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New York State Inspector General's report on the state Petroleum and Alcohol Bureau

New York State Inspector General's report on the state Petroleum and Alcohol Bureau

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Published by Cara Matthews
May 2013 report on the state Department of Taxation and Finance's Petroleum and Alcohol Bureau.
May 2013 report on the state Department of Taxation and Finance's Petroleum and Alcohol Bureau.

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Published by: Cara Matthews on May 20, 2013
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08/09/2013

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State of New York Office of the Inspector General
An Investigation into the Petroleum, Alcohol,and Tobacco Bureau of the New York StateDepartment of Taxation and Finance
May 2013
 
Catherine Leahy ScottInspector General
 
 
STAFF FOR THIS INVESTIGATION AND REPORT
LEONARD A. COHEN
Chief Counsel
SPENCER FREEDMAN
Executive Deputy Inspector General
MICHAEL C. CLARKE
Chief of Staff and Counselor 
PHILIP FOGLIA
Special Deputy Inspector General
KENNETH MICHAELS
Investigative Counsel
 BERNARD COSENZA
Deputy Inspector General for Investigations
ROBERT WERNER 
Chief Investigator 
 LESLIE ARP
 Deputy Chief and Confidential Investigator 
WILLIAM GLEESON
 Investigator 
DENNIS GRAVES
Supervising Auditor 
 VAL DOUGLAS
Supervising Auditor 
PETER AMOROSA
Investigative Auditor 
ILENE GATES
Investigative Auditor 
ALLA KORSUNSKIY
Forensic Accountant
FELISA HOCHHEISER 
Director of Investigative Reporting (New York City)Special Counsel
STEPHEN DEL GIACCO
Director of Investigative Reporting (Albany)
 
i
CONTENTS
EXECUTIVE SUMMARY .............................................................................................. 1
 
INVESTIGATION ............................................................................................................ 4
 
A.
 
Background ......................................................................................................................................... 4
 
B.
 
PATB Major Operations Preceding Operation Keystone ............................................................... 6
 
i.
 
Operation Phoenix ............................................................................................................................ 7
 
ii.
 
Operations Genesis and G-2 ............................................................................................................. 8
 
iii.
 
Operation KG ................................................................................................................................... 9
 
C.
 
Operation Keystone ...........................................................................................................................10
 
i.
 
Parameters of the Operation ...........................................................................................................10
 
ii.
 
Cash Shortages in Operation Keystone ...........................................................................................17
 
iii.
 
Unusual Incidents in Operation Keystone .......................................................................................24
 
a.
 
Burglary of Warehouse During Operation Keystone .................................................................24
 
 b.
 
Attempted Robbery of Purchasers ..............................................................................................25
 
D.
 
Deficiencies Regarding PATB Investigations ..................................................................................26
 
i.
 
Lack of Supervision and Proper Chain of Command ......................................................................26
 
ii.
 
Improper Out-Of-State Use of Weapons .........................................................................................28
 
iii.
 
Improper Handling of Confidential Informants ..............................................................................30
 
iv.
 
Inadequate Procedures for Handling Cash and Inventory ...............................................................33
 
a.
 
Poor Controls for Cash as Evidence .............................................................................................33
 
 b.
 
Unaccounted-for Cash Turned in to Tax and Finance ..................................................................35
 
v.
 
Inadequate Internal Audits ..............................................................................................................37
 
FINDINGS AND RECOMMENDATIONS ................................................................. 42
 
RESPONSE BY TAX AND FINANCE......................................................................... 44
 

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