Audit questions 80% of West Haven’s COVID expenditures

A new forensic audit of more than $1 million in COVID-19 relief funds spent by the city of West Haven indicates approximately 80% of the expenditures should not have been allowed. That doesn’t include the hundreds of thousands of dollars a former state lawmaker and others are accused of stealing from the city.

The problematic expenditures - nearly $900,000 of about $1.13 million reviewed by the auditors - were largely ineligible expenses or lacked sufficient justification and documentation, according to the audit report from the private firm CohnReznick, which was hired by the state’s Office of Policy and Management.

The audit, released Friday, also found “numerous instances” where the city of West Haven lacked “sufficient controls and safeguards to ensure the proper accounting and reporting of CRF (COVID Relief Fund) expenditures.” Additionally, the lack of internal controls, policies and procedures and “other weaknesses” went beyond the COVID funds, affecting the “overall financial operations and management of the City,” the auditors wrote.

“The areas identified may expose other areas to the risk of fraud, waste and abuse,” according to the report.

The auditors said they were made aware of certain transactions considered potentially fraudulent, and under federal criminal investigation, and did not include them in this review.

West Haven Mayor Nancy Rossi, a Democrat, said in a text message to The Associated Press that she had just received the report and still needed review it.

“The city will not comment until we have had sufficient time to thoroughly go through the report,” she said, adding how the city has the ability to rebut findings it does not agree with and submit additional documentation.

Some of the financial control issues raised in the audit were previously identified by the state’s Municipal Accountability Review Board, which required West Haven to take corrective action. The board plans to meet in the coming weeks to “determine next steps,” including a corrective action plan.

OPM hired CohnReznick to conduct the audit after federal authorities charged former Democratic Rep. Michael DiMassa, a former aide to the West Haven City Council, and his former business associate John Bernardo with wire fraud in October. The pair has been accused of stealing $600,000 in COVID funds by using fraudulent invoices submitted to the city through a company they formed in January 2021 called Compass Investment Group LLC. Both have pleaded not guilty.

In February, DiMassa’s wife, Lauren Knox, and John Trascacco, a business owner, were arrested in connection with the case and pleaded not guilty to one count of wire fraud and one count of conspiracy to commit wire fraud stemming from two separate alleged schemes involving DiMassa.

The top two Republicans in the Connecticut State Senate called the audit a “stunning indictment” and said “if this could happen in one town, how do we know it isn’t happening in others?” Sens. Kevin Kelly and Paul Formica said the report “solidifies the need for reform.”

Bob Stefanowski, the likely Republican candidate for governor, criticized Democratic Gov. Ned Lamont and his administration for “failing to put procedures in place that would protect these funds from being abused.” A message was left seeking comment with Lamont’s spokesperson.

Stefanowski on Friday also called for Rossi to resign.

“She knew they were under scrutiny by the MARB, and she failed to put the protections in place to ensure that local resources were protected and spent with the residents needs in mind,” Stefanowski said in a written statement.

Asked about the GOP candidate’s call for her to step down, Rossi said in a text: “I will not be resigning.”