Financial advisers testify they were in the dark about Singh town loans

An outside financial adviser and an independent auditor for the Town of Oyster Bay both testified Tuesday that the town kept them in the dark for years about the millions of dollars of town-guaranteed loans for restaurateur Harendra Singh.

Christine Crowley, a municipal adviser who helped Oyster Bay with bond offerings, and Donald Hoffmann, who conducted audits of the town, both said they didn’t learn about the transactions until summer 2015.

The first loan secured for Singh using the town’s creditworthiness had closed in summer 2010.

Crowley and Hoffmann are prosecution witnesses in the federal corruption trial of former Oyster Bay Town Supervisor John Venditto, former Nassau County Executive Edward Mangano, and his wife, Linda.

The trial is now in its ninth week in Central Islip.

The more than $20 million in town-guaranteed loans for Singh are key to prosecutors’ case against Venditto and Edward Mangano.

Singh has testified he bribed the one-time elected officials for the lifelines for his restaurant and concession businesses.

Testifying Tuesday morning, Hoffmann said he had never before known a municipality to make a deal with a concessionaire. He underscored the financial risk.

“I haven’t seen anything like this,” he said. “It would be important to understand the nature of the transactions and the likelihood of exposure to the town.”

Hoffmann said of Oyster Bay: “We rely on the client to provide information to us throughout the audit . . . and we have to be able to trust the client.”

Crowley, testifying later in the day, similarly said all the statements prepared by her firm relied on information supplied by the town — and certified during that period by Venditto.

She said they would affect both how the town’s bonds were rated and the market for those bonds.

Crowley of Fiscal Advisors and Marketing Inc. of Syracuse said she learned of the town-guaranteed loans from a bond insurance company official, who said he had received a call from a Newsday reporter.

Hoffmann, of Cullen & Danowski LLP of Port Jefferson Station, said he first heard about the loans from a Newsday reporter who called to ask about them.

Crowley said she emailed Robert Darienzo — Oyster Bay’s finance director — and asked to speak with him immediately.

“We wanted to hear from him what he knew,” she told jurors.

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.

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

The three have pleaded not guilty.

Singh, 59, of Laurel Hollow, in the trial’s first four weeks, said he provided perks for the officials including free vacations for the Mangano family and a no-show job paying $450,000 for Linda Mangano as well as free limousine services for Venditto, his aides and his family members.

Singh said that in addition to the town-guaranteed loans, he received county contracts in exchange for his bribes.

On Tuesday, Venditto’s defense attorney, Marc Agnifilo of Manhattan, sought to highlight that the main town contact for both Hoffmann and Crowley was not Venditto but then-Deputy Town Supervisor Leonard Genova.

Hoffmann acknowledged there was “general confusion” among town officials in the summer and fall of 2015 about the amendments to the concession agreements.

Asked if he relied on Genova for information, Hoffmann said, “That’s fair.”

Agnifilo later in the day asked Crowley whether she’d go to Genova when she wanted information on the legal issues facing the town.

“Correct,” Crowley said.

Agnifilo asked if she thought that Venditto would rely on Genova, who also was the town attorney, to “accurately” inform her about the town’s liabilities.

“I would agree with that,” she answered.

Earlier in her testimony, Crowley said that there was no reference to loan guarantees or any disclosure about potential liability relating to the loans for Singh in any bond offerings she helped Oyster Bay with between June 2010 to August 2015.

She said no town officials told her about amendments to concession agreements involving termination fees or about the assignment of concession agreement proceeds documents.

She added that before a May 2015 bond offering, the town didn’t disclose that it had hired lawyers to assist in potential litigation related to the amended concession agreements.

Such information should be reviewed and disclosed to investors, Crowley said.

From 2010 to 2015, Crowley also never saw a town board resolution authorizing Venditto to enter into amendments to concession agreements to facilitate Singh’s ability to get financing for capital improvements, she said.

Information about the amended concession agreements was disclosed for the first time in a bond offering in December 2015, she said.

The financial adviser testified that her firm in 2016 began preparing “limited offering memorandums” for Oyster Bay, used when a town’s financial situation is weaker and aimed at “more sophisticated investors” who would better understand the risks involved.

Her firm prepared limited offering memorandums for no other municipal clients, Crowley said.

Before Crowley took the stand Tuesday, Hoffmann said that he and some colleagues from his firm had a meeting in December 2015 with Genova, town comptroller Robert McEvoy and then-chief Deputy Town Attorney Frank Scalera to “more fully understand” Singh’s concession amendments.

Hoffmann said Genova explained that the loan guarantees were “the result of a rogue attorney” — a reference to then-Deputy Town Attorney Frederick Mei — and said they were the subject of an “ongoing investigation” by the town and outside agencies.

Genova, who has immunity, and Mei, who pleaded guilty to taking bribes from Singh, testified as prosecution witnesses earlier in the trial.

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.