Hare con­tends sign­ing of con­tract with au­di­tor was il­le­gal

The Buffalo News - - CONTINUED FROM THE COVER -

CAO •fromA1

into such a con­tract, it would be an il­le­gal act against the CAO.”

When told Tues­day that The News now has a copy of the con­tract, Hare said he now knows there was one. But he con­tended that its sign­ing was il­le­gal be­cause, he said, the board never voted to hire CTBK.

“The con­tract was il­le­gally ne­go­ti­ated and signed by Je­nine Dunn on Dec. 5, 2018,” Hare said in an email to The News. “The board never voted to hire CTBK. In fact, the board never even con­sid­ered such a hir­ing.”

For­mer board trea­surer Jen­nifer Shank and one other for­mer board mem­ber, who asked to re­main uniden­ti­fied, have told The News that the board voted Oct. 4 – the day mem­bers also voted to fire Hare – to hire a foren­sic au­di­tor.

In his email to The News on Tues­day, Hare said he has re­ported the ex­is­tence of the il­le­gal con­tract to “reg­u­la­tors” and asked for “guid­ance on any con­se­quences for the for­mer board mem­bers for this il­le­gal be­hav­ior.”

He went on to say, “We are con­fi­dent that Head Start grant funds are be­ing spent as re­quired by the grant­ing source.” He also pointed out that Shank and Dunn never re­ported such con­cerns to the fed­eral Depart­ment of Health and Hu­man Ser­vices, which pro­vides grant money for Head Start, or the State Depart­ment of State, which checks for com­pli­ance with com­mu­nity ser­vices block grants and mon­i­tors board gov­er­nance matters at the CAO.

The con­tract, called an en­gage­ment let­ter, is dated Dec. 5. In it, the firm says it will as­sess whether the mil­lions of fed­eral dol­lars pro­vided for CAO-run Head Start and Early Head Start pro­grams were spent ac­cord­ing to the grants’ pro­vi­sions. CTBK agreed to re­view other spend­ing to de­ter­mine the source of the money.

While Hare has said the cost of a foren­sic au­dit could have run into six fig­ures, the firm said in its let­ter that it would cost no more than $10,000.

CTBK said in the let­ter that it would “con­tinue the en­gage­ment” as soon as the board’s pres­i­dent at the time, Dunn, signed a state­ment agree­ing to the terms. She did so Dec. 6.

A week later, one of the firm’s cer­ti­fied pub­lic ac­coun­tants, Matthew J. DeVin­cen­tis, sent Dunn an email ask­ing for six spe­cific fi­nan­cial records, in­clud­ing re­ports on Head Start spend­ing and a home im­prove­ment grant. Ac­cord­ing to the email, DeVin­cen­tis told her that once those were re­ceived, he would “do de­tailed test­ing” at CAO head­quar­ters.

DeVin­cen­tis never re­ceived the doc­u­ments, said Shank, who served as the board’s trea­surer un­til her dis­missal. Nei­ther Shank nor Dunn had the records he was look­ing for, so they would have to ob­tain them from the Fi­nance Depart­ment. DeVin­cen­tis then sched­uled a Jan. 10 meeting at the CAO of­fices to meet Fi­nance Depart­ment staff, an email in­di­cates. Shank, who in­tended to ac­com­pany DeVin­cen­tis, ex­pected to re­ceive the fi­nan­cial re­ports at that time.

Be­fore the meeting could hap­pen, Dunn, Shank and some other mem­bers re­ceived let­ters, dated Jan. 8, telling them they were no longer on the board. There had been a de­fect in the way they had been ap­pointed, CAO at­tor­ney Adam W. Perry wrote, telling each to “re­frain from rep­re­sent­ing your­self as a mem­ber.” Perry has never pub­licly ex­plained the de­fect.

When Dunn told CTBK’s DeVin­cen­tis about the chal­lenge to her sta­tus as a board mem­ber, the visit was called off, Shank said. The firm was un­will­ing to move for­ward while Dunn’s po­si­tion with the CAO was in doubt be­cause she had signed the en­gage­ment let­ter, Shank said.

