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Pension Scandal

SchoolWatch

TIMESUNION.COM
 
Activist: Disbar pension abusers
Capital Region lawyers targets of complaints to standards panel
 

By RICK KARLIN, Capitol bureau

First published: Saturday, January 30, 2010

ALBANY -- They've lost their pension credits and paid fines to the state, but now a handful of lawyers -- including at least two in the Capital Region -- are in the cross hairs of a Long Island tax activist who wants them disbarred for having themselves listed as school employees in order to improperly earn lucrative public pensions.

State Attorney General Andrew Cuomo's office found dozens of school district lawyers who worked as independent contractors had over the years improperly listed themselves as employees of their school clients -- thus qualifying for taxpayer-funded pension credits. State Comptroller Tom DiNapoli also investigated the matter, and lawmakers have cited it as a clear example of taxpayer abuse.

Now, Long Island tax activist George Deabold has filed professional standards complaints against two Albany-area lawyers, Cornelia Cahill and John Sise. If the complaints are upheld, sanctions could range from censure to suspension or even disbarment.

In October 2008, Cahill and Sise settled charges with Cuomo's office that they were wrongfully listed as employees of the Hamilton-Fulton-Montgomery BOCES when they should have been listed as outside contractors. Cahill agreed to pay $270,000 in the settlement while Sise paid $35,000.

Despite several attempts. neither attorney could be reached for comment.

Deabold also filed complaints against Long Island lawyers Lawrence Reich, Carol Hoffman and Jerome Ehrlich. Reich was the first lawyer to be investigated after a report two years ago in the Long Island newspaper Newsday found he had been listed as a full-time employee at five school districts.

There's no guarantee that any of Deabold's complaints will lead to disbarment or and other sanction.

Disbarment complaints are filed through the court system's regional appellate divisions; its Third Department covers Albany and the surrounding region. Complaints and subsequent deliberations remain secret unless a sanction is levied by the court, said Mark Ochs, chief attorney for the Third Department's Committee on Professional Standards, which hears the complaints.

Typically, Ochs said, a sanction results when a lawyer exhibits chronic neglect of cases and clients, or misuses monies such as escrow funds.

"We look for direct injury," said Ochs, who added that anybody can file a complaint.

The committee's job is to determine if the complaints are grounded. The 21-member committee includes three members who are not lawyers.

Last year, there were about 2,500 complaints in the Third Department, which covers a 28-county area. Only 14 lawyers were disbarred.

School lawyers aren't the only people Deabold is taking on: He also wants to see former Gov. Eliot Spitzer disbarred for his tryst with a prostitute, the transgression that led to his 2008 resignation.

"How do you have the top attorney in the state of New York (patronizing) prostitutes and he doesn't get disbarred?" said Deabold, who founded SchoolWatch, a Long Island fiscal watchdog Web site.

Rick Karlin is at 454-5758 or rkarlin@timesunion.com.

Activist: Disbar pension abusers
Capital Region lawyers targets of complaints to standards panel
 
By RICK KARLIN, Capitol bureau
Click byline for more stories by writer.
First published: Saturday, January 30, 2010

ALBANY -- They've lost their pension credits and paid fines to the state, but now a handful of lawyers -- including at least two in the Capital Region -- are in the cross hairs of a Long Island tax activist who wants them disbarred for having themselves listed as school employees in order to improperly earn lucrative public pensions.

State Attorney General Andrew Cuomo's office found dozens of school district lawyers who worked as independent contractors had over the years improperly listed themselves as employees of their school clients -- thus qualifying for taxpayer-funded pension credits. State Comptroller Tom DiNapoli also investigated the matter, and lawmakers have cited it as a clear example of taxpayer abuse.

Now, Long Island tax activist George Deabold has filed professional standards complaints against two Albany-area lawyers, Cornelia Cahill and John Sise. If the complaints are upheld, sanctions could range from censure to suspension or even disbarment.

In October 2008, Cahill and Sise settled charges with Cuomo's office that they were wrongfully listed as employees of the Hamilton-Fulton-Montgomery BOCES when they should have been listed as outside contractors. Cahill agreed to pay $270,000 in the settlement while Sise paid $35,000.

