23 LI school districts have private lawyers on rolls
BY SANDRA PEDDIE AND EDEN LAIKIN, Newsday.com
LINK
sandra.peddie@newsday.com
eden.laikin@newsday.com

March 28, 2008

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.

In some cases, a town, village, library, special district or county also reported the attorneys as employees, often as full time, even though records show they did not always work full time. By being reported as employees at these other agencies, while also working in private practice, they were able to enhance the size of their state pensions.

The employment arrangements -- some of which started in the early 1970s and continue to this day -- enabled a select group of 10 attorneys to garner generous public benefits, even as they earned millions in legal fees as well, state and school district records show. Three of the 10 have not yet begun receiving their pension.

Among the attorneys is one currently collecting a six-figure public pension, a Republican Nassau County legislator and a member of a prominent Republican law firm. Although most of the attorneys declined to comment, those who did speak with a reporter said they were following previous practice when they got onto the public and school district payrolls. Two recently changed their status from employee to independent contractor.

Called into question

The issue of independent contractors being treated as employees so they could obtain public benefits has been called into question after Newsday reported on the case of Centerport attorney Lawrence Reich (see story below -Ed). Five school districts falsely reported him as a full-time employee, enabling him to collect a pension of nearly $62,000 and health benefits for life.

About three weeks ago, the New York State Comptroller's office found that Reich did not meet the standards used by the Internal Revenue Service to determine whether someone is an employee. As a result, he must pay back the pension he has been collecting since September 2006.

The FBI, IRS and New York Attorney General's Office all have launched investigations of lawyers being carried as employees by school districts.

The group of 10

The attorneys uncovered in state, district and county records are:

Private attorney Albert D'Agostino, 64, who has served on boards in Nassau County and Hempstead, currently collects a public pension of $106,702 -- thanks to the fact that three school districts, and a village, town and county all claimed him as an employee. His pension was based on his three highest years of salary, which he earned at three school districts and Nassau County. After he retired in 2000, D'Agostino's firm has continued working for at least three school districts, earning more than $2 million in fees.

Nassau County Legis. Richard Nicolello (R-New Hyde Park), 48, has been carried on the payroll of the New Hyde Park-Garden City Park school district for more than 20 years -- receiving health benefits for part of the time, as well as pension credits -- even while the district paid his law firm tens of thousands of dollars in fees.

Gil Henoch, 75, a partner in a prominent law firm that includes state Republican leader Joseph Mondello, earned a public pension of $11,561 after the Hempstead and East Meadow school districts reported him as an employee. State records show Henoch was paid $30,344 for a single day's work at the Hempstead school district in 1995. State records show he worked a day or less each year for Hempstead from 1988 through 1997, although Henoch said he worked more than that. Hempstead also paid his firm retainer fees, he said.

William Englander, 81, of Port Washington, was reported as an employee of six different school districts -- three of them full time -- in the same year. He retired with a public pension of $25,292 in 1996 and went right back to work for three school districts, earning more than $268,000 through the 2002-2003 school year.

Lloyd Harbor attorney William M. Cullen, 56, has been accruing pension credits since 1983 because the Franklin Square school district and the Brentwood and Half Hollow Hills libraries reported him as an employee. State records show Cullen began as a Franklin Square school employee in 1990, collecting an annual salary of about $20,000. Since 1998, the earliest year for which school records are available, the district has also paid his firm, Behrens, Loew & Cullen, $564,530. After Newsday reported on Reich, Cullen changed his status from employee to independent contractor, school and library officials said. He left the Half Hollow Hills Library in 2002.

Dominick Minerva, 67, former mayor of the Village of Valley Stream, currently collects a state pension of $97,185. After starting a law practice in 1975 with D'Agostino, Minerva was reported as an employee of one school district, two authorities and a sanitary district at the same time, which augmented his pension.

LeRoy Van Nostrand Jr., 90, retired in July 1979 with an annual pension of $5,855, after he was listed as an employee of the Plainedge, Amityville and West Babylon school districts at the same time.

Those seven attorneys are in addition to the three attorneys reported on earlier by Newsday -- Reich, Jerome Ehrlich and Carol Hoffman -- who earned public benefits while in private practice.

Nicolello, Hoffman and Cullen have not yet begun collecting pensions, records show. Nicolello gave up his school health benefits after being elected to the Legislature, which provides benefits, he said.

In an interview, Nicolello stressed that he never claimed more than part-time credit for his schoolwork. He said he recently changed his status at the district to independent contractor from employee.

"I looked at what the comptroller said, and it was a matter of elevating form over substance," he said.

Henoch, who started as an employee of the Hempstead school district in 1971, said in an interview that he received health benefits from the district. But "I never asked to be in the retirement system. When I was hired, they put me on. ... Many districts did the same things with their lawyers."

