Dan's Papers - June 19, 2009

"When I left office in East Hampton Town we had money in the bank. McGintee says he succeeded me in office and found a secret deficit? Let me put it this way. During all the years I was in office, we had two dog control officers. Now we have five. But the number of dogs didn't change."

- Jay Schneiderman, County Legislator, June 2007.

What is most shocking about the arrest in handcuffs of Ted Holts, Bill McGintee's budget officer, last week and what will apparently be the arrest very shortly of McGintee himself, is the timeline of events leading up to today. The timeline speaks for itself, and here it is.

In November 2003, McGintee wins the election to become the next supervisor of East Hampton to replace Republican Jay Schneiderman who announces that he intends to run for County office. The books for the Town show a surplus of $11 million. Schneiderman has left office with all good wishes and wins his County challenge against a sitting incumbent.

Between November 2003 and 2005, McGintee engages in a wide variety of projects all over Town designed to improve the quality of life here. For example, from where I sit looking over Three Mile Harbor, I now look over a beautiful new town marina bulkhead and boardwalk with new park benches and a newly landscaped park facility at the south end. Everybody loves McGintee. How did he do it?

November 2005, McGintee is re-elected to another two-year term in a landslide.

In December of 2006, while shopping at Macy's in Hampton Bays, Ted Hults, who is McGintee's long time Town Budget officer, receives a phone call from McGintee telling him that the Town cannot make the town payroll that week. There is just no money in any of the accounts.

Whether Hults thought of this or McGintee did is going to come out in a courtroom, but by the end of the call it had been decided that what they should do is write a check from one specially held Town account - the account that holds the proceeds of the CPF tax, the 2% that is charged by the Town for every single real estate transaction in the community. The fund is bursting with money, but the money has been collected only to be used for the purchase of open farmland and open space.

McGintee and Hults agreed that as soon as possible, this money should be returned to this account. This is only a stop gap measure. A few days later, the Town Attorney, learning of the plan, says that to use this money for any purpose other than for what it was intended would be against the law. McGintee orders it done anyway.

Between January and November, a rough election campaign is run between Bill McGintee seeking a third term and a formidable Republican rival named Bill Wilkinson. It begins to leak out that something is not right with Town finances and Wilkinson goes on the attack. When Republicans on the Town board ask that an independent audit of the town books be done, McGintee walks out of the meeting. He says the other councilmen do not have the right to see what he is doing. He also says that he has "found" a deficit, and it was created during the prior administration of Jay Schneiderman. He says there will be revelations soon.

In November of 2007, with the townspeople unsure of who is responsible for whatever mess there is, McGintee is elected to a third term by a margin fewer than 100 votes.

In January of 2008, McGintee is asked by Adelaide de Menil of Further Lane in East Hampton if she could deliver seven 300-year-old shingled saltbox homes to the front lawn of Town Hall as a temporary measure. She had assembled these historic homes in a compound on her 50-acre oceanfront property to save them from the whims and wishes of developers by buying them and towing them there. Now her property was being sold and the buyer wanted the houses off and because this has come up suddenly, de Menil said she needs time to find new sites for them and the front lawn of Town Hall is only a mile away. McGintee responds that not only can she temporarily park them there, but also that he will authorize that the buildings, linked by enclosed walkways will become a new Town Hall, to replace the old. Their historic worth would be a Town treasure forever.

Everyone in town is excited by this idea. The cost of renovating them might be $4 million, it is said. De Menil offers to pay to have them towed there, and she also offers to give the town $1 million as a gift for their upkeep. The houses are moved in March 2008.

In April of 2008, after pressing from Dan's Papers to see the actual checks of the return of the money to the CPF fund - McGintee says money was borrowed but was now returned - copies of checks totaling $6 million are sent.

It turns out that the month before, McGintee asked the State for a $10 million loan in anticipation of the approval of a bond. The Town had presented books with inaccurate and cheerful numbers to the State to persuade them to make this loan. The numbers were signed off on by McGintee and Hults, and a notation in the presentation assures the state that the Town Attorney too has signed off on the numbers' accuracy. The loan is approved and the money sent. The State is always happy to help out a town that has gotten in over its head.

In the summer of 2008, the East Hampton Town Attorney Linda Molinari finds out that she's signed off on cooked books, says she never did that, and resigns.

Also during the summer, a petition is presented to McGintee signed by nearly half the people in Town demanding that he resign. He says he will complete his term.

