New Haven Register (New Haven, CT)
City probes checks
Uncertainty over some payments to alleged fraudsters
WEST HAVEN — If the red pen is to be believed, money issued by City Hall to alleged fraudsters was never deposited.
Finance Director Scott Jackson said he needs to investigate whether that’s the case.
According to documents obtained through the Freedom of Information Act, tens of thousands of dollars in City Hall contracts signed off on by former Democratic state Rep. Michael DiMassa were not cashed for months
before finance officials canceled the checks. Jackson said he has open questions as to whether the information about checks not being cashed — written in red pen on the invoices — is correct.
“This looks very stinky. It doesn’t smell right,” he said.
Jackson said he did not know who wrote the notes in red pen, but he has questions about whether vendors actually waited months to cash allegedly ill-gotten checks before the city could cancel them.
DiMassa was arrested Oct. 21, 2021, and charged with wire fraud after allegedly abusing the power offered to him by the City Council to authorize expenditures of a $1.15 million federal pandemic relief grant by signing invoices for work that was never provided, in order to transfer money from the city to a shell company’s bank account. Prior to that, Mayor Nancy Rossi said in an Oct. 8 video statement that she had discovered “potentially fraudulent” activity while reviewing the grant.
DiMassa and city employee John Bernardo initially were the only people arrested after allegedly transferring more than $600,000 to a shell company called Compass Investment Group LLC, claiming to have provided the city’s health department with services related to the pandemic; according to court documents, Health Director Maureen Lillis said she never contracted with a group called Compass Investment Group.
When more allegedly fraudulent invoices signed off on by DiMassa surfaced through public records requests in February, Rossi said those invoices had been under investigation already but she had not discussed it at lawyers’ advice.
According to notes on copies of those more recent invoices, checks that were issued as early as January 12, 2021, to alleged beneficiaries of DiMassa’s alleged fraud were never cashed, and an attempt to cancel them on Oct. 11, 2021 — after Rossi made her announcement about “potentially fraudulent” expenses but before DiMassa’s arrest — were successful. Payments that were noted as being stopped on Oct. 11, 2021, according to notes written on the invoices as well as digital Wells Fargo transaction ledgers, included a $63,356 payment to L&H Company LLC on Jan. 12 2021, a $68,728 payment to L&H Company LLC on Feb. 10, 2021, and a $27,750 payment to the owner of clothing company Koda Lane on March 4, 2021. All invoices were signed by DiMassa.
Jackson said there would be a way in the city’s financial software to mark a check as canceled, but that would not necessarily mean the check itself was canceled.
“I’d like to know if the money left the account,” Jackson said.
Bridgette Hoskie, chairwoman of the City Council’s finance committee, said she hopes it is the case that the checks were canceled.
“I was not aware of the city being able to stop checks that went to (alleged accomplices),” she said.
Jackson, who was hired on Feb. 24, said he had not been aware that L&H Company principal John Trasacco had been indicted in connection with DiMassa when he was preparing the documents as a response to the Register’s public records request. He said the Beverly Hills, Calif., address associated with the company that purportedly was providing the city with pandemic response aids made him curious to investigate more.
“Just looking at it blindly, it doesn’t look right,” he said.
An audit report of the federal grant issued to West Haven, ordered by the state, concluded that any money allegedly stolen by DiMassa, despite being marked as being related to the pandemic, may have been local taxpayer money.
“The funds received by the City under the CRF were not segregated into a separate bank account. The funds were commingled in the City’s general operating bank account. While the
City did establish a general ledger account to capture eligible expenditures, transactions were not recorded to that ledger account on a consistent basis,” auditors from CohnReznick wrote.
Rossi did not respond to a request for comment.