ST. CROIX — Senator Ray Fonseca has asked the Virgin Islands Office of the Inspector General to conduct a comprehensive financial audit of the Magens Bay Authority, citing concerns about the Authority’s cash reserves, interest income and broader financial management practices.
Fonseca made the request following testimony during the Legislature’s Fiscal Year 2027 budget hearing for Magens Bay Authority on Monday, where he said the Authority reported approximately $10.37 million in various bank accounts but earned only $14,072 in interest income.
In a press release issued Friday, Fonseca stated that he wrote a letter to Inspector General Delia Thomas, with copies provided to Senate President Milton Potter and Attorney General Gordon Rhea. He noted that he asked the OIG to examine the Authority’s banking and cash management practices, including whether funds were being held in non-interest-bearing or low-interest accounts when more favorable alternatives were available. He also requested a review of the Authority’s investment policies and Board oversight, procurement and contracting practices, payroll and personnel expenditures, revenue collection and internal controls, and expenditures and contracts associated with a public bathroom construction project.
Fonseca said the request was intended to provide greater transparency and accountability.
“The people of the Virgin Islands deserve to know that every public dollar is being managed responsibly,” he said in a statement. “When an agency holds more than $10 million in cash reserves but earns such a minimal amount in interest, it raises legitimate questions about whether those public funds are being managed prudently.”
But MBA Board Chair Barbara Petersen strongly rejected the notion, calling it “absolutely ridiculous” and “political theater.”
Petersen said the Authority is among the most transparent Boards in the territory. She said the Authority is self-sufficient, generating its own revenue through fees and services, including fees charged to visitors to Magens Bay.
The Magens Bay Authority is established under Title 32, Chapter 3 of the Virgin Islands Code as a corporate instrumentality of the VI government. The law gives the Authority responsibility for acquiring, improving, and operating parks and beaches, while allowing it to generate revenue through fees and rentals. The Authority also remains subject to laws applicable to independent instrumentalities of the VI government.
The Authority’s seven-member Board also has a direct connection to the executive branch: the governor is a member of the Board with voting power by proxy, and the law gives the governor certain appointment and removal authority.
Petersen questioned the basis for an IG audit, saying the Authority does not receive government funding.
“The primary prerequisite to request an audit from the inspector general is that an agency or organization receive funds from the government of the Virgin Islands,” she said.
Fonseca dismissed Petersen’s characterization that the request was “political theater” and said the audit was not directed at any particular individual or entity.
“It’s not an attack on any particular person or a board or any contractor,” he told WTJX on Saturday.
Petersen said the Authority provides annual audits to the Legislature’s Post Audit Division and voluntarily participates in legislative budget hearings despite not receiving government funding. She said Fonseca’s focus on the Authority’s cash reserves was misplaced.
“During our budget hearing, he found it necessary to question why we have money in the bank and wanted to know what we’re doing with it,” Petersen said. “We are a self-sufficient agency.”
Fonseca acknowledged that Magens Bay provides audits but said they do not specifically address the issues he wants examined.
“I want to see that the cash is being managed properly, and it’s being invested in appropriate vehicles, so that we can ensure that the VI funds is being properly managed,” he said.
Regarding the $14,072 in interest income, Petersen said the Authority has deliberately taken a conservative approach to managing its funds.
“We are a conservative organization,” she said, adding that the Board has explored investment opportunities such as stocks and bonds but has chosen not to pursue more aggressive investments.
The Authority’s priority is preserving its accumulated funds rather than taking additional risks to generate higher returns, Petersen said.
“Our major concern is that we are responsible fiduciary directors of the Magens Bay Board,” Petersen said. “And that is our only concern — to make sure that when we earn those $10 million, that we keep those $10 million. And if we only earn $14,000 in interest, then so be it.”
Petersen said the Authority believes its financial practices are properly managed and overseen. She also said MBA would cooperate if an inspector general review was ultimately conducted.
Whether the Office of the Inspector General will take up Fonseca’s request remains unclear. Thomas told lawmakers at an August 11 budget hearing that her office is operating with limited staff while handling a growing workload of audits and investigations. The office has 22 funded positions — 18 filled and four vacant — with 10 auditors available to handle assignments. Audit teams, however, are organized as if there were 13 auditors, forcing staff to cover multiple projects simultaneously and slowing audit completion. Thomas said the investigations caseload rose in fiscal year 2026 from seven open cases to 20, with 12 still open.
“At our current staffing level, we cannot adequately meet the demands of our investigation workload,” she said, requesting additional funding to hire two investigators and one auditor.
Petersen questioned Fonseca’s motivation for requesting the audit, referring to comments she said he made during the Authority’s 2025 budget hearing. She said that Fonseca described Magens Bay as a “cash cow” and suggested that some of the Authority’s money could be used by other government agencies. She said she was seeking a transcript of the 2025 hearing to support her account and characterized Fonseca’s current request as an attempt to gain access to the Authority’s accumulated funds.
“His attempt to have this quote-unquote inspector general audit of how much money the Magens Bay Authority has is simply an attempt to try to raid the Magens Bay Authority of what funding they have to use it within other government agencies,” Petersen said.
Fonseca confirmed that he has described the Authority as a “cash cow.”
“The Magens Bay Authority is a cash cow,” he said. “I said it last year, and I’ll say it again. The agency has more than two times its total operating budget in liquid assets and cash, and it’s only earned $14,072. So, we need to take a look at that.”
Fonseca said he did not recall specifically suggesting that Magens Bay funds should be distributed to other government agencies. However, he said that if an audit determines the Authority has excess funds, they could potentially be used elsewhere.
“I do believe that if Magens Bay has excess funds, and the audit will determine that, that it could be utilized in other areas,” he said.
He pointed to the Charlotte Kimelman Cancer Institute’s need for a new 3D mammography machine as an example.
“So maybe the Magens Bay can look at other appropriate channels of assisting other government agencies, because as you know, the VI government is a cash-strapped agency, and Magens Bay is not,” Fonseca said.
Petersen said the Authority’s primary responsibilities are the preservation of Magens Bay, Lindquist Beach and Drake’s Seat, as well as maintaining the services it provides to residents and visitors.
“It’s just to make sure that we are responsible and that we make money for the beach and that we continue to provide services and a product that both the local people can appreciate, because it is their beaches, and the people that come to the territory and visit us,” she said.
