Features

Audit: Bridgeport Housing Authority rents too affordable, undercharged tenants millions since 2004

Federal auditors found the Bridgeport Housing Authority improperly set rental rates for more than 150 tenants, causing the authority to forego millions in revenue that it could have reinvested in its properties.

The U.S. Department of Housing and Urban Development Inspector General, following up on a previous report that faulted the authority for offering employees “Cadillac” health insurance, said the authority, also known as Park City Communities, has not updated its flat rent since 2004.

Since the cost of housing has risen since 2004, the authority should have updated its flat rents, according to the report released last month.

Auditors said they couldn’t precisely estimate how much revenue the authority lost, but said it was at least “millions.”

In the most recent year, the authority missed out on about $600,000 because it undercharged 161 tenants an average of $300 per month.

According to the audit, new staff at the authority are implementing its recommendations, including updated flat rents.

The report also raised two issues related to unreported conflicts of interest.

Authority officials failed to disclose an apparent conflict of interest when they contracted with a director’s family member to perform work for the authority’s federal programs. After discussing the issue, the executive director took corrective action and terminated the contract.

The authority also had a longstanding contract with an individual who later became an elected official and thus had a HUD-defined conflict of interest. However, officials did not inform HUD or obtain the required approval. After discussing the issue, authority officials agreed to request the waiver, and HUD officials indicated that they were inclined to approve a waiver for this individual to run an after-school program.

Malloy hosted 200 last year for St. Patrick’s Day bash

A peek inside the Governor’s Residence shows how Dannel Malloy has dealt with the joys and sorrows of being Connecticut’s chief executive.

Some parties were catered, others canceled.

On the joyous side, Malloy hosted a St. Patrick’s Day party for 200 people in 2013, according to documents obtained from the state agency that manages the Governor’s Residence.

After the Newtown school shootings Malloy canceled five holiday receptions.

Among the canceled events was a Dec. 20, 2012, press reception for 100 expected to cost $3,450, according to the documents from the Department of Administrative Services, emails spanning December 2012 to April 2013.

The administration rescheduled some of the canceled events for early 2013, but the documents don’t provide a clear picture of how the rescheduled events match up with the canceled ones.

According to the documents, taxpayers paid for six catered events totaling about $15,000 at the residence during the five-month period with most of that going toward the $6,900 St. Patrick’s Day party.

The March 16 St. Patrick’s Day party cost $30 per person, plus a 15 percent service charge.

On Jan. 10, 2013, Malloy had a “formal sit-down dinner” for eight catered by Russell’s Creative Global Cuisine. The menu included a romaine, fennel and blood orange salad with pomegranate vinaigrette; braised beef short ribs with green peppercorn demi-glace; and warm apple crisp. The dinner, including four extra orders of short ribs, cost $654.47.

Malloy hosted local elected officials for a breakfast on Feb. 6. Mary’s Catering charged $265.50 for 25 people. Another event for local officials on Feb. 26, also handled by Mary’s Catering, cost $1,239 for 75 people.

A Feb. 7 luncheon for commissioners catered by Russell’s Creative Global Cuisine cost $3,584.72.

Culinary Accents catered a cocktail party for “inner-city clergy” on Feb. 15 for $2,625.

Two outgoing members of Malloy’s staff, Roy Occhiogrosso and Andrew McDonald, paid for catered events at the residence. Occhiogrosso, who left the Governor’s Office at the end of 2012 to return to the communications firm Global Strategy Group, paid for a Jan. 11 event at the residence. McDondald, Malloy’s general counsel until he became a justice on the Connecticut Supreme Court in January 2013, paid for an event on Feb. 20.

Did Occhiogrosso and McDonald pay for their own farewell parties? The Governor’s Office declined to provide any context about the events, but it appears they may have.

The residence also frequently hosts charitable events. At one April event, according to the emails, a catering worker helped himself to some of Malloy’s personal ice cream and wine.

