Sec. of Commonwealth: Town Must Provide Financial Records Requested by Marblehead Beacon
For much of the past year, Marblehead Beacon has routinely requested and received financial records from the Town of Marblehead, including information about the banks where town money is being held and the associated interest rates. This past July, a key part of our request – the names of the financial institutions – was withheld by the town’s Chief Financial Officer, Aleesha Benjamin.
On July 28, 2023 Marblehead Beacon sent an appeal of the denial to the Secretary of the Commonwealth of Massachusetts, along with a memorandum detailing our arguments. The Town of Marblehead responded with a memorandum supporting its justifications for withholding the information.
On August 11, 2023, the state issued its decision in Marblehead Beacon’s favor, requiring that the town supply the requested records.
Why did Marblehead Beacon request this information?
Marblehead Beacon’s request constituted part of our ongoing follow-up to a multi-part series about the town’s management of hundreds of thousands of dollars in taxpayer funds in accounts that had long been earning suboptimal interest. In the past, Treasurer Rachel Blaisdell had provided us with all relevant bank names as well as amounts held and applicable interest rates.
A Marblehead Beacon investigative series revealed that National Grand Bank (NGB) – whose president sits on the five-member Town of Marblehead Select Board – held tens of millions of taxpayer dollars at exceedingly low interest rates as compared with other institutions. We also noted in our articles that NGB – which has long managed the town payroll – did not offer positive pay, a fraud-protection mechanism widely used to deter check fraud. Following our publication of the series, we learned that Marblehead was planning to move its payroll to Eastern Bank. As part of our follow-up, we sought to inquire as to whether this transfer of accounts to Eastern Bank had, in fact, transpired.
What exactly did Marblehead Beacon seek in our request?
In our July 2023 request, we sought the following:
- The interest rate for and dollar amount in each account in which town money is held;
- All fees/fee schedules associated with every such account;
- The name of every bank/financial institution as it corresponds with the above;
- The type of account(s) the money is held in as it corresponds with the above information (e.g. savings, checking, CD, etc.);
- Which funds are being held in which account/institution. (For instance, details as to each Enterprise Fund, payroll, Board of Health, etc. and what is in it.)
Marblehead denies key components of Marblehead Beacon’s request
The town declined to respond to numbers three and five above. Benjamin wrote to Marblehead Beacon:
“Please be advised that due to cyber-security concerns, the Town is denying the portion of your request for documents with names of the financial institutions and specific dollar amounts associated with a specific financial institution. Similarly, the Town is not providing the interest rate and fees or types of accounts listed by financial institution all pursuant to exemption N of the Public Records Law. See G.L. ch. 4, § 7 cl. 26(n). As an example of this, after the initial release of documents, on May 17, 2023 a check dated 5/11/23 for $18,970.44 was cashed at one of the financial institutions used by the Town. Another example of this, after the initial release of documents, on June 1, 2023 a check dated 5/26/23 for $4,990.56 was cash at one of the financial institutions used by the Town. As stated in my prior email I have instituted new financial controls and policies to protect the assets of the Town and have changed banking institutions to implement positive pay.”
Benjamin acknowledged in her response that this decision was not a statewide directive but rather a new policy that she had chosen to implement. It was this decision that Marblehead Beacon appealed to the Secretary of the Commonwealth.
Town enlists services of counsel, who fail to follow notice requirements
Once Marblehead Beacon submitted its appeal, the town was given the opportunity to respond, and enlisted the services of town counsel to do so. Attorneys Lisa Mead and Marko Samardzic of Mead, Talerman & Costa, LLC submitted a response memorandum to the state. The law requires that they provide a timely copy of their response to Marblehead Beacon. They did not do so. In fact, Marblehead Beacon did not receive a copy of the town’s memorandum until four hours after the Secretary of the Commonwealth had issued its decision – a full week after the town attorneys had submitted their response to the state. It came via email with a note from Attorney Samardzic stating in part that, “[t]his response was sent last week and due to an oversight not forwarded to the Marblehead Beacon.”
