Republicans demand audits of COVID-19 spending in all Connecticut’s 169 towns following arrest of state lawmaker Michael DiMassa in West Haven billing scandal; state auditing underway

The arrest Wednesday of a state legislator has generated calls for broader scrutiny over the state’s distribution of COVID-19 funds that have been spread across the state and will continue into next year.

Republican legislators are seeking audits of all 169 towns that have received federal funds – and broader scrutiny overall as the state and towns are receiving billions of dollars combined over several years. The calls were made after the arrest of state Rep. Michael DiMassa, a West Haven Democrat who was accused of stealing more than $600,000 in federal money by billing the city of West Haven for consulting services that federal officials said he never performed.

A six-page FBI affidavit outlined multiple deposits to a consulting firm run by DiMassa, 30, and then cash withdrawals under the $10,000 threshold that invites scrutiny by the Internal Revenue Service. The affidavit also showed that he purchased tens of thousands of dollars in gambling chips at the Mohegan Sun casino.

Soon after DiMassa’s arrest and even before he appeared in court Wednesday, state Senate Republican leaders called on Gov. Ned Lamont to initiate and oversee a statewide audit of all COVID-19 funds.

Senate Republican leader Kevin Kelly of Stratford and deputy leader Paul Formica said that all 169 cities and towns should be audited to restore public confidence that the federal money is being used for proper expenses. They called upon Lamont’s budget office to oversee the audits of the federal money.

“We ask that your office take immediate action to investigate the use of all relief funds across our state,” the senators wrote to Lamont’s budget chief. “The allegations and possible misuse of funds are deeply troubling. These funds are intended to help residents and communities recover during one of the most challenging times of a generation.”

The senators added, “To learn that officials may have allegedly diverted funding for other purposes shatters public trust. It is wrong, and it is infuriating. … Connecticut must build back the people’s trust and guarantee that wrongdoings will never go unnoticed and will not be tolerated in any capacity.”

Lamont’s budget director, Melissa McCaw, responded that the state Office of Policy and Management, known as OPM, is already investigating the use of the public money.

“When we hear of potential misuse of any type of funds, we are deeply disappointed and will take action to investigate,” McCaw said. “Consequently, OPM is already bringing in an independent auditor and will collaborate with the federal investigation to fully investigate these claims in West Haven and wherever else there are allegations. Even prior to the allegations regarding this one town, OPM already ordered every municipality in the state to report their spending to OPM by Oct. 22, and they have been routinely cautioned that their use of funds must meet the highest standards and withstand audit.”

McCaw added, “Once we have had an opportunity to review and take part in audits and investigations where necessary, we will take all appropriate steps to remedy fraud, illegal acts, violations or abuse reported and address any internal control weaknesses in order to fulfill our fiduciary responsibility.”

House Republican leader Vincent Candelora of North Branford is seeking broader scrutiny of billions of federal dollars that have been sent to state and local coffers.

“While I’m hopeful that the disturbing allegations against Rep. DiMassa in West Haven are a one-off, this case should be a wakeup call to the governor and the public at large,” Candelora said. “A staggering amount of federal relief funds has flowed into Connecticut, and the governor has taken advantage of every opportunity to trumpet all the new programs and grants made possible by these funds and tout the overall positive impact this money can have on our state and its residents.”

He added, “But with such a large amount of federal money comes tremendous responsibility, and we’ve reached a critical juncture where it’s not only time for residents to demand accountability and look beyond the governor’s press releases, but for the governor himself to do his part to meet the public halfway and explain exactly how he’ll measure the success of his own initiatives and what his administration is doing to track whether funds provided to various entities are being used appropriately.”

In March, the legislature passed a bill ensuring that the General Assembly will play a vital role in deciding how $2.7 billion in federal funding over the next three years is spent.

The measure covered the federal money that will be coming to the state over three years — not federal money going directly to cities and towns for education and other expenses. The money for the state needs to be allocated and will be distributed in the traditional manner as the state budget — meaning scrutiny by the legislature’s appropriations committee and then votes in the House and Senate with collaboration from Lamont before any money is spent.

The money sent to the towns is overseen by the governor’s budget office, which sent a detailed letter to mayors, first selectmen, and town finance officers that said the inspector general of the U.S. Department of the Treasury will be conducting an audit of the federal spending.

“Documenting that costs are eligible uses is essential to managing compliance risk and to minimizing the possibility that the costs are deemed ineligible, thereby requiring that the municipality and the state may need to return funds to the federal government,” wrote Martin Heft, an undersecretary in the governor’s budget office. “Municipalities have been asked to document costs clearly with respect to the date and nature of the expense incurred so that together we can best manage resources in the interests of the residents of Connecticut.”

Reports for municipal expenses between July 1, 2020 through Sept. 30, 2021 are due to the governor’s budget office this Friday. The final reporting will be in January 2022.

The reports for the towns are highly detailed with multiple, separate categories that include cleaning supplies, equipment, food programs, hazard pay, legal fees, overtime, testing, vaccinations, and personal protective equipment such as masks and gloves, among others.

Betsy Gara, executive director of the Connecticut Council of Small Towns said the towns have been explicitly told about the importance of making sure that the expenses are justified.

“The vast majority of municipalities are taking great pains to ensure that the use of COVID-19 funds is consistent with federal guidelines,’”Gara said Wednesday. “Towns are committed to using COVID-19 funds to support social and economic recovery in their communities.”

Christopher Keating can be reached at ckeating@courant.com