MAHOPAC, N.Y. - Four months into 2018, the Town Board and the Mahopac Volunteer Fire Department have still not come to terms on a new contract.
The two parties were planning to meet last night (April 18) to continue negotiations and Supervisor Ken Schmitt said he was optimistic that an agreement will be reached “sooner rather than later.”
The dispute centers on financial reporting obligations that the Town Board imposed on the fire department in the wake of the $5.7 million embezzlement that was discovered in 2015. Last summer, former fire department treasurer Michael Klein was sentenced in federal court to six years and five months in prison for stealing the money over what investigators said was a swindle that lasted nearly 13 years.
The Mahopac Volunteer Fire Department is a fire protection district (District 2) and normally would not be legally subject to the same fiscal scrutiny as a regular fire district. But in the wake of the theft, the town asked the department to agree to greater fiscal oversight, as well as some other provisions.
The department was required to send invoices and checks—if they involved money provided by the town—to the Pinksy Law Group in Syracuse for approval. Brad Pinsky is an attorney contracted by the town who specializes in matters pertaining to fire departments.
“We would pay the bills and they would review them,” said Edward Scott, chairman of the board of fire commissioners. “A couple of times they would have questions about certain things and we provided an explanation.”
Scott said one thing Pinsky asked the fire department to do was create separate accounts for its operating expenses and its general expenses, which, he says, it did.
But now, after two years of strict fiscal oversight, Scott said, the department believes it is no longer needed.
“It’s a lot of extra work for the treasurer, something he’s not compensated for,” he said. “[Pinsky’s services] cost $20,000 a year and we are trying to save the taxpayers money.”
Scott said the department now has an independent auditor perform annual audits and added that if the board still feels more oversight is needed, the invoices and checks could be sent to the town comptroller’s office for approval.
“We are completely transparent with our finances now,” Scott said. “We understand why the town did this, but we have changed internal controls and don’t believe [embezzlement] could happen again.”
The contract the town is asking the fire department to sign is for $1.2 million, $200,000 less than what the department originally sought.
“We will deal with it and make it work,” Scott said, “but so far we have received no money.”
Scott said the department did receive a $1 million insurance payment as a result of the theft.
Schmitt said the fire department has indeed made changes to become more fiscally transparent, but he believes it is too soon to end its obligation to send its financial statements to Pinsky.
“There may come a point in time when the town is satisfied they have made changes in respect to review and oversight of their financials,” Schmitt said. “They have made changes, but we want to give it a little more time. We believe they’ve made positive changes, but we need to be completely comfortable there will be no criminal activity moving forward. It’s still kind of raw and I think the taxpayers are looking for these safeguards. [Taxpayers] want us to make sure there is this extra oversight.”
Schmitt said he is convinced Klein acted alone, noting that if he had had accomplices, he would have likely given them up to investigators in exchange for a lighter sentence.
“But the reality is $5.7 million was stolen and everyone is asking how he was able to do this, so it’s obvious there was a lack of oversight,” Schmitt said.
As for the April 18 meeting between the parties—held after Mahopac News went to press—Schmitt said he was confident “we will have a great dialogue.”
“We need to work together. We don’t always get what we want, but somewhere in the middle we will agree to the terms of this contract and we can resolve it,” he said. “[Negotiations] can’t be adversarial or insulting. If that continues, we won’t get anywhere. We need to be open-minded and start rowing in the same direction.
“We don’t want a bad relationship with the fire department,” he continued. “This should never be us against them. They do an excellent job. I don’t know what we would do without a volunteer fire department. If we had to have a paid fire department, imagine how expensive that would be. But we have a fiduciary responsibility here and are the stewards of the taxpayers’ money and we have to make sure [embezzlement] never happens again.”