Financial irregularities reported in a recent audit of Erie Basin Marina operations may rise to the level of criminal wrongdoing, according to Buffalo Mayor Byron W. Brown and Comptroller Mark J.F. Schroeder.
The two outlined their concerns in a letter sent to Erie County District Attorney Frank A. Sedita III, State Attorney General Eric Schneiderman and U.S. Attorney William J. Hochul Jr.
The letter says the audit by the comptroller’s office of the city’s contract with Brand-On Services revealed that the private operator underpaid rent due for managing the marina for the past five years and that 20,000 gallons of fuel supplied to Brand-On over that same period is “completely unaccounted for.”
The audit, which was publicly released last week, says the company owes the city a total of $343,245.
“Some of the findings of the audit lead us to believe that there may have been possible criminal wrongdoing committed by Brand-On Services,” the letter says.
Reached Friday, Schroeder said that he and the mayor discussed implications of the audit earlier this week.
“We agreed jointly to move forward with notifying law enforcement,” Schroeder said. “There are certain concerns that our auditors brought forward, and we have passed those along.”
He specifically cited the missing 20,000 gallons of fuel and a discrepancy of $164,204 in sales of food and other items that apparently were not reported to the city. The letter also questions whether these sales were reported to the county and state for sales tax purposes.
Schroeder also said his office is asking for an explanation of $42,000 in overtime, which the comptroller labeled as “exorbitant,” paid by the city to Michael Wolasz Jr., a Department of Public Works employee and the son of the president of Brand-On Services. He also is listed as an employee of Brand-On.
Letters requesting time sheets and records of employment for Wolasz have been sent to Brand-On and the Department of Public Works, which also oversees operation of the marina.
The Common Council’s Finance Committee is scheduled to discuss the audit when it meets on Tuesday.
Schroeder, who took office in 2012, said Brand-On has a history of problematic audits with the city, although that has not prevented it from having repeated renewals of its contract to run the marina and the nearby Hatch restaurant.
“When I go back to the 2005 audit, it says a lack of controls allows for the possibility of under-reported revenue,” Schroeder said. “In 2009, another audit said ‘we have serious concerns about the management of Erie Basin Marina,’” he said.
Asked whether Brand-On responded by addressing those issues, Schroeder said, “The answer is NO. Capital N. Capital O.”
Brand-On Services is run by Renee Wolasz and her husband, Michael, who was a city employee until his retirement in 2012. Their daughter, Julie Wolasz, manages the Hatch restaurant.
Under its contract with the city, Brand-On Services’ rent was based on sales at the Hatch, slip and dock rentals, and fuel sales.
Brand-On’s contract expires in December. The city will hire new managers for the 2014 season and is asking for separate bids for the restaurant and the marina operations, according to a response to the audit from Public Works Commissioner Steven J. Stepniak.
A new gazebo and clam shack are now under construction at the marina, and the city will soon begin construction of a second floor on the Hatch, at a cost of $1.4 million.
Brand-On also operated the cafeteria at City Hall. Earlier this week, the Common Council approved a contract with Sue’s New York Deli to take over those operations. The cafeteria contract was put out for bids before the marina audit was released to the public.