In a unanimous vote, the Town Council has agreed to let an independent auditor participate in the ongoing investigation of the Secaucus Tax Collector’s Office. This auditor is expected to be in place on July 21.
Just two weeks ago, the Town Council shot down a similar attempt to bring in an independent auditor.
The Tax Collector’s Office has been under investigation ever since auditors found irregularities and discrepancies in 2008 tax payments and accounts that couldn’t be balanced. According to Chief Financial Officer Margaret Barkala, the problem initially appeared to be the result of a new computer system that was installed at the beginning of the year. Later, however, it appeared that this was not the cause of the problem. The discrepancies, Barkala said last week, date back to at least 2005.
As required by law, the town immediately notified the New Jersey Department of Community Affairs and the Hudson County Prosecutor’s Office, which is now conducting its own investigation into the matter. Although the discrepancies were apparently first discovered in February or March, town officials did not go public with the investigation until they alerted the state and county in May.
Tax Collector Alan Bartolozzi, whose work for Secaucus is now at the center of the investigation, was suspended with pay on May 20, but this was recently changed to suspension without pay. He has not been charged with any crime.
Bartolozzi’s attorney, John Lynch, said last week, “I’ve seen the allegations against him, but I haven’t seen the underlying materials they say support those allegations. So, I think it would be premature for me to comment on the matter.” He added that he has not met with or been contacted by the Prosecutor’s Office.
Insurer to pay for audit, additional help
The vote to hire an independent auditor came during a special session that was called by town councilmen Michael Gonnelli and John Bueckner. The councilmen wanted to revisit a proposal made by Councilman Gary Jeffas two weeks ago to hire an independent auditor to investigate the tax office.
Currently, Barkala is leading the investigation with help from auditors from Suplee, Clooney, & Company. Technically speaking, Suplee, Clooney is an independent firm contracted to do the town’s annual audit. However, the fact that Suplee, Clooney has been doing audits for Secaucus for at least a decade, and didn’t catch discrepancies in the Tax Office until now, has some people questioning whether the firm can be an impartial investigator.
Similar questions have been raised about Barkala.
“You have the Finance Office and the auditors – the two principle entities that are supposed to make sure something like this doesn’t happen in the tax office – investigating it,” Jeffas said two weeks ago. “It’s possible they didn’t pick up on something that they should have. So how do you have these same people leading the investigation?”
His proposal to hire a different firm had been voted down 5-2 at the June 21 council meeting. It was met with resistance by the Democratic majority on the governing body, who are allied with Mayor Dennis Elwell. Among other things, the Democrats argued that an independent audit could cost the town as much as $125,000, an unnecessary expense since insurance companies that cover the town will do their own audits before paying out any claims in the matter.
Secaucus has $1 million in insurance coverage for any losses in the tax office. The first $250,000 would come from a bonding company that insures Bartolozzi; the next $750,000 would come from the New Jersey Municipal Excess Liability Joint Insurance Fund, or MEL.
At last week’s special session, David Grubb, executive director of the MEL, agreed to pick up the tab for an independent audit.
“We will arrange for an auditor to come in and assist the process and help prove the claim,” he said. “I am prepared to line that up immediately so that we’re ready to go when we receive word from the [governing body] that the community is ready for that part of the process.”
Later in the special session, the council voted 6-0 to begin the independent audit on July 21. Councilman John Shinnick was unable to attend the session and did not vote on the resolution.
Grubb agreed to “advance a portion of the claim to ease some of the cash flow.”
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Hiring another
Responding to concerns by Gonnelli, Bueckner, and Jeffas that the tax investigation has prevented Barkala from working on the 2009 budget, Grubb also agreed to pay for the hiring of a retired CFO or tax collector to help out in the Finance Office to “take some of the pressure off [Barkala].”
This new hire will be a temporary employee and will work part-time.
Finally, although Secaucus has yet to file a claim for losses, Grubb agreed to “advance a portion of the claim to ease some of the cash flow” after the town has a realistic rough estimate of what its losses might be. Grubb did not specifically state how much of the claim the MEL might be willing to advance.
A payout in the tax matter could come just months after the MEL shelled out $1 million toward a $4 million settlement in a harassment lawsuit the town lost last year. Another big payout in 2009 could increase Secaucus’ insurance premiums when its policy comes up for renewal.
E-mail E. Assata Wright at awright@hudsonreporter.com.