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October 15, 2010

 

DiNapoli: Aurora-Colden Fire District Treasurer
Apparently Misappropriated $331,000 in Taxpayer Funds

Lax Board Oversight Allowed Treasurer’s Actions to Go Undetected


The former treasurer of the Aurora-Colden Fire District apparently misappropriated $331,813 in district funds from 2002 to 2010.  The misappropriation went undetected because of the fire district board’s failure to properly oversee the treasurer’s duties, according to an audit released today by New York State Comptroller Thomas P. DiNapoli.

“Someone has to mind the store,” DiNapoli said. “Local officials can’t just hand someone the checkbook and walk away.  There have to be checks and balances.  Local officials have to watch every taxpayer dime, and $331,813 is a lot of taxpayer dimes. Time and time again my office finds gross misuse of public money.  My auditors found the misuse of taxpayer money had gone on for years at Aurora-Colden Fire District and no one noticed.  Taxpayers can’t afford to pay for fraud and abuse.”

DiNapoli’s audit determined $331,813 in misappropriated funds apparently benefitted the treasurer’s fire truck repair business. The audit found 63 checks, totaling $313,758, were written to the business and went undetected.  The audit found that:
  • 44 checks totaling $242,758 were listed as voided on the warrant reviewed by the board or were not listed at all;
  • 14 checks totaling $56,000 had supporting documentation that indicated the money went elsewhere such as transferred to another district bank account or another company;
  • the district paid the treasurer’s business $15,000 more than the amounts due for goods and services provided by the business;
  • an $8,000 district credit card convenience check was written to the treasurer’s business; and
  • $10,055 was charged on the district’s credit card for supplies delivered to the treasurer’s business.

Auditors could not determine the payees for an additional $42,000 in credit card convenience checks, issued from 2006 to 2008, because the bank did not have records prior to 2009. However, auditors did not find that any of these checks were deposited into the district’s bank accounts.

The audit also found the district paid $78,400 in 13 checks to the credit card company without board approval. On the warrant the treasurer presented to the board, eight of these checks were listed as voided or not included on the warrant. For the remaining five checks, incorrect payees were listed on the warrant.

Two days after auditors contacted the treasurer, he transferred $106,388 from this personal bank account into the district’s checking account. When auditors asked him about the transfer, he said he held district money in his personal investments as an investment strategy for the district to obtain a better interest rate. The treasurer’s monthly reports to the board indicated the district held $104,000 in certificates of deposit but auditors found no evidence of such CDs. The board was unaware the treasurer was holding the district’s money in his personal accounts.

DiNapoli’s audit found the district’s board failed to provide oversight of the treasurer’s activities, which allowed the treasurer’s actions to go undetected for years. The board removed the treasurer from his position in June 2010.

DiNapoli’s audit recommends the board and district officials:

  • take immediate steps to improve oversight of the treasurer’s activities to fulfill their financial oversight responsibilities;
  • consult legal counsel and take action to recover misappropriated moneys;
  • properly segregate the treasurer’s duties so the treasurer does not control all phases of a transaction; and
  • review all credit card activity on a monthly basis and prohibit the use of credit card convenience checks.
The district agreed with the audits findings and indicated it has begun to initiate corrective action.

The Erie County District Attorney’s office was contacted by district officials after DiNapoli’s audit began. The DA’s office is investigating these matters and DiNapoli referred the audit’s findings to the DA’s office as well.

DiNapoli encourages 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 investigations@osc.state.ny.us, or mailing a complaint to: Office of the State Comptroller Investigations Unit, 110 State Street, 14th floor, Albany, NY 12236.

Click here to view the audit report.

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