McKinney’s law licensed suspended for past decade, owes client security fund more than $1,300

Sen. John McKinney, the Republican minority leader from Fairfield and a candidate for governor, owes $1,330 to the mandatory fund lawyers pay into to protect clients and his license has been under suspension since 2003.

“I have not engaged in the practice of law nor held myself out to be a practicing attorney since I left the private practice of law at Cummings & Lockwood over ten years ago,” McKinney said in a statement. “This is consistent with my annual ethics statements filed since that time. As such, this issue is moot. I am currently in the process of formally submitting retirement papers with the Statewide Grievance Committee to clear this administrative error.”

McKinney faces former Ambassador Tom Foley in the Aug. 12 Republican primary for a chance to take on Democratic Gov. Dannel Malloy in November.

Active lawyers in Connecticut are required to pay an annual fee to the client security fund, currently $75. The fund reimburses clients for losses caused by a dishonest attorney.

To avoid paying the fee while not practicing, an attorney can file paperwork to retire, effectively putting one’s license on hold. If a retired attorney wants to begin practicing again, the retirement is revocable.

If a lawyer fails to pay the fee, the Statewide Grievance Committee administratively suspends his or her license. Although it is illegal to practice law with a suspended license, the SGC will reinstate licenses when it receives all overdue fees. The SGC also handles complaints against attorneys.

Malloy, also an attorney, has no record of discipline or suspensions, according to the SGC website.

The SGC first suspended McKinney in July 2003. The SGC also suspended McKinney in 2007, 2008, 2009, 2010, 2011, 2012, 2013 and, last month, 2014. Starting with fees for 2006, the SGC started automatically suspending attorneys for each fee missed. Suspensions are made for missing the prior year’s fee, so the 2014 suspension is for missing payment of the 2013 fee.

Attorneys paying overdue fees must pay a reinstatement fee of $75. Including the restatement fee, McKinney owes $1,330. He didn’t pay $75 in 2002, 2003 or 2004. Between 2005 and 2012, he didn’t pay $110 eight times. He owed $75 for 2013 and another $75 for 2014, although he has not been suspended yet for missing that payment, according to a clerk for the client security fund.

New Democratic Party landlord gets bond commission funding for another property

The new landlord for the Connecticut Democratic Party received bond commission funds last week to renovate a different property totaling $320,000.

The Capital Region Development Authority will lend the money to 360 Main Street Associates at 3 percent interest for 20 years with a balloon payment in year three.

According to the bond commission agenda, CRDA funding will “assist in conversion of underperforming commercial space into 20 units of housing, including 16 micro units.”

The Connecticut Democratic Party recently moved to 30 Arbor Street. The property owner, 30 Arbor Street LLC, is controlled by Carlos Mouta, according to the Secretary of the State’s online database.

Mouta also controls 360 Main Street Associates according to the same database.

On May 23, according to party filings with the Federal Elections Commission, the Democrats paid $1,420 to 30 Arbor Street LLC for rent.

On June 12, the party made two rent payments to the same entity: $2,334.75 and $994.

Election regulator says contractor donations to state parties can be “problematic”

New legal advice from the agency that regulates Connecticut elections suggests that state contractors using a common workaround to give money to state political parties could be violating the law in certain scenarios.

Previous advice from the State Elections Enforcement Commission, in the form of an opinion of counsel provided to the Connecticut Democratic Party in 2007, suggested the party “expressly state that it is soliciting funds only for its federal account,” with the word “federal” underlined, “to avoid the appearance of violating the ban against soliciting prohibited contributions.”

New advice issued earlier this month outlines an even more cautious view from the agency suggesting some prominent examples of executives of companies with close ties to the state, including Northeast Utilities CEO Thomas May, may have violated state campaign finance laws by donating to the Democratic Party’s federal account with the intent of supporting candidates for state office.

May’s solicitation, first reported by The Courant, asked his employees to give to the party’s federal account and “to join me in financially supporting Connecticut’s Governor Dannel P. Malloy.”

