Home Opinion Greg Blass Greg Blass Did Suffolk County cook its books? Will taxpayers ever...

Greg Blass
Did Suffolk County cook its books?
Will taxpayers ever learn the truth?

An anonymous letter sent to Moody's Investment Service accuses present and past county officials of 'creatively planned accounting fraud.'Fotolia stock photo

So now we have more clumsy intrigue in Suffolk County government. And the icing on the cake this time is that it all started with an anonymous letter – a leaked one at that. Does it ever stop?

The letter originally landed in Moody’s Investor Services in NYC, as well as other bond rating agencies on Wall Street. Knowing where their fat, bond-rating fees come from, they quietly gave it to to the county executive and the county comptroller. From there the letter was leaked to Newsday, and that’s when things got dicey.

blass_greg_head_badgeThe anonymous letter said it was authored by county whistleblowers. It warned of “creatively planned accounting fraud” that has been “systematic and institutionalized” by present and past county officials. Without being specific, the letter claimed that, in order to sell its bonds to borrow its way out of its dire financial mess, the county cooked the books. It talked of the county’s transferring improperly from restricted funds, habitually understating spending and overstating revenue.

A big reason the county may be playing games with its financial records has much to do with the soaring costs of a contract it negotiated a few years back — still in effect — with the Suffolk County Police union. It emerged to be one of the single-largest financial plunges ever to be found in Suffolk’s operating budgets. And the county had no idea, then or now, how to pay for it, other than to go further and further into hock.

Right now, Suffolk needs to borrow no less than $105 million just for cash flow. They plan another $54 million on top of that for construction projects. Big time borrowing calls for the county to float bonds, something like IOUs. They need the help of Wall Street to market these bonds, and Wall Street rates the bonds to help their investors reach a comfort level in buying them. The bond sale is announced with bells and whistles throughout the investor community.

If this anonymous letter is accurate, Wall Street might very well rate the bonds poorly, even as junk. Then they wouldn’t sell unless the interest rate were raised higher and higher, interest that the county will have to pay. That’s why letters like this can blow bond deals right out of the water.

All this is making Wall Street and their county buddies a bit edgy. But then the county casually announced (get this!) that it will be OK with Wall Street if the county simply sets up a mechanism, any mechanism, to look into it. No real findings needed, just show that they’re looking into it. Then the bond traders can legally keep this troublesome letter and its allegations under wraps. Not to worry – just another dirty, little game on “the Street.”

So a couple of weeks ago, county officials had a special “waiver committee,” controlled by the executive’s representatives (with one legislative rep for window-dressing) hire a law firm that already does other fat-cat legal work for the county. Conflict, maybe? The county attorney, himself the appointee of the county executive, said this is fine, which calmed the committee, but only briefly. Then the obvious conflict, as it piled onto other obvious conflicts, led them to replace the investigators with another lawyer who is also politically connected to the county’s power elite. So much for conflict resolution.

This “forensic investigator,” and some auditors, will be paid up to a whopping $200,000. Worse, they have to have their report back in a matter of about three weeks, or about mid-October. Will they get to the bottom of all this that soon? Would you take that to the bank? Likely they will throw their “report” from the open window of a speeding car. The big bucks bond sale, set for this month, with so many billable hours and fees, must go on — anonymous letters be damned.

Back to the county’s unprecedented, multi-year police contract: the county executive negotiated it soon after his election — which the police unions assisted big-time. Then the contract earned unanimous approval from the county legislature, whose own elections, both Democrats and Republicans, also received police union support big-time.

So in the wake of this anonymous letter and the hiring of this quickie “forensic investigator,” nary a peep from the legislature. No matter what shape the financial books are in, the real story is better left to executive-controlled committees, dial-an-audit, and galloping, investigative dog-and-pony shows.

At one of these executive-controlled committee meetings, a county legislator showed up to take a look-see. He boldly suggested to those nervously assembled that this whole episode, and maybe allegation of crime, ought to be referred to the state comptroller. This makes sense. It would be objective, and it would save the county $200K. Such logic got nowhere, and the legislator hasn’t been heard from since. Oh, well.

Greg Blass has spent his life in public service since he enlisted in the U.S. Navy as a teenager. He has worked in the private sector as an attorney and served six terms representing the East End in the Suffolk County Legislature, where he was also presiding officer. Greg has worked as an adjunct professor at Suffolk County Community College, as Greenport village attorney, as N.Y. State family court judge and as Suffolk County social services commissioner. Now retired, Greg is active in volunteer work and is a member of the board of directors of several charities. A resident of Jamesport, he and his wife Barbara have two grown children.

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Greg Blass
Greg has spent his life in public service since he enlisted in the U.S. Navy as a teenager. He is a former Suffolk County Family Court judge, six-term Suffolk County legislator and commissioner of Social Services. Now retired, Greg is active in volunteer work and is a board member of several charities. He lives in Jamesport. Email Greg