Riverhead launches forensic audit into business district, prompting leadership shake-up

The Town of Riverhead has launched a forensic audit into the group that runs its downtown Business Improvement District, prompting a shake-up in its leadership and in the planning of several popular community events.

Tensions between the town and business district have escalated in recent months. The town has yet to approve the management association’s $176,700 annual budget for 2025 over concerns about missing audits and spending. 

“This money is the taxpayers of Riverhead,” Councilwoman Joann Waski, the town’s liaison to the organization, said in a recent interview. “It’s our responsibility to see what exactly is going on there.”

The Business Improvement District is funded through a special taxing district that encompasses downtown business owners and is typically supplemented with town funds. The district is responsible for organizing downtown beautification and events such as the Alive on 25 summer street fairs and Halloween festival. It is also responsible for advocating on behalf of small business owners.

Citing budget constraints, the BID's board of directors announced in a news release that it would "downsize" and "release" the group's executive director, Kristy Verity. In a statement, board members said the decision "was not made lightly and reflects our commitment to preserving the financial health and long-term viability of the organization" and that Verity "has always and continues to reflect integrity, credibility, compassion and professionalism."

Verity declined to comment about her departure.

In an interview, the Business Improvement District Management Association's president Sean Kenna said Verity was an asset to the downtown business owners.

“She was very diligent. She did a great job with all the events. It’s unfortunate that this all transpired because she's been nothing but a supporter of Riverhead,” he said.

The town board voted unanimously on April 15 to approve the forensic audit and hired PKF O’Connor Davies, a Hauppauge accounting firm, to conduct it. The audit will cover 2023 and 2024, according to the resolution.

Town officials said in a news release that they ordered the forensic audit “after reviewing certain financial records” provided by the organization. 

Officials did not elaborate about why the probe was ordered or say how long the forensic audit would take to complete.

The group's bylaws require it to file annual independent audits with the town, but none were submitted in 2023 or 2024, Waski said.

Waski said the group shared with her tax returns and bank statements that raised concerns, including some dining expenses and online purchases.

Newsday filed a request for those records under the state's Freedom of Information Law.

Waski said she was also concerned that the executive director's salary rose from $50,000 to $90,000 last year. In 2024, the group also reduced the number of Alive on 25 events from four to two. 

The town hired a separate entity to plan and market two Alive on 25 events in July and August and the Halloween Festival in October, which features trick-or-treating, coffin races and a costume parade.

The Main Street Agency, headed by Diane Tucci, will be paid $15,000 for the events, according to the agreement. Tucci had organized the events in their early years and currently holds a part-time job with the town as town board coordinator.

Kenna said the BIDMA board is working on a new budget proposal and hopes to repair its relationship with the town. “I want us and the town to get along … come together, and just keep moving forward,” he said.