Ex-East Hampton budget officer admits lying about budget

Bringing a two-year-long investigation into East Hampton's budget mess to an apparent close, former budget chief Ted Hults on Monday admitted in a Riverhead court that he tried to close the town's budget deficit by looting a fund to preserve open space and lying to potential bond buyers about the town's financial condition.

Hults, 53, of Sag Harbor, was the only East Hampton official to be indicted in connection with the town's budget problems, which led to the resignation last October of Town Supervisor William McGintee.

At his arraignment Monday on the grand jury indictment, Hults pleaded guilty to securities fraud and official misconduct. He was given a conditional discharge and will not serve jail or prison time.

County Court Judge William Condon described the fraud as "nothing short of stunning," but said he did not believe Hults was likely to commit another crime. Hults no longer works for the town.

"I don't think you're a bad person," Condon said to Hults. "Mistakes were made here."

Hults was indicted Thursday after an investigation lasting several months by a special grand jury examining alleged fiscal wrongdoing in the East End town of 20,000 people.

A report on the grand jury's investigation into the town's ballooning budget deficit, now estimated at between $30 million and $40 million, is to be released Tuesday, said McPartland, chief of the district attorney's government fraud bureau. Condon announced the report contains "credible, admissible evidence" to support the grand jury's conclusions, the district attorney's office said. That office began its investigation in 2008.

Following Hults' guilty plea Monday, Assistant District Attorney Christopher McPartland disclosed that McGintee, who had been investigated in the grand jury probe, resigned as part of an agreement with prosecutors. In return, the district attorney's office agreed not to press charges against McGintee, McPartland said.

McGintee did not return a phone call for comment Monday. His attorney, Marc Mukasey of Manhattan, said McGintee "has not been charged with any wrongdoing . . . He agreed to resign in the best interest of the Town of East Hampton, which he loves, and this matter is behind him."

Hults admitted transferring $8 million from the community preservation fund, which is restricted to purchases of open space and farmland, to town accounts that pay for other municipal services, even after a town attorney told him doing so would be illegal. Hults also admitted misrepresenting the town's books to Wall Street investors considering the purchase of town-backed securities.

Hults declined to answer reporters' questions outside court.

McPartland in court blamed Hults' fraud and looting of the community preservation fund on "his own incompetence" but said Hults gained nothing personally.

With Joye Brown

and Mitchell Freedman