July 15, 2004
Nassau Cancels Contract of Fraud Oversight Firm
By BRUCE LAMBERT, NY TIMES, July 14, 2004

GARDEN CITY, N.Y., July 14 - At a news conference on Monday, the Nassau County executive, Thomas R. Suozzi, trumpeted a novel project to spend $1.5 million in restitution from a corruption case to "root out and prevent waste, fraud and abuse."

But on Wednesday, embarrassed county officials here suddenly yanked a contract from one of three accounting firms hired to do the work after discovering that its associate had been convicted in the same scandal that prompted the restitution.

"This is like hiring Martha Stewart to give stock ethics lessons," said Peter J. Schmitt, the Republican minority leader in the County Legislature, who revealed the situation. "I'm outraged that Suozzi would hire the very firm whose partner was convicted of a felony" to perform oversight, he said.

The scandal involved bribery under the prior administration to switch the health insurance for county workers to the Benefit Plan Administrators company. The change was supposed to save millions of dollars, but instead cost taxpayers an additional $70 million.

The first person arrested was Robert F. Friemann, then a partner in Albrecht, Viggiano, Zureck & Company in Hauppauge. In April a jury convicted him of one felony count of filing a false tax return, but acquitted him of several other charges. He has not been sentenced. Ten others have also been convicted, including Nassau's former chief deputy county executive and a former chairman of the Suffolk County Republican Party.

Mr. Suozzi, a Democrat elected on a reform platform, named Albrecht and two other firms to devise the corruption prevention. Albrecht's contract was for $75,000. The restitution comes from various defendants, but not from Mr. Friemann.

"This oversight initiative is a huge step forward for Nassau County," Mr. Suozzi said on Monday. "Nassau County has never had a permanent regulatory system in place. Our taxpayers should be confident that their hard-earned money is being spent honestly."

After Mr. Schmitt's charges, Mr. Suozzi's press office referred questions to his new chief compliance officer, Helena Williams. She said that before Mr. Schmitt complained, she had already investigated a tip on the Albrecht firm and was disturbed. "I'm not going forward with the contract," she said. "We're not in the business of having the fox watch the henhouse."

Albrecht had disclosed Mr. Friemann's prosecution, but since he officially retired at the end of 2001, the firm listed him as a retired shareholder, Ms. Williams said. It failed to divulge that he continues to have a business relationship with the firm and still works there, she said.

"That's material information that should have been more fully disclosed," Ms. Williams said. The firm is inappropriate to handle the oversight project, "particularly since we are funding it with B.P.A. money," she said.

Ms. Williams added that she did not doubt the reputation of others at Albrecht and said that its past work and its bid were highly rated. The prosecutors who handled the corruption case said there was no evidence that anyone else in the firm was involved in wrongdoing.

But Mr. Schmitt complained that Albrecht had a checkered past as one of several law and accounting firms the Suozzi administration hired without bids to work for agencies under a former deputy county executive, Peter T. Sylver, who was indicted last week on charges of official misconduct. "This is becoming the latest chapter in catch me if you can," Mr. Schmitt said.

Democratic legislators approved the accounting contracts on Monday. The Legislature's presiding officer, Judith A. Jacobs, a Democrat, said of the disclosure: "I am absolutely floored. It's just so ironic, it's hard to absorb. I am very curious as to what process is being used by the administration in the selection of these firms."