Three audits released this week by the New York State Comptroller’s Office outline years of weak financial controls, unauthorized bank accounts, and lax oversight across the Border City Fire District and its two fire companies — failures that allowed former chief John Morabito to divert tens of thousands of dollars before he pleaded guilty last year to stealing company funds.
Morabito, 71, who served as chief of the Border City Hose Company from 2015 to 2021, admitted in July 2024 to misapplication of property after state investigators found he stole more than $18,000 in donations, rental payments and other company income. Prosecutors said he made approximately $16,000 in cash withdrawals and used a company credit account to buy tools, fixtures and home improvement supplies for his personal residence. He received a conditional discharge and repaid full restitution. He is permanently barred from holding any fiduciary duties within the company.
District board failed to oversee finances, enabling Morabito’s off-book accounts
The audit of the Border City Fire District found commissioners failed to enforce even the most basic financial safeguards, allowing Morabito — while also serving as district chief — to open and control an unauthorized bank account that never went through the treasurer. He used that account to deposit more than $41,000 from a private rescue-boat contract he negotiated without board approval, along with insurance checks and fundraising proceeds belonging to the district or its companies.
Auditors found he withdrew over $24,000 in cash without records indicating who received the payments or what they were for. Another $49,000 in checks — including insurance proceeds due to the district — were also deposited into the same account with no proper documentation. The district board, meanwhile, failed to file required financial reports on time, did not audit treasurer records annually and ignored its own procurement policy on most purchases.
District officials agreed with the comptroller’s recommendations and said corrective actions are underway.
Serven Volunteer Fire Company lacked policies, controls and oversight
The Serven Volunteer Fire Company — one of the district’s two companies — had no adequate bylaws, no conflict-of-interest policy, no ethics code and no structured financial procedures, according to its audit.
An honorary member collected and deposited hall rental fees into a separate account, monthly treasurer reports were handwritten and incomplete, and the board did not review treasurer records or approve disbursements consistently. Of the 102 payments auditors examined, several lacked receipts, improperly included sales tax or carried late fees.
The company also failed to file legally required state and federal reports, including an annual report on foreign fire insurance tax proceeds and IRS Form 990. Serven leadership accepted the findings and reported adopting new bylaws, forming audit and bylaw committees and implementing required financial controls.
Hose company audit shows Morabito diverted money through hidden accounts
The Border City Hose Company audit found that company officers “did not provide oversight” and in some cases prevented the treasurer from doing his job. The most significant issues centered on Morabito, who opened and controlled an unauthorized “Fire Department” account with multiple sub-accounts.
From January 2018 to September 2019, he deposited more than $72,000 into the off-book account, including $32,400 from the unauthorized rescue-boat contract and $5,330 in district insurance money. The source of more than $35,000 in additional deposits could not be clearly verified. He withdrew about $22,000 in cash with no documentation and kept almost no records of how funds were spent. The company president also maintained a separate “Underwater Squad” account and wrote checks without maintaining records.
The treasurer accounted for less than half of the company’s total revenue during the audit period and failed to file required federal or state reports. The Hose Company, which recently reorganized as a social club, did not submit a formal response to the audit.
Auditors urge sweeping reforms, officials agree
The state comptroller urged the district and both companies to adopt and enforce complete financial procedures, annual audits, conflict-of-interest policies, ethics codes and strict controls over bank accounts and disbursements. The reports emphasize that restoring transparency and accountability is essential to rebuilding public trust — particularly after Morabito’s criminal case confirmed just how vulnerable the system had been for years.
District and Serven officials say they are implementing reforms. The Hose Company’s future governance structure remains unclear following its recent reorganization.
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