Law enforcement officials are accusing County Comptroller Eliot Auerbach of grandstanding and endangering public safety after Auerbach announced that he was cutting off key operational funds for a countywide drug and gang task force and the Ulster County District Attorney’s Office.

On March 15, Auerbach announced that he would no longer authorize the disbursement of “confidential investigative funds” held by the county for use by the Ulster Regional Gang Enforcement Narcotics Team. The money is used by the inter-agency task force to pay informants and make undercover purchases of narcotics and weapons. Auerbach has also frozen investigative funds used by the Ulster County District Attorney’s Office. The comptroller said that his action was based on the results of a review of internal controls he conducted after former URGENT co-commander and Kingston Police Detective Lt. Tim Matthews was arrested and charged with grand larceny in connection with a missing $9,000 from a safe at KPD headquarters.

Auerbach said that he would withhold release of his findings pending the completion of county and federal grand jury investigations of Matthews and URGENT. But, Auerbach said, the review had uncovered “inadequate” oversight of the investigative funds at both URGENT and the District Attorney’s Office, which warranted the funding freeze. Auerbach said that he would not authorize further payments until both agencies submitted “thorough and detailed” written protocols for handling the funds.

“They need to implement a series of checks and balances and internal controls that ensures beyond a shadow of a doubt that there is stewardship over these funds,” said Auerbach.

The frozen funds are held in five separate accounts and contain money allocated to the task force and the DA by county lawmakers, as well as grant money and money turned over to the task force through federal seizure laws which allow police to keep a portion of recovered drug loot and other illicit assets. The money, Auerbach said, is accessible to six people affiliated with URGENT (including Matthews until late last year) and the District Attorney’s Office. Cash withdrawn from the accounts is kept in a safe at the URGENT headquarters in the Ulster County Law Enforcement Center. When cash runs low, supervisors replenish the fund from the county-held accounts.

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Ulster County Undersheriff Frank Faluotico, who oversees URGENT, said that he had been requesting additional funds from the comptroller for three weeks with no reply. According to Faluotico, sheriff’s officials were unaware of the funding freeze until Auerbach issued the press release announcing it on Tuesday.

“Mr. Auerbach has had oversight on these funds for four years and now, there’s an allegation against one police officer and he decides to cut us off without informing us,” said Faluotico. “This is a serious safety issue for the county and police officers. There are going to be more drugs and guns on the street.”

Faluotico said that the task force generally accesses the funds in chunks of $5,000 to $10,000. He described the amount of cash on hand for current URGENT operations as “minimal.” Faluotico added that the cash crunch could endanger ongoing investigations in cases where undercover officers have arranged “buys” from drug dealers but may not have the cash to follow through.

“It’s becoming an officer-safety issue,” said Faluotico who added that he was looking into whether Auerbach had the authority to withhold funds which had already been allocated to the task force by county lawmakers.

Faluotico said that the sheriff’s office had revamped internal controls on the investigative funds late last year and revealed that Matthews continued to maintain control over URGENT money even after he gave up day to day management of the team in late 2009. According to Faluotico, Matthews maintained sole responsibility for the investigative funds from the team’s inception in March 2007 until December 2010 when sheriff’s officials “took back the books” in light of Matthews’ diminished role in day-to-day URGENT operations. The action came a month before Matthews was placed on administrative leave amid allegations of payroll fraud and subsequently arrested for the alleged theft of money from the KPD safe. Faluotico declined to comment on whether any irregularities were found in Matthews bookkeeping citing the ongoing grand jury probe.

Under the new system, Faluotico said, four supervisors meet regularly to reconcile the investigative funds. Faluotico said that he had invited Auerbach to attend a recent session to observe the new protocol, but the comptroller did not show up.

Auerbach, meanwhile, stands by his position that there needed to be better internal controls before he could authorize further withdrawals from the accounts.

“This situation has raised questions as to the stewardship of those monies,” said Auerbach. “We need to identify where that money went, what the results were and is there a paper trail that surrounds it.”

Like Faluotico, District Attorney Holley Carnright said that he was blindsided by Auerbach’s decision. Carnright added that the situation was especially galling because Aurebach had not offered any criticism or suggestions following a sit down with himself and DA’s Office Chief Investigator William Weishaupt to review records and procedures for handling confidential investigative funds.

“He reviewed the documents, he was satisfied by them and he left,” said Carnright. “I haven’t heard a peep from him since.”

Carnright said that his office uses a system of controls on investigative funds modeled on those used by the FBI and promulgated by the state Department of Criminal Justice Services. Carnright said that in light of the lack of communication from Auerbach’s office regarding suggestions for new protocols, he believed the abrupt freeze on investigative funds was fueled by politics.

“I really have to question whether this entire process is politically motivated,” said Carnright of Auerbach’s announcement. “For a person to put his own political agenda ahead of public safety, I find that very troubling.”