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Dewey, Cheatem & Howe - On Long Island?

SchoolWatch

 
LAW FIRM SCANDALS  - FEDERAL AND STATE INVESTIGATIONS BEGIN...LAW FIRMS AND DOZENS OF SCHOOLS SUBPOEANAED... WHERE WILL THIS END?
 
 
SCHOOLWATCH has been saying all along: 
 
"Just follow the money!"
 
 

5 more lawyers lose credits

 
Cuomo is a Eunuch!
Attorney General Andrew Cuoma has announced another payout by school district law firms that amounts to nothing more that “wrist slapping.”  Cuomo settled with two school law firms for a total of $600,000.  Both settlements with these law firms allow the foxes to remain in the hen house at the expense of the taxpayers.
The law firm of Girvin & Ferlazzo settled their pension fraud with the Attorney General for $500,000.  Whip-tee-doo!  This firm was previously reported to have scammed the system for millions of dollars, defrauded the school districts by submitting claims for partners work when it was low paid associates doing the work, and also scamming for health insurance claims.  $500,000 is but a small fraction of the amount scammed, and Cuomo is announcing this as some sort of victory for the taxpayer.  Nothing in Cuomo’s recent press releases indicates that any of the attorneys of this firm are being held accountable for violating the public trust, violating the law, or violating the attorney Code of Professional Responsibility.  Let’s be thankful that Cuomo is not bringing his “tough guy” act to violent criminals.  No one would be safe!
The Hogan & Sarzynski firm of Binghamton also bought its way out of trouble with a $100,000 payment.   Big deal.  Ed Sarzynski has been victimizing special education children around the State for decades, enabling districts to delay and deprive students with disabilities of needed services through his bullying tactics.  Now the taxpayers learn that he has engaged in criminal activity while he victimized their children, and what is the result?  He pays a small fine and continues to terrorize families.
  
Cuomo is a sissy of an attorney general.  Listen to this tough talk and then compare it with his deals. "Both of these firms engaged in long-term schemes that cost New York's taxpayers and warped the very laws their attorneys were supposedly expert in," said Attorney General Cuomo. "The systemic abuse my office has uncovered in the public pension and benefits systems has wasted millions of taxpayer dollars, and we will continue working to put an end to the abuse and an end to lawyers receiving public benefits they are not entitled to."   (Actually, Cuomo’s office did not uncover this, and it is just grandstanding for him to try to take the credit.) The result, small fines. Oh, sure, they may seem large to you and I, but these fines are but a single-digit fraction of what these firms rake in from school districts each year.  Accountability?  None.  All of these lawyers are being left in place to continue to manipulate the system, continue to practice law, and to continue to violate the public trust.  Cuomo is a eunuch!
 
Read how the Girvin firm set this scam up, as reported by Cuomo:
“The Girvin Firm and the school districts served by HFM BOCES would agree annually to an amount for the Girvin Firm's retainer fees to provide labor relations services. The schools would then pay those retainers to HFM BOCES, which in turn would pay individual lawyers at the Girvin Firm the same amount in the form of "salaries." It was left to the Girvin Firm to determine which of the partners would be improperly listed as "employees" to receive these "salaries" and what each individual's salary would be, regardless of whether he or she performed any labor relations work for HFM BOCES .”
So, The Cuomo allows them to pay a fraction of what they stole back to the state, and allows them to continue in their practice of law when they defrauded these school districts and received pay for services that weren’t performed.  12 of the Girvin firm attorneys were involved in the scam, yet The Eunuch boasts only that the firm is held accountable.  What about the attorneys, you Eunich!  What about their individual accountability?  Why have you left them with their law licenses and in a position to continue to rape the taxpayers?
 Oh, let’s analyze another component of the settlement The Eunuch worked out with the Girvin firm.  The settlement will have the AG’s office monitoring the firm’s bills to public sector clients for 3 years.  Well, for a firm the size of the Girvin firm, that has multiple full-time employees working its billing, it would take a full time AG person to effectively monitor this billing.  Is the AG’s office dedicating someone to this task? And if so, you and I are paying for that.  But the reality is that it will be such a superficial “monitoring” that it will be meaningless.  To illustrate how easily the Girvin firm will be able to recoup this money from their client school districts, imagine this:
1) Each of these corrupt lawyers is told they must help recoup this $500,000.
2) Each of them adds ten-tenths of an hour to their billing each day.  So, instead of ten entries of .1 (1-6 minutes of work), they make ten entries of .2 (7-12 minutes of work). Or they could mix it up and increase a 1.1 to a 1.2.  You get the point.  This is something that is impossible for someone “monitoring” billings to detect.
3) Now, if each of these lawyers has an hourly rate of $250/hour, this amounts to $250 per lawyer of fraud each day.
4) With twenty lawyers listed on their website, this would amount to $5000 of fraud each day upon the taxpayer.
5) So, after 100 business days of this fraudulent activity, they have recovered the fine paid to the State, and have put in place a new practice of fraud, all while under the watchful eye of The Eunuch.
Now, don’t imagine that these disreputable attorneys have not already calculated some way to continue “doing business as usual.”  These deals were not cut without some new plan in mind to allow them to keep the money flow going.  Associates in these firms are already reporting on the pressures they are having placed upon them with their billing practices to make up the losses associated with this scandal.

The Hogan, Sarzynski firm’s settlement is an extremely sweet deal for the lawyers. Their scam involved allowing the lawyers to participate in the health insurance plans of the district as well as the State retirement system.  Ironically, their firm’s website says that they have “earned a reputation for excellence and integrity.”  Right. Hogan had a lot of integrity – he was listed as an employee of 6 districts and a BOCES at the same time. He’s been receiving a pension benefit of $91,752.00 since 2000, collecting over $500,000 in benefits to day.  (Note that The Eunuch is not taking into account the cost of the health insurance.)  The Eunuch reported in his press release, “Hogan purposefully manipulated the school districts both for his own personal benefit and for the benefit of the firm.”   The deal The Eunuch cut with the firm was that the partners pay $100,000 to the State and cooperate in criminal or civil cases against Hogan.
So, those current scammers at H&S pay a small fine and get left in place to find some other way to rip off the taxpayers, and they push Hogan under the school bus.  Hogan was admitted to practice law in 1954. That puts him at 80+ years old.  What a deal!  The partners agree to cooperate in going after the 80 year old guy, who statistically will not be around to see the end of any civil or criminal prosecution.  The current perpetrators of the crime get left in place, and the aged attorney that is no longer able to access our schools for his crimes is the fall guy.  The Eunuch must have an aversion to taking in the attorneys who are spry.

The Eunuch Cuomo said, "This firm abused its relations with public schools so its lawyers could receive taxpayer-funded benefits they weren't entitled to. To think that this practice went on for more than 40 years belies any sense of reason and vividly illustrates a wanton disregard of laws protecting public funds." Yet, Cuomo is allowing those with a wanton disregard of laws protecting public funds to remain in positions to access those funds.  One really has to wonder what these lawyers may have given The Eunuch in exchange for these deals.  Obviously, The Eunuch is using this publicity in an attempt to appear the “tough Attorney General” for his future run for governor, so one cannot help but think that these lawyers getting the sweet deals have made some promises to help The Eunuch in that endeavor.
In ancient China, the eunuchs who worked in the emperor’s palace used to keep their testicles in a vessel so that they could be buried with them and be whole in the afterlife.  I imagine one day meeting with Cuomo in his office, and as we chat my eyes will be darting around his office looking for the urn in which he keeps his.

Newsday.com

Cuomo to hold Long Island hearings on school pensions

BY ROBERT E. KESSLER

robert.kessler@newsday.com

3:44 PM EDT, May 15, 2008

State Attorney General Andrew Cuomo announced today that he and a bipartisan group of state legislators will hold hearings on Long Island next week on the improper granting of pension and other benefits by school and special districts as well as local governments.

Cuomo's office, along with other federal and state agencies, has been investigating whether there has been a massive granting of improper benefits to professionals employed in the districts and government entities.

