New Haven Register (New Haven, CT)
After DiMassa arrest, city expects ‘additional fiscal controls,’ official says
WEST HAVEN — The City Council authorized Mayor Nancy R. Rossi or her two designees to have the authority to allocate federal money for authorized COVID expenses.
Now, after state Rep. Michael DiMassa — one of those to whom it was designated — was arrested Wednesday for allegedly rerouting federal pandemic relief funds intended for West Haven to a personal business banking account, many residents are asking: How could this happen?
City Hall officials are declining to answer that question, at least for now. The second of the mayor’s designees, Finance Director Frank Cieplinski, has not re
sponded to repeated requests for comment. The mayor — a certified public accountant by trade — said she discovered discrepancies in spending of a federal COVID grant going back months while reviewing expenditures. A resolution passed by the City Council in December tasked her with the management of that grant, both in maintaining and submitting the documentation for reimbursement to the state and for emergency management operation expenditures. “Right now the forensic audit is underway,” said Rossi, in a text message response to questions Thursday. “Once it is complete, we will be able to discuss what was found and any changes in internal control.”
DiMassa, D-West Haven, had been a city employee for 12 years, where he provided administrative support to the City Council and several other offices.
He resigned Thursday, a day after he was arrested and charged with one count of wire fraud.
According to court documents, he allegedly invoiced the city for more than $636,000 of federal pandemic response money for services allegedly rendered by Compass Investment Group LLC, a business he formed in January. He then allegedly made several withdrawals from the business’ bank account and spent tens of thousands of dollars on chips at Mohegan Sun, according to a federal warrant. The warrant also says Compass allegedly did not perform the work for which it billed the city Health Department.
DiMassa, who is free on bond, did not respond to a request for comment Thursday, nor did a second City Hall employee who is listed as a principal with Compass Investment Group.
In an August interview with the Register to defend the city’s use of federal COVID money to pay out accrued compensatory time to City Hall employees – an issue unrelated to the allegations in the federal criminal case — DiMassa explained some of his roles during the pandemic.
“I was responsible for doing all the tracking of paperwork and expenditures,” he said.
DiMassa at the time claimed he also worked with Health Director Maureen Lillis by responding to calls for service, acting as a point person for the city on its hotel housing program for the region’s population experiencing homelessness, and checking with local businesses that they were maintaining compliance with indoor masking requirements. He also said he worked with Corporation Counsel Lee Tiernan to interpret executive orders.
DiMassa said the hours he worked in responding to the pandemic outside of his regular hours were tracked through journal notations.
Controls
Now, Rossi said some of the changes to the city’s internal controls for its purchasing and invoicing system “may be confidential.”
“We won’t know until the forensic audit is complete and public,” she said.
This week, the state’s Office of Policy and Management authorized a forensic audit of the city’s finances. The city is one of three municipalities in the state that is under the authority of the Municipal Accountability Review Board, which reviews the city’s financial reports and has approval authority over financial decisions made by city officials.
Following a request for comment from OPM, a spokesman forwarded three letters from OPM officials addressed to the city, including an Oct. 14 letter from Secretary Melissa McCaw informing the city the department had hired CohnReznick, LLP to conduct an audit “to review the City’s activities surrounding the alleged misuse of Coronavirus Relief Funds.”
“The City is a recipient of approximately $1.15 million of CRF, which was distributed as pass-through funding by the State of Connecticut through its sub grantor, OPM. The objective of the audit is to investigate the allegations of misuse of CRF by the City,” McCaw wrote. “The audit will assess the City’s compliance with the U.S. Treasury’s guidance on the use of CRF and evaluate the City’s policies and procedures, and internal controls.”
Some of the mayor’s critics have pointed to the late-December resolution passed by the City Council authorizing her, or either DiMassa and Cieplinski as her designees, to manage expenditures of a federal COVID grant as problematic.
“If she didn’t know, she was not engaged. That in itself is concerning,” said Barry Lee Cohen, a Republican councilman who is running against Rossi for mayor in the Nov. 2 election. “I don’t even know if we have a standard operating procedure for vendors.”
Earlier this month, Rossi said she was not involved in the day-to-day management of federal grants, which is handled by the Finance Department. “I’m not sure who did what over there, I have my own duties as mayor,” she said at the time. “I look at the monthly reports and things like that to keep the budget balanced.”
Rossi said she is very active in the preparation of the annual budget and the balancing of the budget. Rossi did not address a question about how the city processes invoices and purchases, citing the forensic audit.
According to the affidavit charging DiMassa, “Compass Investment Group LLC fraudulently billed the City of West Haven and its ‘COVID-19 Grant Department’ for consulting services purportedly provided to the West Haven Health Department that were not performed.”
Councilwoman Bridgette Hoskie, D-1, said she could not help but feel partially responsible for the alleged theft. “I will carry the guilt that I should have done better,” she said.
Hoskie, as chairwoman of the council’s Finance Committee, presented the December motion authorizing DiMassa as one of the mayor’s two designees to handle COVID expenditures. She said that, at the time, she believed he was “a good choice” because of his track record of bringing in hundreds of thousands of dollars to the city through grants and as an elected official. “It is obvious the proper amount of oversight wasn’t taken. Hindsight is 20/20,” she said. “My thought process, as I’m sure was everybody else’s, was he was a good candidate to help disburse this money.”
In July, Hoskie requested an accounting of how federal pandemic money had been spent thus far. She said, prior to that, she had been waiting to see invoices. She said that Wednesday’s arrest underlines a need for the city to “overhaul” its financial process. “You sometimes don’t know something is broke until this happens,” she said.
She said that under Rossi, the city has more financial oversight than ever before, with the MARB reviewing its budget and an OPM employee working out of City Hall as part of the city’s participation in the MARB. Hoskie said it was made abundantly clear that federal grant money would be audited, which she and others believed would be a considerable disincentive to misappropriating funds.
David Sacco, an economics lecturer at the University of New Haven, said that, although DiMassa allegedly was able to reroute hundreds of thousands of dollars for several months, the FBI’s intervention is evidence that there are systemic checks in place for fraud. “This stuff happens in the private sector too: people ... can take advantage. Companies get defrauded all the time,” he said. “... When they get caught, it tells me the system is working.”
Council Chairman Ron Quagliani, D-At Large, said he is “asking the same questions as the rest of the community.” “It sickens me that monies intended to help our community recover from COVID-19 was allegedly diverted for personal use,” he said.
The federal money was intended for “necessary expenditures due to the COVID–19 public health emergency,” according to the state.
The invoice DiMassa allegedly submittedlisted charges that included 305 hours of Consulting ServiceLegislative Review Executive Orders - COVID-19, 483 hours of Consulting Service-Support Staff Services, 305 hours of Monitors/Security Site (April 2021-May 2021), and 102 hours of Consulting Service Lobbying Service-COVID-19 Federal. The amount billed to the City of West Haven was $85,595.00, the warrant affidavit says.
An invoice also listed items that included 150 hours of Consulting Service-Legislative Review Opening Guidelines, 100 hours of Consulting Service Support Staff Services, 242 hours of Consulting Service Lobbying Service-COVID-19 Federal, and Economic Consulting-Economic Site Plan Assessment/Review. That amount billed to West Haven was $84,650.00, the warrant affidavit says.
Quagliani said that, because of multiple ongoing investigations into the city’s spending, he was disinclined to “discuss information in a public meeting that has not been vetted by these investigations as that could jeopardize the investigation and open up the city to liability.”
However, he said he believes changes will be made at the conclusion of those investigations.
“I would expect there to be recommendations on additional fiscal controls to ensure something like this can’t happen again,” he said.