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Ansonia Mayor’s Company Faces Tax Liens, Foreclosure

by Ethan Fry | Apr 8, 2015 7:29 pm

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Posted to: Ansonia

FILEA construction business owned by Ansonia Mayor David Cassetti owes the Internal Revenue Service more than $100,000 in back taxes and faces foreclosure for not making payments to its mortgage lender.

Cassetti has owned the business, Birm-1 Construction, since 1986.

The mayor said part of the reason the taxes are not paid is because his former accountant embezzled “hundreds of thousands” of dollars from the company.

Cassetti said he filed a complaint with city police last summer.

On Wednesday, Ansonia Corporation Counsel John Marini released a letter dated Feb. 20 from an Ansonia detective acknowledging police are looking into a larceny complaint from Cassetti.

A copy of the detective’s letter is embedded below:

Ansonia PD Letter

Ansonia Police Department Lt. Andrew Cota also confirmed detectives are working on a case.

In addition to federal taxes, Cassetti said his company owes about $15,000 in back taxes to the City of Ansonia. He said he’s chasing clients who owe him money, which is why his company owes money.

“I have a lot of money owed to me right now,” Cassetti said. “I’m hoping by the end of June to have things paid off . . . I’m making every effort to pay the tax.”

The Federal Tax Liens

In the past two months the IRS has filed three liens on 10 Riverside Drive, the address of Cassetti’s Birm-1 Construction and Birmingham Management Group, a company launched in 1997 of which his son is now president.

On Feb. 4, the IRS filed a $29,708.43 lien on the property, representing unpaid taxes from 2012 and 2013.

On Feb. 17, the IRS filed a $48,677.08 lien for unpaid taxes from 2013.

On March 9, the IRS filed a $24,107.28 lien against the business. It was again for unpaid taxes from 2012.

The liens total $102,492.79.

Cassetti said the taxes have not been paid because he is owed money by clients and because his accountant ripped him off.

He declined to name the accountant.

The mayor said the company’s woes stem from the theft, which he discovered last year.

“I had a financial guy working before I left. He embezzled quite a few hundreds of thousands of dollars of money,” Cassetti said.

Cassetti alleged the embezzlement had been going on for about a year and a half when he found out about it.

“I’m going after him,” Cassetti said.

Foreclosure Threat

In addition to the tax liens, Cassetti faces a handful of lawsuits alleging Birm-1 hasn’t paid money it owes on mortgages.

Between January 2002 and November 2006, Cassetti signed mortgages with Naugatuck Valley Savings & Loan on Birm-1’s Riverside Drive headquarters and two properties it owns on Beaver Street in return for $700,000.

The mortgages were bought in 2013 by Hayden Asset VII LLC, a Delaware-based company controlled by a New York City-based real estate investor.

In liens filed at City Hall in February, Hayden alleged Birm-1 still owes money on the mortgages.

According to one of the lawsuits — filed by Hayden Asset against Casetti, Birm-1, and SALJD Riverside Properties, LLC — Cassetti stopped making monthly payments on the mortgage from November 2012 through January 2015.

State business records list Cassetti as the principal manager of SALJD Riverside Properties. It is one of three lawsuits involving Cassetti and his various companies.

The mortgage holder is now seeking foreclosure of the mortgages and possession of the company’s properties.

Cassetti said Wednesday that he’s disputing Hayden Asset’s allegations.

“I was with Naugatuck Valley Savings & Loan,” he said. “They sold the note, which sold it to another bank, which sold it to another bank, and now a hedge fund owns it . . . As far as I’m concerned I think (they) breached the contract.”

Cassetti said he has hired accountants and lawyers to negotiate with the hedge fund controlling his mortgages.

Cassetti said he’s “winding down” Birm-1, and transitioning ownership of his other company — Birmingham Management Group — to his son.

Will People Care?

Cassetti, a Republican, was elected mayor in 2013, defeating Democrat James Della Volpe, a seven-term incumbent.

The mayor, who just announced he’ll seek a second term, is popular and approachable. And he’s lowered taxes twice in a city where the median household income is $45,505.

The opposition acknowledges he is a strong candidate.

Edward Adamowski, a First Ward Alderman and chairman of the Ansonia Democratic Town Committee, said Cassetti’s legal woes do not bode well for the city now managed by Cassetti.