Marblehead Beacon’s appeal ultimately prevailed, despite our inability to respond to the town’s response claims.
Town claims fraud at NGB caused by Marblehead Beacon publishing bank information
The town attorneys’ memorandum asserted that it was only after publication of Marblehead Beacon articles about the town’s financials that “the Town was victim of check fraud,” wherein “[n]efarious actors used banking information (such as the kind that was released in the ‘updates’ to the Marblehead Beacon) in order to perpetrate crimes against the Town.” The memorandum also referenced a police log published in the Marblehead Current about a “‘fake town check’” that was “‘presented at National Grand Bank’” and concluded that “the factual support for withholding disclosure is evident as the Town was the victim of check fraud on two occasions…because the perpetrators were aware of certain banking information such as the type requested here.”
The town’s memorandum failed to explain how knowing the name of the bank where money is held helped “nefarious actors” successfully perpetrate fraud on NGB. It also did not note that Town Administrator Thatcher Kezer had – months earlier – publicly presented a pie chart showing the names of the very same banking institutions and corresponding amounts in his State of the Town presentation, which was made available to both in person and remote audiences. Furthermore, all Marblehead town employees and vendors could presumably see that their checks were originating from NGB. The fact that Marblehead had town monies held at NGB, in other words, was widely known independent of any articles in Marblehead Beacon. Furthermore, NGB did not – and to our knowledge still has not – implemented the “positive-pay” fraud control mechanisms that might have thwarted any such fraud attempts sooner.
State’s determination: Unclear how “terrorist” could use info to “maximize damage”
With regard to the Town of Marblehead’s claim about cybersecurity risk, the Secretary of the Commonwealth’s determination explained that the town had failed to meet two applicable standards. The first is “whether, and to what degree, the record is one a terrorist ‘would find useful to maximize damage,’” and the second is whether there was “factual and contextual support for the proposition that disclosure of the record is ‘likely to jeopardize public safety.’”
The state found that “[b]ased on the Town’s response it is unclear how the requested information resembles the types of records listed in the statute, nor how the information is one a terrorist would find useful to maximize damage.”
The state’s response also noted that “the Town has not provided ‘sufficient factual heft’ to conclude that a reasonable person would agree that disclosure of the records is ‘likely to jeopardize public safety or cyber security’ as required by [the] Exemption,” and that “it is unclear how [the applicable law] specifically or by necessary implication permits the Town to withhold the responsive records.” The Secretary of the Commonwealth’s August 11th decision may be read in full here.
What comes next?
It was and remains the position of Marblehead Beacon that the public is entitled to know the names of the financial institutions at which a municipality holds taxpayer funds, how much interest the money makes, and other related information. This information, we contend, is in fact foundational to ensuring good fiscal management and transparency in town government, and plays no role in encouraging or supporting bank fraud.
We reached out to Select Board member Erin Noonan, who was recently elected Chair, about the town's financial policies moving forward, and she said that "[t]he professional staff in our finance department are stewards of over $100 million in taxpayer dollars, and take this role seriously." Noonan went on to say that [d]ozens of towns in the Commonwealth have faced extortion through cyberattacks in the past year. Delay in responding to detailed banking information was to allow counsel and the state to offer guidance and to protect taxpayer money from being vulnerable to bad actors. That said, I am confident that the town will comply with record requests, according to counsel."
Marblehead Beacon did not appeal to the Secretary of the Commonwealth based on "a delay in responding." On the contrary; on several occasions we have waited beyond required response times for other request answers or records. We appealed here based on the original response from Benjamin that she would not be providing answers to two key pieces of information.
Following the ruling from the state, Marblehead Beacon reached out to Benjamin to inquire as to whether the town would provide the disputed information. On August 21, 2023 Benjamin again provided us with partial information – even after the state decision. When asked why she stated, "[t]he bank and interest was ok to be released not what type is where. Thank you." This was incorrect, and within a very short time that same day, Rachel Blaisdell released the final requested information.
Marblehead Beacon will publish a follow-up on our town finances series in the future, which will include the most recent data provided by the town.