Buffalo, N.Y. (WBEN) - What started as a routine audit of the Erie County Clerk's Office by the Erie County Comptroller's Office turned into a lot of things that didn't add up for Comptroller Kevin Hardwick.
"We found a lot of problems with their internal controls, especially segregation of duties, the sorts of things that if left unchecked, lead to money missing. Then eventually, we found some money that appears to be missing. We can't account for it," said Hardwick in an interview with WBEN. "There are severe, significant cash discrepancies."
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The original audit by the Comptroller's Office specifically looked at January and December of last year, 2022, and out of the 40 business days the Clerk's Office was open, Hardwick says his office found there was cash missing on 28 of those days, with the amount being a little under $14,000.
"We then on our own and at the invitation to the clerk, Mickey Kearns - I think he takes this as seriously as we do - he asked us to look at the earlier this year and the rest of last year. When you total everything up, again, what we found in the audit and then since the audit, you come up with about $90,000 that we can't account for," Hardwick said.
Upon the audit's findings, the direction of the Comptroller's Office has turned to investigating any potential patterns, if someone is taking money, and did this start in January of last year when the audit started? Hardwick's answer was probably not.
That's why Hardwick has reached out to New York State Comptroller Tom DiNapoli and is enlisting his help in helping out with their investigation.
"We're hoping that he can help provide a multi-year forensic audit and see how far this went back, and how much cash we're talking about," Hardwick said.
In the meantime, Hardwick has also brought in Erie County Sheriff John Garcia and Erie County District Attorney John Flynn to conduct their own investigations in the matter. The comptroller believes his office has given them enough where they can figure out whether or not to pursue criminal charges within the next few days or weeks, rather than months.
"Every dollar that we raise in fees or through sales tax or whatever is $1 we don't have to raise in property tax. If we're raising this $90,000 in fees, and it's going out the door rather than going into the county's budgets, then that's a problem, because it impacts everyone in Erie County," Hardwick said. "Again, we're not sure whether $90,000 is the extent of it, in fact, we're pretty sure it's not. So that's why everybody's concerned. We're concerned, the County Clerk Mickey Kearns, I can tell you, is very concerned, and, of course, we've involved now the Sheriff and the DA."
Upon hearing the news of the audit into the Erie County Clerk's Office, local political analysts understood right away the seriousness of the findings.
"The Clerk's Office handles lots of money, lots of cash, so something like this definitely needed looking into. I am glad that Comptroller Hardwick did that," said Ken Kruly of PoliticsAndStuff.com. "As far as how it plays out, I guess we're going to have to wait a little bit to see how the investigation by the Sheriff's Department and the DA go."
"Of course, it's always surprising when you hear it, but then when you think about it, it's not unusual. If there's going to be problems, if there's going to be misdeeds or illegalities, it's going to come with the handling of cash and not having the right controls in place to catch it early or to prevent it totally," added Republican political strategist Carl Calabrese. "I was not surprised that what the comptroller found had to do with the handling of cash, and it was sizable. The comptroller has said that it could be even more once they really get into it, and maybe even do a forensic audit. But I am not surprised that it involves the handling of cash. I'm not surprised at all."
Hardwick knows that the Clerk's Office is one of the biggest moneymakers for Erie County, and those types of departments or offices should be audited on a regular basis. However, he says this sort of audit hasn't been done with the Clerk's Office for eight years.
"I didn't do one last year, because it was our first year in office and we were understaffed in our audit division. And it was an election year. Mickey was up for an election, had I come out with this audit during the middle of the clerk's election last year, it might have affected the outcome, and it certainly would have had everybody crying politics. I didn't want that," Hardwick explained. "I've tried to make the Comptroller's Office as boring as possible, trying to keep politics out of it to the extent possible. That's why we waited to this year, and we came up with some significant findings, obviously."
While Hardwick and his office do have an inkling on where the money could have gone, they're not going to share that with anybody until the Sheriff and the District Attorney wrap up their investigations.
Early on in the auditing process, Hardwick says his auditors were having a lot of difficulty getting information from the Clerk's Office and the staff in place there. After the serious, significant cash discrepancies became apparent to Kearns, Hardwick says he has been in constant contact with the Comptroller's Office.
"A few weeks ago, I sat in on a meeting and Mickey was there also, and I laid it out for them. I said we're talking about money we can't account for. I think we got Mickey's attention, and since that point, he's been more than cooperative," Hardwick said. "Whatever we wanted, he's given us, and he's suggested some other things or he's asked us to look into some other things.
Another service Hardwick has offered for Kearns and the Clerk's Office is help in establishing and modifying procedures that will make it more less likely for these sorts of problems to happen again.
The level of cooperation Kearns has offered the Comptroller's Office is exactly how Hardwick believes government should work.
"This is a crisis, and rather than point fingers and lay blame, I think we're admitting there's a problem in the Clerk's Office, and we're moving forward and we're trying to tighten things up," he said. "In a crisis and opportunity here, I think the silver lining of this dark cloud is we will have better cooperation among county government departments."
With the way Kearns has cooperated with Hardwick and the Comptroller's Office, neither Kruly nor Calabrese are of the belief there is any sort of political agenda being executed in this audit. While Kearns doesn't appear to be personally involved in any of this action, things happening under his watch could still be reflected in politics going forward.
"If it's a widespread, system-wide fraud, that's going to have incredible implications, politically and legally. If it's more confined and limited, can be handled quickly and corrected quickly, it'll be less so. But no public official that deals with money, deals with the public and deals with the handling of cash wants any discrepancies," Calabrese said. "Nothing good can come from it, but it's very, very important to know what those problems are, and to implement remediation as quickly as possible."
Calabrese feels an audit such as this could be very helpful in not only identifying real problems that are happening, but potential problems, and making recommendations to implement so those potential problems don't someday become a real problem in the future.
Here is a written statement from Kearns with regards to the findings of the audit from the Comptroller's Office:
“Since February of this year, the Erie County Comptroller’s Office has been conducting an audit of the Erie County Clerk’s Office. During the course of this audit, areas of concern have been identified that my office is investigating along with the Comptroller’s audit team.
"The Comptroller and I have sent a letter alerting the Erie County Sheriff’s Office to these irregularities and requested his assistance in investigating this matter further.
So as to not to jeopardize the integrity of the investigation I will have no further statements until the investigation has been concluded.”