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    Local Columns
    Saturday, May 04, 2024

    State government dithered over Amistad

    I sailed to Bermuda in 2005 aboard the state-funded schooner Amistad and became acquainted with crew members who were then working hard for little pay to make the ship's goodwill mission for Connecticut a success.

    The experience of the long and, in the end, stormy voyage also gave me a glimpse into the workings of the organization running the ship.

    I kept in touch with some of the crew over the years and didn't think that much about a nickname they came up with for Greg Belanger, a subsequent president of Amistad America. They called him The Talented Mr. Ripley, after the character from the 1956 novel and subsequent films of the same name, because of what they said were his skills in massaging the truth while slipping in and out of difficult situations.

    I forgot about the nickname altogether until Amistad America started to unravel in 2013, after I reported that the organization, which has received millions in federal and state financing over the years, had lost its nonprofit status with the Internal Revenue Service, after not filing income tax returns three years in a row.

    A Superior Court judge last year granted a request from Attorney General George Jepsen to take the ship from Amistad America and put it in the control of a receiver. Its fate seems to lie with the General Assembly, which must decide what to do with Connecticut's now debt-laden tall ship.

    I was reminded again of The Talented Mr. Ripley nickname last week while reviewing hundreds of pages of emails between state officials and the governor's staff, communicating about Amistad during the summer and fall of 2013.

    The emails, acquired through a Freedom of Information request, provide an unusual look behind the scenes at the state's lethargic response to news in May 2013 that they were funding a defunct nonprofit at the rate of almost $400,000 a year. Except for some short delays, they kept the money flowing for another year.

    One key player even signed on to a suggestion from Amistad America's Belanger that he and state officials work in tandem on "talking points" to manage the outfall of the news that the organization had lost its nonprofit status.

    Christopher "Kip" Bergstrom, deputy commissioner of the Department of Economic and Community Development, emerges in the emails as an especially eager advocate for an organization that had been flouting state funding rules for years, failing to file four years of required audits with Office of Policy and Management budget officials.

    "Kip likes the idea of joint messaging," someone on Bergstrom's staff wrote in an email to the DECD's press officer, as the Amistad story gained traction in state media.

    Bergstrom rails about the news coverage about Amistad in some of his emails.

    "I am fed up with reporters' falsehoods and grandstanding," he said in one email.

    "Contrary to some reporting on Amistad America in The Day, and now the Courant, our findings paint a positive picture," Bergstrom wrote in June to another state economic development administrator.

    DECD and OPM got warning of Amistad's lack of financial accountability as early as an audit for the 2008 fiscal year, the last one Amistad filed, according to the emails. The auditors that year found "material weaknesses" in financial controls, a negative finding that caused OPM to impose a corrective action plan, one that apparently didn't do much good.

    In reading the emails, some obvious mistruths made me think of The Talented Mr. Ripley.

    In a routine report in April 2013 to the DECD, for instance, Belanger wrote that Amistad America had finished the previous year with a surplus. This was an organization we now know had a long list of creditors at that time, with claims of more than $2 million.

    Indeed, not only did Amistad America not file tax returns for that year or a required audit with the state, but their accounting firm had more or less quit for lack of payment. They had no organized financial records at all.

    But Belanger reported a budget surplus to the state.

    Belanger also denied at the outset of the reporting in May that the organization had lost its nonprofit status, a claim passed along by the DECD press officer to DECD officials. Belanger soon changed that instead to a claim that it was a misunderstanding by the IRS.

    Deputy Commissioner Bergstrom began, in an email late in the day May 9, the day I first called DECD to ask about Amistad losing its nonprofit status, what would evidently become his damage control partnership with Belanger.

    "There was a snafu in the latest 990 (tax) filing that will be corrected in the next few days," Bergstrom told the DECD press officer, reporting on a conversation he said he had just had with Belanger.

    From what we now know about the lack of financial records for Amistad America, it would have been inconceivable to think the missing 990s could be finished "in the next few days."

    The misleading of the public wasn't limited to the DECD, though, in the unfolding disclosures of the Amistad debacle.

    Karen Gano, the attorney with the Office of the Attorney General assigned to the case, reported in a June 14 memo the contents of a press statement from the attorney general that said Amistad America "is asking the IRS to review its decision to reinstate its tax exempt status . . . Amistad America has represented to this office that the necessary documents have been provided to accountants."

    Had Gano been reading the May and June email exchanges about Amistad in which she was included she would have known of the lack of accounting information available from Amistad and how impossible a reinstatement by the IRS would have been at that time.

    A few weeks later, she admits in a July 3 email to Bergstrom how far out of the loop she had been on Amistad.

    The sharpest conflict in the unfolding saga was between Deputy Commissioner Bergstrom and state Rep. Diana Urban of North Stonington, who began to publicly complain about the lack of accountability after the first news stories appeared.

    Her public statements and demands for information seemed to especially annoy Bergstrom.

    "I do not think it is particularly productive to rehash the Amistad financial history and DECD's oversight," Bergstrom said in one email about Urban's questions.

    He also suggested in a June email to DECD Commissioner Catherine Smith that information about Amistad be withheld from Urban, after the lawmaker made a formal request.

    "I do not think we should share this level of detail with Rep. Urban as it will cause more confusion than clarity," Bergstrom wrote to Commissioner Smith, in an email that included details of the amount of money creditors claimed they were owed by Amistad.

    DECD officials were also slow to recognize other warning signs about Amistad America's lack of compliance with laws.

    Bergstrom reported by email that there were no liens on the ship, which was not true. In fact, it is the federal liens against the ship that continue to cloud the title and which now may require more funding from the General Assembly to establish clear ownership of the vessel.

    Bergstrom also reported in an email that the organization's filings were up to date with the Connecticut Secretary of the State, which was not true. At that time, Amistad America was three years in arrears for corporate filings required by law.

    It wasn't until after the May disclosure of the loss of Amistad America's nonprofit status that Belanger reported to Deputy Commissioner Bergstrom that the ship was no longer homeported in Connecticut and was then being run by a Maine tall ship sail-training program, Ocean Classroom. Belanger also reported then that he was the new paid director of Ocean Classroom.

    The Ocean Classroom contract says that the Maine nonprofit, which subsequently closed, while Belanger was running it, would pay most of Amistad's expenses, crew salary, maintenance, insurance etc., while Amistad America would pay only $5,000 a month.

    The emails reveal some other sources of income to Amistad America that had not been made public before, including $62,000 a month from a film company that used it for a television show. The emails also discuss some additional $400,000 in state bonding from 2007, that was in addition to the $3.6 million in operating money provided over the years by Connecticut and the millions spent to build the ship.

    Commissioner Smith also noted in a memo about Amistad America that the organization received $2 million in federal funding, when federal earmarks were at their height.

    The most momentum in solving the Amistad problem in the beginning came from the Office of Policy Management, which questioned whether anyone knew if what Belanger was saying could be verified.

    OPM also took the lead in replacing the Amistad auditors who had quit with a firm that responded to an OPM-drafted bid request. And it was OPM complaints about Amistad's delays in moving the audits along that seemed to eventually help bring them to a conclusion.

    In the end, the auditors finished the audits more than a year after the public first learned that Amistad America hadn't filed tax returns for three years. But the auditors essentially did not vouch for the accuracy of the numbers in the long-awaited audits.

    The auditors noted that the audits were based in part on numbers that did not come from records or receipts but rather were "verbal" reports.

    Those were largely verbal reports on Amistad America from someone who his staff used to call The Talented Mr. Ripley.

    This is the opinion of David Collins

    d.collins@theday.com

    Twitter: DavidCollinsct

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