State paid firm $1.4M to clean up abandoned hospital; work not formally authorized

Connecticut officials are examining why the state paid a contractor an estimated $1.4 million to clean up asbestos and other hazardous materials at Cedarcrest, an abandoned mental hospital in Newington, when that work was never formally authorized.

The state Department of Administrative Services confirmed that AAIS, a West Haven company, was hired to perform the cleanup and provide security services at the former Cedarcrest Hospital from August 2020 to December 2021.

But state officials now say that project was not approved through an appropriate contracting process. And they said DAS is still trying to understand how much work AAIS completed at the site.

John McKay, a spokesman for DAS, told the CT Mirror there was no specific contract between the state and AAIS for the remediation work at the the former hospital, which is located just off the Berlin Turnpike in Newington.

Instead, he said, the roughly $1.4 million that AAIS received was initiated through a “blanket purchase order,” which was also used to fund cleanup services at other stateowned properties in recent years.

That irregular payment process, according to DAS, was handled by former state employee Michael Sanders, who died of a drug overdose in late 2021 shortly after a federal grand jury began requesting records related to AAIS, the state’s hazardous waste contracts and Connecticut’s school construction program.

“The project was being overseen by Mike Sanders,” McKay said.

Prior to his death, Sanders was responsible for managing the state’s relationship with AAIS and several other companies that were part of an emergency list of demolition and hazardous waste contractors. The list was created to offer a streamlined path that would replace the standard bidding process to address immediate needs, such as removal of asbestos discovered during public building renovations.

Sanders was also part of the state’s school construction office that was led by former state deputy budget director Konstantinos Diamantis, who is at the center of the federal investigation.

This isn’t the first time that Sanders has been publicly blamed for improperly awarding demolition and abatement contracts for state-funded building projects.

Diamantis, who stepped down from his position in state government in late 2021, also pointed the finger at Sanders last month after local officials in New London accused both men of pressuring the municipality to hire AAIS for work at New London High School.

It’s unclear if the payments for the Cedarcrest property are of interest to federal prosecutors. Nobody has been charged to this point in connection with the federal grand jury investigation, despite numerous subpoenas being issued to Gov. Ned Lamont’s administration and several school districts in Connecticut.

Even so, the former hospital has become a focal point in an ongoing audit that was commissioned by the state last year in the wake of the federal criminal investigation.

DAS hired Marcum LLP, an independent auditing firm, last March and paid the company to sample 10% of roughly 321 demolition and hazardous waste projects that were awarded through the emergency contracting list that Sanders managed.

At the same time, the state specifically ordered Marcum’s audit team to examine the payments that were issued for Cedarcrest. Officials instructed the auditors to determine whether the state was accurately billed for the work that was performed at the hospital, which officially closed in 2010.

DAS officials told the CT Mirror that they singled out the Cedarcrest property because the agency wanted to review AAIS’s invoices so that Marcum could “quantify the work” that had been completed inside several buildings at the former state hospital site.

But that analysis failed to provide the state with the answers it was looking for, according to DAS.

“Marcum was not able to quantify the work that had been done,” McKay said. “DAS continues to review this matter.”

“DAS did not ask Marcum to review other specific projects,” he added. He did not address why other projects were not subject to the same level of scrutiny.

According to state officials, the money that AAIS received for the Cedarcrest project was funneled through the blanket purchase orders that were used to fund numerous projects that involved asbestos cleanup and other hazardous material handling.

Financial records obtained from the State Comptroller’s office show that AAIS made millions of dollars through some of those purchase orders, but those records do not clearly detail all of the work that was supposed to be performed for that money.