WEST HAVEN, Conn. (WTNH) — A forensic audit of West Haven’s finances ordered by the state found that nearly 80% of the city’s federal COVID-19 relief spending should not have been approved by municipal leaders.

The Municipal Accountability Review Board (MARB), which oversees city finances, voted Friday to release the forensic audit report by CohnReznick LLP, the firm that conducted the review of municipal records after multiple allegations of misuse of Coronavirus Relief Funds and the arrest of former state Rep. Michael DiMassa, who was also a city employee. The city received $1.15 million in these funds.

CohnReznick auditors concluded that around 80% of the city’s CRF expenditures in the interim report through Sept. 30 should have been disallowed. Those expenditures “were largely the result of either ineligible expenses or a lack of sufficient justification and documentation,” as reported by CohnReznick.

Auditors reported items that did not meet the CRF criteria amounted to $892,887.

The Office of Policy and Management (OPM) said auditors also uncovered “significant deficiencies in internal controls, policies, and procedures unrelated to the CRF program which permeate across the local government organization.”

“It is West Haven leadership’s responsibility to safeguard the assets of the City and ensure proper controls are in place to mitigate against waste, fraud and abuse. Since the questionable and potentially fraudulent use of COVID Relief Funds and other irregularities surfaced, the City has taken little action to address the seriousness of vulnerabilities to further losses,” OPM officials said.

The audit identified problems such as mismanagement of city credit cards and a failure to properly review expenditures. It also identified a failure to track and authorize overtime by city employees.

The city’s finance director told CohnReznick investigators that “there isn’t any consistency in the manner in which departments approve new vendors, approve invoices or utilize purchase orders.” The city’s municipal charter requires purchasing procedures that were not followed.

West Haven Mayor Nancy Rossi issued the following statement Saturday, saying in part:

I take the findings of the audit seriously. The report highlights shortcomings in internal controls and processes; some of which we have already addressed, and some which require additional focus.

The Coronavirus funds were administered by West Haven employees who did not have the city’s best interest at heart. Two of those employees have been arrested for conspiracy to commit fraud and wire fraud. We have initiated a comprehensive corrective action plan beginning with the recent hiring of a new finance director.

West Haven Mayor Nancy Rossi

Read Rossi’s entire statement:

On Monday, Rossi released a new statement, saying in part:

I understand the outrage from the community, and quite honestly, I am equally outraged. This is embarrassing to West Haven. Proper financial controls have been a problem and ignored in our city for decades. I have made a real effort and some progress on improving the city’s control structure, but, admittedly, not fast enough. I take full responsibility as mayor, but at the same time, I make the commitment to our residents that I will make any needed changes and will facilitate the implementation of any additional financial controls necessary to ensure that something like this never happens again.

West Haven Mayor Nancy Rossi

Rossi said Monday some of the issues in the audit report have already been addressed and they will be “drafting and implementing additional controls to satisfy the other noted deficiencies soon.”

Rossi said she has a meeting with MARB Tuesday where they will discuss a comprehensive correction plan. She added Finance Director Scott D. Jackson will be addressing the City Council at its next meeting to provide an update on immediate steps taken and the correction plan going forward.

Max Reiss, director of communications for Gov. Ned Lamont, also issued a statement Friday:

The audit findings are outrageous and a betrayal of the public’s trust. They require further analysis and investigation. The MARB has considerable work to complete in order to assist West Haven with its finances and accounting practices. The legislature established the MARB process to improve municipal transparency and accountability and that process should continue for the benefit of the residents of West Haven and the State of Connecticut.

Max Reiss, director of communications for Gov. Ned Lamont

DiMassa and a business associate, John Bernardo, have been charged with stealing more than $1 million in federal COVID relief money that was intended for West Haven.

Bernardo was arrested on charges of conspiracy to commit wire fraud and wire fraud following DiMassa’s arrest.

In February, two additional people were arrested in connection to the case.

West Haven’s finances are under partial state control through MARB. OPM told the board Friday that West Haven may now face a near-complete state takeover of local finances.

MARB will meet in the coming weeks to determine the next steps, and a corrective action plan will be considered at their next meeting.

Read the full audit report below:

OPM officials also submitted a draft set of recommendations regarding the city for MARB consideration.

See the full document below: