Additional discrepancies totalling more than $24,000 were found in a second justice court bail account, Southold Town’s outside auditors told town board members at yesterday’s work session.
The discrepancies were found in Justice William Price’s bail account and occurred over a three year period ending in 2013, which marked the culmination of an investigation into a five-year embezzlement scheme by longtime justice court clerk Christine Stulsky, who pleaded guilty last year to stealing more than $200,000 in bail monies from Justice Rudolph Bruer’s bail accounts.
The discrepancies in Price’s bail account were uncovered by comparing bail money receipted by the court to bank account deposit tickets. They totalled about $11,000 per year in 2011 and 2012 and fell off to $2,800 in 2013.
A forensic audit would be needed to determine the exact amount and reason for the discrepancies, Rob Posner of the auditing firm Albrecht Viggiano Zureck, told board members. Without such an audit — done by going through every file going back to 2011 — there is no way to know if money was actually taken. It could be poor record-keeping, Posner said. After Stulsky was arrested, the discrepancies ceased, he said.
The cost of a forensic accountant would “astronomical” and could not be justified by the relatively small amount unaccounted for, Posner said.
Justice Court director Leanne Reilly and members of the court staff are going through the old files to determine the source of the discrepancies, Posner said. It’s a slow process due to the large number of files, Posner said.
The town board created the justice court director position after Stulsky’s arrest and hired Reilly for the job. She has been working with court staff to review and organize the court’s files and set up new systems with numerous safeguards to prevent future embezzlement. Price has been “very assertive” working with Reilly to straighten things out, Supervisor Scott Russell said yesterday.
“We’ll test the controls to be sure,” Posner said, “but if they’re in place you’d have to have collusion by the entire department.”
Stulsky, a senior clerk employed by the town for 34-years, resigned from her post upon her arrest in March 2014. She pleaded guilty in January 2015 to grand larceny and was sentenced to six months in jail and five years probation under a plea deal that requires her to make full restitution to the town.
Stulsky had been the only staff member to handle the bail deposits, which were often in the form of cash. Investigators found Stulsky siphoned off cash instead of depositing it into the appropriate bank account. She also had control of the receipts, the computer where deposits and payments were entered, and the checkbook.
For several years, the town’s outside auditors had pointed out deficiencies in the court’s control systems and made recommendations to remedy them, but no action was taken.
“If the justices had acted through the years, if they’d instituted any of those changes we would not be sitting here discussing this today,” Russell said.
In December the state Commission on Judicial Conduct dismissed a complaint against Southold Town justices William Price and Louisa Evans that alleged failure to properly monitor and supervise Stulsky. Bruer, who retired Dec. 31 after 20 years on the town bench, told SoutholdLOCAL in January he had also received notice from the commission of a complaint and had responded to it, but had not yet heard any determination. There is no public record of any finding of wrongdoing by Bruer.
“I want it to be clear that the bail account is not a town account. The justice only has control over it and only the justice is responsible for the loss, not the taxpayers,” Russell said.
Russell pointed out that the court’s account into which collected fines were deposited never had any discrepancies.
Councilman James Dinizio argued for going forward with a forensic audit to determine the cause of the discrepancies, despite the cost.
“There was a quarter-million that was taken,” Dinizio said. “How does it look to people who were coming to court? Now we’re having the same people, the justice court, monitoring themselves,” he said.
“We have to pay the price for what went on,” Dinizio said. “I think the public deserves and answer, and one that’s unbiased.” The court staff has all of its regular duties to take care of also, he said.
The supervisor told Dinizio if that’s what he wants, he should draw up specs for an RFP for a forensic audit himself. “I install alarms for a living. I’m not a lawyer and I’m not an accountant,” Dinizio replied, adding he’s not qualified to draw up an RFP.
“I’d like to get to the bottom of this,” Dinizio said. “I think the public would like to get to the bottom of this and feel confident that the information we have is what it is. I don’t think we’re there yet,” he said.
“I dont think the public is really screaming out to know the bottom line,” Councilman Bob Ghosio said. “At this point, do we really need to spend the money on a forensic accountant? We know what it was. We know it was substantial. I think that’s enough.”
Russell said he wanted it to be clear that “the work is ongoing,” he said. It’s being done by the court staff, he said.
Councilwoman Jill Doherty said the court staff would have to organize and review files in order for a forensic accountant to do an audit anyway. “I think as long as an independent firm is overseeing them, that’s enough,” Councilwoman Jill Doherty said.
Dinizio said he wants to review the annual audits to see what AVZ has said about control deficiencies before he is willing to make a final decision on what comes next.
The board agreed to take the matter up again after AVZ submits its final report and Dinizio has had a chance to read past years’ findings about deficiencies in financial controls in the court. The draft report discussed today by the board was not released to the public.
Price could not be reached for comment. Justice Louisa Evans recused herself from the board’s discussion.