"The fraud that this investigation has already uncovered is inexcusable, and it's going to end now," Cuomo said in a news release.

"At the hearings, we will explore not only the current state of our investigation," Cuomo said, "but also potential legislative solutions that may save taxpayers millions of dollars going forward."

Cuomo has credited stories in Newsday for prompting his investigation.

Also conducting the hearing, scheduled for next Thursday, will be State Sens. Dean Skelos [R- Rockville Centre and Kenneth LaValle, [R-Port Jefferson] and Assembs. Robert Sweeney [D-Lindenhurst] and Earlene Hooper.[D-Hempstead]

Glen Cove Superintendent Laurence Aronstein, whose district declined to put attorney Carol Hofffman on its payroll after she requested it, said the hearings would be "healthy."

"I think the fact that they're reaching out into the field and that they're interested in hearing from the field... is critically important," he said.

Several lawyers around the state who received pensions as if they were employees, but actually were contract workers not entitled to the benefits, already have reached settlements with Cuomo's office.

But Cuomo has said that the practice may be very widespread and his investigation is ongoing.

The location of the hearing is to be announced.

Staff writer Sandra Peddie contributed to this story.

Law Firms involved in Pension Scandal continue Rape of Tax Payers

 

SchoolWatch has received multiple reports from education law attorneys  across NY State that represent parents and school districts that the firms involved in the pension scandal are engaging in conduct allowing them to continue raping the tax payers to make up for the revenue lost due to the pension scandal. As we have all seen, these law firms have stolen tens of millions of dollars from school districts across New York State, and Attorney General Andrew Cuomo is investigating the abuse of the pension scandal.  Yet, these attorneys are all still working for the same school district clients.

 

One junior associate, who insisted on remaining anonymous and who works for a Long Island firm named in the scandal reported to SchoolWatch that the attorneys in the firm have been directed to “churn fees” on cases to make up for the lost revenue and to cover the considerable expenses associated with “dealing with the ‘f-ing’ FBI,” as one senior partner described the Federal Bureau of Investigation that has secured documentation from there office.   Two parent attorneys have reported that the school district attorneys that they routinely have dealt with appear to be generating needless paperwork, prolonging hearings unnecessarily, and engaging in frivolous defenses in order to generate additional  fees on routine matters. “There is no doubt that this change in behavior is the result of the pension scandal, and they have just determined to make up for the lost revenue with fee churning.”  Fee churning refers to conduct of attorneys that drives up the fees in a case needlessly in order to increase revenues for the firm.  It is considered unethical conduct, and looked at negatively by the profession.

 

A Central New York school district firm was recently chastised in federal court by a Magistrate who recognized what was occurring, and told the lawyer that continuing the litigation was “flushing money down the toilet.”  Susan Johns, of the CNY Ferrara Firm refused to settle and continues to litigate, reported a parents attorney.  “She has no good faith legal basis upon which to proceed, and I am certain that her intentions are to generate attorney fees for her firm,” said the parents attorney. “It’s unconscionable, and certainly not in the best interest of her client or the tax payers of that district.”

 

A parents’ attorney on Long Island reported, “It is clear that the last two special education matters that I have initiated are proceeding to hearing because of extremely unreasonable positions taken by the school districts attorney, that I believe are taken to ensure a hearing occurs in order to generate greater fees for the firm.”  Another parents attorney, who also has been engaged in special education litigation on Long Island, reported that one of the firms named in the scandal appears not to be implementing a settlement agreement for the purpose of causing a new legal action to enforce that settlement agreement.  “This is the first time I have encountered a special education settlement agreement not being implemented by a school district.  It’s alarming. I am attempting to determine if this failure is linked to fee churning, and suspect it is.”

 

As taxpayers, we must ask, "Why is the Attorney General allowing these firms and attorneys to continue to rape us?"

 

SchoolWatch has had numerous anonymous letters received, providing more information into this scandal and other scandals involving school attorneys across the state.  We are working diligently with our developed sources to vet this information, so that these scandals can be reported to you.  Stay tuned.  We are sure there is more to come.

 

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Published: April 11, 2008
 
ALBANY — Attorney General Andrew M. Cuomo has expanded his investigation into an alleged pension fraud scheme to include scores of lawyers and school districts accused of having bilked the state out of tens of millions of dollars in benefits.
Mr. Cuomo announced on Thursday that he had issued subpoenas to 90 lawyers and 180 school districts on Long Island and upstate. Investigators believe they were part of a scheme, dating back at least a decade, in which school districts listed lawyers working as contractors as “employees,” allowing them to receive full health insurance and pension benefits accorded to state employees.
“It is surprising to me the level of fraud we’ve seen,” Mr. Cuomo said at a press conference outside his office here. “The more we dig, the worse the situation gets.”
The investigation began in February after Newsday reported a scam involving a lawyer, his firm and five school districts. The newspaper reported that the lawyer was listed as a full-time employee at all five districts even though he worked as a contractor. The designation made him eligible for lifetime health benefits and guaranteed him a pension of more than $61,000 a year, according to the newspaper.
The report also said that the lawyer submitted no time sheets and did not work full time for any of the districts, while the districts paid his firm more than $2.5 million in fees.
The lawyer, Lawrence Reich, told the newspaper that what he was doing was “common practice” among Long Island lawyers.
After the newspaper report, the F.B.I. issued subpoenas to the school districts. The State Department of Education then referred the matter to Mr. Cuomo’s office. Mr. Cuomo’s investigation now includes lawyers and firms in more than 20 upstate counties including Albany, Broome, Delaware, Erie, Madison and Monroe.
Of the 90 lawyers whom the attorney general’s office has identified as having possible involvement in the scheme, 20 are on Long Island. Thirty of the 180 school districts believed so far to be involved are also on Long Island.
Mr. Cuomo said that one lawyer being investigated was listed as an employee of seven school districts in a single year and may have collected more than $700,000 in taxpayer-paid benefits.
Some lawyers who were listed on the payrolls of school districts and boards of cooperative educational services being investigated never provided any legal services, Mr. Cuomo said. Others were listed as employees of several school districts and accumulated substantial credits in the state’s employee retirement system. At least one lawyer was reported to have received state benefits until his death.
“It’s remarkable that it has gone on for as long as it has,” Mr. Cuomo said. “It was a great scam.”
For the school districts, the motivation was reimbursements they would receive by claiming that they were paying benefits to an employee rather than fees to a contract lawyer, Mr. Cuomo said.
Richard P. Mills, the state education commissioner, said in a statement on Thursday, “Abuse of the kind alleged cannot be tolerated.”
Mr. Cuomo said that his office had criminal and civil jurisdiction in the case and that he would weigh the level of fraud against intent in determining how to proceed. He said that civil charges, involving money damages, were a probable result of the investigation and that criminal charges were possible.
“This is not a close legal call,” Mr. Cuomo said. “Nobody can come in and say, ‘Oh, I didn’t understand the rules.’ People understand the rules.”
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Inside Scoop on the Lawyer Pension Scandal (5/10/08)

 
Attorney General Andrew Cuomo cut a deal this past week with a Buffalo law firm, Hodgson Russ.  The deal forced the firm to pay a $50,000.00 penalty for the improper arrangement of having its attorneys listed as employees of the local BOCES, while they should have been listed as independent contractors. Hodgson Russ cut this deal quickly, so as to distinguish themselves from the other firms and attorneys that have been named in the school district attorney pension scandal.  None of the Hodgson Russ attorneys were contributing to the pension system.  The Hodgson Russ arrangement simply was a means of local school districts accessing attorneys at Hodgson Russ through the middle-man of the BOCES.  This was really a “scam” targeting the New York State Education Department in order to claim reimbursements from NYSED for the attorney expenses.  The beneficiaries of this scam were the local school districts, and the victim the NYSED.  It is much less egregious than the pension scandal that Cuomo is pursuing. Karl Kristoff, a senior partner at Hodgson Russ is rumored to have approached the Attorney General’s office and brokered this deal to save the firm from possible criminal liability. 
 