Despite several attempts. neither attorney could be reached for comment.

Deabold also filed complaints against Long Island lawyers Lawrence Reich, Carol Hoffman and Jerome Ehrlich. Reich was the first lawyer to be investigated after a report two years ago in the Long Island newspaper Newsday found he had been listed as a full-time employee at five school districts.

There's no guarantee that any of Deabold's complaints will lead to disbarment or and other sanction.

Disbarment complaints are filed through the court system's regional appellate divisions; its Third Department covers Albany and the surrounding region. Complaints and subsequent deliberations remain secret unless a sanction is levied by the court, said Mark Ochs, chief attorney for the Third Department's Committee on Professional Standards, which hears the complaints.

Typically, Ochs said, a sanction results when a lawyer exhibits chronic neglect of cases and clients, or misuses monies such as escrow funds.

"We look for direct injury," said Ochs, who added that anybody can file a complaint.

The committee's job is to determine if the complaints are grounded. The 21-member committee includes three members who are not lawyers.

Last year, there were about 2,500 complaints in the Third Department, which covers a 28-county area. Only 14 lawyers were disbarred.

School lawyers aren't the only people Deabold is taking on: He also wants to see former Gov. Eliot Spitzer disbarred for his tryst with a prostitute, the transgression that led to his 2008 resignation.

"How do you have the top attorney in the state of New York (patronizing) prostitutes and he doesn't get disbarred?" said Deabold, who founded SchoolWatch, a Long Island fiscal watchdog Web site.

Rick Karlin is at 454-5758 or rkarlin@timesunion.com.

 
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Cuomo wins round in pension fight

Temporary restraining orders denied as tool against investigation
 


First published: Saturday, May 24, 2008

ALBANY -- Attorney General Andrew Cuomo won the first round Friday in a court fight spawned by his ongoing probe of alleged pension fund abuse, beating back an attempt by Albany lawyer James Roemer to get a temporary restraining order to stop the inquiry.
 
Roemer, who is representing four attorneys under investigation by Cuomo and state Comptroller Tom DiNapoli, argued the probe was harming his clients and others under investigation.
But Cuomo's counsel, Henry Greenberg, successfully argued before Albany County State Supreme Court Justice Gerald Connolly that restraining orders are not typically used to stop state agencies from conducting investigations.
"They are asking in effect to stop two state agencies, two heads of state agencies ... to stop these investigations in their tracks," said Greenberg, adding later, "I've never seen anything like it."
Roemer filed suit last week against Cuomo and DiNapoli, who have been conducting separate but parallel probes of lawyers for school districts and other government entities around the state. These lawyers have been listed as employees to earn taxpayer-funded pension credits -- a practice Cuomo and DiNapoli say is wrong. They say the lawyers are independent contractors who are ineligible for the benefits.
But Roemer, who himself collects a pension from his work as a municipal lawyer, has maintained that past comptrollers knowingly allowed the practice.
The investigation by Cuomo and DiNapoli is wide-ranging. Earlier this month, the Times Union reported Albany County judge Stephen Herrick earned pension credits while he served as a lawyer for the Albany school district. On Friday, Roemer noted Cuomo has subpoenaed Herrick, Roemer and others whose pension credits are now in question.
Additionally, last week Roemer was fired by Sullivan County, which had used him in labor contract negotiations. He suggested publicity surrounding the pension affair was hurting the reputations of those being probed.
"Much has been written in the press because that's where this case has been publicized so far," he said. "We think this (court) is the format where issues in this case need to be decided, not in the court of public opinion."
 

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Newsday.com

Mills makes move

Education commissioner comes down on double-dipping, but it took too long

May 23, 2008

State Education Commissioner Richard Mills announced yesterday that he'll overhaul the double-dip system that allows retired school administrators to earn a pension while continuing to work. It's a good move, but he should have acted sooner.

People have raised the issue before.
Suffolk County District Attorney Thomas Spota reported on efforts to milk the system in September 2006. At a hearing at Farmingdale State College yesterday, Attorney General Andrew Cuomo produced an application from a school board requesting permission to hire a retiree as superintendent. The application was written on letterhead that already included the man's name - showing that the board expected a State Education Department rubber stamp. Where were the red flags?