The other lawyers did not return repeated calls for comment.

Reviewing the records

Records reviewed by Newsday show that at least 23 school districts carried the private attorneys on their payrolls, and in most cases, also paid them retainer fees. Thirteen of the school districts are in Hempstead town, three in Babylon, three in North Hempstead, two in Oyster Bay, one in Smithtown and one in Huntington.

Most districts carried only one lawyer on the payroll at a time. But state pension records show that one district, Bellmore-Merrick High School, carried two lawyers as full-time employees at the same time. From 1991-1993, the district reported both Reich and Englander as full time.

District officials issued a statement asserting that the employment arrangement was established under a previous administration.

At least one other district carried two lawyers on the payroll at the same time, according to state and school district records. Lawrence reported both D'Agostino and Minerva as part-time employees 1997 to May 1999.

David Sussman, former Lawrence board president, said he was unaware of their employment status, but added, "I don't know if we would have done anything different if we were aware, unless we were told it was not a legal arrangement."

State pension records also show both D'Agostino and Minerva were reported as employees of a number of other municipal entities, sometimes four at the same time, and in some cases, full time.

Minerva retired in May 1999 and began collecting his $97,185 pension. D'Agostino retired in October 2000 and began collecting his $106,702 pension.

Despite retiring, D'Agostino and Minerva's Valley Stream law firm has continued working for the Lawrence, Valley Stream No. 30 and North Merrick school districts on retainer, according to records and school officials.

Valley Stream District No. 30 board president Maria Fletcher said she was unaware that the district had reported him as a full-time employee from 1979 through 2000. "That's not accurate. He was a part-time employee," she said.

Attorney Englander built up his pension solely through working for school districts since 1979, records show. Most years he was reported as an employee of multiple districts, often four or five at a time.

State records show him as an employee of six different school districts in 1994. That year, three districts -- Mineola, North Bellmore and Bellmore-Merrick High School -- reported him as full time. Three others -- North Merrick, Bellmore and Smithtown -- reported him as part time.

Former Smithtown board member Maryann Zumpano said Englander's status as an employee never came up.

"Board members are lay people. They're not equipped to run a school district," she said. "The board at its annual meeting usually appoints the attorney; but the business office handles all the arrangements, and the superintendent and auditors have the ultimate responsibility to assure the board that everything is done appropriately."

Staff writer Robert Kessler contributed to this story.

NY Comptroller: Attorney Must Return Pension Funds
By Sandra Peddie and Robert E. Kessler, Newsday, Melville, N.Y.
LINK

Mar. 8--A private attorney incorrectly classified as an employee by five school districts will have to pay back pension money he's collected since 2006, the state comptroller's office said Friday.

In an opinion released Friday, the state comptroller said that Centerport attorney Lawrence Reich was not entitled to the yearly pension of nearly $62,000 that he's been collecting since September 2006.

"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," said Dennis Tompkins, the comptroller's spokesman.

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.

THE STORY SO FAR

Feb. 15 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 public pension of nearly $62,000 and health benefits for life.

Feb. 15 A federal grand jury in Suffolk County opens an investigation into possible fraudulent financial double-dipping at the districts: Baldwin, Bellmore-Merrick, Copiague, East Meadow and Harborfields. FBI agents subpoena the districts' financial records. And the state comptroller's office says it will audit four of the five districts.

Feb. 18 State Attorney General Andrew Cuomo starts an investigation into possible financial misconduct in the five districts, issuing a subpoena for records at Ingerman Smith, the Hauppauge law firm where Reich was employed until December.

Feb. 19 Federal agents from the FBI and IRS obtain Reich's business records from Ingerman Smith.

March 5 Cuomo asks for personnel records from all 704 school districts across the state.

March 6 Newsday reports that Hewlett-Woodmere school officials more than doubled the salary of one of the private attorneys on its payroll in his last two years, Jerome Ehrlich, substantially boosting his New York State pension, while paying his law firm more than $400,000 in additional fees during those same years.

Newsday.com
More schools involved in lawyer, pension scandal
BY SANDRA PEDDIE AND EDEN LAIKIN
LINK

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

February 21, 2008

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.

The disclosure of two more lawyers receiving public benefits while working as private attorneys for school districts comes as state and federal probes into the practices of attorney Lawrence Reich broadened. On Tuesday, Reich's former law firm, Ingerman Smith, turned over its files on Reich to the Federal Bureau of Investigation and the IRS, and New York State Attorney General Andrew Cuomo has opened both a civil and criminal investigation.

Newsday reported last Friday that Reich was employed as a full-time employee of five school districts at the same time, while his firm, Ingerman Smith of Hauppauge, also was on retainer to the districts. Of the two additional attorneys, one only worked only part-time, while the second worked at one district at a time.

