Posted on Wednesday, January 16 2008 by Heather Brandon
Springfield Mayor Domenic Sarno‘s office issued a press release late today regarding the loss in value of the city’s investment with Merrill Lynch. “I am putting forth rigorous effort to find out exactly what transpired and how the city ended up where we are today,” Sarno said. “I will not settle for anything less than an exhaustive and open review.”
After the failure of City Councilor James Ferrera‘s resolution on Monday this week, which would have enabled the City Council to ask the state-appointed Finance Control Board for up to $50,000 for an independent, local counsel to probe the case, today Mayor Sarno appealed instead to State Auditor A. Joseph DeNucci (pictured, left). In a brief letter, Sarno requested not only a full audit of this particular investment, but also an audit of all other current city investments. The full text of the letter is below.
The City of Springfield, Massachusetts
Office of Mayor Domenic J. Sarno
January 16, 2008
Re: Merrill Lynch investments
Dear Auditor DeNucci:
I am writing this letter to seek your agency’s assistance in undertaking a complete audit of the City’s Merrill Lynch investments as well as all other current City investments in the cash management area.
This request is made as a result of the December 20, 2007 announcement by the Springfield Finance Control Board that Merrill Lynch securities acquired by the City during April, May and June of 2007 at a cost of $13,925,000 had declined in market value, as of November 30, 2007, to $1,257,500, representing an unrealized loss of $12,667,500.
The Offices of the Attorney General and Secretary of State have publicly acknowledged that their offices are reviewing the matter, and the Springfield Finance Control Board has retained outside counsel for advice on this matter.
As a newly elected Mayor, I want to assure that every reasonable effort is made to recoup the City’s investment, and that measures are taken to assure the City’s resources are properly safeguarded. As such, I respectfully request your assistance in working with the City and other agencies involved and help advocate on the City’s behalf, evaluate internal controls and ensure integrity in financial management systems as the City moves forward as well as ensuring that results are fully disclosed to the public.
Mayor Domenic J. Sarno
According to a description on its Web site, the Office of the State Auditor “audits the agencies of state government to ensure that funds are spent in an appropriate manner. In so doing, the State Auditor provides the Governor, Legislature, auditees, and the public with an independent financial, managerial, and technical assessment of the state’s agencies, activities, contracts, and programs.”
The state auditor also “has the discretion to conduct special fraud audits throughout local government, when requested by the local governing body. In carrying out its responsibilities to ensure compliance with state and federal law, the OSA works closely with law investigations, and providing technical assistance. …The OSA is not simply a critic, but is an agent, an advocate, and a catalyst for improved management and delivery of government services.”