A source at Hodgson Russ indicated that the firm’s decision-makers were aware that this scandal was explosive and that Attorney General Cuomo is expected to select a number of those attorneys in the pension scandal that have engaged in the most egregious conduct and arrest them.  The HR employee indicated that HR wanted to be sure to be isolated from the “upcoming fireworks.”  The deal cut by HR protected the firm from any criminal action that is anticipated being initiated against firms and attorneys involved in the pension scandal. The HR employee spoke to SchoolWatch on condition of anonymity indicated that HR attorneys did this at the instigation of BOCES, and there was no personal gain such as pension benefits.  Apparently, the Marc Rietz decision of 2002 that prevented CNY attorney Marc Rietz from collecting pension benefits was known to the attorneys at HR, therefore they did not attempt to collect pensions.  “That decision forbidding this pension scam is well-known to every attorney that practices school law in New York.  Marc Reitz has spoken openly about it at many conferences and informal gatherings.  No one in the education law field was unaware of it.”
 
Cuomo is also under fierce political pressure to abandon his campaign against the corrupt and politically connected attorneys.  The attempts to derail Cuomo’s investigation include pressure from the New York State Education Department. A source close to the A.G.’s office reported that Cuomo is looking at each case separately, but is seeing a growing pattern of conduct suggesting systemic abuses that go beyond the pension scandal.  Other investigations have spun off from the pension scandal, and there is talk of a RICO task force being formed to investigate these crimes, and that individuals working in Albany in the New York State Education Department’s Office of Counsel may also be the targets of this RICO task force. (RICO is the acronym for the law enforcement statute that addresses Racketeer Influenced and Corrupt Organizations).
 
Interestingly, while Cuomo’s office ramps up for an expanded investigation into corruption, Richard Mills, the Commissioner of Education, issued a joint statement with the A.G. regarding the pension scandal and congratulating BOCES districts for their cooperation with the A.G.’s office.  Mills has been attempting to head off this scandal and has expressed fear to staffers of this attorney scandal leading to connections to NYSED awareness and involvement in other scandals.  Mills is right to have these concerns, as multiple lawyers have had their criminal defense attorneys speaking to investigators from the A.G.’s office and brokering deals.  SchoolWatch has learned that these “brokered deals” involve school district lawyers providing information about other monetary scandals that they are aware of, and that some of those scandals involve money filtering to individuals in key positions in the Commissioner’s office, including the Office of Counsel and the Office of State Review.
 
SchoolWatch has developed a number of sources that are providing information to us on this matter. Stay tuned.  There is more to come.

timesunion.com
 
Old ruling adds to pension dispute
2004 state Supreme Court decision could bolster effort to deny credits in state system to private lawyers
 
By RICK KARLIN, Capitol bureau
Click byline for more stories by writer.
First published: Tuesday, May 6, 2008

With private lawyers under state scrutiny for getting themselves listed as public employees in order to get into New York's pension system, a 2004 court case has come to light that clearly stated the practice was not allowed.

Comptroller Thomas DiNapoli and Attorney General Andrew Cuomo have been casting a widening net across New York's legal landscape, exploring instances in which lawyers have been listed as employees of school districts or BOCES organizations in order to gain taxpayer-financed pension credits.

Because such lawyers, who typically work at outside law firms, don't meet the usual definition of an employee, Cuomo maintains they don't qualify for public pensions. He has criticized such practices as "payroll padding" by school systems.

But some lawyers and school officials have said they did nothing wrong, at least not knowingly, since the comptroller, attorney general and state Education Department had not previously disallowed the practice.

However, in a little-known case in state Supreme Court in Albany County, a judge in 2004 ruled a lawyer for a central New York BOCES could not accrue pension credits for his legal work for the same reasons noted by Cuomo and DiNapoli -- that people must meet certain conditions in order to be listed as employees, such as working regular hours and under supervision.

In that case, Marc H. Reitz had sued the Teachers Retirement System, seeking pension credits from the 1980s until 2002 for his work as a legal adviser to the Oswego County BOCES and the South Jefferson and Oneida school districts in central New York.

Justice Joseph Cannizzaro in his decision sided with the retirement system, ruling that Reitz should not have been listed as an employee at Oswego BOCES, South Jefferson and Oneida. He found Oneida had agreed to "pay and report petitioner as an employee" in order to boost his final average salary for retirement purposes.

DiNapoli and Cuomo are looking into whether lawyers were also improperly included in the State and Local Retirement System, which is separate from the teachers system.

Last month, for instance, lawyers from Albany's Girvin & Ferlazzo law firm -- Jay Girvin, Jeffrey Honeywell, Kristine Lanchantin and Kathy Ann Wolverton -- were stripped of state pension credits when DiNapoli said they shouldn't have been listed as employees of the Hamilton-Fulton-Montgomery BOCES, which hired them to do legal work for member school districts.

And people familiar with the situation said Cuomo and DiNapoli are at least looking at whether the Syracuse firm where Reitz is listed as a partner, Ferrara, Fiorenza Larrison Barrett & Reitz PC, also may have had people improperly listed as earning pension credits from the State and Local Retirement System.

Cuomo is also continuing to probe Girvin & Ferlazzo.

The 2004 case appears to bolster arguments by DiNapoli and Cuomo about contractors not being entitled to those credits.

"The court case is crystal clear," said one Albany lawyer, Matthew B. Tully, who added, "I would think the attorney general is in a much stronger position because of this case."

Reitz didn't return a call on Monday.

Jeff Honeywell of Girvin & Ferlazzo, though, said he was unaware of the 2004 case, which was unreported, meaning it hasn't been widely reprinted in law books or other sources.

Honeywell said the Reitz case involved a separate retirement system. Additionally, Reitz appeared able to keep other pension credits, according to the ruling, due to his earlier employment with the Oswego BOCES prior to becoming a lawyer.

Rick Karlin can be reached at 454-5758 or by e-mail at rkarlin@timesunion.com.


All Times Union materials copyright 1996-2008, Capital Newspapers Division of The Hearst Corporation, Albany, N.Y.

Newsday.com

DiNapoli suspends $106,700 lawyer pension

BY EDEN LAIKIN AND SANDRA PEDDIE

eden.laikin@newsday.com
sandra.peddie@newsday.com

4:58 PM EDT, April 25, 2008

New York State Comptroller Thomas DiNapoli has suspended the $106,700 a year pension of a Valley Stream attorney who had received 21 years of retroactive pension credits from Nassau County and Hempstead town, even though he had been paid as an independent contractor and not as an employee, officials said Friday.

Albert D'Agostino, 64, would have to pay back most, if not all, of the roughly $791,359 he's collected since retiring in October 2000, if DiNapoli's office determines he was not a legitimate employee, officials said. In addition, he would have to pay back $83,015 in health benefits he has received.

"We suspended his pension while we look at all the entities that reported him as an employee, to see if any were eligible," said DiNapoli spokeswoman Emily DeSantis. She added that the comptroller would recalculate D'Agostino's pension and "most likely reduce his benefit."

Newsday, which wrote about D'Agostino's retroactive pension credits two weeks ago, has reported on a number of attorneys who, while working as independent contractors for school districts, also received state pension credits as if they were employees.

Yesterday, DiNapoli said more pensions could be suspended. "We'll continue to dig until we're confident that state pensions are only going to those people that rightly earned them," he said.

D'Agostino was also reported as an employee by three school districts – Lawrence, Valley Stream 30 and North Merrick – and the Village of Valley Stream, while being paid additional fees as a contractor. He accumulated a total of 28 years credit in the state retirement system.

D'Agostino declined comment Friday.

Meanwhile, SchoolWatch, a Long Island advocacy group, posted a statement on its Web site urging a boycott of law firms "involved in the pension scandal."

"We as taxpayers simply cannot sit back and continue to feed these 'fat cat' lawyers and their firms. . ." the group said. "Millions of dollars have been stuffed in the pockets of these firms and attorneys, and it must stop."