Under IRS rules, an individual cannot be treated as both an employee and independent contractor for the same job. The story brought a nearly immediate reaction from the FBI, which that same day subpoenaed Ingerman Smith's records.

The new disclosures -- which bring the total number of school districts involved to 11, and adds two more law firms -- suggests the practice of putting private contractors on public payrolls may be more widespread.

Records reviewed by Newsday show that Carol Hoffman, currently a partner at the Garden City law firm of Jaspan, Schlesinger and Hoffman, was listed as an employee at different times at four school districts. The districts were Plainedge and Bethpage, where she was listed as full time, and East Rockaway and Lawrence, where she was listed as part time.

In addition, the records show that Jerome Ehrlich, now a partner of the Garden City law firm of Ehrlich, Frazer and Feldman, was employed part time by two districts, Hewlett-Woodmere and Great Neck simultaneously. That allowed him to retire in 2006 with an annual pension of $34,029, after being credited with working 38.5 years in the state system.

Hoffman, 56, is not yet drawing a pension, records show. Reached yesterday at her second home in Key Largo, Fla., she declined to comment beyond saying only that, "Hundreds and hundreds of people over thousands of years have been doing this."

In an interview, Ehrlich said his arrangement with the districts "started a long time ago," when he said it was a "prevalent practice."

Both Hoffman and Ehrlich were once former partners of Reich, the Centerport attorney who was falsely listed as a full-time employee by five school districts simultaneously, earning a $61,459 pension and health benefits for life. At the same time, the districts paid Ingerman Smith $2.5 million in fees, according to records. Records show that, in one year alone, Reich was credited with working 1,286 days.

In addition to the FBI and Cuomo's office, the New York State comptroller's office announced that it would audit four of the five districts where Reich worked.

Earlier this week, Jaspan, Schlesinger, Hoffman suspended Reich -- who went to the work at the firm last January after leaving Ingerman Smith -- and asked for his resignation.

According to the Jaspan Schlesinger Hoffman Web site, Hoffman worked in the state Education Department Office of Counsel from 1976 to 1979. She later served in the governor's Office of Employee Relations.

She went into private law practice around 1982, Schlesinger said.

State records show she was listed as a full-time employee of the Plainedge school district from 1984 to 1987 and then part time in 1988. From 1989 to 1991, she was listed as part time in East Rockaway, and from 1991 through 1997, she was a part-time employee of the Lawrence school district.

After that, she was listed as a full-time employee of the Bethpage school district until 2003.

Complete records of payments to Hoffman's firm were not available yesterday, but Bethpage school records show that from 2000 through 2004, Bethpage paid the firm $847,106. In addition, the district paid her a $40,000 salary in 2003.

Earlier this week, Steven Schlesinger said he asked Reich to leave the firm because "I don't need the bad publicity." Yesterday in an interview, he said Hoffman's arrangement was different -- and legal -- because she worked at only one school district at a time.

School district records show that Great Neck paid Ehrlich's firm $578,411 from 2000 through 2004. Ehrlich himself earned $8,814 from Hewlett-Woodmere and $51,249 from Great Neck in 2005.

In an interview yesterday, Ehrlich said he thought the practice was legal, but added, "I don't think it's a practice that's continuing."

State records also show that John Gross, a partner in Ingerman Smith, is credited with more than eight years in the state pension system after serving as a part-time attorney for the Village of Northport. At the same time, the village paid Ingerman Smith fees for additional legal work, Gross said.

"That was just the way they did it," he said in an interview. It was "nothing I requested."

Comments thread

A Messy Business on Long Island: Private Attorneys Earn State Pensions

Corruption in our public school system. Such a huge subject, and every state has it's own horror stories. New York City still, I believe, wins the honor of being the most corrupt in the nation...and then there's New Jersey, as the following article describes (2006, Newsday):

Calling for a watchdog: With school fraud, corruption out of hand, grand jury urges state to create monitor of schools' spending.
Byline: Eden Laikin And Karla Schuster, Newsday, September 26, 2006

