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State audit shows City of Dunkirk misused HUD funds

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Buffalo: State audit shows City of Dunkirk misused HUD funds
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More than one million dollars was misused by the city of Dunkirk according to a audit by the State comptroller. City officials told YNN's Katie Cummings how they plan to fix the problem.

DUNKIRK, N.Y. — An audit by the Office of the New York State Comptroller found the City of Dunkirk, specifically the Department of Development, used HUD grant funding for items such as travel, staff bonuses and property purchases. From 2008 to 2012, more than a million dollars was misused.

Dunkirk city officials say they didn't notice until January of this year when a new administration took office.

"These letters were from 2011, and they just weren’t taken seriously," said Steve Neratko, Director of Planning and Development.

While some purchases may have been necessary, the audit states there was no supporting documentation.

YNN reached out to the former Director of Development Kory Ahlstrom, but he declined to comment.

Before being elected as mayor, Anthony Dolce served on the common council, but says he was unaware of the activities.

"In this report, it states very clearly that there were a few attempts to conceal the nature of what they were doing," Dolce said.

The city says it's consumed a lot of time and resources resolving these issues, which means some projects will be set back.

“Right now, it’s preventing us from being able to loan decent amounts out there to the community, or excuse me, to the businesses to further benefit the community," Dolce said.

"Generally, we start spending funds in April or May. This year, we couldn't start until November and basically it's because we had to work through all these difficulties," Neratko said.

Going forward, Neratko says he plans to work with HUD and hopefully rectify the situation for the future.

"The city may or may not have to reimburse HUD for the misspent money, so we’re going to spend every effort and we're going to take every route possible on trying to recoup that money," said Neratko.

The state comptroller recommended establishing formal procedures for the HUD grant program, which Dolce agrees with. He says the council has 90 days to submit a corrective action plan.

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