In deciding in 2000 to give D'Agostino the retroactive credits, the state relied on letters from two prominent people connected to the Nassau County Planning Commission, an advisory board where D'Agostino served as part-time counsel. The state also considered his 1099 payments – tax forms used to pay independent contractors, not employees.

Nassau County Comptroller Howard Weitzman said D'Agostino was placed on the county payroll in 1999. When he retired in 2000 and secured the retroactive credits, he also got lifetime health benefits.

Weitzman said the county has paid $83,015 so far for D'Agostino's family health coverage. If DiNapoli determines that D'Agostino is not entitled to the pension, the county would end his benefits and seek to recover the $83,015.

Weitzman has asked the state to refund the $102,246 the county paid to fund D'Agostino's pension.

Last month, DiNapoli froze the pension of attorney Lawrence Reich, who Newsday found was reported as a full-time employee by five school districts simultaneously. DiNapoli determined that Reich was not an employee and said Reich would have to pay back money he wasn't entitled to. Reich, who retired in 2006 with a $61,459 pension, has about 10 years of eligible service with the state.

The FBI, the state Attorney General, the IRS and the Nassau District Attorney have launched investigations.

Last week, DiNapoli revoked pension memberships of four Albany attorneys who were reported as employees by an upstate BOCES and reduced service credit for a fifth attorney. Earlier this month, he announced new regulations for local governments to determine who is an employee.

Cuomo: 90 attorneys' pensions 'potentially fraudulent'

BY ROBERT E. KESSLER

robert.kessler@newsday.com

7:37 PM EDT, April 10, 2008

New York State Attorney General Andrew Cuomo said Thursday that his office has found more than 90 attorneys around the state, including 20 on Long Island, who may have improperly been given credit for state pensions because of "potentially fraudulent" claims that they were employees of school districts and not ineligible outside contractors.

Cuomo said his office was considering bringing criminal or civil charges against the lawyers and seeking to recoup potentially "tens of millions of dollars" in pension monies that the lawyers may have improperly received at the expense of taxpayers in what he termed "basically a payroll padding scheme."

"It is egregious conduct and there is no excuse for the fact that it went on as long as it did," Cuomo said at a news conference in Albany. "And if I were a taxpayer, I would be offended. I am a taxpayer, by the way. I am offended."

The attorney general said he began his investigation in February in the wake of Newsday's stories.

"The issue actually started on Long Island and it has been expanding rapidly," Cuomo said. "The more we dig, the worse the situation gets."

Cuomo declined to identify any of the 90 lawyers under investigation for the scheme, but said "it was a great scam which has gone on for many years."

Six of the 20 Long Island attorneys identified by investigators as having received pension credits have died, according to sources familiar with the investigation. The other 14 include four who have not been previously linked to the pension situation in Newsday articles, according to the sources.

Those four attorneys include one who serves as vice chairman of Nassau County Comptroller Howard Weitzman's advisory panel on county auditing procedures. No charges have been brought against anyone.

In his news conference, Cuomo singled out an unnamed attorney as having collected "in excess of $700,000 in taxpayer-funded pension benefits." That attorney -- who sources identified as John Hogan, 78, of Binghamton -- in one year was simultaneously listed on the payrolls of seven school districts and a BOCES, Cuomo said.

Reached at his home, Hogan told a reporter, "I couldn't really comment."

Cuomo said that the 90 attorneys worked for 180 school districts around the state, including 30 on Long Island.

The felony charges sources say are under consideration include filing false claims, fraud and violation of the state's so-called Tweed Law, which enables the attorney general to pursue both criminal and civil charges.

Of the 14 on Long Island contacted by a reporter, all said they had done nothing wrong. Some noted that the granting of pension credits to school district attorneys was a system that had been going on for decades and is a practice that they inherited from the previous attorneys in the districts.

In his news conference, Cuomo dismissed that argument.

"We're talking about lawyers well versed in employment statutes who know that 'business as usual' is no excuse for breaking the law," Cuomo said. "In many instances, these were not simple misunderstandings but repeated acts of fraud."

Newsday previously has reported that 10 of the 14 attorneys included in Cuomo's investigation received credit for pensions because they were listed as employees of school districts whose hiring was approved by school boards.

The four other Long Island attorneys, who have not been previously identified, according to the sources, are:

Nicholas DeSibio, 70, of Hewlett, who is receiving a state pension of $65,945 a year, according to state comptroller records. DeSibio received the pension for work as an employee of the Island Park School District, as well as the Greater Atlantic Beach sewer district, the Liquidation Bureau in the state Insurance Department, and the Village of Island Park, according to the state comptroller's office.

In 2003, DeSibio was given credit for working full-time for the sewer district and, at the same time, credit for half of the year for both the school district and the liquidation bureau, according to the state records.

According to Island Park School District minutes, DeSibio remained on its payroll after retiring in July 2003 and changed his status from employer to independent contractor on March 31.

Terrence Smolev, 63, of Mineola, who is receiving a yearly pension of $4,143, according to state comptroller records. Smolev is also vice chairman of Nassau County Comptroller Howard Weitzman's audit advisory committee, was a longtime trustee of Hofstra University and currently is a trustee at Dowling College. Smolev was credited in the state pension system for working as an employee of the North Merrick School District between 1982 and 1999.

George Lipp Jr., 80, a former Bay Shore attorney now retired in Florida. Lipp collects a pension of $9,321, according to the state comptroller's office. He was credited with working for the Babylon, Island Trees and Levittown school districts.

Eugene Ginsberg, 79, of Garden City, who receives a $1,314-a-year pension, according to the controller. He was credited with working full time for the Malverne school district between 1980 and 1991.

Lipp declined to comment. DeSibio and Ginsberg did not return calls for comment. Smolev said he was unaware of any investigation by Cuomo and said he had done nothing wrong during his work for the North Merrick School District.

The other 10 attorneys under investigation who have been previously identified by Newsday are: William Cullen, Albert D'Agostino, Jerome Ehrlich, William Englander, Gilbert Henoch, Carol Hoffman, Dominick Minerva, Richard Nicolello, Lawrence Reich, and Leroy Van Nostrand.

None returned calls seeking comment on Cuomo's ongoing criminal investigation. Some of their attorneys said they had done nothing wrong.

"This is the farthest thing from a criminal case; nor should it be, because no criminal conduct occurred," said Hoffman's attorney, Kenneth Keating, of Garden City.

Staff writers Sandra Peddie and Eden Laikin contributed to this story.

Newsday.com

5 school districts claimed same "full-time" lawyer

BY SANDRA PEDDIE

sandra.peddie@newsday.com

4:24 PM EST, February 14, 2008

Five Long Island school districts falsely reported to the state that a part-time private attorney was a full-time employee in each district, enabling him to earn a public pension of nearly $62,000 and health benefits for life.

At the same time, his law firm was paid more than $2.5 million in fees, records show.

The attorney, Lawrence W. Reich, was listed as full time by as many as five different school districts at once -- Baldwin, Copiague, East Meadow, Bellmore-Merrick High School and Harborfields, according to records supplied by the New York State comptroller's office. In 2000, for example, he was credited with working 1,271 days in one year. The year before, he was credited with working 1,286 days.

State auditors uncovered the problem seven months ago in Harborfields, but took no action. On Thursday, the state comptroller sent letters to four of the five districts - Baldwin, Copiague, Bellmore-Merrick and Harborfields - notifying them that they would be audited to determine whether they were properly classifying people who provide professional services as employees or contractors.

In a statement, Comptroller Thomas DiNapoli said, "We have decided to take a closer look at this issue to make sure that only those individuals who are entitled to receive a state pension get a state pension."

Reich defended his arrangement with the districts as "common practice" among attorneys on Long Island.

A Newsday review of records shows that Reich submitted no time sheets, never worked full time and that school officials knew he was only working part time. They allowed him to collect public benefits worth tens of thousands of dollars. His law firm, Ingerman, Smith of Northport, knew of the arrangement, as well, the records show. And an official at one district even made light of the situation in a letter warning Reich that there might be a problem with his status and asking him how to "correct the record" of his "employment."

