West Haven Mayor Nancy Rossi said the city plans to provide whatever's necessary to making the needed adjustments after a report released from the Office of Policy and Management detailed misuse of COVID-19 Relief Funds (CRF).
The majority of funds given to the city of West Haven, approximately $900,000, through the COVID-19 Relief Funds (CRF) program were misused, the report said.
The audit, done by CohnReznick, shows that approximately 80% of the $1.15 million in pandemic relief funding provided to the city was not used properly.
Rossi said she is taking the findings seriously.
"The report highlights shortcomings in internal controls and processes; some of which we have already addressed, and some which require additional focus," she said in a statement.
The CRF program was passed by Congress at the start of the pandemic in 2020 to help municipalities across the county.
According to the report, federal officials laid out rules and requirements to properly use this funding. Auditors said that approximately $892,887 spent didn't meet the criteria.
The report states that the purchasing process within city departments are inconsistent and individual city departments were performing their own purchasing functions. This is because the purchasing manager role has been vacant for a long time. City officials said purchasing can't be centralized until the position is filled.
In a statement Saturday, the mayor notes that the city has recently hired a new finance director, Scott D. Jackson, who will coordinate the city's response to issues raised in the report.
Auditors concluded that the city shouldn't have allowed the majority of funds that were ultimately approved.
These expenditures were the result of either ineligible expenses or a lack of sufficient justification and documentation. Additionally, auditors uncovered significant deficiencies in internal controls, policies and procedures that were not related to the CRF program, the report said.
Rossi said she is confident that West Haven "can significantly increase reimbursement for these COVID-related expenses."
Auditors said that the CRF funds weren't separated from the city's general operating bank account, according to the report. CohnReznick suggested that the city establish segregated bank accounts for all future grant or program funds received to avoid any crossover.
“The audit findings are outrageous and a betrayal of the public’s trust. They require further analysis and investigation. The MARB has considerable work to complete in order assist West Haven with its finances and accounting practices. The legislature established the MARB process to improve municipal transparency and accountability and that process should continue for the benefit of the residents of West Haven and the State of Connecticut," Max Reiss, spokesperson for Gov. Lamont said.
According to the report, there are several instances where the Municipal Accountability Review Board previously identified and required the city to take corrective action.
West Haven's former finance director Frank Cieplinski told auditors that city invoices are often times submitted once it's due to be paid. The report found that this process has resulted in many accounting irregularities.
Rossi points out that the funds were administered by West Haven employees "who did not have the city's best interest at heart."
"Two of those employees have been arrested for conspiracy to commit fraud and wire fraud," the mayor said.
This includes former state representative Michael DiMassa and a second city employee, John Bernado. Federal prosecutors say DiMassa gave more than $600,000 to Compass Investment Group, LLC between February and September 2021 for consulting services that were never performed, according to prosecutors. Compass Investment Group, LLC was set up in January 2021 by Bernardo.
Rossi noted that the city has made good financial progress over the past four years. She said this includes "four consecutive operating budget surpluses and a positive fund balance, or rainy day fund, for the first time in decades."
The city is projecting a budget surplus of more than $2 million for the 2021 fiscal year.
"Although West Haven has not received state MARB restructuring funds for the past two years, we do welcome the board’s assistance and look forward to working with its member to continue strengthening the city’s financial position," Rossi said.
Back in October of 2021, Rossi said in a YouTube video posted on the city’s website that she has reviewed many of the city’s federal CARES Act expenditures and came across several large expenditures that concerned her.
The review board plans to meet in the coming weeks to figure out next steps. Officials said a corrective action plan will be considered at the next meeting.