March 2, 2005
Hevesi Audit Finds School Employees Used At Least $11.2 Million of Roslyn School Funds for Personal Benefit
Audit of Roslyn Schools Details Breakdown of Oversight and How Dozens Benefited with Cash, Cars, Travel, Personal Goods at Taxpayers’ Expense
After reviewing 57,000 checks dating back eight years and tens of thousands of computer records, State Comptroller’s Office auditors have identified $11.2 million that was used by school employees, their friends and families for personal benefit, according to an audit released today by New York State Comptroller Alan G. Hevesi. Some senior employees had the School District pay their personal credit card bills, which included more than $1 million in cash advances withdrawn from automatic teller machines, and pay for mortgages on luxury homes, personal automobiles and much more.
The audit identifies 26 individuals, in addition to the three already charged, who personally benefited from the misuse of School District funds. It details the monumental failures of the Roslyn School Board that was charged with monitoring school financial operations and of School District employees who were charged with handling District funds and reviewing and approving expenditures.
The audit findings and documentation have been referred to the office of Nassau County District Attorney Denis Dillon for a determination as to whether further criminal prosecutions may be appropriate.
“At least $11 million of public funds were spent to benefit individuals because those responsible for watching were not doing their jobs. Certain senior officials with the keys to the cash register went on a spending spree of massive proportions. That means Roslyn taxpayers paid more than they should have and Roslyn students and teachers were shortchanged. The trust that is essential for school districts to do their job has been shattered,” Hevesi said. “The education provided by the Roslyn School District was and remains impressive. The new leadership of the School District has pledged to implement our audit’s recommendations and to provide us with reports every three months on their progress. Those changes are critical to restoring public confidence in the Roslyn School District. Auditors will return in a year to conduct a follow-up audit to assure that the Board and superintendent have implemented management reforms recommended by this audit.”
Nassau County District Attorney Denis Dillon said, “I would like to thank State Comptroller Alan Hevesi for his office's hard work in conducting the audit of the Roslyn School District. The audit will be incorporated into our ongoing investigation, in which I fully intend to prosecute all involved in this scandal to the full extent of the law. Protecting the taxpayers of Nassau County has always been a top priority of mine. Crimes of this nature have many victims, which include the students and teachers of the Roslyn Union Free School District and the residents and taxpayers of the Roslyn community. If proven, the unscrupulous behavior of these defendants will be most swiftly and certainly punished.”
Nassau County Comptroller Howard Weitzman said, “The most important lesson of the Roslyn embezzlement scandal is that corruption festers when there is no light. One of the best ways to shine a light into school business practices is for school boards to establish audit committees made up of citizen volunteers, as we have done in Nassau County. These committees provide an additional layer of oversight that complements the work of the District’s outside auditors. In addition, we strongly recommend that Long Island school districts regularly conduct a competitive selection process for auditors. Comptroller Hevesi and I are working together to help local school officials combat theft by improving their districts’ financial controls and oversight.”
Senator Michael Balboni (R-East Williston) said, “It’s time to turn our anger into action. Comptroller Hevesi has pointed out the problem, District Attorney Dillon will prosecute those responsible for it, and Assemblyman DiNapoli and I will work to pass laws that will prevent it from ever happening again.”
Assemblyman Thomas DiNapoli (D-Great Neck) said, “Comptroller Hevesi’s audit has revealed the alarming depth of the financial abuses in Roslyn. This points out the essential need to enact the oversight legislation we developed with the Comptroller’s office to protect school district taxpayers and to prevent such abuses from occurring again.”
Assemblyman Charles Lavine (D-Glen Cove/Roslyn/Plainview) said, “Comptroller Hevesi has now exposed the full extent of the problem. Those who misused the public trust will be punished. The Comptroller has given us management reforms, the superintendent and Board have said they will adopt them, and we are changing laws in Albany to make sure this never happens again. We need to take the lessons from this tragedy and move forward. The Roslyn School District is and will continue to be the best because of its teachers, parents, children and the honest, hardworking community.”
Former School Superintendent Frank Tassone, former Assistant Superintendent for Business Pamela Gluckin, and former District Account Clerk Deborah Rigano (Gluckin’s niece), have already been charged by the Nassau DA with multiple felonies for their role in this scheme. Auditors found that, in total, Gluckin personally benefited by at least $4,634,012. Tassone’s personal gain was at least $2,407,965. Rigano’s personal gain was at least $334,452. A total of $1,580,274 was not traceable to a specific individual. Twenty-six other individuals, including other school officials and other relatives and friends of Tassone, Gluckin and Rigano, had a personal gain totaling $2,288,462.
The largest component of the losses involved payments totaling $5.9 million the District made for personal credit cards for Tassone, Gluckin, and Rigano and at least ten of their family members and friends. Gluckin and Tassone would not only charge purchases to their credit cards, but also withdraw cash advances using ATMs. Gluckin and Tassone withdrew at least $1 million between them, sometimes withdrawing cash on a nearly daily basis. Tassone’s highest monthly cash withdrawals totaled $34,620, and Gluckin’s highest monthly cash withdrawals totaled $35,500. Since the District paid all credit card charges including the cash advances, Tassone and Gluckin thus effectively received School District cash and were free to spend it as they wished.
Among the items purchased or paid for with the District’s resources:
Hevesi called the number of schemes to defraud the District “breathtaking.” In some instances, changes were made to District accounting records to conceal fraudulent payments to credit card companies and financial institutions. In other instances, the fraud was barely concealed.
Auditors determined that the misappropriation of District funds occurred because:
Auditors examined a voluminous amount of information to determine the total amount that was missing. They reviewed all available checks (57,000) and electronic records primarily for the period January 1, 1996 through June 14, 2004. While numerous records and documents were missing at the District, auditors did extensive testing of transactions by obtaining missing records and documents from original sources such as banks and other financial institutions and recreating a record of transactions from these documents, records available at the District and interviews of District staff. Auditors issued 17 subpoenas to 10 different financial institutions to obtain information for 54 credit card accounts, reviewed tens of thousands of vendor files, and reviewed and analyzed eight years of the District’s data and transactions. Auditors found that some school documents have disappeared so that a full tally of the missing money is impossible.
The audit makes 27 recommendations to correct weaknesses in the District’s system of internal controls, including:
Since the initiation of the Comptroller’s audit, District officials have enhanced internal controls over several important aspects of their operations. For example, an external CPA firm has been hired to perform the Internal Claims Audit function, and the District has made significant changes to the procedures related to the Treasurer and Deputy Treasurer positions, requiring them to be present when checks are being printed. They also are now maintaining a listing of check numbers through the use of a log which is initialed by the Treasurer and Deputy after each check is printed.
“Now the most important task is to see this doesn’t happen again in Roslyn or anywhere else,” Hevesi said. “With organizations that represent the school community, we have developed a five-point plan that strengthens internal controls in schools, the first line of defense. Legislation implementing that plan is being introduced in both houses. We’ve also asked for funds so that the Comptroller’s Office can resume regular audits of all school districts around the State. In the meantime, we will continue our audits of Long Island schools, and we will come back to Roslyn to make sure our recommendations are fully implemented.”
SCANDAL AT ROSLYN: