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Rye’s Forensic Deception – Questions for the State’s Incoming Chief Judge: Guest Column by Ted Carroll

by Ted Carroll, Guest Columnist

This past summer, Rye New York’s newly appointed independent auditor took to the podium at city hall and confirmed what former City Manager Frank Culross and I and others have been saying publicly for years now – which is that to initiate the city’s largest ever fraud, a circumvention of city internal controls took place, and former Rye Golf Club manager Scott Yandrasevich, who now resides in state prison, required assistance maintaining this multi-year, multi-million dollar fraud.

Westchester County’s District Attorney’s office conducted an investigation of Rye’s Golf Club fraud and focused its efforts on Yandrasevich, and apparently only Yandrasevich–who by definition of the two key descriptors our auditor chose, ‘circumvention’ and/or ‘collusion’–clearly did not steal all by himself.

Many here ask why the DA’s office would undertake to do this. Was the scope limitation made under some agreement to deny the plain fact that an internal controls circumvention took place? Was this an undertaking to shield a high-ranking current public official who has long been politically supportive of, and friendly with, District Attorney DiFiore – now nominated by Governor Cuomo to be the state’s Chief Judge? What other explanation(s) are there for skilled investigators not naturally following this notorious yet extremely conventional municipal fraud to its origin and source?

As a part of the Rye City Council’s own investigation of the fraud, the city hired Breen & Associates in late 2012 to conduct forensic interviews and records testing. Their resulting reports are still being suppressed by the city and Mayor Sack (elected to get to the bottom of what happened at RGC) from public disclosure under various legal dodges. Breen interviewed at least two former Rye City Comptrollers – people who had to verify and approve Yandrasevich’s hundreds of monthly phony staffing company invoiced charges (totaling over $7.4 million) against non-existent rate cards annexed to a non-existent contract generated by no public bidding resulting from no written RFP which received no public notice and was thus subject to no public disclosure nor discussion.

In order to help account for some of these missing controls, last March, former Rye City Councilman Mack Cunningham, who served on the City Council while the fraud was originated, tested Frank Culross publicly on the so-called ‘professional services’ exemption to the municipal contracting laws. He was rebuked by Mr. Culross on this approach. This contractual services exemption thesis also solidly flunks the internal financial controls (IC) portion of the standard CPA Exam – where disbursement line approvals require comparison and confirmation to agreements and rates by financial department staff. None of these approvals could be delegated to Yandrasevich without a circumvention and/or collusion as he was a senior department head and thus not separated from the financial transaction and the monetary charge origination.

Serious questions about the actions of other city officials remain unanswered. What role did the city comptrollers play? What orders were they given by prior city managers O. Paul Shew and Scott Pickup? What legal advice about the non-existent RM Staffing contract was given by prior city attorney Kevin Plunkett, and current city attorney Kristen Wilson?   

Now that The Honorable Ms. DiFiore has been nominated for the top judgeship in the state, is it not time for the residents of one of its smallest cities to know the identities of ALL parties who helped originate and maintain its largest ever fraud? Is ‘accountability in government’ simply an election season talking point? How does our incoming head judge define the word “justice?” With the upmost due respect, please be specific, Madam Justice.

Ted Carroll is a lifelong Rye resident, a Certified Public Accountant, and a partner at Noson Lawen Partners, a media industry private equity firm.

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by Ted Carroll, Guest Columnist

This past summer, Rye New York’s newly appointed independent auditor took to the podium at city hall and confirmed what former City Manager Frank Culross and I and others have been saying publicly for years now – which is that to initiate the city’s largest ever fraud, a circumvention of city internal controls took place, and former Rye Golf Club manager Scott Yandrasevich, who now resides in state prison, required assistance maintaining this multi-year, multi-million dollar fraud.

Westchester County’s District Attorney’s office conducted an investigation of Rye’s Golf Club fraud and focused its efforts on Yandrasevich, and apparently only Yandrasevich–who by definition of the two key descriptors our auditor chose, ‘circumvention’ and/or ‘collusion’–clearly did not steal all by himself.

Many here ask why the DA’s office would undertake to do this. Was the scope limitation made under some agreement to deny the plain fact that an internal controls circumvention took place? Was this an undertaking to shield a high-ranking current public official who has long been politically supportive of, and friendly with, District Attorney DiFiore – now nominated by Governor Cuomo to be the state’s Chief Judge? What other explanation(s) are there for skilled investigators not naturally following this notorious yet extremely conventional municipal fraud to its origin and source?

As a part of the Rye City Council’s own investigation of the fraud, the city hired Breen & Associates in late 2012 to conduct forensic interviews and records testing. Their resulting reports are still being suppressed by the city and Mayor Sack (elected to get to the bottom of what happened at RGC) from public disclosure under various legal dodges. Breen interviewed at least two former Rye City Comptrollers – people who had to verify and approve Yandrasevich’s hundreds of monthly phony staffing company invoiced charges (totaling over $7.4 million) against non-existent rate cards annexed to a non-existent contract generated by no public bidding resulting from no written RFP which received no public notice and was thus subject to no public disclosure nor discussion.

In order to help account for some of these missing controls, last March, former Rye City Councilman Mack Cunningham, who served on the City Council while the fraud was originated, tested Frank Culross publicly on the so-called ‘professional services’ exemption to the municipal contracting laws. He was rebuked by Mr. Culross on this approach. This contractual services exemption thesis also solidly flunks the internal financial controls (IC) portion of the standard CPA Exam – where disbursement line approvals require comparison and confirmation to agreements and rates by financial department staff. None of these approvals could be delegated to Yandrasevich without a circumvention and/or collusion as he was a senior department head and thus not separated from the financial transaction and the monetary charge origination.

Serious questions about the actions of other city officials remain unanswered. What role did the city comptrollers play? What orders were they given by prior city managers O. Paul Shew and Scott Pickup? What legal advice about the non-existent RM Staffing contract was given by prior city attorney Kevin Plunkett, and current city attorney Kristen Wilson?   

Now that The Honorable Ms. DiFiore has been nominated for the top judgeship in the state, is it not time for the residents of one of its smallest cities to know the identities of ALL parties who helped originate and maintain its largest ever fraud? Is ‘accountability in government’ simply an election season talking point? How does our incoming head judge define the word “justice?” With the upmost due respect, please be specific, Madam Justice.

Ted Carroll is a lifelong Rye resident, a Certified Public Accountant, and a partner at Noson Lawen Partners, a media industry private equity firm.