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Sat, Dec. 07

Former treasurer Fabrizio speaks out on 2008 audit

Lee Fabrizio

Lee Fabrizio

KINGMAN - Everyone, including the Arizona Auditor General, is entitled to their opinion, according to former County Treasurer Lee Fabrizio.

The Auditor General was asked by the Board of Supervisors to audit the County Treasurer's Office in 2008 after questions were raised about how the office was investing funds from the county and other entities, such as school districts.

On Sept. 18, Mohave County released the Auditor General's audit, which took to task several of the investment policies and procedures used by Fabrizio's office. Fabrizio lost his run for re-election in November to current Treasurer Melissa Havatone.

"It's just their opinion," Fabrizio said of the audit. "I still feel that nothing I did was illegal."

The audit states that Fabrizio declined to meet with staff from the Auditor General's Office. "I was never asked to meet with them," he said.

The audit states that Fabrizio's office should have notified the Board of Supervisors when it entered into an agreement with Merrill Lynch to safekeep investment funds for the county. Fabrizio's office also should not have authorized Merrill Lynch to purchase investment and safekeep the investment funds. The funds were later moved to UBS when Merrill Lynch began to fail. State statutes governing how a county treasurer's office oversees county investments are rather vague, Fabrizio said.

"Maybe I didn't tell the Board when I made the agreement (with Merrill Lynch,)" he said. But Merrill Lynch and UBS never charged the county for safekeeping the funds, he said.

He couldn't remember if the office bought investments from Merrill Lynch. Control of the investments was left in the hands of former Deputy County Treasurer Janet Barker, he said. "I wasn't paying attention."

The audit states that Fabrizio's office did not retain a paper trail of the investments it made, did not get quotes from more than one broker, and did not review the broker they were using or investment ratings to make sure the county was getting the best deal.

Fabrizio said he was sure his office went out for bid for the lowest and best prices on investments.

Barker was supposed to be keeping track of all the paperwork since she was in charge of the investments, he said. She was the professional and had years of experience working as a broker.

Not being able to find paperwork was nothing new, he said. His office had a hard time finding the investment paperwork from the previous employee in charge of the investments.

"Do you go looking into other people's files?" he said, after being asked if he should have been aware of what Barker was doing. "I talked to her every day. She was lying to me. I trusted Janet more than I probably should have, but you have to put your trust into people until they prove otherwise.

"I was in that office every day," he said. "maybe not a total of eight hours every day, but I was in the office every day."

Nine months after taking office, Havatone said her office is still trying to reconcile some of the investment reports.

"It's not something we can work on all day, every day," she said. "Nobody was overseeing the investments (in Fabrizio's office.) Barker was handling it. You need to know what's going on."

Havatone said she asked Barker about the investments more than once before becoming treasurer. She needed the information in order to reconcile the daily cash flow sheets. But when she asked Barker for the information about the investments, Havatone said she was told that she didn't need to see the investment books and that she just needed to put down what Barker told her.

Havatone's office is also trying to fix some of the other deficiencies in the office, she said. It moved the county's safekeeping account for investments from UBS to Chase Bank. Both the Board and the State Board of Deposits approved that agreement.

All investments are now researched and purchased by Davidson Fixed Income Management, a company that oversees a number of government investment accounts in the state. Davidson does not have direct access to the funds in Chase Bank. It must make its recommendations to the County Treasurer's Office before it can purchase an investment.

Investments are reconciled on a monthly basis by the office and policies have been updated and defined, Havatone said. The office has also moved more than $30 million in funds out of more risky corporate bonds and into more stable U.S. agency securities.

There is nothing the office can do about the loss of money from entities that invested in the county pool, she said. They are investments that go up and down with the market.

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