“How can you run a city when you’ve bankrupted a company, when you’re not paying your bills?” Adamowski said.

But on the evidence of the 2013 election, Adamowski doubts voters feel the same way. And this is the second time Cassetti’s private business dealings have been questioned.

Two months before the 2013 election, Adamowski pointed out Cassetti owed the city about $15,000 in property taxes.

Cassetti quickly paid the amounts due after the company’s tax debt was raised publicly.

“Of course your taxes should be paid,” Cassetti said at the time. “It just was an oversight in my office. Everything was on the bottom of the pile.”

Cassetti went on to win the mayor’s race by more than 700 votes.

“Obviously it’s not a big deal to the residents,” said Adamowksi, who is mulling a run against Cassetti in November.

“I think a lot of people in the city know that he’s in that position, and I don’t know if they care,” Adamowski said. “I might sound like a jerk by saying it, but to me, as a resident — exclude me from being an Alderman — as a resident it doesn’t look to me like anybody cares.”

FILEGOP Reaction

Irving Reed, chairman of the Ansonia Republican Town Committee, did not return a call for comment.

Marini, a former Republican Alderman, a former leader of the city’s GOP Party and now the city’s corporation counsel, said lots of companies go through tough economic times.

“It was a business hit hard from the economy, but at the same time it’s finding new life,” he said. “Anyone that’s ever operated a major business would understand that’s just how it goes.”

He then lashed out at Democrats.

“The individuals that have brought this up, the Democrats, they’re people that don’t understand how to run a business,” Marini said. “They’ve never operated a business. It’s clear from the last 10 years they have absolutely no idea what it takes for a business to succeed. So it’s really not surprising that they would bring this up.”

How Serious Is This?

The IRS liens plainly state Cassetti owes the government money and threatens “additional penalties, interests and costs” if he doesn’t pay up.

An IRS spokeswoman declined to comment on the matter or the agency’s regulations in general.

She emailed the Valley Indy a link to the IRS website’s section on business taxes.

Thomas Groth is a Bethel-based lawyer who specializes in helping people resolve disputes with the IRS.

He said it’s “somewhat routine” to see the agency file a lien on a property owned by a business with unpaid taxes.

The IRS may pay closer attention to Cassetti’s debt because a chunk of it (roughly $61,000) is unpaid employment taxes. That’s Social Security, Medicare or income taxes.

“The IRS does take those types of taxes more seriously,” Groth said. “The government sees that as someone else’s money. You’re withholding from your employee’s paycheck with the understanding that you’re going to remit it to the government, and you’re not remitting it to the government.”

But usually the IRS is willing to work with companies, assuming the owner isn’t doing things such as drawing a massive salary and tooling around town in expensive cars.

“With any type of tax issue, the IRS is going to look at your current situation,” Groth said. “The IRS, while they do have awesome collection abilities, they are willing to work with taxpayers in current compliance. They’re not interested in working with taxpayers who continue to rack up additional liabilities.”

Isn’t This Private?

While campaigning for mayor, Cassetti touted his experience as a self-made businessman as a reason to vote for him.

His offices at Birm-1 on Riverside Drive served as the backdrop for the announcement of his mayoral bid. He said running the company gave him “a clear understanding of what true leadership is.”

He touted the company’s $2.5 million valuation and 14 employees.

A person’s private business dealings are open to scrutiny when the person seeks public office, according to Richard Hanley, a journalism professor at Quinnipiac University in Hamden.

“A public official who owes taxes is going to be covered differently from some ordinary citizen who owes taxes because the public official is conducting the public’s business,” Hanley said. “It’s up to the journalist to provide the information and let the public decide whether it’s worthwhile or not relative to their understanding of the civic responsibility of holding office.”