That Mills issued his statement yesterday morning, just prior to Cuomo's public hearing, seems very political. "Wonderful timing," quipped Assemb. Robert Sweeney (D-Lindenhurst) at the hearing.

Mills froze the so-called 211 waiver program for 60 days so that, he says, he can investigate and propose better administrative rules. But his department has not exactly been a model of self-policing. Reforms should go further and include new laws with clear penalties.

Two state senators who fight for Long Island school funding, Dean Skelos (R-Rockville Centre) and Kenneth LaValle (R-Port Jefferson), indicated at the hearing that double-dipping stories had embarrassed them. They've been answering pointed questions from constituents and upstate colleagues, too, who wonder why Long Island needs so much state aid.

School officials are biting the hand that feeds them. That's all the motivation they should need to clean up their act.

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Department of Law

120 Broadway 

New York, NY 10271

212-416-8060 


For Immediate Release:

New York City Press Office / 212-416-8060

Albany Press Office / 518-473-5525

nyag.pressoffice@oag.state.ny.us 


Department of Law

The State Capitol 

Albany, NY 12224 

518-473-5525

May 15, 2008 

 

ATTORNEY GENERAL CUOMO EXPANDS "DOUBLE DIPPING" INVESTIGATION TO EVERY SCHOOL DISTRICT IN NEW YORK STATE 

 

CUOMO TO HOLD PUBLIC HEARING ON PENSION INVESTIGATION WITH LEGISLATURE NEXT WEEK 

  
NEW YORK, NY (May 15, 2008) - Attorney General Andrew M. Cuomo today announced that he will hold a public hearing on employment arrangements at Long Island school districts as part of his statewide investigation into pension fraud in New York's school districts, local governments, and special districts. The hearing will be held in conjunction with members of the New York State Senate and Assembly. 


Cuomo also announced a broad expansion of his investigation into "double dipping" by seeking information from all 685 school districts in New York State regarding the hiring of retired individuals who are already receiving public pensions. Cuomo previously sought such information from all school districts on Long Island


"New Yorkers need to know that their tax dollars are not being wasted on state benefits for those who do not deserve them," said Attorney General Cuomo. "We are expanding our investigation to determine whether 'double dippers' engaged in any fraudulent activities and we are holding a public hearing to shine a light on questionable employment practices in our school districts. The fraud that this investigation has already uncovered is inexcusable, and it's going to end now." 

Attorney General Cuomo is investigating the practice of school districts permitting employees to "double dip," allowing them to earn both salaries and pensions simultaneously. The Attorney General's office will now be examining whether this is a proper use of public funds, whether these practices and their implementation violate existing laws and regulations, and whether existing law needs to be clarified as to these practices. 


The Office of the Attorney General is sending a letter to every school district in the State seeking information about these "double dipping" practices. The letter requests: 


a.. The identity of all current employees who are receiving public pensions in addition to their salaries, as well as the amounts of their salaries and pensions; 
b.. Whether districts specifically classified these employees in a manner intended

to permit them to collect both their salaries and pensions simultaneously; 

c.. Whether the districts can document a real need to hire retired individuals as opposed to otherwise qualified non-retired individuals; 

d.. The cost to the public of paying both the salaries and the pensions of these employees; and 

e.. Any and all communications, including applications and certifications, between the districts and any state agencies concerning the employment of the specified employees who were already receiving pensions. 


On May 22, 2008, Attorney General Cuomo will preside over a public hearing where he will hear testimony related to his statewide investigation into pension fraud. The Attorney General will be joined at the hearing by New York State Senate Deputy Majority Leader Dean Skelos, Assemblymember Robert Sweeney, Senator Kenneth LaValle, and Assemblymember Earlene Hooper.  These legislators were designated by the Senate Majority Leader and the Speaker of the Assembly. 


