Dunkirk mishandled $1M in HUD money

DUNKIRK, N.Y. (WIVB) - A New York State audit raises red flags about a million dollars worth of "questionable" spending of federal HUD money by the City of Dunkirk.

In Dunkirk, a city of about 12,000, 53 percent of its people are considered low- or middle-income. But more than a million dollars designated to rebuild urban neighborhoods was mishandled, according to the State Comptroller's Office.

State Comptroller spokesman Brian Butry said, "City officials mismanaging a federal program, and didn't put in place effective controls to safeguard these funds."

Mayor Anthony Dolce was a councilman at the time and says he had no idea this money was being mishandled.

"This is unfathomable, you know, to have this level of misappropriated money," he said.

The State Comptroller's Office found that more than a million dollars of Community Development Block Grand funds were spent on such questionable activities as: travel and staff bonuses within the Dunkirk Local Development Corporation. $400,000 in loans were made without proper documentation. Equipment was purchased that didn't qualify for HUD money, including a dump truck and utility vehicles. And property acquisitions were made that served no legitimate purpose under Block Grant guidelines.

Mayor Dolce said, "They have indicated that we are definitely under consideration for loss of funds."

The Dunkirk Local Development Corporation paid the owner of a vacant car dealership on contaminated land $550,000, which ended up being more than $200,000 over the appraised value.

Dunkirk Planning and Development Director Steve Neratko said, "There was no appraisal done on it until after the fact."

Right now, the city is having trouble collecting up to $200,000 in loan money it is owed because of the way business was handled.

HUD investigators may have to make a determination if criminal charges will be placed. Sources tell News 4 the City of Dunkirk is also considering working with the State Attorney General's Office.