Records show that Reich drafted contracts setting the compensation for superintendents and other top administrators. School officials told Newsday it wasn't a conflict of interest for him to do that while he was working as the school attorney because he reported to the boards of education, not the superintendents. Under Internal Revenue Service rules, a person cannot be paid both as an independent contractor and employee for the same job.

"Clearly, it's an attempt to manipulate the system so that a person can receive Cadillac fringe benefits that a person in the private sector would otherwise not be entitled to," said Paul Sabatino, a municipal lawyer who is also former Suffolk chief deputy county executive. "To me, that has the appearance of impropriety, and I wouldn't do it," said William Bernstein, co-chairman of the Suffolk Bar Association's taxation committee. "It's obvious to me why he wanted to be an employee."

In an interview, Reich insisted he had done nothing wrong. "I don't file these papers," he said. "I don't have the faintest idea what they're filing for me." He said that he did propose that the districts pay him a salary, while also paying a retainer to his firm, in which he was a partner.

"I followed essentially a practice that was very common among my colleagues in the industry," he said. Former state Comptroller Alan Hevesi harshly criticized a similar arrangement in February 2005, when his office discovered that a small state authority for horse breeding had given Rocky Point attorney Steven Losquadro full-time benefits, even though he worked part time. Hevesi called the arrangement "unacceptable and highly inappropriate," and Losquadro agreed to stop receiving health benefits.

That audit, reported in Newsday, caught the attention of Joseph Dragone, Harborfields' then-assistant superintendent for business. On March 3, 2005, he wrote Reich, asking him how to "correct the record of your 'employment' by the school district."

He added, "Although you are obviously better looking than Steven Losquadro, I would still not like to see your picture in Newsday, nor am I interested, quite frankly, in my own fifteen minutes of fame."

A copy of the letter was sent to then-Harborfields Superintendent Raymond McCloat, who has since retired and now works in the Freeport schools. In an interview, McCloat said Reich's arrangement was "never questioned" while he was at Harborfields.

Harborfields officials refused to release Dragone's letter and other correspondence requested under the Freedom of Information Law, but Newsday obtained them elsewhere.

Dragone declined to be interviewed, but said in an e-mail: "Sorry, but other than the fact that Larry was a professional colleague in three districts in which I worked and good friend for more than 30 years, I would have no desire to comment to the news media about my relationship with him."

Reich began his career in the state Education Department Office of Counsel in 1967, according to his resume. He left in 1978 to work for the law firm. That same year, he started working for the Baldwin school district, which provided him with family health coverage.

Over the following years, Bellmore-Merrick High School, East Meadow, Copiague and Harborfields all listed Reich as an employee. In 2000, all five listed him as full time at the same time.

Records also show he was paid part time. In 2002, for example Baldwin paid him $14,999.92, East Meadow $14,000, Bellmore-Merrick High School $23,911.63, Copiague $26,363,65 and Harborfields $16,713.03.

East Meadow school district records show that Reich left that district's payroll on Nov. 30, 2001.

Superintendents in Baldwin and Bellmore-Merrick, who were not at the districts when Reich was hired, declined to say whether they thought Reich's arrangement was appropriate.

But Copiague Superintendent William Bolton, who was not at the district when Reich started there in 1988, defended it as common practice. He also suggested that any questions about Reich's arrangement were making a mountain out of a molehill. "It seems rather small," he said.

James Brennan, Harborfields board president, said board members were assured by Reich and his law firm that his arrangement was appropriate. "We were always told that it was legitimate," he said.

Under state pension rules, a public employee can earn only one year's credit in a calendar year, regardless of the number of days credited, said Emily DeSantis, spokeswoman for the state comptroller.

However, because Reich was treated as an employee, he was allowed to accrue 41.82 years in the state pension system, according to records, even though he was in private practice most of that time. In addition, because Baldwin began listing him as a full-time employee in 1978, Reich was able to retain health benefits.

Ingerman Smith was aware of the arrangement. On Aug. 29, 1995, firm partner Daniel Greenberg wrote a letter to the Harborfields school district, saying, "We appreciate the Board's willingness to accommodate this method of continuing its relationship with the firm."

Greenberg did not return a call for comment.

The firm is one of the larger educational law firms on Long Island, representing nearly 50 districts, according to its Web site. Campaign records show the firm has contributed generously to various state and local politicians.

In 2005, Janet Wilson arrived as superintendent in Harborfields. In August, she questioned Reich's arrangement, according to records.

In a letter she later wrote to the state retirement system, Wilson said the district asked Reich to either document his time or change the arrangement.

"Despite several reminders to Mr. Reich, the arrangement remained unchanged..."

Then in September 2006, Reich retired from the districts with an annual pension of $61,459. But in letters, he made it clear that he planned to continue working for the districts.

"Although I intend to retire into the New York State Employees Retirement System, I have no intention to retire in the customary sense of the word. I will remain active as member of the law firm, and I will continue to serve the district as previously," he wrote.

He asked that the districts "reconfigure" his payment and pay him a traditional retainer, rather than a salary. That was in addition to the retainer being paid to the firm.

Then in July 2007, state auditors reviewing the books of the Harborfields school district questioned his pension eligibility, he said in the interview.

Upon the advice of auditors, Wilson wrote the state retirement system, making it clear the district had no records showing that Reich ever worked full time.

Reich said he also contacted the state, but was assured that his arrangement was common practice and that "I shouldn't be unduly concerned," Reich said.

In October -- shortly before the Harborfields audit was released, Reich notified the districts that he was retiring for good.

In December, the state comptroller's office released the Harborfields audit. Although it criticized excessive retirement payouts to several former administrators, including Dragone, it made no mention of Reich.

Partial client list from the Ingerman, Smith web-site:

http://www.ingermansmith.com/default.asp?id=903&sid=C


  * Amagansett Union Free School District
  * Baldwin Union Free School District
  * Bay Shore Union Free School District
  * Bedford Central School District
  * Bellmore-Merrick Central High School District
  * Brentwood Union Free School District
  * Bronxville Union Free School District
  * Center Moriches Union Free School District
  * Cold Spring Harbor Union Free School District
  * Copiague Union Free School District
  * Cradle of Aviation
  * Dobbs Ferry Union Free School District
  * Dowling College
 
* East Islip Public Library  
  * East Islip UnionFree School District

 
* East Meadow Union Free School District
  * East Quogue Union Free School District
  * Elwood Union Free School District
  * Freeport Union Free School District
  * Greenburgh-Graham Union Free School District
  * Harborfields Central School District
  * Harrison Central School District
  * Hauppauge Union Free School District
  * Huntington Public Library
  * Irvington Union Free School District
  * Islip Union Free School District
  * Jericho Union Free School District
  * Katonah-Lewisboro Union Free School District
  * Kings Park Central School District
  * Levittown Union Free School District
  * Long Beach City School District
  * Longwood Central School District
  * Longwood Public Library
  * Mahopac Central School District
  * Mamaroneck Union Free School District
  * Massapequa Union Free School District
  * Mattituck-Cutchogue Union Free School District
  * Mount Pleasant Central School District
  * Nassau BOCES
  * Nassau Community College
  * North Shore Central School District
  * Northport-East Northport Union Free School District
  * Nyack Union Free School District
  * Ossining Union Free School District
  * Plainedge Union Free School District - PAT FLAMIO WORKS HERE

  * Pocantico Hills Union Free School District
  * Port Jefferson Union Free School District
  * Riverhead Central School District
  * Rockville Centre Union Free School District
  * Roslyn Union Free School District
  * Rye City School District
  * Sachem Central School District
  * Seaford Union Free School District
  * South Huntington Union Free School District
  * Southold Union Free School District
  * Uniondale Union Free School District
  * Village of Westhampton Beach
  * Wantagh Union Free School District
  * West Babylon Union Free School District
  * White Plains City School District

Newsday
-------------------------------------------------------------------------
LO N G   I S L A N D

THURSDAY, FEB. 21, 2008/LONG ISLAND EDITION



Jerome Ehrlich andCarol Hoffman received public benefits while working as private attorneys for Long Island School Districts


A Messy business indeed

By Joye Brown


Joye.brown@newsday.com


And so it grows, with today’s installment of lawyers, law firms, school districts, school board members and superintendents caught in the glare of public scrutiny.It’s a mess.  And by the time the state attorney general and federal
Internal Revenue Service and FBI are finished, it could spread to districts across Long Island.     But wait.  Weren't they supposed to be taking steps to root out this kind of abuse? Thetheft of millions of dollars in public money in the Roslyn school system sent district administrators to prison; so did a 2006 grand jury
investigation of Suffolk County’s 70 school districts.