State parties are allowed to keep two separate accounts, one to support candidates for state and local office and another for federal candidates.

The ethics and contracting reforms enacted following the resignation and imprisonment of former Gov. John Rowland made it illegal for state contractors to donate to candidates.

The state contractor ban also prevents them from contributing to a party’s state account. The ban does not apply to candidates for federal office or to a party’s federal account.

Parties are allowed to transfer funds from their federal account to the state account, using the national party as an intermediary, and then to provide direct support for candidates for state office, significantly weakening the ban and obscuring the connections between contractors and the politicians they support.

Even without directly transferring funds, the party accounts are accounting devices with little practical distinction. Parties pay some of their employees with money from both accounts. If an employee paid partially by each account solicits a state contractor to donate to the party, which account is doing the solicitation?

In a July 2, 2014, opinion of counsel, SEEC’s lowest level of legal advice, the agency expanded on its previous advice to the Democratic Party, this time to the principal of a state contractor, William Ducci. According to the Federal Elections Commission website, Ducci has donated to a number of Republican candidates for federal office.

“The short answer to your question is that Connecticut law does not prevent a Connecticut state contractor from contributing to the federal account of the state party committee, to the maximum extent allowed by federal law,” wrote Shannon Clark Kief, SEEC’s legal compliance director. “There would be scenarios where such a contribution would be problematic, for example, if the contribution was solicited for the benefit of Connecticut (non-federal) candidates and that money was later used to make expenditures for that purpose.”

“Such expenditures, if coordinated with the state party committee’s state account, might be considered disguised contributions from the state contractor to the state party committee’s state account. Such contributions would be impermissible for a state contractor to make,” Clark Kief continued. “It is illegal for any person to, directly or indirectly, pay, give, contribute or promise any money or other valuable thing to defray the cost of any campaign or election to any committee, other than to a campaign treasurer. If the contribution was made to the federal account of the state party to defray the cost of a Connecticut candidate’s campaign, that too would be impermissible.”

SEEC spokesman Joshua Foley said “the basic answers are the same” although the law has changed in the time between the two opinions. “It’s more nuanced,” Foley said. “Our thinking on it, I guess, got more refined.”

Ducci, of Ducci Electrical, asked SEEC whether he could contribute to a state party’s federal account without negatively affecting his company’s state contracts.

“Frankly, after waiting all these months, I am very disappointed,” Ducci said. “I asked a very specific question as to whether or not I could contribute, and what I received was a five page ‘Opinion of Counsel.’ What I had hoped for was an answer to my question.”

“The opinion includes several different vague and highly subjective caveats, including who solicited the contribution, what purpose it was solicited for, what the money is ultimately spent on, and which political candidate the money ultimately goes to help, any one of which could make the contribution illegal,” Ducci said. “Bear in mind that most if not all of these are out of my control.”

”I’m not a lawyer, I’m a contractor.  I was trying to do the right thing by asking for a straight answer before making a contribution, but I can’t seem to get one,” Ducci said.

Because of the ambiguity, Ducci said, contractors might get away with giving to the party in power, “but it sure sounds pretty threatening if you are contributing to the other camp.”’

Donors to the Democratic Party’s federal account include:

Employees of companies involved in a joint venture selected by the Department of Transportation to manage a $500 million development in Stamford gave nearly $100,000 since DOT made the decision.

A former Republican-party donor gave almost $6,000 since the election of Gov. Dannel Malloy in 2010, while one of his companies received $4.3 million from the state bond commission and another got $18.2 million of contracts and subcontracts from DOT since 2011.

Two employees of Mystic Aquarium, a beneficiary of state funding, donated $6,000 in January, as have First Five companies, developers of affordable housing and other companies receiving state assistance.

Employees of another DOT contractor, HAKS Engineers, gave $45,000 in November possibly at a fundraiser attended by Malloy and have continued to give this year.