Bellone on Levy memo: 'A rookie mistake'

Suffolk County Executive Steve Bellone at the William

Suffolk County Executive Steve Bellone at the William H. Rogers Legislature building in Smithtown. (March 6, 2012) (Credit: Newsday/Karen Wiles Stabile)

An internal legal memo accusing former Suffolk County Executive Steve Levy of deliberately misleading Wall Street on county finances should never have gone to lawmakers, Suffolk County Executive Steve Bellone said Wednesday.

"It was a rookie mistake," he said in an interview. "Ideally, if you are going to produce an internal document, the idea is to keep it internal."

Bellone also disputed the characterization of the document as a legal memo -- words he had used Tuesday -- insisting that the administration considered it only to be informational.

"I don't want to give anybody the impression that it was some significant, detailed report that carried a lot of weight in the administration," he said. "That is not the case at all."

And what of the document's damning and disturbing conclusions? One sentence in the report clearly implies that crimes may have been committed:

"Currently, significant evidence has arisen suggesting Suffolk County officials during 2011 -- and perhaps earlier -- undertook an intentional effort to provide deceptive and fraudulent information to the bond markets in an attempt to finance its operations amid expansive budget deficits, perilous cash flow and political and fiscal failures by members of the Suffolk County executive's office."

"Yes," Bellone acknowledged, "there are conclusions that may have been drawn that may be overstated."

One might think that if the administration found fire, it would be begging for a formal investigation.

Bellone said he did not see a reason to aggressively seek an investigation. "The information is out there," he said. "If anybody wants to investigate, all of the information is public."

He declined to say whether the Suffolk district attorney's office had interviewed administration officials in the matter; whether Suffolk had been contacted by the Securities and Exchange Commission, which surely would take a dim view of such shenanigans if proven to be true; or whether the administration had supporting evidence of suspected malfeasance that was not included in the -- memo, report or whatever else the 29-page, unsigned document could be called.

The memo, produced by a team including Bellone's chief deputy, says Levy overstated revenue and understated expenses.

Well, what municipality doesn't? The game is to get the budget passed, pray that projections meet their mark and make necessary corrections when they don't.

So why compile a memo in the first place? Bellone repeated that the document was supposed to address concerns by the administration and some lawmakers about whether the county could face possible sanctions for going to the bond market in December and reporting that Suffolk's 2012 budget was hunky-dory -- and then reporting two months later that the county's cumulative 2011-13 budget was circling the drain.

OK, there were reasons to be concerned -- although the report didn't stop Moody's from lowering the county's bond rating at the awful news of a prospective $500-million-plus budget gap.

But clearly there were other things at work. The document, for instance, could be viewed as a pre-emptive attempt to inoculate Bellone's administration from blame for the downgrades.

But the bond rating agencies also pointed out that the county has no plan for the budget crisis. Bellone said he is working on a plan. He said he's frustrated because the brouhaha over the report is distracting him from fixing the budget.

The distractions are likely to continue. Levy, denouncing the memo, has called a news conference for Thursday to demand an investigation of Bellone's budgeting practices as Babylon Town supervisor.

Yikes.