An outside attorney and a team of forensic auditors have found “neither merit . . . nor substantiation” to allegations in an anonymous letter sent to Wall Street rating firms that Suffolk officials were mishandling county finances.
“We did not find any evidence that would corroborate or support in any way the allegations,” said attorney Michael Cornacchia, a former prosecutor.
Suffolk initiated the review last month after an anonymous letter was sent to Standard & Poor’s, Moody’s Investors Service and Fitch Ratings alleging — without any specific details — “unethical conduct” by the county comptroller and budget offices.
The letter referred to improper transfers of funds, over-reporting of revenue and underestimates of expenses over several years. The letter alleged “sustained, institutionalized and creatively planned accounting fraud.”
Out of caution, the county’s outside auditor, Deloitte Touche, which just completed its first year-end audit of 2015 county operations, urged the outside review.
The county said it considered the allegations “serious.” But Cornacchia said in his letter, which was partially redacted, that “the lack of specificity created obvious difficulties in determining whether the allegations could be substantiated and found to contain any merit.”
Cornacchia said the team interviewed 15 county officials and reviewed county finances from 2013 to 2015. He said information provided by officials “undermined the substance and validity of the allegations.”
Cornacchia, along with an auditing team from Stone Turner Group, completed the inquiry on Oct. 14, so their findings could be made known to investors before the county’s fall bond sale earlier this week.
The county sold $105 million in short-term, one-year notes using delinquent property taxes as collateral to help with cash flow, as well as $54 million in long-term bonds for various construction projects.
Details of the report first came to light Wednesday after the county’s three-member waiver committee approved a county attorney’s request to hire Cornacchia. Another law firm that the committee had approved earlier withdrew due to concern over the county’s deadline for the work.
Cornacchia, who is in private practice, is a former assistant Suffolk district attorney and a former assistant U.S. attorney. He served as chief investigative counsel for the Volcker Commission, which probed charges of bribery and corruption in Iraq’s oil-for-food program.
County Attorney Dennis Brown said Cornacchia’s services will cost the county $59,995, while the auditors will cost $132,968.
Comptroller John M. Kennedy Jr. said he was pleased by the findings, but said three members of his staff will undergo training to become certified fraud examiners. He also said he will press to expand the current county audit committee, which has representatives of the comptroller, the county executive and the county legislature. He said he wants to add several outside members who have banking or finance experience.
Suffolk Legis. Robert Trotta (R-Fort Salonga) said the expense of the outside probe was unnecessary.
“I’m puzzled how an anonymous letter could cost the taxpayers almost $200,000,” Trotta said. “Clearly, we are doing something wrong.”
Funeral for Farmingdale band chaperone ... Heuermann in court ... Robotic companion ... Jets superfan