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Comments

posted by: Edward Adamowski on April 9, 2015  8:50am

Mr Marini, the Democrats did not bring this to the attention of the Valley Indy. Maybe you should do some research and understand the facts prior to commenting. It is on the state judicial web site for all to see. Furthermore, I see you are back to blaming the past administration! After a year and a half into this administrations term all I see is money being spent as if the world was coming to an end by the next election. Taxes go down and spending goes up! Hmmmm did the city hit lotto? No! You are depleting the reserve fund, unassigned, fund, whatever you call it now! The city will soon be bankrupt at this rate!  I strongly encourage the residents to get envolved and understand what is happening here.

posted by: Pete Marcinko on April 9, 2015  11:51am

Am I reading this correctly?. ..tax leans from 2012..but just found out about it last year? I may be confused but how is leadership not knowing what is going on in your own buisness?
The other thing I’m trying to wrap my head around..but did corporation council just say democrats don’t know how to run a buisness?? Is this a blanket statement to all democrats? If so does being republican mean your a good buisness man by not paying your bills or allegedly not paying attention to your responsibilities with regards to your bills. Am i misreading a statement or does it say he still owes the city he runs the city he wanted no public figures who owe taxes to be involved in $15000?

posted by: Ansonia Gop on April 9, 2015  11:56am

Mr. Adamowski-  I look forward to discussing the proposed city budget with you at Tuesday’s Board of Aldermen meeting.

For the residents sake I hope we have your vote on the budget and tax decrease. 

I’m sure you are already aware that the bulk of spending increases this year are attributable to capital investment and payments on unfunded liabilities.  In other words, expenditures that will save taxpayers and the city in the long run.

Also, it has previously been explained that the city reserve fund is intentionally being lowered because it was grossly overfunded, representing an unnecessary burden to our taxpayers.  Do you recommend continuing to maintain the general fund at over 10% of the budget?  Do you recommend a tax increase this year?

posted by: Ansonia Gop on April 9, 2015  12:08pm

Pete- Definitely not a blanket statement on all Democrats. Just on those offering the “insightful” critique.

posted by: Pete Marcinko on April 9, 2015  12:20pm

Thanks for clarifying John. As a democrat i found it out of context since no one said republicans dont pay there bills.

posted by: Kenneth Plavnicky on April 9, 2015  1:05pm

If anyone is concerned about money we all should be happy with a tax decrease two years in a row!!

posted by: Edward Adamowski on April 9, 2015  2:11pm

No tax increase and spending Decrease that’s what I want to see Mr Marini.

posted by: Tara Kolakowski on April 9, 2015  6:07pm

As a Democrat, and former business owner, I find Corporation Councils remarks highly offensive.  I owned and operated a successful business for 7 years before selling it.  Have You ever owned a business Mr. Marini ?  I think not.  And furthermore, the City of Ansonia’s Attorney should NOT be commenting on and/or defending the Mayor’s private business.  The Mayor should be represented by his own attorney, not the taxpayers.

posted by: Linda Amico on April 9, 2015  8:26pm

I wish there was a like button so I could click on it for a lot of these comments. In my mind Democrat or Republican doesn’t matter. The only thing that matters is right & wrong.

posted by: Kenneth Plavnicky on April 9, 2015  9:19pm

Tara ,it’s clear that Mr. Marini was referring only to the Democrats who are using this opportunity to criticize the mayor’s ability to lead the city .I believe he already clarified that ! It’s also obvious that he is speaking as a member of the Ansonia GOP not as the city attorney ,given the email he posted under!(ANSONIAGOP)

posted by: Jon Roman 469 on April 10, 2015  12:32pm

Everyone has personal finance issues, even our highly paid school administrators and teachers.  Stay focused Mr. Mayor and keep up the great work you are doing.  No Mayor in the history of Ansonia has worked as hard as you have and certainly no previous Mayor has been able to cut taxes two years straight.  That’s what matters to me and I beleive the people will once again support you this November - in a big way! 

Thank you for all you do for the city of Ansonia sir.

posted by: Edward Adamowski on April 10, 2015  3:13pm

Sandy, you are correct. Mr Marini without a doubt runs the show!  I also agree with Linda’s statement, it has nothing to do with Democrat or Republican, it has to do with right and wrong!  The poll shows how the residents feel. I am glad people are starting to see what is going on here.

posted by: Kenneth Plavnicky on April 10, 2015  5:43pm

Ed…We the people run the city of ansonia,  the residents have made it clear that they want lower taxes. Also an administration that will fight to bring business back. Please remember the residents before voting against the proposed budget and against the plan for tax reduction. It’s really not to late to be part of the solution!

