June 11, 2009
DiNapoli: East Hampton Improperly Used Millions
Former Budget Director Arrested; Audit Contains Good News for Other Towns
The Town of East Hampton improperly advanced at least $8 million from its Community Preservation Fund (CPF) to finance government operations, according to an audit released today by State Comptroller Thomas P. DiNapoli at a Hauppauge press conference. East Hampton also transferred at least $1.5 million from the CPF to the town’s general fund as reimbursement for expenses allegedly incurred on behalf of the CPF. However, the town had no evidence that these expenses were CPF- related. Suffolk County District Attorney Thomas Spota is bringing charges against the town’s former budget director as a result of the audit.
“The CPF’s goal is to preserve open spaces and farmland in the five towns, a goal which includes purchasing open space and environmentally sensitive lands,” said DiNapoli. “The fund was never meant to be used to cover operating expenses that have little or nothing to do with this mission. District Attorney Spota used our audit to identify this improper use of public money, and his criminal investigation is a wake up call to local officials: Don’t break the rules.
“The CPF is for environmental protection, not to cover up a hole in a town’s budget. When it’s used right, the fund is a great tool for protecting the environment of Suffolk County’s East End.”
The audit covered the period of April 1999 to March 2008 for the towns of East Hampton, Riverhead, Shelter Island, Southampton and Southold. DiNapoli’s office conducted the audit at the request of State Senator Kenneth LaValle, and Assemblymen Marc Alessi and Fred Thiele.
“Despite the town attorney’s explicit warning that it would be illegal to use open space and farmland preservation money to pay town bills, the defendant schemed to conceal, for political reasons, a fiscal crisis in the town of East Hampton,” District Attorney Spota said. “Mr. Hults is charged with defrauding the government, falsifying business records, official misconduct and other charges and the investigation is ongoing.”
The audit also found the town of Southampton erroneously used CPF moneys to fund payments in lieu of taxes (PILOT) agreements. The town paid PILOTs totaling $107,650 to a fire district that did not meet the eligibility requirements in 2003 and 2004. The town of Shelter Island also needed to tighten controls over CPF transactions. However, financial controls in the towns of Riverhead and Southold are adequately designed and operating effectively, said DiNapoli.
Auditors also found the following:
DiNapoli recommended that East Hampton town officials:
DiNapoli recommended that Southampton town officials:
And DiNapoli recommended that Shelter Island town officials:
Town officials generally agreed with DiNapoli’s findings and indicated they would take corrective action.
Click here to view the audit.
To view the letters to each town, visit: