This will eventually be a very detailed posting as their are so many aspects being uncovered. The documents will spell out the details and I have obtained a small portion so far and I am awaiting many more to come.The situation started with an Internal memo that was written by the Hartford Schools Chief Financial Officer, Paula Altieri. That memo is below:
It is unclear what started this chain of events or why Altieri launched her Investigation, but after you review the facts, it will probably be clear that the Accountants should stick to accounting and leave the investigations to the investigators.
Altieri begins her memo and also her "Investigation" regarding a payment that was supposed to have been made to Segur Insurance, the City's Insurance Agent, for a payment that was in excess of $600,000. The payment was about to become past due when the Broker for Segur, Hybrid Insurance, operated by Earl O"Garro, emailed Hartford 's Treasurer Adam Cloud.
As you can see from the e-mail O'Garro e-mailed treasurer Cloud on July 18, 2013 requesting the wire transfer and also submitted copies of the invoices to Cloud. The invoices were apparently copies that were originally sent by Segur to the City of Hartford. The invoices that O'Garro submitted to cloud appeared very generic in nature with no logo or distinctive markings, the original invoices from Segur contained the Segur Logo . it appears that O'Garro created a second set of invoices to send to Cloud
Upon obtaining O'Garro's invoices , Cloud, by e-mail, forwarded them to former Finance Director Julio Molleda. Molleda replied that the checks would be cut and included in the next days check run .According to sources, somewhere along the line in the Finance department, City Comptroller Lee Ann Ralls instructed Finance department staff person Ellen Mcreary to wire the money as mentioned in the O'Garro e-mail rather than mail a check.
This is apparently where some of the problems began. Segur was set up in MUNIS, the City's computer program, as a vendor. Hybrid was not. If the proper protocols were followed, a payment would have never been able to have been processed to Hybrid and a check cut, but apparently when the wire information was provided, that allowed the process to be violated and the money was sent to Hybrid electronically rather than a check being printed to Segur.
It doesn't appear that Adam Cloud had input on that process , other than the e-mail to Molleda requesting payment for the outstanding invoices. So far it appears that the breakdown was entirely in the Finance Department. The normal process is that for any vendor payment, the finance Director has to apply a "warrant" for the payment and is then sent to the Treasurer's Office to authorize the payment. The way it has been explained to me is that the Treasurer's Office can not simply cut a check or process a payment without the Finance Department warrant
In Altieri's memo she also makes the claim that there is no proof that the Insurance is in effect in her September 24, 2013 memo, yet her own Risk Manager, John Griffin, who apparently answers directly to Altieri sent an e-mail on September 10, 2013 stating that "National sent confirmation that coverage is in place" National is one of the Companies that provided the policy. The other company, Starr, was apparently reluctant to confirm that the insurance was in effect , but the e-mail stated that Starr was "awaiting approval from legal" before sending any confirmation
Although on face value Altieri's accusations seem serious, once you start peeling back the layers, you might want to ask yourself what is the motivation for the memo in the first place.
The claim that cloud moved an Insurance Policy without bidding doesn't appear to be accurate. Quotes were solicited from numerous companies for the Fiduciary Liability Policy for the Pension Commission. The policy had been in place for years. According to sources, the policy was never intended to cover the Board of Education
The changes in vendor's was approved by a vote of the Pension Commission before any changes were made
.CLOUD Fiduciary Policy Rejections0001
There is much more to come on this as numerous FOI requests are hopefully complied with by the City and the Board of Education. Sources are telling me that a string of e-mails between City Hall, Altieri and Griffin may lay the groundwork for the motivation behind this and it may have nothing to do with Cloud and his relationship with O'Garro. In the meantime though it seems that not just the City of Hartford was duped by a slick operator. Earl O'Garro is being chased by numerous entities who also apparently fell for his smooth talk. Included are the State of Connecticut who are calling O'Garro's loans in default and due in full. For more on O'Garros defaults read Jeff Cohen here
One source who spoke on the condition of remaining anonymous said he felt pretty confident the City's Insurance payment is gone along with O'Garro. He further stated that he believes O'Garro got caught up in a "High roller" lifestyle and in the end the bills caught up with him. O'Garro's homes are apparently headed into foreclosure, the restaurant he opened for his wife in Middletown was apparently suffering losses of over $30,000 per month in operating costs and many other losses that are public record now.
Since the payment was made to the City's broker, the City will suffer no loss. Under Connecticut law, it is apparently up to the Broker and the Agent to battle out who suffers the loss, but it won't be Hartford
Among those losses are the Cloud Family as well, Chris Cloud is apparently owed a large past due amount from O'Garro for his lobbying fees and the Cloud Family hasn't apparently seen a rent check from O'Garro for the 30 Lewis Street Office in some time.
Much more will be developed on this as time goes on