posted by: Pete Marcinko on April 10, 2015  6:48pm

Boy ken I hope that was a auto correct error and not a Freudian slip. Im extatic that the city has lowered taxes…really who wouldnt be? The part that worries me is the increased spending. If you take money from your savings account and put it in your checking(essentially)..its not income. So what happens when your savings account is empty? So yes i understand mr Marini when he says that the rainy day fund or what ever you want to call it was over inflated, but what gets cut when its gone? Or like Waterbury,what happens when the bill comes? Waterbury residents loved there taxes not going up till well they realized they had to. Bankrupting many companies as well as seniors.
Again im extatic that the city lowered taxes! However much like Mr Adamowski I too am concerned about what happens next? I think my alderman is concerned about the residents. But he is also worried about there future.

posted by: Ansonia Gop on April 11, 2015  1:01pm

Sandy:

Your points are very well taken.  I will try to address your concerns.

The situation here, as demonstrated in the yearly audits of an outside firm (Michaud, Accavallo, Woodbridge & Cusano) indicate that Ansonia’s general fund (aka “rainy day fund”) has been overfunded for the past 5 years, forcing taxpayers to shoulder an unnecessarily high tax burden for what is essentially a mammoth slush fund.

Specifically, our general fund came in last year at over 17% of the overall budget.  Previous years show a reserve coming in over 10% of the budget.  Our auditor’s have recommended maintaining the reserve at an average of between 8% and 10% of the budget. 

This raises the question: is it not better to have the largest reserve possible?  The answer is actually no.  A unnecessarily high reserve will actually hurt a city’s bond rating, create an unnecessarily high tax rate and create a false sense of security.

Consider that, despite the overfunded reserve, that city has actually been entirely ignoring unfunded liabilities such as the city pension.  Failing to make regular payments on liabilities is shorthand for higher taxes in your future.  It’s not responsible.  And if you are concerned about “bankrupting” the city, that’s the way to do it.

The Mayor’s plan is to leverage some excess reserve funds to pay down non-operational costs like the unfunded liabilities, debt costs and infrastructure/capital improvements, and to provide a tax cut to residents.

The tax cut is responsible and sustainable because it is based on projections of next year’s surplus and revenue.

Sandy, from your past comments I know that you care about the city and want the absolute best for it.  I want to assure you that the Mayor and his staff feel the same. 

Also remember that its the residents who truly run this city, and you have a Mayor and administration doing their best to respect the needs of the residents to lower the tax burden while also moving the city forward.

Everyone in city hall would be happy to answer further questions about the budget, city finances or anything else. 

Yes, I recognize that I tend to be a vocal part of the administration.  That is only because I have always been extremely passionate about the future of Ansonia and its residents.  I will not apologize for fighting for this City or defending an administration that is working on behalf of all residents, whether they be Republican, Democrat, Unaffiliated or otherwise. 

JP Marini

posted by: Rita St Jacques on April 12, 2015  5:55am

Still waiting to hear from the mayor.

posted by: Robert Witmore on April 12, 2015  9:36am

AND…..to Sandy’s point ,  It is obvious their is displeasure indicated through the simple –voting- link within the article reflected above & beyond the previous post election confidence.
Its imperative Damage Control using a professional self made presentation & explanation , NOT read off paper or written by another (individual) be given by the Mayor & the Mayor only to the Ansonia’s populous ASAP.
I for one do not feel good about the self inflicted management style knowing the remote possibility of someone falling asleep at the financial wheel would be disastrous which is a reflection by renown developers who could rebuild Ansonia.  This is why completion between candidates find themselves digging deep into financial facts during an election to reveal what sums up to be the best candidate prior to these self inflicted & personal cover-ups.  Holy S^#@ ….We would hate to spin this election roulette wheel again knowing somewhere someone has no BLACK spots and only Red spots on the game wheel when the game began.

posted by: Beth Lynch on April 13, 2015  12:09pm

I really wish that all contributors, including Sandy Shrtl, would be required to use their real names when posting on this site.  In researching his Facebook page there is very little information on him and I believe his Facebook account is a fake. I take offense to his use of an abbreviation of the surname of a large Ansonia family of which I am a member.  We have no one named Sandy in our family and I firmly believe that if I, or any of my relatives, had something to say we would use our real names and not hide behind an alias.  Thank you.

posted by: Eugene Driscoll on April 13, 2015  12:36pm

There will always be trolls.

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