Summary & Conclusion
Travel began on Saturday Feb. 19, 2005 in the morning. Officials claimed reimbursement for meals and lodging for Saturday while check in for the conference began on Sunday Feb 20 at approximately 4 PM. Conference opening was on Monday morning Feb 21, 2005. Travel beginning before the morning of Sunday Feb. 20 was unnecessary and an abuse of the publics trust. No sanctioned activity took place before 3 pm on Sunday. All travelers were able to arrive Saturday well before 3 pm and should have instead traveled at the same time on Sunday instead. Travel and expenses on Saturday were not a reasonable and necessary expense but instead reflects a desire to cheat the taxpayer and enjoy a night out on the town with friends and family at taxpayer expense. Only one individual was required as a designated town representative to attend any session on Wednesday. All others could have returned Tuesday evening after training but chose to stay at an additional $90.00 for meals Wednesday and $224.00 hotel charge Tuesday evening (each) returning instead at 6:35 P.M. on Wednesday.
Despite the Town Boards approval of Saturday travel, such travel was a frivolous expense not directly attributable to any necessary business reason and authorized by these same individuals as a benefit for themselves.
Is it ethically correct or an abuse of taxpayer funds for the supervisor and his secretary to claim and accept a $90-95.00 reimbursement for meals on the day (2/23/05) when they left NYC shortly after breakfast?
Please note that the town supervisor’s secretary attended this conference while listed as the “administrative assistant to the town board” (on an application to attend), a title we believe is non-existent, deceptive, and attendance would be of little or no benefit to the town or taxpaying public given the level of decision making responsibilities of this position and topics addressed at the conference.
While we are less concerned (but still disturbed) about the decision of all six of these officials remaining in NYC the evening of Feb. 22nd after the end of training (when only one representative was to attend a business meeting the following morning), the additional expense of unnecessary hotel and meal reimbursement through Wednesday evening is an unwarranted burden on the taxpayer. There is simply no reason these individuals could not have returned on Tuesday evening as other attendees who are not in question did, saving the taxpayers a considerable sum.
After review of this document the town has now claimed that as they have established a per diem rate, they were not required to account for their expenditures and could have claimed $95.00 a day without receipts. This is simply not how the town has applied this $95.00 figure. A review of town records available to us indicates that a flat unsupported per diem rate was never applied to any travel reimbursements and in fact and practice, receipts were required, the $95.00 amount only serving as a ceiling for reimbursements. Amounts were not paid at that established rate unless receipts were provided.
In addition, town code is quoted here:
§ 48-3. Reimbursable expenses.
“Only expenses that are actual, necessary and reasonable will be reimbursed in accordance with established guidelines.”
§ 48-6. Meals and lodging
B.
The Town Board shall determine the reasonable cost of meals and lodging per day for the community in question. [Amended 12-15-1993 by L.L. No. 13-1993]
Despite the possible conflict with §48-6, §48-3 appears to have been controlling in all these cases. (See vouchers for Cooper, Barone, O’Boyle). If that is the case, then the towns currently devised explanation must in fact fail and be seen for what it actually is, an after the hand in the cookie jar, contrived excuse.
Even if the towns explanation were true, several problems continue to plague these town officials as a $95.00 per diem rate applied in this way appears to blatantly violate the plain language of General Municipal Laws of NY, Article 5 § 77b and c. Any Per Diem rate truthfully used was to be limited to $51.00 at the time of travel. Reimbursements above this figure would be a violation of that law and constitute a waste of taxpayer funds requiring as a minimum reimbursement to the town from the travelers for this and previous years expenditures. Rates of $50.00 a day for other locations also violate this NYS provision.
In addition, no matter what spin is placed on these reimbursements by the town, there are in fact serious implications in the acceptance of any obviously erroneous receipts (receipts for more meals than claimants, take home gifts, no reasonable way that individual expenses could be adequately allocated to individuals for wage reporting requirements under IRS rules, etc.) when one considers the income tax reporting and withholding obligations of the employer under federal guidelines. It is difficult to believe that the Internal Revenue Service would find acceptable such shoddy accounting procedures for determining taxability and proper reporting/allocation of travel reimbursements. There are of course obvious legal complications in how these reimbursements were treated for tax reporting purposes. Simply said, if any receipts used were for other persons’ expenses in the substantiated expenditures part of IRS reporting for wages and block 12 code L, these receipts could be considered to be fraudulently submitted, purposely avoiding federal tax liabilities.
Town credit card records were not requested or released and many questions could be answered (possible charges examined) if these records were also reviewed during this requested investigation. Investigators may find more information or possible violations of town codes (improper use of cards) on use of the credit card. It is requested that these records be examined during any investigation into the above allegations.
The cited discrepancies, omissions and commissions are probably less than could be found by professional, trained auditors/investigators. Lesser instances of errors are not listed. No doubt additional instances of fraud and abuse are present in these documents. Common taxpayers, not CPA’s, discovered the above listed items. We did not attempt to list each and every discrepancy of many, only those we believed would be sufficient enough to trigger a thorough investigation by your office.
Please note that Town officials have recently made news reports for various problems. Supervisor Catalino for a recent DWI and speeding arrest outside town limits in the early morning hours in an official town vehicle (personal use of a town vehicle) and the town board interview on local channel 2 news regarding per diem rates set at $95.00 a day in NYC, well above IRS guidelines.
As an additional item, Town cell phone records were requested. On questioning, a town official indicated that there were an additional two phones not listed that were provided by Verizon to the town with no billing records. Despite no billing records according to town officials, these phones were obtained due to the towns contract with Verizon for service and should be considered town/governmental property and subject to some form of review for abuse or misuse of town property. Without town maintained records (if statements made to that effect are in fact true) there is no system to monitor or discourage abuse or personal use of these phones. These phones are apparently in the hands of the town supervisor (already found to have used a town vehicle for personal purposes) and town highway superintendent for their exclusive use. Regardless of billing arrangements, records of these phones should be available to the public for review. It is suggested that this issue be considered for review for potential abuse. On the surface their appears to be something wrong with such an off the books agreement with Verizon.
Should your office determine not to initiate an investigation of this issue, please notify the undersigned so that alternate routes to resolution may be initiated. Should an investigation be conducted and concluded where a report is issued and becomes a public record, please notify the undersigned so a copy of the report may be obtained when finalized. Please feel free to contact any of the undersigned should additional information or clarification be necessary. Thank you for your consideration in this matter.