Records: Interlock company with ties to Melius got boost from Nassau, Suffolk policies

By requiring that the court-mandated DWI deterrents be By requiring that the court-mandated DWI deterrents be connected to 911 emergency systems, Nassau and Suffolk counties effectively steered offenders only to the companies with that technology. Interceptor Ignition Interlocks, in which Oheka owner Gary Melius was an early investor, was for months the sole qualifier in Nassau, and one of three in Suffolk. Photo Credit: Joe Rogate

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Nassau and Suffolk counties crafted policies on ignition interlock devices several years ago that significantly boosted the business of a company tied to influential developer Gary Melius, state records show.

By requiring that the court-mandated DWI deterrents be connected to 911 emergency systems, each county effectively steered offenders only to the companies with that technology. Interceptor Ignition Interlocks, in which Melius was an early investor, was for months the sole qualifier in Nassau, and one of three in Suffolk.

The issue of how ignition interlock companies were chosen on Long Island surfaced recently in a lawsuit in which Melius, owner of Oheka Castle in Huntington, won control of Interceptor from its founder, John Ruocco. Disclosure of the suit came after Melius survived a gunman's bullet last week at Oheka -- an attack that investigators have yet to solve.

Interceptor, of Shirley, was one of seven companies that in 2010 gained state certification to supply interlocks for convicted DWI offenders. The state left it up to counties to determine which features they wanted on the devices, which test blood-alcohol content before allowing a vehicle to start.

But unlike most counties at the time, Nassau and Suffolk required that their interlock devices have a real-time connection to 911 emergency systems.

"There is a lot of great technology on the table. I would just like to say that Interceptor pioneered it all," Ruocco told Suffolk legislators in December 2010.

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That technology was new to the interlock industry that year, when the devices became required by New York's Leandra's Law in the vehicles of all DWI offenders placed on probation. The restrictions in Suffolk and Nassau all but disqualified many of Interceptor's competitors, state records show.

As a result, the company's local market share spiked -- from 7 percent to 54 percent in Nassau, and 13 to 22 percent in Suffolk into 2011 -- as most others' were flat or in decline.

"We kind of fell off the map there because the counties ultimately said we only want to install new customers with that technology, and we didn't have it at the time," said Jim Ballard, president and chief executive of Smart Start Inc., a Texas company that was a leading interlock provider on Long Island when the new restrictions were enacted.

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In June 2010, Melius' KNET Inc. signed a consulting agreement with Interceptor, pledging to get laws passed to help the business win public work -- laws requiring the use of the technology that Interceptor could provide, court records show. In return for his lobbying, Melius would receive 2.8 million shares in the company.

Nassau officials said discussions with Interceptor began in 2009, under the administration of former County Executive Thomas Suozzi, after the state passed Leandra's Law, named after an 11-year-old girl killed by a drunken driver. The law's mandatory interlock provision became effective in August 2010.

In Nassau, officials from the probation department, the district attorney's office and county legal staff recommended in May 2010 that all interlocks in Nassau be 911-connected as a way to quickly notify authorities if an offender had someone else blow into the device, probation director John Fowle said. Nassau County Executive Edward Mangano accepted the recommendation, Fowle said.

Aides to Mangano, who has received $16,500 in campaign donations from Melius since 2009 -- including $5,000 in June 2010 -- have said political donations have no bearing on county decisions. Melius gave Suozzi $15,000 in 2008-2009, and backed him in the 2009 election won by Mangano.

Between August 2010 and December 2011, Interceptor went from 7 percent of Nassau's interlock business to 54 percent -- 562 of 1,043 devices installed -- according to state Division of Criminal Justice Services records. The six other state-certified firms largely stopped getting new work in the county, but could maintain the devices they had already installed.

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"It was and continues to be good public policy to use these types of devices," Fowle said of 911-enabled interlocks, noting that from August 2010 to November 2011, Nassau deemed Interceptor "the only vendor with 911 interface and as such the only vendor authorized to install."

In Suffolk, the legislature passed a local law setting its higher interlock standards in December 2010. At that point, Interceptor was supplying 13 percent of 518 installed devices.

By December 2011, the Melius-connected firm had increased its share to 172 devices, or 22 percent of the 789 installed in the county. Two other firms, LifeSafer and Consumer Safety Technology Inc., which introduced Intoxalock, a 911-enabled interlock shortly after Interceptor's model, also saw Suffolk business grow.

