Town of Oyster Bay masked $22 million deficit, witness testifies

An independent auditor for the Town of Oyster Bay testified Monday that the town credited itself in 2013 with a $30 million land sale that had yet to close, a violation of accepted accounting practices that he said masked a $22 million deficit.

Donald Hoffmann said the transaction was calculated that year as revenue, allowing Oyster Bay to close the 2013 fiscal year with what appeared as an $8 million surplus.

The auditor from the Port Jefferson Station-based Cullen & Danowski, LLP took the stand in the federal corruption trial of former town supervisor John Venditto, former Nassau County Executive Edward Mangano and his wife, Linda — now in its ninth week in Central Islip.

The town ultimately disclosed that it counted the transaction in materials relating to its 2013 audit, causing the auditor to make a modified opinion — an unusual step, Hoffmann said.

The land sale still has not closed five years later, he said.

Hoffmann also said that he first learned about Oyster Bay’s indirect loan guarantees for restaurateur and town concessionaire Harendra Singh from a Newsday reporter who called in August 2015 to ask about them.

Hoffmann said he contacted town comptroller Robert McEvoy for clarity, and McEvoy said it was likely about concession agreements.

“What concession agreements,” Hoffmann said he asked.

Hoffmann testified that from 2010 to 2013, Oyster Bay did not disclose to his auditing firm its four town-guaranteed loans for Singh in a series of official letters.

“They should have been disclosed,” Hoffmann said.

The more than $20 million in town-backed loans are at the heart of prosecutors’ case against the one-time elected officials. Singh testified that he bribed them with perks including a no-show job for Linda Mangano paying $450,000 in exchange for the loans and lucrative county contracts.

Hoffmann’s testimony was only the latest acknowledgment that Oyster Bay sought to hide loans to Singh backed by the town’s creditworthiness and that the town officials sought to a paint a rosier-than-reality picture of its finances.

Former deputy town supervisor Leonard Genova said last week that between 2010 and 2015, when Oyster Bay floated bonds to cover town expenses, he and Venditto purposely didn’t disclose the Singh loans in financial documents.

Also Monday, a federal agent who analyzed records of phone calls in the case testified to a flurry of calls on Jan. 13, 2015, the day the FBI visited Linda Mangano at her Bethpage home for the first time.

FBI special agent William Sena said records show on that day, the Manganos’ son, Alex, called his father and his father called him back.

Then, Edward Mangano called the Mineola law firm of Joseph Conway, then Singh, then Conway’s firm again, Sena said. The firm called Mangano back and Alex Mangano called his father again, the agent said.

Monday morning, FBI special agent Laura Spence testified that Singh paid regular visits to the Mangano home in Bethpage to administer testosterone injections to Edward Mangano.

“He advised that he went to the Mangano home because he would regularly inject Ed Mangano with testosterone shots,” Spence said of Singh.

Assistant U.S. Attorney Lara Treinis Gatz had been asking Spence about her earlier testimony that Linda Mangano said Singh visited the Manganos for “social reasons.”

Prosecutors contend that Singh and the Manganos gathered at the home after Linda Mangano’s interviews with the FBI to coordinate stories.

Linda Mangano, 54, of Bethpage, is charged with conspiracy to obstruct justice, obstruction of justice and making false statements to the FBI.

Edward Mangano, 56, of Bethpage, and Venditto, 68, of North Massapequa, face charges that include conspiracy to commit federal program bribery and honest-services wire fraud, extortion for Mangano and securities fraud for Venditto.

The three have pleaded not guilty.

Singh — a one-time close friend to Edward Mangano — pleaded guilty to bribing Mangano with free family vacations and the no-show job for his wife, among other perks, and to bribing Venditto with free meals and free limousine services.

On Monday, the prosecution did not pursue the testosterone subject further after Mangano’s defense attorney, Kevin Keating of Garden City, objected and the lawyers met with U.S. District Judge Joan M. Azrack for several minutes out of earshot of the jurors and others in the courtroom.

But Keating himself addressed it when he took another turn at questioning Spence, the lead agent on the Mangano case.

Asked if she knew that Mangano had been “diagnosed with a testosterone deficiency,” Spence answered, “No.”

Keating asked about Mangano receiving medical treatment from Singh’s brother, who is a physician.

Spence responded that Singh does have a brother with a medical practice upstate.

Asked if “Mangano hated going to the doctor,” Spence said she was “not aware.”

Spence last week testified that Linda Mangano lied to federal authorities more than two dozen times when questioned about her job with Singh.

On Monday, Mangano’s defense attorney, John Carman of Garden City, suggested that her statements to Spence could be interpreted in ways other than as lies or fabrications.

For example, in discussing whether she worked “a lot” at first at Singh’s Queens restaurant, the Water’s Edge, Carman indicated that the phrase meant something different to Linda Mangano than it did to Spence and prosecutors.

Carman and Spence also differed about whether Linda Mangano believed she had had a job opportunity with state Assemb. Michael Montesano (R-Glen Head), who testified earlier in the trial that he refused to extend such an offer to her.

“She said she could have taken that job,” Spence responded. “It’s not factual at all.”

Sena, the FBI agent who analyzed phone call records, also spoke Monday about the period of time surrounding Nassau County’s awarding of the bread-and-rolls contract for the jail.

Singh had sought the contract, according to previous testimony.

Sena said that records from March and April 2012 show a significant volume of communication from Edward Mangano to the then-majority leader of the county Legislature, Peter Schmitt, who is now deceased.

In that same time period, there were many calls between deputy county executive Rob Walker and counsel for the Legislature’s GOP majority Christopher Ostuni, Sena said.

Nassau County director of purchasing Michael Schlenoff testified last week that he felt pressured by Ostuni to change the award or to split the contract.

Keating, Edward Mangano’s lawyer, had suggested the push to award the contract came not from his client but from Schmitt. Ostuni worked for Schmitt.

By Nicole Fuller

nicole.fuller@newsday.com@NicoleFuller

Nicole Fuller is Newsday's senior criminal justice reporter. She began working at Newsday in 2012 and previously covered local government.