The City of Dunkirk spent more than $1 million in federal block grant funds on unauthorized or questionable activities, according to an audit released Tuesday by the State Comptroller’s Office.

“These funds were spent on questionable activities such as travel and staff bonuses rather than rebuilding neighborhoods and helping low-income residents as intended,” Comptroller Thomas P. DiNapoli said in a statement.

“City officials have mismanaged this program and failed to put in place effective controls to safeguard grant funds. They repeatedly neglected to show if program goals were met or that projects provided a public benefit,” DiNapoli said.

Auditors examined records covering April 2008 to June 2012, which was most of the tenure of Kory Ahlstrom, who was hired in August 2008 as the city’s director of planning and development and served as chairman of the Dunkirk Local Development Corp. He was replaced when Mayor Anthony J. Dolce took office in January.

DiNapoli said that auditors found the development corporation, which administers the U.S. Department of Housing and Urban Development’s Community Development Block Grant program, operated with little oversight or monitoring by the Common Council and mayor.

It spent more than $500,000 to buy two properties – a vacant building and a former car dealership – that officials couldn’t justify as an eligible block grant activity. Further, $41,000 was spent on ineligible equipment, including leasing a dump truck for the Department of Public Works and buying two vehicles for the Parks Department; $15,000 on unauthorized travel expenses and conference registration fees for the chairman; and $6,600 for bonuses to the chairman and treasurer.

Dolce, who was a member of the Common Council during that period, said the Council “definitely was kept in the dark on these transgressions.”

Auditors found that several transactions were recorded in a manner to apparently hide the true nature of the transactions, DiNapoli said.

“These are taxpayers’ dollars. It’s very disturbing,” the mayor said.

DiNapoli’s office, which issued nine recommendations in its draft report to the city in October, also has forwarded its findings to HUD for further review.

Dolce said that in September, the Council hired a consultant to provide technical and compliance assistance for administering the program.

“We have taken all sorts of actions already,” Dolce said Tuesday. “We are making sure [the] Council approves everything and is well aware of everything.”

A copy of the audit can be found at