A lack of time sheets, failed oversight, and "deception and manipulation" have enabled numerous private professionals working as consultants for special districts to improperly obtain public pension benefits at the expense of taxpayers, according to a blistering grand jury report issued by Nassau County District Attorney Kathleen Rice.
Often, public employers were complicit in that deception, according to the report, which was the culmination of 18 months of investigation and grand jury testimony following Newsday stories on pension abuses last year.
"It shocks the conscience that this sort of stuff goes on," Rice said in an interview.
The report highlights 11 case studies - although individuals are not identified, details make it clear that many of them were first reported in Newsday - to illustrate how people gamed the system. It also recommends legislative changes that expand on the pension reforms pushed through last year by New York State Attorney General Andrew Cuomo.
Rice's office opened a criminal investigation into pension abuses in February 2008 after Newsday reported that five school districts reported a private attorney as a full-time employee at the same time, enabling him to secure a nearly $62,000-a-year pension and health benefits. It became a grand jury examination when it became clear that no criminal charges were possible, she said.
"It was clear to me that the taxpayer was being ripped off," Rice said. "It was equally clear that it was not criminal."
Move toward accountability
Because there are no criminal statutes requiring that all public employees certify the time they worked, no laws were broken, said her spokesman, Eric Phillips.
The grand jury recommendations are designed to redress that and provide more accountability, said Assistant District Attorney Robert Emmons, who oversaw the investigation with Assistant District Attorneys Peter Mancuso and Meg Reiss. "The system lets employees, in particular, off the hook," he said. "It needs to be tightened up so there's no wiggle room."
The report found that the professionals provided little, if any, backup material to document their work, that the number of workdays used for pension salary calculations was sometimes wildly inflated and that employers did not require conventional time sheets. Such abuses, at a time when fewer and fewer people in the private sector are provided pension benefits, "are simply intolerable," the report said.
Investigators subpoenaed records of special districts - the tiny units of government that handle specific services such as garbage and water for specific areas - with revenues of more than $3 million and probed roughly 20 individuals, Phillips said. Two of the unidentified individuals cited in the report have collected more than $950,000 in pension payments. The others have not yet started collecting pensions.
Lawyer's case studied
The report's first case study describes an attorney, who is also a partner in a private law firm, who claimed to be an employee of six local governments and school districts. The attorney decided to seek retroactive credit for his 21 years as a consultant for the Nassau County Planning Commission and submitted three letters from officials arguing that he was, in fact, an employee. The letters, the grand jury report said, all used the same phrase: "Government being what it is . . ."
Although the attorney was not identified, details in the report make it clear it is Albert D'Agostino, who retired in 2000 with a public pension of $106,702. Newsday first reported on D'Agostino's case in April 2008.
His attorney, James Roemer of Albany, said the similar phrasing in the letters was not unusual because it was likely that the people who wrote them conferred with each other.
Last year, New York Comptroller Thomas DiNapoli revoked D'Agostino's pension. D'Agostino sued, claiming he had been denied due process. Last month, a state Supreme Court ruled that he must get his pension back because he wasn't given adequate notice, but left the door open for the comptroller's office to hold a hearing on the matter.
In addition to proposing new laws, the grand jury report recommends instituting regulations that would, among other things, create sanctions for public employers who fail to report anyone who has been incorrectly classified as an employee.
Karl Schweitzer, president of the Long Island Special Districts Association, said that while he has not seen the proposals, "These don't sound like hard changes."
Rice said she would push for passage of her proposals in Albany, adding, "Enough is enough."