 

That September, the Suffolk grand jury issued a scathing report, which found three major problems:


-     Lack of oversight and internal controls by those charged with the
responsibility to safeguard taxpayers’money.’


-     Large expenditures of public funds for compensation and fringe benefits to school administrators that are largely hidden from taxpayers and designed to be beyond taxpayer control.


 -     The public pension system for school district employees is being defrauded of millions of dollars in taxpayer money.


So it’s 2008 and residents are livid – again! – over a series of Newsday reports about a system of education that has allowed private lawyers to earn money, and state pensions, by contracting to do legal work.


 

What’s changed?  “There’s been virtually no change in anything,” Thomas Spota, Suffolk’s district attorney, said yesterday.


And nothing will change until Long Island starts seeing the local  education
system for what is is. BIG BUSINESS.


Long Island’s more than 170 school districts account of more than 8 percent of the region’s economy.  That’s a $9.3-billion industry.  And it’s bred healthy cottage industries of law firms, administrators, consultants and vendors
of all kinds who rely on it for their livelihoods. Like any system, the primary goal of Long Island’s business of education is to keep itself in business. It’s like a political party that favors players who are well connected.


It’s stronger than any democratic branch of government because there’s no loyal opposition, no organized system of checks and balances to keep things honest.   

 

It’s a system so entrenched that the public’s only recourse is to turn down budgets. And even when they do, they have no control of 65 percent of the budget.

What happens? Children lose programs.  Some parents have to find ways other than buses to get their kids to school.  And they lose teachers, the newest and least powerful in the system.


Raises don’t stop; personal contracts for administrators– which the grand jury determined to include perks from cars to district contributions to private pension plans – don’t get renegotiated.  Nor do contracts for law firms or the public relations firms that represent some districts.


That stuff’s set in stone by the superintendent and the school board long before the budget debate and the vote.


The system protects itself. It’s tailor-made for abuse, all in the name of local
control. There’s much to admire about Long Island’s system of educating children.  Its schools – with the exception of those we keep racially and economically isolated – are among the best in the nation.


There’s reason to love our schools. But how long will that love be blind?


QUESTION:  Why would an attorney for a private law firm want to get onto a public payroll such as a school district?


ANSWER:  Because you would become a member of the New York State Employees Retirement System.  For every year you’re listed as a part-time or full-time public employee, you accumulate credits toward your retirement pension.  The more time you accumulate in the system, the higher the percentage of you final average salary you receive in your pension benefit. The formula for figuring out one’s retirement benefit is basically the percentage of years in the system multiplied by the average of the highest three years of salary.

Newsday.com

Four law firms dominate school district services

BY STACEY ALTHERR and EDEN LAIKIN

stacey.altherr@newsday.com
eden.laikin@newsday.com

10:40 PM EST, February 23, 2008

On Long Island, where public education is a multi-billion-dollar enterprise, four law firms control more than 60 percent of the estimated cost for legal services.

In 106 of the 124 school districts, $56.9 million was spent for legal fees from 2000 through 2004 -- $16.4 million alone during the 2003-2004 school year. Experts say legal costs have grown since then, with lawyers handling a wide range of issues from personnel and union issues to special education lawsuits.

The four law firms -- Guercio & Guercio in Farmingdale; Ingerman Smith in Hauppauge; Ehrlich, Frazer & Feldman, and Jaspan Schlesinger Hoffman, both of Garden City -- earned the majority of that total amount during that period, the most recent data available to Newsday.

Some experts say that consolidation of legal services is expected because educational law is highly specialized and few lawyers are experts at it.

In an unprecedented series of moves that have unfolded in rapid-fire fashion in the past week, three of these firms -- Guercio & Guercio being the exception -- that have attorneys whose arrangements with school districts allowed them to receive lucrative public benefits while working as private legal counsel are now under state and federal investigation.

Subpoenas and probes

Last week, Ingerman Smith turned over its files on former law partner Lawrence Reich to the FBI and the IRS. New York State Attorney General Andrew Cuomo has opened both a civil and criminal investigation and has subpoenaed records at the three law firms.

Federal and state investigations were begun a week ago after Newsday reported that Reich, while at Ingerman Smith, was also listed as a full-time employee at five school districts at the same time, even as the law firm was on retainer to those same districts, allowing him to earn an annual state pension of more than $61,000.

Carol Hoffman, a partner at Jaspan Schlesinger Hoffman, was listed on public records as an employee at different times at four districts, Newsday has reported. At Plainedge and Beth.page she was listed as full time; at East Rockaway and Lawrence, part time.

Jerome Ehrlich, a partner of the Garden City law firm of Ehrlich, Frazer & Feldman, was employed part time by two districts, Hewlett-Woodmere and Great Neck simultaneously -- and prior to that, full time at Bellmore-Merrick Central High School District. That allowed him to retire in 2006 with an annual pension of $34,029. Both served the districts as outside counsels at the time of the pension accruals. Hoffman has not yet retired.

Ingerman Smith, Ehrlich, Frazer & Feldman, and Jaspan Schlesinger Hoffman have been subpoened in recent days.

Federal and state criminal probes of numerous Long Island school districts is unprecedented. All of the firms involved have said they have done nothing wrong. Last week, Guercio & Guercio posted a letter on its Web site essentially stating that it had broken no laws and had never had one of its attorneys on a school payroll.

Education expertise

The evolution of how four law firms tied up the bulk of the legal work has to do with the growing complexities of education law, said Gregory Guercio, a partner in Guercio & Guercio, which currently represents 31 of the Island's 124 districts.

"School districts are $100 million plus corporations today with very significant and intense legal issues," said Guercio. "There is no school district that could employ enough staff lawyers with all the specialties necessary."

Representatives of the firms and others say that, as education law has become more complex within so many different areas of law, districts need larger firms to handle their needs. Those needs include lawyers having specialties in such diverse areas as labor, special education, litigation, and even public construction law and bonding issues.

"We have five lawyers that do only special education work," said Guercio.

Critics, who generally agree that large firms can handle more specialized needs, say that these law firms wield too much power with school boards and superintendents, and are not looking out for the best interests of taxpayers.

Relationships too close?

Very few school districts maintain inside counsel, experts say, because no one lawyer could handle all the work. Firms with expertise in the complexities of education law are hired by -- and report to -- boards of education, not superintendents, although they will represent them if litigation comes out of the duties of that position, such as a student suspension.

Newsday reported last week that, while acting as a district's attorney, Reich was also drafting contracts for individual administrators. Critics characterized that relationship as too cozy.

According to representatives in the firms, most districts pay two separate retainers -- one for labor counsel and one for general counsel. Retainer rates vary, but most are between $30,000 to $50,000 a year for each of the two areas. That gives school administrators and boards access to them from a quick phone call on an employee matter to representing the district on a complicated special education case. General counsels also sit at school board meetings to advise the board on matters of law and to close the meeting to the public to discuss personnel matters.

The labor counsel, usually from the same law firm, deals with grievances filed by employees to negotiating with unions.

"One contract could take 18 months to two years to settle, with a tremendous amount of our time for that," said John Gross, a senior partner with Ingerman Smith, which has 30 attorneys and represents 35 school districts.

For other litigation, attorneys charge a lesser rate, about half of their normal $400 an hour, said Gross.

