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September 09, 2010



DiNapoli: Potential Fraud in Kinderhook and Greenport Could Have Been Prevented by Proper Fiscal Oversight



New York State Comptroller Thomas P. DiNapoli today announced that proper oversight could have detected the misappropriation of funds by the bookkeeper in the Towns of Kinderhook and Greenport. DiNapoli's Investigations Unit, along with Columbia County District Attorney Beth Cozzolino and the New York State Police Bureau of Criminal Investigations, found Pegeen Mulligan-Moore, the suspended Greenport and former Kinderhook bookkeeper, misappropriated $287,000 in Kinderhook town funds to pay for personal credit card purchases. Additionally, Mulligan-Moore is charged with depositing more than $53,000 of the Town of Greenport's checks into her personal checking account.

“Among the town bookkeeper’s chief responsibilities is to keep track of and safeguard taxpayer dollars,” DiNapoli said. “This is a cautionary tale for all local governments in the need for proper fiscal oversight. What happened in Greenport and Kinderhook is unacceptable. Unfortunately, there are too many instances where public funds are stolen or misused. Last month, my office released a report that found 51 cases of fraud and abuse across the state over the past three years. And my Investigations Unit keeps finding more. Taxpayers can’t afford to pay for fraud and abuse.”

DiNapoli’s office found a lack of oversight in the towns allowed Mulligan-Moore’s actions to go undetected for so long. If proper controls had been in place, Mulligan-Moore’s wrongdoing could have been detected sooner.

DiNapoli noted proper checks and balances need to be in place to prevent taxpayer dollars from misuse. It is important for local governments to properly segregate financial duties among employees so no single employee controls all phases of a transaction. Specific controls local governments should have in place include:

  • someone independent of day-to-day transactions performing bank reconciliations;
  • placing limits on the dollar amounts for wire transfers from bank accounts;
  • requiring an independent confirmation for each transfer by the bank;
  • appropriate auditing of all claims (payments) by the governing board;
  • monthly budget monitoring by the board;
  • periodic reviews of the need for credit cards; and
  • an annual audit of financial operations by the board.

The investigation began after Patrick Grattan, newly elected Town Supervisor of Kinderhook, contacted DiNapoli’s office requesting an audit because he could not find documentation to explain $127,459 in electronic payments from the Town General Fund to American Express.

Columbia County District Attorney Beth Cozzolino stated, “The defendant is charged with stealing from the very people who paid her to protect their money. She abused her position of trust and power.  I will fight to restore justice to the taxpayers who are victims of her crimes.”

During the investigation, DiNapoli’s investigators found the Town of Kinderhook did not have a town American Express account and the accounts Mulligan-Moore claimed were town accounts actually belonged to her and her husband.

Mulligan-Moore paid American Express more than $287,000 over the last four years.  She used the card to make everyday credit card purchases including restaurant meals, clothing, electronics, auto parts and gasoline.

Mulligan-Moore was able to accomplish this by linking the Town General Fund account to her personal American Express account in the American Express electronic payment system.

The grand jury indicted Mulligan-Moore on 20 counts. She was released on bail. Some of the counts include:

  • Grand Larceny 2nd Degree: Alleging the defendant stole more than $50,000 from the Town of Kinderhook between Dec. 7, 2006 and Dec. 31, 2009.
  • Computer Trespass: Alleging she accessed a computer network at the Town of Kinderhook’s bank, the National Union Bank of Kinderhook, without authority to steal money which aided her commission of the felony of grand larceny.
  • Falsifying Business Records 1st Degree: Alleging the defendant created a false entry in the town’s 2008 annual financial report.
  • Criminal Possession Stolen Property 5th Degree: Alleging the defendant possessed blank Town of Greenport checks at her home located in the Town of Kinderhook.
  • Attempted Forgery 2nd Degree: Alleging the defendant attempted to forge the Greenport checks at her home in Kinderhook, which were found on a computer printer.
  • Grand Larceny 2nd Degree: Alleging the defendant stole more than $50,000 from the Town of Greenport between December 7, 2006 and December 31, 2009.

Last month, DiNapoli’s office released a report that found more than 51 fraud and abuse cases, totaling approximately $10 million, in local governments and school district across New York since 2007. DiNapoli’s report also included red flags government officials should be aware of to prevent misappropriation of funds. The red flags include lifestyle or behavioral changes and significant personal debt and credit problems; reluctance by employees to provide information to auditors and a weak internal control environment; incomplete bank reconciliations and unjustified cash entries or adjustments and uncontrolled access to blank checks.  To view the report, visit: http://www.osc.state.ny.us/press/releases/aug10/081010a.htm.

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 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.

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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