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


New York State Senate Deputy Majority Leader Dean Skelos (R-Rockville Centre) said, "Taxpayers have the right to expect that every penny of their school taxes is spent in the classroom. This practice is an abuse of taxpayers and Attorney General Andrew Cuomo and I are working together to develop comprehensive legislation that will ensure that this type of fraud never occurs again." 
 
New York State Assemblymember Robert Sweeney (D-Lindenhurst) said, "This appears to be an abuse of the public trust. The average Employee Retirement System member receives a pension of less than $15,000. The average pension in the Teachers' Retirement System is $34,412. It's galling that some of these local appointed officials 'game' the system. These public hearings are an important tool to bring attention to these practices. I commend Attorney General Cuomo for shedding light on this issue." 


New York State Assemblymember Earlene Hooper (D-Hempstead) said, "The costs of double dipping to New Yorkers cannot be understated. We are holding hearings to make clear that it is no longer OK to ignore this widespread problem. Attorney General Cuomo is on the front lines of this battle to root out fraud and see that state funds and benefits are properly spent." 


Attorney General Cuomo's ongoing investigation of pension fraud has expanded to include more than 4,000 local governments and special districts across New York State and all 37 Boards of Cooperative Educational Services ("BOCES"). The investigation has already revealed that many lawyers had remained on school districts' or BOCES' payrolls for such extended periods of time, or were included on the payrolls of so many school districts or BOCES simultaneously, that they accumulated substantial credits in the New York State Employees' Retirement System. Last week, Cuomo announced settlement agreements with a western New York law firm and a Capital Region attorney that ended their improper employment arrangements with school districts and various BOCES and rescinded all public benefits they had wrongfully received. 


The Attorney General's office urges individuals with knowledge of any questionable arrangements between any BOCES, local governments, or school districts and their outside professionals to contact the Public Integrity Bureau by telephone at 212-416-8090 or by e-mail at public.integrity@oag.state.ny.us

 

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Timeline of Newsday's investigation into double-dipping

FEB. 14-17: Newsday reports that five Long Island school districts falsely reported to the state that part-time private attorney Lawrence Reich was a full-time employee in each district, enabling him to earn a $62,000 pension and health benefits for life. A federal grand jury in Suffolk opens an investigation into possible fraudulent double-dipping at the districts; FBI agents subpoena the districts' financial records, and the state comptroller's office says it will audit four of the five districts. Newsday reports that Joseph Dragone, the Harborfields school official who made light of Reich's employment arrangement in a letter, retired from that district with a $122,000 pension and today makes $190,000 in the Roslyn school district as an interim superintendent.

Cuomo eyes 12 upstate attorneys in pension scandal

At least 12 present or former attorneys at an Albany law firm, including a current commissioner of the state Public Service Commission, are under investigation by state Attorney General Andrew Cuomo for improperly getting state pension credits from a single BOCES district upstate, according to sources familiar with the investigation and attorneys for some of those involved.

Cuomo's state pension investigation expands

State Attorney General Andrew Cuomo's investigation into the possibly improper awarding of state pensions to attorneys for school districts has escalated sharply, and now includes a host of other professionals who may also have received state pension credits, according to sources familiar with the investigation.

Nassau seeks payback for questioned pension credits

The New York State comptroller is reviewing the case of a private attorney in Nassau County who received 21 years of retroactive pension credits -- helping him earn a six-figure annual pension -- even though he had been paid as an independent contractor all those years, a spokesman said Monday.

Cuomo: Lawyer pensions on school payrolls are "fraud"

New York State Attorney General Andrew Cuomo Thursday night said his office believes that "multiple acts of fraud" were committed when Long Island school districts put private attorneys on their payrolls so that the attorneys could receive hundreds of thousands of dollars in state pensions.

23 LI school districts have private lawyers on rolls

Twenty-three school districts -- nearly one-fifth of all the school districts on Long Island -- improperly reported private attorneys as employees, which helped the attorneys earn public pensions totaling more than $342,082 a year, plus health benefits worth thousands more, a Newsday review of records has found.

NY comptroller: Attorney has to pay back pension

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.

School doubled lawyer's salary, boosting pension

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.

