefits. The primary beneficiary of this extra pay and benefits was Stanwix, who received more than $290,000 for lifetime health insurance and medical reimbursement benefits for himself and his spouse, extra vacation days and other benefits. It was during the course of the August 2006 audit that auditors identified a possible conflict of interest between Stanwix and one of the authority’s contracts and a second audit was initiated.

The Monroe County Water Authority, headquartered in Rochester, is the third-largest water supplier in New York State, providing more than 60 million gallons of water to more than half a million customers daily. In 2004, the authority reported operating revenues of $47.2 million and operating expenses of $38.3 million.

Click here for a copy of the audit

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