State agencies have found that village officials over the past 20 years consistently mismanaged funds, broke conflict of interest policies and raised questions as to whether or not taxpayers’ money went to intended projects.
A U.S. Department of Housing and Urban Development review in 2008, of a period from 1990 to 2008, reported that a member of the village board and former mayor Leo Lynch used funds from a housing rehabilitation program to award contracts and give loans to benefit themselves and family members.
A recent state Comptroller’s Office audit also uncovered many questionable financial practices between 2004-07, mainly involving missing records and a lack of purchasing controls, that made it difficult to verify where village money was spent.
But law enforcement officials are doubtful if anyone will be held accountable for some of the more serious financial violations.
State police Investigator William Keiffer was involved in reviewing the HUD findings. While it is clear the funds were “not handled properly” and “mismanaged,” the problem with this kind of investigation is an inability to link that to a crime, Keiffer said in a phone interview. “They didn’t follow the procedures set by HUD,” he added, but the findings don’t always translate to “criminal liability.”
“No proof that anyone actually stole money,” Keiffer said.
The investigation did result in one arrest last year, however. The former mayor’s son, Leo Lynch Jr., of Poland, was charged in April with misdemeanor petit larceny and felony falsifying business records. Both charges were related to his time as a village of Middleville employee while his father was mayor.
Fairfield Town Judge John Sweeney recused himself from the case due to his position as village justice in Middleville. The case was then transferred to Ilion Village Court, which then passed the case to Herkimer County Court.
Lynch Jr., 41 at the time of his arrest, pleaded guilty last year to the petit larceny charge, which covered over the falsifying business records charge, according to the court clerk’s office. He was sentenced October 14 to an one year conditional discharge and forced to pay restitution of $213.67, as well as $750 in court fines, the clerk’s office reported.
Edward Kaminski, the attorney representing Lynch Jr. in the case, said the allegations were tied to village employee time sheets. Lynch Jr. had put minutes on several time sheets to make up for time he worked on prior days but did not get compensated for, Kaminski said. “Ten minutes here, 15 minutes there,” he added. But in order to settle the issue, the guilty plea was entered and restitution and fines paid, Kaminski said in a phone interview.
Lynch Jr. did not return a call Friday.
While the arrest addressed one issue raised by state officials, the more substantial conflict of interest violations may go unpunished.
The HUD report stated that Lynch, who resigned in January 2007 after over 20 years in office, knowingly broke conflict of interest regulations.
Lynch referred prior requests for comment to Mark Rose, former village attorney. Rose has said he had no involvement with the village loans.
Program regulations were part of village guidelines set for management of an over $290,700 revolving loan fund, which was established to provide low-interest loans to homeowners to address residential sub-standard conditions.
The report concluded that Lynch and the board disregarded program guidelines, having gone ahead with two loans despite HUD’s denial of requests, signed by Lynch, for waiver’s from conflict of interest requirements.
Additionally, a $10,000 loan was made through the program to West Canada Woodwork for the mayor and his sons business, according to the report. This loan, and several others totaling nearly $150,000 that were deemed ineligible by the report, were repaid to the fund, according to the HUD report.
Construction contracts were also awarded to “West Canada Woodwork - Lynch Contractors” to perform rehabilitation work through the HUD-funded program, and the “company owners had a familial relationship with the former mayor at the time contracts were awarded,” the report states. No amount is given in the report for the contracts.
The HUD report also cites several loans that were in conflict of interest, including six loans, totaling over $4,100, to the mayor’s son Greg and Mary Lynch. And Charles Dingman received an over $2,000 loan while holding a village trustee position.
Dingman has said in a phone interview for an earlier Evening Telegram article on the HUD program that his loan was used to convert his fireplace to propane.
“As far as my recollection, it [the program money] was the village funds, so the village made the decision on them,” said Dingman.
The conflict of interest loans, which were repaid, all had village board approval, according to the report.
No new program applications are being accepted as the RLF has been suspended by current Mayor Elizabeth Schrader, who initiated the HUD review and subsequent OSC audit.
Schrader has said the two reports’ findings are related to actions prior to her taking office in April 2007. And all financial controls recommended by the OSC have been implemented.
Middleville, N.Y. —