Pension probe to scrutinize state school districts

The investigation into possible double-dipping by attorneys working for school districts in obtaining state pensions expanded markedly Wednesday, as State Attorney General Andrew Cuomo asked for information about potential financial irregularities from all 704 school districts across the state.

Lawyer in probe sought spot on school district payroll

Carol Hoffman, one of three Long Island attorneys under federal and state investigation for their financial relationships with school districts, asked the Glen Cove school district to put her on the payroll in 2001, justifying it by saying that three other districts were doing the same thing, according to her letter.

Federal agents subpoena two dozen school districts

A slew of federal agents ranged out over Long Island yesterday hand-delivering grand jury subpoenas to more than two dozen school districts as part of an investigation into possible double-dipping by attorneys employed by some of the districts, according to school officials, attorneys and sources.

Attorney sought to get on Roslyn payroll

Carol Hoffman, one of three Long Island attorneys currently under federal and state investigation for their employment arrangements with school districts, solicited the Roslyn school district in writing in 1998 asking to be put on the payroll and explaining that she wanted to get more credit in the state pension system.

Reich's journey started at state Education Dept.

It started for Lawrence Reich behind the towering marble columns of the New York State Education Department, across the street from the state Capitol in Albany. It ended for him beneath the gold-framed Gustav Klimt posters in a law firm's conference room in Hauppauge.

Four law firms dominate school district services

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.

Cuomo wants records from every LI school district

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.

Probe of school districts' deals with lawyers grows

The investigation into allegations of financial wrongdoing at a number of Long Island school districts has mushroomed, with the New York State Attorney General's office subpoenaing the records of two more law firms and federal agents, in a parallel investigation, serving subpoenas on officials in a number of school districts.

Islanders sound off on schools' private lawyers

Long Islanders interviewed yesterday by Newsday expressed mostly outrage about Lawrence Reich and other private attorneys who have been listed by school districts as employees, enabling them to earn state pensions, while their law firms were also being paid fees by those districts. Some of those interviewed demanded a thorough county investigation of the matter, while others said the money paid to the lawyers should be used to fund teacher salaries and after-school programs.

More schools involved in lawyer, pension scandal

Six more Long Island school districts listed two private attorneys as employees, enabling them to earn state pensions, while also paying their law firms more than $1 million in fees, state and district records show.

TIMELINE: The story so far

Feb. 14: Newsday.com reports that five Long Island school districts falsely reported to the state that part-time private attorney Lawrence Reich was a full-time employee in each district, enabling him to earn a public pension of nearly $62,000 and health benefits for life.

Joye Brown: Our schools are a big business with big troubles

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.

FBI, IRS get Suffolk attorney Reich's records

Federal agents yesterday obtained the business records of a Suffolk County attorney who is at the center of a criminal investigation involving his employment by five Long Island school districts.

Official who warned Reich now in Roslyn district

The Harborfields school official who made light of Lawrence Reich's employment arrangement in a letter warning him to "correct the record" now works in the Roslyn school district, which has weathered its own financial scandal in recent years.

AG Cuomo starts investigation into 5 LI districts

State Attorney General Andrew Cuomo yesterday started an investigation, parallel to an ongoing federal probe, into possible financial misconduct at five Long Island school districts, issuing a subpoena for records at the Hauppauge law firm of Ingerman Smith, according to a spokesman for Cuomo and an attorney for the firm.

Joye Brown: Children again lost in district legal shuffle

Children.

What did law firm know about pay arrangement?

A small-town law firm founded in 1937, Ingerman Smith grew into a legal powerhouse, representing more than one-third of all the school districts on Long Island and racking up millions of dollars in fees.

FBI subpoenas 5 school district for data on lawyer

A federal grand jury in Central Islip has opened an investigation into possible fraudulent financial double-dipping at five Long Island school districts, according to several sources.

Five districts falsely reported lawyer's job status

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.

Schools' job classifications not sanctioned

Attorney Lawrence Reich says what he was doing was "common practice" among Long Island attorneys.

Records don't show practice is common

Attorney Lawrence Reich says what he was doing was "common practice" among Long Island attorneys.

Superintendent's Pay 2007/2008

PENSION PROBLEMS
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