Hare sug­gested Tues­day that CTBK part­ner Kelly G. Be­saw had an­other rea­son for end­ing the con­tract. “When Be­saw dis­cov­ered an au­dit by an­other firm was near­ing com­ple­tion, he moved to break con­tact with CAO im­me­di­ately, which we learned weeks later.”

Be­saw would not com­ment on the con­tract with the CAO.

The board mem­bers who had been dis­sat­is­fied with Hare faulted him for pro­vid­ing them with too lit­tle fi­nan­cial in­for­ma­tion, among other things. “It is of the ut­most im­por­tance we re­ceive ad­e­quate, timely fi­nan­cial com­mu­ni­ca­tion to carry out our fidu­ciary re­spon­si­bil­i­ties,” the board told him in a memo in Jan­uary 2018. “Any fur­ther acts of non­com­pli­ance will not be tol­er­ated.” Among the board’s con­cerns, Shank said, was that grant money de­voted to Head Start and Early Head Start was be­ing di­verted to other CAO needs.

In Oc­to­ber, the board told Hare in writ­ing that he was be­ing fired. Based on its memo, the mem­bers were dis­sat­is­fied with the fi­nan­cial data they were given. “We have yet to re­ceive con­sis­tent timely monthly (not year to date) fi­nance re­ports on the dead­line set by you. Timely re­port­ing to fund­ing sources is still an is­sue,” it said.

But Hare never left the job. He re­turned to work the next busi­ness day, a Mon­day. Perry had nul­li­fied the de­ci­sion to fire Hare by stat­ing the board had failed to give ad­e­quate no­tice of its meeting, Shank said. Perry, a part­ner at the Hodgson Russ law firm, has not pub­licly ex­plained why the vote was nul­li­fied.

In crit­i­ciz­ing The News, Hare has fo­cused on its re­port­ing about the foren­sic au­dit. In var­i­ous emails and let­ters, he has said no au­di­tor was hired and no au­dit be­gun. And if no au­dit be­gan, he has said, how could one be stopped as a con­se­quence of the re­moval of cer­tain board mem­bers?

The CAO’s web­site now fea­tures a state­ment that CTBK’s Be­saw gave to an at­tor­ney with Perry’s Hodgson Russ law firm. It echoes Hare’s point: “We were con­tacted in Novem­ber 2018 by the Chair­per­son and the Trea­surer of CAO’s board. Their in­ten­tion was to en­gage us to per­form a foren­sic in­ves­ti­ga­tion of cer­tain matters at CAO. Ul­ti­mately, this foren­sic en­gage­ment was never com­menced. Ac­cord­ingly, our en­gage­ment was not stopped be­cause it had not be­gun.”

The News asked Be­saw about the let­ter in­di­cat­ing that CTBK’s en­gage­ment would be un­der­way with Dunn’s sig­na­ture and the emails show­ing that one of the firm’s CPAs was gath­er­ing records about Head Start spend­ing and sched­ul­ing a meeting. Be­saw re­fused to com­ment on those de­tails.

Hare main­tains that cer­tain board mem­bers tried to hire a foren­sic au­di­tor with­out seek­ing com­pet­i­tive bids through a “re­quest for pro­pos­als.”

But Shank said the board was not us­ing state or fed­eral money to pay for the au­dit. It was us­ing non-reg­u­lated pro­ceeds from the an­nual fundrais­ing din­ner held in 2018, which had gen­er­ated some $41,000. The board had bud­geted no more than $10,000 for the au­dit, and CTBK agreed it could com­plete the work for that sum, she said.

While the foren­sic au­dit never ma­te­ri­al­ized, the CAO faces new scru­tiny. The News has con­firmed that the FBI and state At­tor­ney Gen­eral’s Of­fice are in­quir­ing about CAO matters.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.