Sep. 26--Corruption and mismanagement is so pervasive in public schools that a new state office of Inspector General for Education should be created to investigate fraud and waste, a Suffolk grand jury has found.
September 26, 2006 Corruption and mismanagement is so pervasive in public schools that a new state office of Inspector General for Education should be created to investigate fraud and waste, a Suffolk grand jury has found. "The magnitude and frequency of the financial crimes plaguing our public school system demand equally drastic steps to protect public monies and restore the faith of the citizenry," the grand jury said in a stinging 348-page report released yesterday that called for reforms that go far beyond what state lawmakers enacted a year ago in response to the Roslyn embezzlement scandal. The report did not uncover any major new instances of fraud in addition to those already documented by state auditors or in the eight indictments previously returned by the grand jury. Nonetheless, the panel said its year-long examination of financial records from all 70 Suffolk districts raised doubts about whether any existing state agency can adequately monitor local school spending. "No one government agency has the sole responsibility of safeguarding education funds," Suffolk District Attorney Thomas Spota said at a news conference in Hauppauge to release the grand jury report. "If stockholders [of public companies] don't like what's going on, they can pull their money out. Taxpayers do not have that luxury." In addition to the Inspector General, who would have the power to subpoena records, the grand jury also called for several other reforms. New state laws would require that all high-ranking school business administrators have at least a college degree in accounting or finance, that school boards provide to the public copies of all employment contracts at least a month before they are voted upon and that school board members and employees would face termination or criminal penalties if they fail to report known corruption. Several local state lawmakers hailed the grand jury's recommendations, including Sen. Kenneth P. LaValle (R-Port Jefferson), a member of the Senate Education Committee, who had three years ago proposed legislation creating an Inspector General for Education. "To this point, it's fallen on deaf ears, because the very people we have sought oversight over have blocked that legislation," LaValle said yesterday, referring to local education officials. State Comptroller Alan Hevesi did not comment directly on the grand jury's findings, but praised the panel's "excellent efforts" and said he would work with Spota to develop further fiscal reforms for school districts. A state law approved last year included funding for Hevesi's office to hire 80 new auditors, with a requirement they audit every school district in the state by 2010. And a spokesman for the state Education Department said the agency is now proposing 70 additional staff of its own to monitor, audit and investigate school districts. School officials seemed split on the panel's proposals. Some, such as Brentwood's interim Superintendent Michael Cohen, said they would grudgingly accept anything that might restore public confidence. "We're going to have another layer of oversight that didn't exist before because of the misdeeds of other folks," Cohen said. Others contend that the reforms enacted by the state Legislature last year should be given time to work. "Before jumping ahead and creating a new office and other requirements, let's understand what's been done and the impact it's having," said Robert Lowry, deputy director of the New York State Council of School Superintendents.
Jeannette Santos, a board member for Western Suffolk BOCES and the immediate past president of the Nassau-Suffolk School Boards Association, said a statewide Inspector General is no substitute for the watchful eyes of local education officials. "We as board members just have to be more vigilant to watch where the money goes," she said. "We have to be on top of things." The grand jury, however, found many cases where local school boards approved expenditures, particularly pay packages and perks for employees, with little or no review. "Members of certain boards of education blindly approved their superintendents' requests and recommendations regarding salary increases and fringe benefit awards," the grand jury wrote. For example, 21 school districts gave car allowances to employees other than the superintendent, including one district that doled out that perk to 50 administrators in the 2004-05, including an assistant principal, totaling more than $45,000. The report, by law, did not identify districts by name, although many -- such as William Floyd, where four school officials have pleaded guilty to malfeasance -- were easy to recognize. For example, the report had harsh words for the not-for-profit group SCOPE, a Suffolk-based educational cooperative that for years acted as an employment agency, placing retired school officials as interim administrators in districts across Long Island. The retired administrators placed by SCOPE did not get the necessary state waiver to work while already collecting a state pension, a violation of law that cost the Teachers' Retirement System about $3 million, the report found. The panel said the state Teacher's Retirement System should seek restitution. "I'm dancing as fast as I can to bring the money home [from Albany] every year, and then when I read things like this ... " said state Assemblywoman Patricia Eddington (D-Medford), who supports the grand jury's recommendations. "It's high time we watched where the money is going." Staff writer John Hildebrand contributed to this story. District finance oversight recommendations Among the Suffolk Grand Jury's recommendations regarding local school district financial management: 1 Creation of a new state agency -- a New York State inspector general for education -- to investigate, report on corruption and other criminal activity in local school districts. Agency would have power to subpoena school records, would have to report annually on its findings to the legislature, state comptroller and the state Department of Education and post findings on a public Web site for at least five years. 2 New state law requiring public school employees, school board members and persons or entities doing business with a local district to report information they have about possible criminal conduct in the district. 3 New state law creating compensation committees in each school district, comprised of at least one local resident, among others, who would oversee oversee and report to local school boards on all proposed contracts negotiated after Jan. 1, 2007, and make recommendations regarding proposed fringe benefits. 4 New state law requiring school boards to post on their Web sites, or provide copies in libraries and district offices, all employment contracts and any amendments at least one month before any board vote. 5 New state law requiring school business administrators in districts with annual expenditures over $100 million for the preceding three years have at least a master's degree in accounting or finances. Other business administrators should have at least a bachelor's degree in accounting or finance. 6 Requiring the state Department of Education to provide mandatory continuing education every two years accounting principles, fraud prevention and fiscal management for every superintendent, assistant superintendent for business or business manager in a local school district. Copyright 2006 Newsday Inc.
Copyright (c) 2006, Newsday, Melville, N.Y.