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October 08, 2010


DiNapoli: Former Otisville Treasurer Pocketed $77,000

Audit, Investigation Find No Trace of Village Financial Records

Taxpayers in Otisville were cheated out of tens of thousands of dollars by their former village treasurer, who covered up the theft with inaccurate—and in some cases non-existent—record-keeping, according to an audit and subsequent investigation announced today by State Comptroller Thomas P. DiNapoli. DiNapoli’s Investigations Unit worked with the New York State Police and Orange County District Attorney’s Office to uncover evidence that the treasurer had misappropriated nearly $77,000 from the village budget.

“Barbara McDowell was at the center of a complete breakdown in the village’s financial system,” DiNapoli said. “She left Otisville’s financial system in total disarray, and tried to hide her wrongdoing by fudging records and ignoring regulations. My office exposed her and put an end to her abuse of her position. She’ll now face a criminal prosecution for her actions and will have to account for every dime in taxpayer dollars that went missing during her tenure.”

"Comptroller DiNapoli's office provided invaluable auditing resources and investigative manpower on this case," said Orange County District Attorney Frank Phillips. "It would have been prohibitively expensive–if not impossible–for our office or the municipality to conduct this intense investigation alone. We'll work with the Comptroller's team to recover all missing taxpayer dollars."

The Office of the State Comptroller identified irregularities in Otisville’s financial records management as far back as 1999. Subsequent audits in 2002 and 2006 recommended several corrective actions, which were ignored by village board members. The recommendations included the creation of periodic financial reports and accounting records, and filing an annual financial report with the Office of the State Comptroller.

By April 2009, Otisville officials found the village’s bank accounts nearly depleted and requested an audit from DiNapoli’s office. Auditors were unable to locate cash receipt books, deposit slips, cancelled checks and other financial records for the period of their audit between 2007 and 2009.  The treasurer did not prepare bank reconciliations, enter required information into the village’s computer database, or file annual financial reports with the State Comptroller. The treasurer also neglected to pay more than $87,000 in State and federal payroll taxes between 2006 and 2008, resulting in $17,000 in penalties.

DiNapoli’s Investigations Unit contacted the DA’s Office and State Police, which had already been alerted to the problems, and the three agencies began a joint investigation resulting in the arrest and arraignment.

Otisville officials pointed out that none of the current board members were in office during the prior audits in 1999 and 2002. Two current board members were in office during the last audit in 2006, but both officials said they were never shown copies of the final report.

DiNapoli is encouraging the public to help fight against fraud and abuse.  New Yorkers can report allegations of fraud, corruption and abuse of taxpayer money by: calling the toll-free fraud hotline at 1-888-672-4555; filing a complaint online at, or mailing a complaint to: Office of the State Comptroller Investigations Unit, 110 State Street, 14th floor, Albany, NY 12236.

Click here to read the full audit, or visit



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