Suffolk probation director Patrice Dlhopolsky said Interceptor, LifeSafer and Intoxalock were the only providers to initially meet county requirements for 911-enabled interlocks. State records show that Intoxalock's market share in Suffolk increased from 10 to 33 percent during 2011, and LifeSafer's increased from 15 to 18 percent, beginning in May 2011.

The remaining interlocks in use at the end of 2011 had been installed before Suffolk's more restrictive requirements were put in place.

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Interlock devices cost $90 to $150 to install and have monthly lease fees of between $75 and $100 -- all paid for fully by the convicted DWI offenders.

In the legal dispute over Interceptor, Ruocco accused Melius of being a duplicitous "political fixer," and Melius said Ruocco mismanaged the company and charged different investors vastly varying amounts for Interceptor shares.

State Supreme Court Justice Thomas Whelan, who has connections to Independence Party leaders that Melius is close with, sided with Melius in December, citing Suffolk's law as proof Melius had met his duties to get beneficial legislation passed. He stripped Ruocco of much of his ownership.

The state certification was worth $3.7 million to Interceptor, according to state contract records. It lost its certification to install interlocks last May, after a yearlong suspension from making new installations.

A state auditor estimated that about $500,000 for cellular payments, which averaged about $11 a month, went unpaid by the company, resulting in the termination, according to a state probation office report. Another state official said Interceptor's certification was terminated because "their devices weren't working properly." Further details about alleged problems with Interceptor products weren't immediately available.

The company remains a licensed interlock vendor in other states, including New Jersey and Idaho, records show.

During the 2010 debate over Suffolk's interlock technology requirements, state probation officials had warned against setting too-high local standards.

"Here's my great concern," said Robert Maccarone, a deputy commissioner in the state Office of Probation and Correctional Alternatives. "I don't want counties to become wed to one single vendor because I think while in the short term you are trying to do your very best to ensure the best product and the best price, in the long term you may get locked into a technology and it will be difficult for new manufacturers to break into the market, where in effect there's a monopoly."

Suffolk's interlock law was unanimously approved by the county legislature in December 2010, and took effect in January 2011. Then-County Executive Steve Levy allowed it to become law without his signature.

Levy, who received nearly $60,000 in donations from Melius into 2010, didn't respond to requests for comment.

The Suffolk interlock bill's primary sponsor, Legis. Lou D'Amaro (D-North Babylon) received $6,100 from Melius in 2007 and 2008. But he said the Oheka Castle owner never did more than possibly hand him an Interceptor pamphlet at a time many certified firms were providing the county with data.

"It's unfortunate this is being dragged into [Melius'] business disputes, but that had nothing to do with passing the bill. Absolutely nothing," D'Amaro said. "The legislation went through all kinds of hearings, and many companies were talking about their technology."

Interceptor, because it was the first to develop 911-connected interlocks, "did have a head start," said Brad Fralick, director of government relations for Intoxalock, one of the two other devices that met Suffolk standards. "Our technology was almost there. Our plan was to get our technology perfected and go to market with it."

But even as Intoxalock devices were being installed in large numbers in Suffolk -- outpacing Interceptor -- it did not do much business in Nassau.

"They were adamant," Fralick said of Nassau officials. "They wanted the fullest capabilities on the devices, which took us some more time."

When Nassau set the standards that only Interceptor could immediately meet, it in essence barred most of the other state-certified interlock firms from operating in the county. Texas-based Smart Start Inc. had nearly four times the business that Interceptor had before August 2010 -- when county judges could mandate interlocks at their discretion, and offenders had a wider choice.

But by December 2011, Smart Start had only a quarter of the installations of Ruocco's and Melius' firm: 129 to 562. Another firm, Sens-O-Lock of America, withdrew from new installations in Nassau and Suffolk after the stricter technological requirements were enacted.

Chief executive Craig Lotz said he doubted Interceptor's devices ever worked as advertised.

"The abilities they claimed to have were somewhat suspect in the interlock community," he said. "I don't know if at that time, the technology existed. It was more a sales brochure, rather than reality."

Records show that Sens-O-Lock never returned to Long Island, but Smart Start subsequently developed an interlock that meets Nassau and Suffolk's requirements, and is again working in both counties.

D'Amaro said that motivating technological advancements in the industry was always his desire with the legislation he drafted in Suffolk not to aid any one particular firm.

"My feelings were, if we can ensure the best technology in Suffolk County, why not?" D'Amaro said. "We knew there were companies that already had it, and we were very hopeful there were going to be several more coming online soon. And that's what happened."

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