In October 2008, a financial whiz who has made millions and who grew up in East Hampton, a friend of McGintee, is hired to straighten things out. He flies in from Paris. He says he will show that none of this was McGintee's fault, but was the fault of Schneiderman. He says this before looking at the books. He is hooted out of office within 72 hours.

In November 2008, other auditors and accountants take a crack at figuring out the East Hampton Town books story. It's said there are 40 checkbooks and more than half of them have not been balanced in years. It's going to take time.

In December 2008, McGintee presents a second load of allegedly cooked books to the State for an additional $10 million to shore things up until further bonding can go through. That too is granted. Everyone breathes easier.

In April 2009, de Menil announces a donation of an additional $400,000 toward the completion of the partially renovated historic buildings she donated. All work has stopped on that renovation, and the projected cost is now about $11 million.

Also in April, County DA Thomas Spota announces that he will investigate the finances of East Hampton Town. It is widely rumored that State District Attorney Andrew Cuomo may run against the unpopular Governor Paterson and that Spota might be up for the job of replacing Cuomo. Spota's a nice guy, but until now has not been a particularly high profile DA in the County. And here is East Hampton in his jurisdiction, absolutely crying out for an investigation, high profile and, possibly, a no-brainer.

In May, the Democrats and Republicans meet to choose who will run for the Town Supervisor's office in November's election. McGintee says he will not run for a fourth term. He will be happy to have completed his three terms and hopes to leave office amidst congratulations and praise.

Both the Democrats and Republicans choose their candidates. The candidates, Zwirn and Wilkinson (again), both announce that they will each refuse to hire even one sitting Town Board member to run with them, even those who fought McGintee. They both want a clean sweep of the broom, but they do agree that they will each have to ask a clerk in Town Hall where the brooms are kept. There will be no elected officials there who would know.

June 1, 2009. Ted Hults resigns. He says he is doing so because obviously there are going to have to be cuts on the Town payroll and that by resigning he hopes that one of those cuts would be saved, thereby assuring at least one person remained who did so because of his taking the axe instead of them.

June 7, 2009. McGintee hires the very hardball legal firm of Bracewell and Giuliani to defend his rights.

June 8, 2009. Hults is taken away in handcuffs. He is charged with six felonies and two misdemeanors, all eight relating to the illegal looting of the CPF fund and in the false statements made in the request to the State for the $20 million worth of loans. He does not hire a lawyer but instead is assigned a public defender.

June 9. DA Spota notes that after a vigorous investigation of the financial records of not only the Town, but also of McGintee and Hults's own personal records, there appears to be no personal gain made by either of them. Nobody went to Las Vegas. Nobody bought a condo in Florida. Nobody bought a Rolls Royce with these funds.

Hults pleads not guilty and his public defender says Hults will cooperate in every way with the DA.

June 11, 2009. An audit by the State of each of the five eastern towns' finances reveals a few slaps on the wrist to four of them, but the fifth, East Hampton, gets a knuckle sandwich. With an annual budget of about $90 million a year, this Town has gone from a surplus of $11 million at the beginning of McGintee's term to a deficit of $18 million as of today, three and a half years later.

I said at the beginning of this story that this timeline speaks for itself. But I'd also like to voice my own opinion.

I think Bill McGintee is a well-meaning, amiable fellow whose idea of balancing a budget consists of being surprised to discover there is no money left in the bank to spend.

Until about 15 years ago, it was just malfeasance for a Town official to lie about the numbers to a State or Federal agency. You'd throw the bum out of office and that was that. But 15 years ago, laws in many states, including New York, changed. Now lying about the numbers to either State or Federal officials can get you 10 years in prison. Was McGintee warned about that change? Who knows? In any case, he allegedly went ahead and did it.

In that sense, this story, as close to home as it is, reminds me of the current trial going on with Anthony Marshall, son of the late Brooke Astor. He did so much for her, supervising her care when she grew older. In return, she never liked him or his wife, but tolerated them. And then, when she got to be 100, she couldn't even remember the things he did.

Marshall, now 80, had waited all this time, and now her mind was gone. But she wouldn't die. What was he supposed to do? It's been said that sons of rich women in such circumstances might not be blamed for doing what he did, which was spend bits of money here and there on himself and his wife. It's sort of a shame, but not something for which he should have to go to jail.

As for McGintee and Hults, they should know that since these new laws have come into effect, in the cases where there has been no evidence of personal gain, the sentences are usually the pain and suffering caused by the cost of defense and the revelation of the malfeasance, followed by a suspended sentence and parole to make sure it doesn't happen again. In other words, the stupidity of not putting your hand in the till after committing a felony is a cure for incompetency.