Audit finds improperly given grants
More than $230K went to ineligible businesses, review finds
Nearly one-quarter of the 33 businesses that shared in a pot of $947,075 federal American Rescue Plan Act monies earmarked for small and medium businesses were ineligible for the grant funding, according to an audit released Monday by the Ulster County Comptroller’s Office.
“Eight of the 33 awardees were ineligible,” the audit stated about the program that run in 20212022. “In total, the program disbursed $947,075 to small businesses, of which $231,169 went to ineligible businesses.
Additionally, the audit found that the Ulster County Economic Development Alliance approved grants to businesses that deviated from legislative priorities, including businesses not owned by county residents. Among those grants, the audit found, was one to an out-of-county business owner that was used to furnish an Airbnb facility, including for the purchase of an antique armoire bookcase, a washer-dryer combo, bed linens and outdoor teak furniture.
And, the audit revealed, county taxpayers were left on the hook for $15,000 for a “potentially fraudulent award” to a T-shirt business that received the grant but then failed to provide the documentation required under the state’s compliance criteria. As a result, the county was forced to repay those monies, the audit stated. As an aside, Gallagher said, the agent negotiating with the county on behalf of the business was owned by Vincent Cozzolino, who was convicted in 2021 of corrupting the government and sentenced to five years probation and a $1 million fine. “The (UCEDA) continued to conduct business with Galileo Group
acting as the agent for the business after the widely publicized felony conviction of Cozzolino.”
The audit also found that the Ulster County Economic Development Alliance failed to file required tax forms with the Internal Revenue Service, which could result in financial penalties to the county.
“Much like the previous audit of the CARES II grant program, the CARES I audit has revealed significant deficiencies in eligibility determination and the program’s overall alignment with Legislative intent,” the audit stated.
In an August 2023, audit of the CARES II program, Gallagher found that 17 of the 42 businesses originally awarded grants were given to ineligible businesses, that former alliance President Tim Weidemann failed to review applications for eligibility before sending them to the scoring committee as required and that Weidemann — who according to the report had sole control over the information — failed to adequately review the data used to compile scores, resulting in numerous errors.
In a letter in response to the audit, Deputy County Executive Amanda LaValle, who is also president of the alliance, said the organization generally concurs with the audit’s findings and cast the blame for deficiencies on former Alliance President Tim Weidemann. LaValle noted that the grants were approved by the state.
“Based on our review of CARES I and consistent with prior review of the administration of the CARES II program, we have concluded that the programs were tantamount in their contractual deficiencies with regard to programmatic requirements,” LaValle wrote. “As with the CARES II audit, it has been determined that the former President/CEO who also served as the Director of Economic Development, was responsible for the contract discrepancies and its execution.”
In April, Weidemann resigned as the alliance president to take a position with U.S. Rep. Pat Ryan. While he was Ulster County Executive, Ryan, D-Gardiner, launched the two-phase CARES small business grant program as part of his “inflation relief plan.”
LaValle stated that the Alliance board is working to hire an outside financial and operations management to review procedures and provide guidance in creating an internal compliance strategy for the organization.