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July 22, 2010

DiNapoli: $378,000 in Town of Fairfield Funds Misappropriated
on Unauthorized Checks Payable to the
Former Supervisor and His Wife

The wife of the former supervisor of the Town of Fairfield admitted to misappropriating $378,000 in town funds by using her husband’s signature stamp on 347 checks that she made payable to herself and her husband, according to an audit released by State Comptroller Thomas P. DiNapoli.  Following fieldwork by DiNapoli’s auditors, the former supervisor’s wife was indicted on 350 counts related to the lost money.  The supervisor, who has since resigned, had hired his wife as deputy supervisor.  Auditors tracked the town’s bank activity from 2004 to 2009.

“No public official should ever play fast and loose with taxpayer dollars – let alone steal from the public,” said DiNapoli.  “What makes Fairfield’s case especially shocking is that the lost funds equal nearly a third of the town’s entire budget.  Taxpayers can’t afford to pay for fraud.”

DiNapoli said the incident might have been avoided had the town kept a closer eye on town financial activities.  Auditors found that the town board:

  • Did not adequately oversee town finances, making sure cash was safeguarded and all transactions were documented and recorded;
  • Did not recognize the obvious risks associated with giving the former supervisor total responsibility for incompatible duties and failed to implement procedures that might have mitigated that risk;
  • Increased the risk of theft by approving the purchase of a signature stamp for the former supervisor.  His wife used the stamp to sign 316 of the 347 unauthorized checks;
  • Kept inaccurate and incomplete accounting records; and
  • Did not audit town financial records in accordance with state town law.
DiNapoli recommended that the town:
  • Segregate incompatible financial duties among two or more people, or more closely supervise those charged with handling town monies;
  • Move to recover the lost town monies;
  • Ensure that all town bank accounts are reconciled monthly, preferably by someone who does not handle cash or maintain the accounting records, or by the town board;
  • Annually audit records and reports of all town officers and employees who received or disbursed money during the preceding fiscal year, in accordance with town law; and
  • When receiving donations, ensure that these moneys are treated as other municipal moneys; do not set up a fundraising committee.

Town officials generally agreed with DiNapoli’s recommendations, and indicated they would take corrective action.

Click here for a copy of the audit.

In March 2010, DiNapoli proposed legislation to strengthen municipal ethics laws after a DiNapoli audit identified widespread disparities in how local governments oversee financial disclosure rules and enforce ethics requirements.  He also released a model code of ethics for local governments.


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