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Thursday, March 3, 2022

Grand Theft Auto: Charlestown

Frantic scramble by CCA to avoid blame for $3 million budget “oopsie”

By Will Collette 

Charlestown Planning Commissar and de facto CCA chief Ruth Platner has stepped to the forefront of the Charlestown Citizens Alliance’s defense against charges of financial ineptitude.

Platner usually tries to stay in the background, so her taking command of the CCA's damage control effort is a sign of how badly the CCA messed up.

The big issue: how did $3 million in Charlestown’s surplus funds get “misplaced” between 2020 to 2022 leading the town to spend $3 million we didn’t have?

Platner is now saying the money was never missing and used this hypothetical to try to make her point: 

If you move your car from the driveway to the garage, the car is not missing, stolen or lost. It has simply been moved. In the garage your car is still available to drive to work and it has the same value. Your total assets are unchanged. Reporting the car stolen would be a false police report, and making accusations against particular neighbors would be even more damaging and irresponsible, especially when you know right where the car is.

Same car, different place, no big deal, right?

But for Ruthie’s fable to line up with what actually happened, you’d have to move that car, then forget where you put it and buy a new car with money you don’t have. Aesop she’s not.

That, in a nutshell, is what happened in Charlestown. We thought we had $3 million more in loose change than we actually had - so we spent it.

And by the way, $3 million is a really big deal for a small town like Charlestown. It's equivalent to 10% of our total budget.

Never admit, never apologize

Now, the CCA could just say, “we made a mistake. We’re sorry. We’ll make sure it doesn’t happen again” but they can’t because the CCA’s code is to “never admit, never apologize and always attack.”

Platner also “explains” how Charlestown has more surplus money “parked in different locations,” a practice that is part of Charlestown's money management problem.

We not only have the “Unassigned Fund Balance” but funds set up for various purposes including some of Platner’s pet projects. She calls this "savings;" I call them slush funds.

She points to one of them, Charlestown’s $500,000 cash fund for lawsuits, even though Charlestown already has legal insurance through the RI Interlocal Risk Management Trust and could buy more coverage if we needed it.

Indeed, we could buy insurance for most of the emergencies we might face – and we do, budgeting $311,815 to pay for it. There’s a whole branch of the insurance industry that specializes in insuring municipal risk.

Dollar Store Parable of incompetence

To justify the town’s multiple pots of surplus money including the $500,000 legal fund, Platner points to her campaign to prevent the Dollar Store from coming into Charlestown.

Town zoning office Joe Warner was under pressure to come up with a way to block the store and the best angle he could find was to designate the Dollar Store as a “department store,” a business type banned in the "Traditional Village District" along Route 1a.

Dollar Stores are many things, including bad employers with a serious rap sheet, but department stores they are not. In 2017, State Superior Court threw out that reasoning and ordered the Charlestown Zoning Board of Review to take another look at the Dollar Store appeal.

At that time, the ZBR was also CCA-controlled, so naturally they denied Dollar Store’s appeal. It looked like the case was going back to court where it would have cost Charlestown even more money to defend a really shaky zoning decision and almost certainly lose.

Fortunately for Charlestown, the Dollar Store decided Charlestown just wasn't worth it as a potential site. Platner’s take-away was that we need to squirrel away a lot more money to defend flaky town decisions rather than stop making those stupid decisions.

We need a Bad Actor law

There has been another approach that Charlestown could use to block bad businesses, one I have urged the town to consider for more than ten years. 

Charlestown needs to adopt a “Bad Actor” ordinance and policy that would restrict the kind of businesses Charlestown would give permits or licenses, contracts or sales orders. CLICK HERE for a recent example of where we needed a Bad Actor law.

Bad Actor laws often contain a broad mix of offenses such as corporate crime (fraud, tax evasion, bribery, price-fixing, bid-rigging, etc.), environmental violations, labor law violations, wage theft, and of course performance issues such as defective, late or overpriced work.

Most – maybe all – of the businesses the town has battled would be barred from Charlestown with a well-crafted Bad Actor ordinance.

No, no, no. No forensic audit

Like a colonoscopy, we may not like it, but it's still a good idea
Platner then turns her outrage against the idea that Charlestown should commission an outside forensic audit to find out what really happened and why. 

