Scathing Mt. Vernon Audit, Possible Criminal Probe

MOUNT VERNON, NY — A report released by the New York Office of the State Comptroller has increased the chorus of voices calling for a criminal investigation into financial improprieties in the city of Mount Vernon.

The city's murky financial situation has been a long-running cause of finger-pointing between city leaders and the former comptroller.

At various points over the past 12 months, police, fire and public works vehicles were unable to purchase fuel after bills went unpaid. City Hall was shuttered for weeks after funds for badly needed boiler repairs were not released, eventually resulting in a catastrophic failure that flooded parts of the building. Garbage went uncollected and Mount Vernon was forced to borrow trucks from other jurisdictions after much of the municipal fleet was deemed unsafe to be on the road. City workers were denied authorized overtime pay and some paychecks even bounced, according to labor officials.

Now, in a blistering report, the Office of the State Comptroller has put much of the blame at the feet of Mount Vernon's former comptroller.

“The lack of operational controls and failure by the former city comptroller to complete basic financial functions contributed to Mount Vernon’s fiscal crisis,” DiNapoli said in a statement released this week. “It is time for city officials to turn the page and overhaul their fiscal operations. I am encouraged by the response of Mayor Patterson-Howard and the city council and urge them and the new City Comptroller Darren Morton to act immediately to implement our recommendations.”

The audit covered disbursements, excluding payroll, from Jan. 1, 2018, to Sept. 30, 2020, including trend analysis, a review of unpaid bills and legal issues. The audit is broken up into two major sections: oversight of payments and the comptroller’s responsibilities.

The city of Mount Vernon faced financial uncertainty and problems because it lacked critical operational controls over finances, electronic banking, purchasing goods and services and segregating financial duties, according to the audit released Monday.

The audit provided a detailed account of the millions in expenses that were not timely paid, inappropriate actions by the former city comptroller and poor disclosure that caused the city's financial troubles and ongoing legal issues.

DiNapoli concluded that among other areas of concern:

• 88 claims totaling $1.8 million were not paid in a timely manner.
• 60 claims totaling $460,584 were not paid for essential services and infrastructure.
• The city lacked adequate policies and procedures to ensure claims were properly authorized for valid purposes and paid in a timely fashion.
• Officials and employees did not have clear guidance on how the disbursement process worked.

Auditors also found that former Mount Vernon Comptroller Deborah Reynolds:

• Implemented a manual voucher system that restricted the ability of officials and employees to monitor operations and prevented officials from accounting for committed funds and determining whether vouchers had been paid.
• Made 25 unauthorized electronic disbursements and three withdrawals totaling $16.4 million, most of which circumvented the mayor’s required countersignature of checks.
• Used contingency appropriations to pay for $1.3 million in expenditures without the city council’s knowledge or approval.
• Disregarded city policies and retained outside counsel, and then failed to seek reimbursement for more than $7,500 in payments to outside counsel in violation of a court order.

The mayor and city council agreed with the audit’s findings and said they would work with the new city comptroller to undertake a series of changes in response to the audit. DiNapoli made 29 recommendations to overhaul the operations of the city comptroller’s office and establish necessary oversight policies and procedures to prevent future problems.

In a statement addressing the report, Mount Vernon Mayor Shawyn Patterson-Howard said that the report is a first step towards moving the financial health of the city in the right direction.

"I believe the report accurately confirms the dire concerns and challenging issues we’ve endured since the beginning of this administration," Patterson-Howard said. "The audit report is proof and documentation of gross negligence by former Comptroller Reynolds. I believe this audit report showcases a lack of transparency, lack of segregation of duties, manipulation of policies and the need for further criminal investigation by the New York State Attorney General and Westchester County District Attorney."

Meanwhile, Westchester DA Miriam Rocah indicated for the first time that her office is doing just that.

"We are aware of the OSC report," Rocah's office said in a statement released Tuesday night. "The OSC report presents very serious issues and the community is understandably concerned. Since we are in the midst of an ongoing investigation, we will have no further comment at this time."

This isn't the first time Reynolds and Mount Vernon lawmakers have found themselves on opposite sides of a thorny legal issue.

After months of feuding and court battles with the former comptroller over the release of city funds for approved budget items, the council made an unusual move in April in an attempt to avoid similar infighting over the infusion of federal rescue plan money, a portion of which was expected to hit city coffers later that month. The lawmakers voted that the initial American Rescue Plan funds would be received by the Mount Vernon city clerk, rather than by the city comptroller's office.

Reynolds successfully blocked the move by the Mount Vernon Mayor and city council members in court. The city funds used to fight that battle are now at the center of DiNapoli's findings of impropriety.

Calling DiNapoli's findings "one-sided," the lawyer for Reynolds, Jay Hashmall said that it was the unethical and hostile tactics of other elected officials that required his client to take drastic measures to protect taxpayers.

"It does not take into consideration the actions taken by members of the City administration to prevent the former comptroller from fulfilling her fiscal obligations which necessitated the legal actions she took," Hashmall told the Journal News. "Members of the various administrations took exception to her efforts to have the city comply with the city's and state's fiscal rules and repeatedly attacked her creating a hostile work environment."

Reynolds left office in December, after deciding not to seek another four-year term as city comptroller in the November election. The new City Comptroller Darren Morton took over in January.

SEE ALSO:

• Mount Vernon Votes To Bypass Comptroller on Pandemic Relief Funds
• Out Of Gas: Judge Orders Comptroller To Pay Overdue Fuel Bills
• Gas Rationing For Police: Mayor Declares Fuel Emergency
• Mayor: It Will Take 'Act Of God' To Avoid City Shutdown