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Home Government HOSED. RYE TAXPAYERS SLAMMED BY APPARENT UNDERREPORTING FRAUD. Commentary by Ted Carroll.

HOSED. RYE TAXPAYERS SLAMMED BY APPARENT UNDERREPORTING FRAUD. Commentary by Ted Carroll.

Guest Column by Rye Resident Ted Carroll

When the bottom falls mysteriously out of your 2nd largest municipal revenue category, resident tax increases are the only way to make it up.

Rye City Permit Revenue Analysis - Nov 2017

(PHOTO: Permit analysis. See the actual worksheet.)

Up to $6.6M in possible missing fee receipts tells me somebody’s lying. Either it’s city management or members of the collective building and construction industry or perhaps its city resident taxpayers own ‘lyin eyes.’ Because we all know there is almost no street in the City of Rye you can drive down without passing an active construction project – a renovation, a remodeling or a full tear-down on the way to a brand new structure. This rolling building explosion has been a constant for years now and we all know how much it costs to complete even the smallest residential project in tony Rye, NY.

But if you can’t trust your own ‘lyin eyes’ word for it, you can assuredly take the word of Rye city hall. After all, city hall sees all the builder/developer paperwork, issues the permits, sits as judge & jury over requests for property law variances, inspects the ongoing construction progress, issues final Certificates of Occupancy, and collects construction permit fee revenues – the 2nd largest source of city income after our property taxes. And city hall is after all honest, right?

So now take a look above at those city management quotes about city building activity trends on my analysis pulled directly from city prepared budgeting documents for each of those years. And go ahead and please check me. Go to the Rye City web site and click on ‘Digital Documents,’ then to ‘Budgets’ and then go to the ‘Proposed Budget’ for each year in question and curser down it to page 3-94, ‘Licenses and Permits.’ That’s pretty clear, isn’t it?

Exploring Prehistoric Rye

In ancient local times (the mid 1970’s to be exact) I was a summer staff accountant on the City of Rye’s annual independent audit for several years. My audit duties included verifying internal financial control compliance for multiple items such as proper segregation of duties, comparing contractual disbursements to underlying contracts on file, confirming bank account balances against city ledgers, and comparing construction permit fee receipts to required underlying construction cost documentation, like project foundation costs, lumber costs, plumbing costs, electrician costs, and carpentry costs.

Sometime in the recent or not-so-recent past, the city did away with requiring this submission of independent 3rd party proof of actual construction project expenditures that I test-verified. Instead city management substituted a single sheet sworn final cost ‘affidavit’ – financially unverified by anyone other than the individual building contractor or homeowner – thus creating an “I promise to be honest” compliance system.

As I’ve written before, how these unnamed interests succeeded in removing this fundamental proof-of-cost internal financial control protection for the city’s 2nd largest income line item is perhaps a study in hubris, ignorance, political campaign contribution influence, or all three.

Why Project Cost Verification Using 3rd Party Proof is Essential

History may not repeat itself, but it rhymes. Our internal financial controls were set up as they were back then for a reason. Residents who’ve lived here half a century and over can still sharply recall the unpleasant upheavals erupting out of city hall (then housed in The Square House) and outward into the newspapers, courts and jails.

Rye chron headline

(PHOTO: History predicts the future? See this Rye Chronicle story from 1964.)

For those of us who were not yet in Rye then, this recent building permit revenue shortfall story from just across the river might serve in place of those distinctly un-fond local Rye memories –

Ex-Ramapo Building Inspector Mallia sentenced to no-jail in corruption case as promised

But the good news here is that Rye City Comptroller Joe Fazzino is an intelligent, honest senior city department head. Perhaps one half of an extra clerical salary position can do the simple ongoing verifications on these final permit cost submissions for him – and our outside audit firm can annually test-verify them just like I did.

More importantly, any submitted legally sworn final cost affidavit from these years above in question is subject by law to a thorough municipal review – a process now essential given city management’s recurring annual written fee expectations vs. these inexplicable material recurring annual city revenue shortfalls.

All’s Mr. Fazzino and Rye taxpayers here need is a straightforward action directive motion from the City Council empowering a segment focused external auditor special review & investigation – and this time please one not improperly pretext stamped with “Attorney-Client-Privileged -WorkProduct” and then illegally later withheld from FOIL to try and protect the guilty.

With what looks like many missing millions at stake here, time is of the essence.

Ted Carroll is a lifelong Rye resident, a Certified Public Accountant, a former member of Rye’s outside independent audit staff and a current partner at Noson Lawen Partners, a media industry private equity firm.

See Carroll’s recent MyRye.com commentaries here:                             

FIELD GUIDE TO RYE MUNICIPAL CORRUPTION – 2017 SPECIAL EDITION.

RYE OFFICIALS HIDE EMPLOYEE WRONGDOING, RECORDS TAMPERING IN MUNICIPAL GOLF GREEN’S FIASCO.

Series Part 1 – Crime & Cover-up

Series Part 2 – Records Erasures & Undisclosed Conflicts

Series Part 3 – They Knew

Series Part 4 – AIG Launches Investigation into City Insurance Settlement

Series Part 5 – A Deadly Pattern

Series Part 6 – Improper & Illegal Chemical Purchasing Practices at Rye Golf.

Series Part 7 – The Whitewash Investigation

  1. Mr. Carroll:

    FYI.

    The City of Rye has secreted the statement of final costs documents of all City of Rye building projects and are not providing them in response to a legitimate FOIL.

    Why?

    Will the new Rye City Council allow this to continue or will they demand these documents be released to the public?

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