Fishing for Answers on City’s Investment Loss
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.
Sincerely,
[Signed]
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.”
RT
January 16th, 2008 at 9:36 pmAnd DeNucci is also a former boxer. (no kidding–see the bio from his web page). If anyone can fight for that money, I have confidence in him.
“Prior to his election, Joe DeNucci was a well known professional boxer. In 1956, while a 16-year-old high school junior, he was a Golden Gloves champion. The following year, as a senior in high school, he began his professional boxing career. Throughout his career, he was ranked among the world’s top middleweights. At the closing ceremonies of the old Boston Garden, it was announced that Joe DeNucci had the most bouts in the history of that storied building. In recognition of his outstanding boxing career, Joe DeNucci was inducted into the National Italian American Sports Hall of Fame in Chicago in May 2004.”
NoPolitician
January 16th, 2008 at 9:54 pmI just don’t get this one. Why would Sarno ask the state auditor to review all of Springfield’s investments? Why doesn’t Sarno, or one of his staffers, review the investments? He’s mayor now, not a city councilor. He calls the shots.
This is getting weirder every day.
Heather Brandon http://urbancompass.net
January 17th, 2008 at 9:47 amMaybe Mayor Sarno is trying to invoke the “special fraud audit,” as it must be requested by the local governing body.
The request would carry more weight if it were coming from the control board rather than the mayor’s office, given the current nature of city governance, and the other ongoing investigations into this matter. If I were in DeNucci’s shoes, I would not know if I were venturing into a land mine or not by following up on this, and I would have to make a bunch of calls to try to read between the lines, and that’s a pain, and slows down the process.
Unfortunately members of the City Council as well as Mayor Sarno seem dissatisfied with whatever explanations have been received up to this point, which makes it hard to know whether facts are being withheld, or if facts have simply not been laid out well in layman’s terms.
I suppose we’ll find out more today.
Heather Brandon http://urbancompass.net
January 17th, 2008 at 9:54 amThe news of Springfield’s troubles with Merrill Lynch was picked up by a couple of other bloggers this week, which I thought might interest some readers:
Blogger Mark Pribonic at On the Borderline
Mondo QT blogger Carola Von Hoffmannstahl-Solomonoff at Blogger News Network