Roy Simon, a professor and expert on legal ethics at Hofstra Law School, said that attorneys also benefit from charging a retainer, because it builds close relationships with the school board.

"It makes deep connections," he said. "It is less likely that if someone will charge less, that the district will use them instead."

Steven Schlesinger, a partner with Jaspan Schlesinger Hoffman, who has developer Donald Trump as a client, said school districts get a bargain when his firm represents them. He said stories about the federal and state investigations will hurt districts in the long run because large law firms won't want to solicit their business.

"Right now, my private client is paying $550 an hour, and school districts are paying $215 to $225 an hour, plus all the bad publicity I can find," he said.

Lorraine Deller, executive director of Nassau-Suffolk School Board Association, said school boards are awaiting the results of the investigation and hoping for some clear-cut direction.

"Right now, we are still puzzled as to what exactly are the ramifications of the story," she said.

Newsday.com

Cuomo wants records from every LI school district

BY ROBERT E. KESSLER

robert.kessler@newsday.com

February 24, 2008

The investigation into possible financial misconduct at Long Island school districts has escalated sharply as New York State Attorney General Andrew Cuomo requested that all 124 districts on Long Island provide extensive information on their relationships with lawyers and law firms for the past eight years.

"Double dipping and self-dealing cannot be permitted," Cuomo spokesman Jeffrey Lerner said late yesterday afternoon, in explaining the marked expansion of Cuomo's ongoing probe. "The attorney general's office will be looking beyond whether any one person did something wrong. We are now focused on determining whether these alleged abuses are systemwide."

Ten days ago, Newsday reported that one lawyer, Lawrence Reich, had been a full-time employee of five school districts simultaneously, even as he and his law firm, Ingerman Smith of Hauppauge, were being paid for services. That arrangement allowed Reich to receive a state pension and lifetime health benefits.

Since that story was published, two more lawyers were reported by Newsday to have been on the payrolls of six additional districts, bringing the total to 11. Yesterday's developments expand the investigation to every Long Island district.

Since the first story broke, a federal grand jury in Central Islip has opened an investigation and federal prosecutors, FBI and IRS agents have questioned potential witnesses and issued subpoenas.

Cuomo, in a separate but parallel investigation, has subpoenaed three law firms in the past week to get their records in connection with attorneys receiving state retirement credit for working full or part time for the school systems while their law firms were also paid by the districts. Nobody has been charged.

Stressing the speed of the investigation, yesterday's letter to the districts from Cuomo's office asks that all the requested material be returned in writing by Friday and that before then a state investigator might contact the districts for oral reports on the material.

The letter - sent to all the school districts on Friday - was signed by the head of Cuomo's public integrity unit, Ellen Nachtigall Biben, who has the title of special deputy attorney general.

Among the information requested is the names of all lawyers who were paid as district employees while their firms also were retained by the district; the amount of money paid directly to the lawyers as district employees and the amount of money paid separately to their firms; and the names and amounts of payments to all lawyers by the districts.

The districts were asked to supply the information voluntarily. But sources told Newsday yesterday that the attorney general's office was prepared to issue subpoenas to compel any district that declined to cooperate voluntarily.

Newsday.com

TO: Fellow Mad-as-Hell Taxpayers

February 24, 2008

Another day, another scandal involving wasted tax dollars. Isn't that the way you feel sometimes when you pick up the newspaper?

This past week, there was a story about a prosperous-looking lawyer, Lawrence Reich, who wriggled his way into the state pension system. He did so by having himself listed as a full-time employee on the books of five separate Long Island school districts. In fact, he was working as a consultant, but his dishonesty qualified him for a public pension of nearly $62,000 a year. By the end of the week, two more law firms and 11 school districts were implicated in similar sweetheart deals. We taxpayers are their dupes.

Then there was the $85,000 Mastic Beach public pool tile repair that turned into a $7.1-million payday for the contractors. Can you imagine continuing to sign those bills without at least asking a few tough questions?

If hard-working, honest Long Islanders aren't fed up by now with this abuse of our trust, then we are as numb as ocean swimmers in February. It's one thing to look at a rising property tax bill and think, "At least I'm getting good services." Most people don't mind paying for a fair value, right?

But giving money to people who game the system, who are continually figuring out new and sneakier ways to enrich themselves beyond our control ... that leaves a sick feeling. One way to handle it is to immerse ourselves in our busy lives. We shrug about how we're powerless, roll up the windows in our minivans and keep driving on.

But reality continues to knock.

This winter, we learned that the superintendent of the Water Authority of Great Neck North, Robert Graziano, makes $192,427 a year, which is more than the salary for the governor of New York! He bought a car on the taxpayer's dime - a 2005 Ford Crown Victoria - and also a 42-inch plasma TV. He justified the TV to his board by saying it was for "security" purposes. Oh, sure. That Giants-Patriots game probably never looked safer.

The man even hired his son, Gregory, and got him a $38,300 pay increase just this year. Which of us wouldn't like to obtain secure jobs for our children and pay them enough to live in Nassau County? Gregory Graziano's salary is now $140,000.

These special districts are part of what drives up the cost of living and makes it hard for our children to settle here. Special taxing districts bill Nassau and Suffolk taxpayers $500 million a year, or about $726 for every family of four. That money could go a long way toward paying the home heating bills this winter.

Time to wake up

It feels as though some public employees - not all of them, of course; thank goodness there are still dedicated public servants here who respect their constituents - have lost their sense of honor. Honor is an old-fashioned word, but what else keeps someone from dipping a hand in the till when he or she can get away with it?

Brookhaven Town Supervisor Brian X. Foley, who took office five years into the project, says he welcomes an investigation of the out-of-control spending on the Mastic Beach pool. Too bad it wasn't investigated long before all the headlines. Or how about Harborfields' former assistant schools superintendent, who warned Reich in 2005 that he should correct the record of his employment status or risk having his "picture in Newsday"?

Really, is public humiliation the only check on these people? Sometimes, it feels as though they are laughing at us.

The first wake-up call came a few years ago, when officials announced that Roslyn school administrators had stolen millions of dollars from the district. Don't you remember seeing the former school superintendent, Frank Tassone, dressed for his sentencing in an orange jailhouse jumpsuit? He got four to 12 years in prison. What a shame. This is a man who was in a position to be a role model for our children. Let's hope they don't follow his example.

His arrest led to probes of several Island school districts, and that lesson wasn't lost on voters. They rejected school budgets in near-record numbers in 2005. The voting booth is one of the only outlets for our outrage.

But most of the school districts scheduled a second vote and won. Word spread among parents that if the budgets weren't approved, the schools would cut our classroom teacher's aide or the band program or bus service - things that are near to our hearts. Of course we felt blackmailed into passing the budget on the second vote. Even when taxpayers try to stand up, we get shoved back down into our seats.

Is it any wonder we develop a cynical shell and tune out?

Only a few hundred people voted in this past December's election of special district representatives, even after the Graziano tale and other abuses of the system came to light. To be fair, one would have to be a walking Day Runner to keep up with these special district election schedules. There are 11 dates a year across Long Island - one every month except for February.

Reform is clearly needed. Gov. Eliot Spitzer has at least proposed to do away with the salaries and benefits of special district officers; unpaid posts are the norm in most of New York. Officials should also create a simpler election calendar. And, sure, the FBI is on the case investigating Reich. County prosecutors, state comptrollers, IRS agents - we can rely on them to step in when a situation turns really bad.

But school embezzlers and other scoundrels will probably keep gambling that they won't get caught.

What to do, what to do?

There's more we can do, as individuals. But it's going to take stepping on the brakes of that minivan and rolling down our windows. It's going to take a quiet revolution in what we value.

Say we decided to give up boasting about our cars or boats or summer homes. Say we bragged instead about how carefully our school district spends our money - and we know because we attend the meetings or serve on the board.

We could keep an eye open for that commissioner or labor leader living beyond his or her means, and ask how that's possible. When a public pool is closed for five years running - stranding the girls' swim team on dry land - we could make a few more inquiries. Learn about the Freedom of Information Act. Request documentation. Write a letter to the editor. Blow the whistle.