As it is, all the CCA-controlled town government has done is investigate itself, and of course found itself blameless. 

For example, Town Administrator Stankiewicz claims the whole thing was “miscommunication/non-disclosure between the auditor and the Town Treasurer.” [Page 483 of the 2/14/22 Town Council agenda packet]. 

But outside the CCA, people like Town Council President Deb Carney kept up the call for an independent investigation, even though it might discover someone really did do something wrong – but as we know, the CCA cannot possibly do anything wrong, right?

So Platner dismisses Carney’s call for a forensic audit, claiming that a forensic audit “would cost hundreds of thousands of dollars and implying that crimes have been committed.” 

Let’s start with what a forensic audit is:

A forensic audit, also known as a forensic examination, is a search of financial records for evidence of illegal financial conduct. The phrase forensic is defined as belonging to, employed in, or appropriate for courts of justice or public discussion and debate. A financial audit, often known as a financial statement audit, is described as an independent auditor’s assessment of an entity’s financial statements and related documentation. So, the outcomes of this assessment include an auditor’s report attesting to the fairness of the financial statements and relevant disclosures.

The term “illegal financial conduct” has a fairly broad meaning though the first thing that often comes to mind is fraud. But there are other types of "illegal financial activity."

For example, it could include deliberately overpaying for property as we did at Tucker Estates, paying $900,000 when our tax assessor pegged its value at $333,600. We even had the Town Planner get several appraisals using a mix of false assumptions until the town got an appraisal that met the seller’s price. Since when is it Charlestown’s responsibility to do that?

Or submitting – and being awarded – a DEM grant to pay $426,000 for land owned by the CCA ally the Sachem Passage Association that the town planner and tax assessor knew was worth only $61,900.

Or using town money to fight a fictitious issue, the imaginary revival of the Old Saybrook-Kenyon bypass, the Charlestown Choo-choo hoax created by Ruth Platner herself.

Then there are inconsistencies and potential favoritism in the award of overtime and comp time.

And there is the ethically questionable practice of our supposedly outside auditors actually writing town financial statements rather than sticking to the review of the statements produced by the town. The Securities and Exchange Commission forbids such activity as The CPA Journal reported:

“An accounting firm cannot be deemed independent with regard to auditing financial statements of a client if it has participated closely, either manually or through its computer services, in … preparation of the financial statements” [SEC Codification of Financial Reporting Policies section 602.02.c(i)

Those are all possible instances of “illegal financial conduct” that either an independent forensic audit or a state grand jury could investigate. 

By the way, we've been using the same auditor for many, many years when financial best practices call for changing auditors every 5 years to prevent excess familiarity that could compromise their objectivity.

There is also the cover-up of all these issues by Town Administrator Mark Stankiewicz (right) who is denying the public, the media and even the Town Council President access to town records on these subjects. 

By a 3-2 party line vote, the CCA Council members gave its blessing to Stankiewicz's practice of denying the Council President the right to see town documents she needs to do her job.

Finally, Ruth’s claim that a forensic audit would cost hundreds of thousands of dollars is wrong. A cool website on the cost of things had probably the most direct and clear answer:

An article on Rushmore Forensic claims that a forensic accountant could vary anywhere from a few thousand dollars to more than $20,000 once everything is said and done.”

But that’s classic Ruth who is renowned for just making stuff up, 

If you are a Charlestown taxpayer, the $3 million oopsie is going to cost you. Budget Commission Chair Richard Sartor wants the town to accumulate an unassigned fund balance far in excess of what we need to handle emergencies. No longer having that $3 million at his disposal throws a monkeywrench into his plans. 

His target is between 23-33% of the town’s $30 million budget requiring somewhere between $6.9 and $9.9 million [2/14/22 Town Council Agenda Packet, page 486].

We don’t have that much in our unassigned fund balance because it is $3 million less than what the town thought it had at the end of December. We have $5 million and change.

This isn’t the end of this discussion, but only the beginning. We’ve learned a lot about the creeping rot within Charlestown town government. Despite the Stankiewicz cover-up, we’re going to keep fighting to shine a light on it.