Cache of Old Checks Found in Westbrook, Connecticut

WESTBROOK - The town has been giving away "free" loans to developers for the last several years, according to Treasurer Darlene Jones.

During the evening of Mar. 19, Jones discovered a number of uncashed checks, made payable to the Town of Westbrook, on her assistant's desk dating back to 2004.

The checks, intended as performance bonds, were submitted by applicants to the town's planning, zoning, and wetlands commissions.

Performance bonds are usually issued for a five-year period and placed into an interest-generating bank account.

Once the developer's project is complete, the commission gives permission for the bond to be released.

Jones notes that "the town has the fiduciary responsibility that in the case that someone didn't do their job, the check is ours and the money is ours."

While Jones is unsure whether the town would have received money from bonds by developers who failed to do their jobs, she did locate four $25 checks dated in 2005 for building excavation fees.

"It reflects poorly on the town when the fees are not collected," Jones said, adding that when the treasurer's office receives checks, they are supposed to be deposited at the bank.

During a Mar. 27 Board of Selectmen meeting, Jones told residents that the discovery "puts an unknown liability to the people's accounts where checks were not deposited or not deposited in a timely fashion."

Jones was able to deposit checks of approximately $32,000 into a Citizen's Bank consolidated account but said some of the checks were too old to be deposited.

The town did not receive calls from developers that their checks were not being cashed, though Jones admitted that some cashier's checks were found and developers would have no idea whether those checks were cashed or not.

It is possible the three commissions for the past five years issued over $500,000 in performance bonds and failed to accurately ensure that money was received for those bonds, Jones said.

Kostin, Ruffkess & Company, LLC, of New London, the town's auditors, referenced a $361,000 shortfall in the last audit report, Jones said, adding that this was not properly investigated.

Jones believes the town should get a new auditor and First Selectman Noel Bishop indicated that the Board of Finance put a bid for auditors but has not yet chosen one.

The chairmen of the three commissions have been notified about the uncashed checks along with Board of Finance Chairman Paul Connelly and Town Attorney Michael Wells.

They, along with Bishop, are expected to meet during the week of Mar. 31.

"We will follow the recommendation the lawyer made for steps to be put in place," Bishop said.

Wells recommends chairmen review records for the past five years to see what applicants were required to post bonds and to determine whether the applicants posted cash or surety bonds.

A table should then be created with the applicant's name, identifying information, approval date, bond posting date, and the bond expiration date.
Wells believes that information should be reviewed by all three commissions and the treasurer.

At that point, Wells said, each commission should determine what it will require from applicants whose checks were received but not deposited.

He then recommended that the treasurer ensure that the Citizen's Bank consolidated account provides separate reporting of deposits and separate interest earned.

Finally, to prevent a future occurrence, Wells believes a clear procedure be established where checks are properly documented and deposited.

An investigation into the exact amount of uncashed and uncollected performance bonds and building fees is ongoing and is expected to be complete in a month's time, Jones said.