There are a few souls in every community who get involved beyond all expectation. Perhaps we could learn to treasure them more, and join them. That would give new meaning to the word "citizen." That would be an example worth setting.

Forward this message to everyone you know.

NOTE: Dewey, Cheatem & Howe ("Do we cheat 'em? And how!") is the gag name of a fictional law firm, used in several parody settings. For example, a popular Three Stooges poster features the Stooges as bumbling members of such a firm (although the name was never used in an actual episode). Similarly, mention of a firm by this name is employed by comic figures such as Johnny Carson, Groucho Marx and Daffy Duck. In Leisure Suit Larry III, the protagonist must pay several visits to a firm by this name.

The name pokes fun at the perceived propensity of some lawyers to take advantage of their clients. Many law professors perversely work "Dewey, Cheatem & Howe" into the hypotheticals presented on final exams, especially in professional responsibility and legal ethics courses.

 

Newsday.com

School doubled lawyer's salary, boosting pension

BY SANDRA PEDDIE AND EDEN LAIKIN

eden.laikin@newsday.com; sandra.peddie@newsday.com

March 6, 2008

Hewlett-Woodmere school officials more than doubled the salary of a private attorney on its payroll in his last two years at the district - substantially boosting his New York State pension - while paying his law firm more than $400,000 in additional fees during those same years, district records show.

The attorney, Jerome Ehrlich, was a partner in the Garden City law firm of Ehrlich, Frazer & Feldman at the time. School district records show that Ehrlich's salary jumped from $25,000 in 2004 to $60,000 in 2005 and 2006. School records show he worked fewer days for the district after the raise.

"That's convenient; looks like a pension booster to me," said E.J. McMahon, director of the
Albany-based Empire Center for New York State Policy, a pro-business think tank. "It's hard to figure out how they would justify it unless they were getting twice as many hours" or doing Ehrlich a favor.

Ehrlich is one of three Long Island attorneys under federal and state investigation because of their financial arrangements with school districts. The Federal Bureau of Investigation,
Internal Revenue Service and New York Attorney General all launched probes after Newsday reported last month that five school districts falsely reported to the state that attorney Lawrence Reich worked full- time at each one, enabling him to get a pension of approximately $61,000 a year. While employing him, the districts were also paying his law firm more than $2.5 million in fees.

The third attorney is Carol Hoffman, a partner at Jaspan Schlesinger Hoffman, in Garden City.

District Superintendent Les Omotami did not return calls for comment yesterday. Howard Weinick, the school board president, said in a written statement that the board's contract with Ehrlich was "cost-effective and operationally efficient." Weinick did not respond to e-mails asking why the board approved Ehrlich as an employee in the first place.

The amount of a New York State pension is roughly calculated by multiplying the number of years worked by the average of the three highest consecutive years of salary. Ehrlich, 71, retired from the district in June 2006 with a pension of $34,029.

Emily DeSantis, spokeswoman for the state comptroller, which administers public pensions, said her office would not comment on the increase in Ehrlich's pay, nor would she calculate how much Ehrlich's pension would have been without the increase.

Ehrlich's contract shows that the district also agreed to pay 100 percent of his health insurance upon his retirement, as well as that of his wife, for life.

State and district records show that Ehrlich worked fewer days after his salary was increased by the school board. In 2004, he worked 207.50 days, and in 2005, he worked 173 days.

In an e-mail to Newsday, Weinick disputed those numbers, saying that the district's payroll software "resulted in reporting errors to the state." He said Ehrlich should have been reported as having worked only 130 days.

Ehrlich's lawyer, John Carman of Garden City, said Ehrlich did, in fact, increase his workload by having regular office hours one day a week at the district.

"He was getting $60,000 to be available one day a week, which isn't extraordinary, given what attorneys make these days," he said.

He declined to say whether Ehrlich asked for the raise.

By working at Hewlett-Woodmere and, over the years, the Bellmore-Merrick High School and Great Neck school districts, as well, Ehrlich was able to get credit for a total of 38 1/2 years in the public pension system - even though he was in private practice the entire time. It is that financial arrangement that is at the heart of the federal and state investigations.

Internal Revenue Service rules bar an individual from getting paid as both an employee and independent contractor for the same work.

District vendor records obtained by Newsday show that Hewlett-Woodmere paid his law firm, Ehrlich, Frazer & Feldman, $155,498 in 2004, $203,105 in 2005 and $211,157.15 in 2006.

In a letter to school officials, Ehrlich's partners - Florence Frazer and Jacob Feldman - said Ehrlich was a school district employee before the formation of Ehrlich, Frazer & Feldman in 1992. They said there was no double billing.

Ehrlich joined the Hewlett-Woodmere payroll in 1971. He was reported as full-time starting in 1978 and remained an employee until 1987. He was back on the district's payroll from 1994 until he retired in June 2006. During that time, from 1978 to 1985, Ehrlich also became an employee of the Bellmore-Merrick Central High School District, reported mainly as full-time.

Newsday.com

NY comptroller: Attorney has to pay back pension

BY SANDRA PEDDIE AND ROBERT E. KESSLER

sandra.peddie@newsday.com
robert.kessler@newsday.com

7:47 PM EST, March 7, 2008

Five school districts incorrectly classified a private attorney as an employee, allowing him to obtain a yearly pension of nearly $62,000 to which he was not entitled, the State comptroller said in an opinion released Friday.

As a result, the attorney, Lawrence Reich, will have to pay back the money he has already collected since 2006, said Dennis Tompkins, the comptroller's spokesman.

"He should never have been reported as an employee; he should have just been a contractor. We're asking all five districts to adjust their reporting," Tompkins said.

The comptroller's audit comes three weeks after Newsday reported that five school districts falsely reported Reich as a full-time employee, allowing him to obtain a state pension and health benefits for life. At the same time, records show, those districts paid Reich's law firm, Ingerman Smith of Hauppauge, more than $2.5 million in fees.

The school districts were Baldwin, Bellmore-Merrick High School, Copiague, East Meadow and Harborfields.

Reich's attorney, Peter Tomao of Garden City, issued a statement saying the comptroller's opinion did not state that Reich had acted improperly. He said that Reich was entitled to a pension for the years he worked at the state Education Department, 1967 to 1978, before he began working as an attorney on Long Island for the school districts.

Comptroller Thomas P. DiNapoli's opinion was based on findings that school officials did not supervise or control how Reich performed his work at the districts, that none of them provided him with an office or work materials, and that he had no set hours or time sheets. Those standards are among the ones used by the Internal Revenue Service to determine whether someone is an employee or independent contractor.

After the Newsday story, the IRS, Federal Bureau of Investigation and New York attorney general launched criminal investigations. The probes have expanded rapidly, involving every school district in the state, several law firms, and two of Reich's former partners, Carol Hoffman and Jerome Ehrlich. Both of those attorneys have said they did nothing improper.

Reich, 67, of Centerport, retired from four of the districts in September 2006, with a pension of $61,459. He left East Meadow in 2001. Because he worked 12 years in the state, he is entitled to a small pension, worth approximately $5,000 a year, according to state formulas.

The comptroller's office declined to estimate exactly how much Reich will be required to pay back.

After the comptroller's statement was released, the Bellmore-Merrick High School, Copiague and Harborfields school districts all issued statements saying they would cooperate with the comptroller's office to change their reporting systems.

East Meadow superintendent Leon Campo said his district would "take corrective action." He added that he plans to ask the comptroller's office for guidelines on how to deal with the situation in the future. Baldwin superintendent Thomas Caramore did not return a call.

Several sources familiar with the pension investigation said DiNapoli released the report despite requests in recent days for him not to do so from both federal and state criminal investigators. They argued that it could affect any possible criminal prosecution, sources said.

Tompkins said the U.S. attorney had no "formal objections to our releasing the audit." He declined to characterize any discussions with Attorney General Andrew Cuomo's office.

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