Calls for SEC investigation of allegations that Nassau County ‘cooked the books’; State Assemblymember Charles Lavine calls for State Comptroller DiNapoli to audit the county
(Long Island, NY) This morning, former Nassau County Comptroller Howard Weitzman announced that he filed a formal complaint with the Securities & Exchange Commission calling for an investigation of misleading and deceptive financial reporting by Nassau County (full letter attached). Based on mounting evidence of efforts to ‘cook the books,’ Weitzman is asking the SEC to review whether laws were broken. Weitzman was joined by State Assemblymember Charles Lavine, who called for State Comptroller Tom DiNapoli to audit the county.
“George Maragos and other county leaders have repeatedly issued false and misleading financial statements that have deceived the public and those who purchase Nassau County’s bonds,” said Weitzman. “It is clear to me that Mr. Maragos is cooking the books to produce the financial results that he wants instead of financial results that are accurate.”
At issue is whether George Maragos and other county leaders have sought to hide or postpone liabilities in order to show a budget surplus when one does not exist. Earlier this month the Wall Street Journal reported on the county seeking a controversial court order on the last working day of December 2012 to defer $88 million in payments of property tax refunds until 2013 in order to turn a nearly $45 million deficit in 2012 into a $41 million surplus.
In recent years the SEC has brought charges against other state and local governments which have engaged in similar patterns of deception by issuing inaccurate and misleading financial statements. In similar circumstances government officials have been held to account for misleading statements in a budget report and a State of the City address (Harrisburg, Pennsylvania), hiding projected cost overruns from the public (‘Big Dig’ project in Boston, Massachusetts), failing to disclose pension liabilities (State of New Jersey), transferring revenues to mask deficits (Miami, Florida), or concealing retiree health costs (San Diego, California).
“I am deeply troubled by the mounting evidence that Nassau County has ‘cooked the books’ to mask a budget deficit and other financial woes,” said State Assemblymember Charles Lavine. “I have called on State Comptroller Tom DiNapoli to audit Nassau County to get to the bottom of these very serious accusations. Election year politics is not an excuse to engage in Enron-style accounting.”
Over the past four years, Nassau County has undergone three bond downgrades by major rating agencies, the county’s budget outlook has been lowered from ‘stable’ to ‘negative,’ and the county’s debt has reached a new all-time high.
The Government Finance Officers Association (GFOA) is charged with reviewing municipal reports for compliance with Government Accounting Standards. Nassau County has history of receiving the GFOA award for excellence in financial reporting for over 20 consecutive years, including Weitzman’s 8 years in office. This year’s CAFR must shamefully end that tradition. The GFOA cannot allow its imprimatur on a document trumpeting a surplus when no surplus could exist without the connivance of County officials manipulating the judicial system to obtain a court order for the sole purpose of changing the public’s view of the County’s year end position.



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