The Warren County Sheriff’s Office has asked a special State Police investigative team to look into questions of possible misconduct in a Warren County-based organization’s loan fund, a fund that a state administrative agency acknowledged Tuesday that it is also reviewing.
Warren County Sheriff Bud York requested an investigation by the Bureau of Criminal Investigation after questions were raised about conflicts of interest and oversight within the loan fund for “high-risk” businesses administered by a regional development corporation under the auspices of the Lake Champlain Lake George Regional Planning Board.
Because the Regional Planning Board’s activity stretches over multiple counties, complaints made to his agency about the organization are being referred to the State Police BCI Special Investigations Unit, York said. York said going to the state agency will eliminate any unfounded claims of “politics” being a factor in the inquiry that have been made during other investigations of governmental officials.
“I spoke to the major (who oversees SIU) and he said they certainly will look at it,” York said. “We turned everything we have over to them.”
Numerous local elected officials have been found to have connections to those who received money from the little-publicized loan fund, which many Warren County leaders and business owners did not even realize existed until recent weeks.
That lack of knowledge came despite the fact that Warren County is the lead county of five involved in oversight of the planning board.
As concerns about the loans emerged in recent weeks, county supervisors have changed procedures to have more oversight of the Regional Planning Board. No questions about the organization have been aired publicly by officials in the other counties, which include Washington, Essex, Hamilton and Clinton.
Scrutiny of the Regional Planning Board began in recent months when its funds were found to have been among money allegedly stolen by David Decker, former director of Lake George Watershed Coalition who was arrested on nearly two dozen felony financial fraud charges last year.
Questions raised by Queensbury resident Travis Whitehead led to concerns about a possible conflict of interest on the part of Queensbury Supervisor Matt Sokol, who voted on funding for the Regional Planning Board despite the fact his family’s company received a $50,000 low-interest loan from the organization last October.
The loan fund also shows a number of large local businesses, closed businesses and other loans involving politically connected individuals, as well as what some Warren County supervisors saw as a high default rate. Whitehead and some Warren County supervisors have raised questions about several of them.
Whitehead referred his concerns to the Sheriff’s Office and state Authorities Budget Office, which oversees economic development organizations but had not been reviewing the loan fund and regional development corporation that the Regional Planning Board oversees. The ABO was created in 2009 in response to concerns about lack of oversight, corruption and secrecy in public authorities and economic develop organizations.
Jeffrey Pearlman, director of the Authorities Budget Office, said Tuesday that his agency was “looking at it” when asked about the Regional Planning Board loan fund, but said he would not comment further.
Pearlman said the inquiry was prompted by referrals by Whitehead.
“We appreciate his good work. We are a small office with a large regulatory oversight authority. We rely on individuals like him to bring things to our attention,” Pearlman said.
Walter Young, director of the Regional Planning Board, said the ABO has not been involved with his agency’s activities, as the Regional Planning Board’s regional development corporation loan fund gets funding in a different manner than those that the ABO reviews. The loan fund was started decades ago with $3 million in federal funding the through U.S. Department of Commerce, and Young said it is now “self-sufficient.”
He has defended the organization’s activities, saying that a loan committee made up of six people reviews applications and thoroughly vets them.
One loan that Whitehead has questioned was a $50,000 loan to Desiree Diskin, daughter of Regional Planning Board Chairman and Putnam Town Supervisor John LaPointe and daughter-in-law of Regional Planning Board Auditor Michael Diskin, for a business known as All About You Boutique, a beauty salon in the Essex County hamlet of Port Henry. Mr. Diskin is also the Essex County treasurer.
A mortgage signed by Desiree Diskin, and LaPointe was used as collateral for the loan, which is to accrue 5 percent interest and is to be paid back in 12 years.
Young, the Regional Planning Board director, said Tuesday that the salon was in operation at Ms. Diskin’s home.
But a visit to the home by a reporter later Tuesday found no indication of a business there, as well as no online listings or phone listings for a salon by the name. Ms. Diskin’s Facebook page indicates she works at a salon in Vermont, and an online state license search indicates she does not have a cosmetology or barber license in New York, but does have one in Vermont.
The town of Moriah building and codes office said no building permit had been sought for the property as of this week.
Essex County records show she received a county business certificate in 2011 for All About You Boutique at her home.
Ms. Diskin said later Tuesday that the funding will be used to convert a garage on her property into a salon and construction had been slowed by winter weather, but was expected to start in the coming weeks. She said her relatives had no role in the financing.
“The work will be done,” she said. “I did this all by myself. I had to go through a lot and make a presentation to the board.”
Diskin said she hopes to employ local cosmetology school graduates to try to supply jobs in a region where they are needed.
A six-person “revolving loan fund” committee that is part of the Regional Planning Board’s regional development corporation makes decisions on loan applications, Young said.
Young said the required disclosures were made during the loan application process regarding Diskin’s father’s relationship to the Regional Planning Board.
Mr. Diskin said Thursday that he had no role in his daughter-in-law's loan, and did not realize she had gotten the funding until after it was approved.
"I have nothing to do with the loans," he said.
A call to LaPointe was not returned Wednesday.
Queensbury at-Large Supervisor Doug Beaty, who has been a critic of the Regional Planning Board and what he believes is a lack of oversight, said he visited the agency’s office in Lake George on Tuesday to try to review documentation related to loans about which he had questions, including the Port Henry hair salon.
He said Young told him that he could not provide the information because of confidentiality rules regarding the applicants and that Beaty should file “FOIL” (Freedom of Information Law) requests.
Beaty said that response concerned him.
“I was quite surprised,” he said.
Beaty said he had concerns that the loan fund seems to be mainly for “connected” people and business owners and that he has spoken to a number of Warren County business owners who had no idea it existed.
“There really needs to be a close look taken here,” Beaty said.
He said EDC Warren County and Warren County Local Development Corp., two agencies reviewed by the ABO who provide funding to businesses in the county, have been more forthcoming with county supervisors, providing annual accounting of loans to county supervisors.
As supervisors continue to push for more review, the Warren County Board of Supervisors Finance Committee asked county Treasurer Michael Swan on Wednesday to formally request a “loan aging report” from the Regional Planning Board that would detail the status of all loans.
Swan said records he was provided show the loan fund has $2.8 million in loans outstanding, but $1 million of that had been “written off as lost” and no interest was being collected.
Young said last month that only $89,000 was in default, though.