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Fund misappropriation puts Niles general fund in red
By Jordan Cohen
NILES
City Auditor Giovanne Merlo said a “misappropriation of funds” by the administration of former Mayor Ralph Infante in 2014 is responsible for this year’s general fund dropping into red numbers – a situation prohibited by the city’s current designation of fiscal emergency.
“They [Infante administration] paid a cemetery worker wages, benefits and an incentive when he retired totaling $204,000 from the light-department funds when he should have been paid out of the general fund,” Merlo said.
Under state law, enterprise funds such as the light department, which generates its own revenue, cannot be used to make up for general-fund shortages. “The state auditors found this in the performance audit, and it had to be corrected immediately,” Merlo said.
As a result, council had no choice Wednesday but to approve the $204,000 transfer from the general fund to reimburse the light department, putting the general fund in the red.
“We only had a carryover of $22,000 last year, and this is a huge hit to the general fund,” Merlo said.
“This is another disaster approaching us,” Mayor Thomas Scarnecchia told the packed council chambers. “We have barely enough to operate for the rest of this year.”
Merlo said the state’s 2014 performance audit could not be released until council rectified the fund misappropriation. Councilman Ryan McNaughton, D-at large, said he believes the finding is only the beginning.
“The state auditors are finding more crap from the past that has to be cleaned up,” said McNaughton, without going into details.
Law Director Terry Dull, in response to a question from The Vindicator, said he did not believe the misappropriation of funds constitutes a criminal offense, however.
In February, agents from the FBI and the Ohio Bureau of Criminal Investigation raided Infante’s home in Niles and took away documents as part of an apparent criminal investigation.
Another issue contested by many in the audience, and questioned by several council members, is a request by Scarnecchia to hire Atty. Matthew Blair of Niles to represent the city in labor negotiations. According to the proposed agreement, Blair and any associate legal personnel that work with him in the negotiations would be paid a total of $245 per hour.
Blair is also on the board of the Mahoning Valley Sanitary District, the city’s water provider, which led to questions from council about a potential conflict of interest and whether another attorney might provide a lower fee.
Council would only pass the first reading of the proposal pending a review by Dull on the possibility of a conflict.
Scarnecchia said the use of outside counsel is endorsed by the state auditors and is a component of the city’s financial recovery plan from fiscal emergency, where it has been since October 2014.