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Wednesday, October 16, 2013


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

Griffin, the Risk manager began asking questions and if the policy was in effect. It is unclear what his concerns were or why the Board felt it necessary to have the policy. Somewhere along the lines , Cloud and the pension Commission solicited proposals to attempt to save the City some money on the Policy. During that process, apparently O'Garro (Hybrid) proposed a company that would save the City and the Pension Commission approximately $3,000 annually. Below is a list of companies that apparently rejected the City's proposal offer and the reasons for the rejections

.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


Anonymous said...

So Wait,

Cloud knew this guy was behind in his rent to him and owed his brother thousands of $$$ so he pressed the Finance Director to authorize a wire executed by his wife to this guy hours after receiving a request for payment of hundreds of thousands of dollars?

Further Cloud was aware for weeks before the leaked BOE memo that O'Garra was probably gone with the money but didn't tell anyone?

AC is not the sympathetic victim in this one!

Anonymous said...

Get the FBI in on this one. Sorry Kevin your attempt to help Cloud is futile.

Anonymous said...

I agree with what you said anonymous. Another incompetent Department Head. AC could have protected our money better by disclosing his knowledge about O'Garra. Kevin at the end of you posting is like we all should feel sorry for the Cloud family. Hell no, they got what they deserved by associating with those individuals.

Anonymous said...

I have to agree with Anon. It's not like Paula Altieri is a new accountant running a small business. She is the finance officer for a large and complex organization. Whatever her motivations it does not hide the slimy underbelly of the city.

Cloud is an elected official so the mayor cannot take the blame for Cloud's lack of leadership. The mayor is responsible for allowing Cloud to supervise his wife, which violates good judgement, creates ethical and perhaps fiduciary issues if they both have the ability to approve transactions.

It's another example of a poorly lead department that needs leadership change. Who cares what Altieri's motivations are as long as the city and its vendors are accountable to the citizens.

Anonymous said...

kevin, i read your blog and admire your tenacity but if your true motivation is to find the truth than maybe a bit of objectivity in your reporting is in order.

The memo from the school board in bullet 3 says they could not confirm the status of the "fiduciary policy " which is a different policy from the excess and surplus policies quoted in the email from griffin. I believe the memo bullet 4 refers to the excess and surplus policies and it says exactly what griffin confirms in email.

In regards to the payment, where is the approved paperwork to support the payment of the Hybrid invoices? The invoices you attached have no approvals on them. Are segur and hybrid two different companies? does the the city charter or any other document speak to the role of the treasurer and what he should have before monies are released from city coffers?

You claim the treasurer had no input into the payment. Well hate to tell you this but the treasurer has the FINAL input as he is the only one authorized to issue payment. as i understand from reading cohens reporting, the only two in the treasurers office with the ability to issue wire transfers are mr cloud and his wife. if you claim the paperwork was not in order to pay hybrid, the payment should have been withheld by the treasurer until the paperwork to pay hybrid was in order. Was the paperwork in order to pay the city's approved broker segur?

And finally the quotes listed as proof of marketing are dated 2013. Where are the competing quotes for 2012 when the fiduciary policy was moved to hybrid.? Interesting as well that you mention the policy is still with Chubb. is this the same policy? one would think you could confirm by the policy numbers. if the policy numbers are the same one would reasonably ask why would you change agents to keep the same policy? what is the benefit of changing agents? Does the change in agents have anything to do with who receives commission on the policy? Also are you certain there was a 3000 savings? Have you been able to Foi the payment history for this fiduciary policy pre and post 2012?

If your motivation is to be fair and objective and to seek the truth have you FOI the documents or evidence that led up to the school board memo?

Perhaps there is no motivation from the school board memo other than (like you) to seek to find the fair and objective truth to irregularities discovered. The school board memo seemed to bring into light questions that needed answers. answering questions is not an accusation of guilt. It's unfortunate that all parties involved were not afforded the standard of confidentiality until the facts were sorted through. you should be investigating who "leaked" this memo to the press and there you might find the opportunist.


your points are well taken, but as I posted , there are still numerous FOI requests pending for more documents to answer more questions

Anonymous said...

After reading your posting, it sure sounds like there was some back room deals cut to get this O'Garro guy the money. thanks to the schools for catching this. At least someone is watching if cloud ain't willin

Clarence Darrow said...

Kevin, I deal in evidence not in innuendo,rumors and gossip and from what I have seen from your posted evidence,it appears that Adam Cloud was falsely accused.

Anonymous said...

Previous reports said that it was the finance dept that requested the funds be wired to Hybrid but these documents don't support that claim.

Quite the opposite, these documents show Cloud inserted himself where he had no business doing.

Bring on the state's attorney.

Anonymous said...

What was Cloud thinking? These invoices weren't even to the City. Hybrid invoiced Segur.

Someone who has a "fiduciary" responsibility should have noticed a basic thing like these bills were not the city's!

Another example of poor leadership in Hartford.

Anonymous said...

Kevin, just reading this red flags pop up,

You write that O'Garro submitted a "second set" of invoices sent to Cloud. The invoices have no logos by your own admission "generic" in nature. they are not invoices to the City but rather this segur company. Auditing 101 look for authentification of invoices and make sure you pay invoices that are "billed" to you. This is the first RED flag that something is not right.

You write that "process are violated" this is the second RED flag. Why did they violate processes for this guy?

You write there was "no warrant" for payment issued to Hybrid, well here is a third RED flag. And why is payment issued without an approved "warrant"?

And you question what would have "started" this "iinvestigation" by the school board's chief finance officer? YOU MUST BE KIDDING ME!!!!!

The question is why aren't you outraged? Maybe this is why we have "accountants" watching over money and not so called "investigators".

Anonymous said...

What a messy mess. But it only happens in Hartford, Connecticut. Let's take a deep breath before moving forward. Hopefully, the State's Attorney will be on board soon. As always, the capital city is in serious trouble. Who would want to live here? Who would want to open a small, medium or large business here? Who voted for the Democrat Team for Mayor, Court of Common Council, City Treasurer and Constables in the last election? NOT ME!!!!

Anonymous said...

C'mon, what's the big deal, can't a guy take care of a friend who rents space in his family's building and employs his twin brother?

Anonymous said...

Apparently anon at 10:33 these guys think they have the power to do whatever they want.

Anonymous said...

Curious that there's been silence on what steps the city is taking to get the money back and what steps have been taken to make sure the treasurer follows procedures. This highlighted the need for better checks and balances as well as addressing nepotism.

Anonymous said...

Clarence, when was ac falsely accused? don't see any accusations in the school memo report. Wondering why if this guy knew he was associated with this firm outside his office why he just didn't say something on the record somewhere to the finance director, the pension commission, or corp counsel. His judgment or lack thereof raised questions. He seems to have opened himself up to suspicions and maybe unnecessarily. Now ppls want to ask why and they should.

Anonymous said...

Kevin, has the cloud group filed eviction notice for this Ogarra fellow for past due rent?