A senior New York State Police investigator held a stake in a politically connected company embroiled in a legal dispute that Suffolk County District Attorney Thomas Spota sealed from public view after the shooting of Oheka Castle owner Gary Melius.
Thomas J. Hughes, a 23-year State Police veteran, owned more than 300,000 shares in Interceptor Ignition Interlocks, a Shirley company that profited from changes to state and local DWI laws and policies. Hughes' wife and in-laws were also investors in the company, according to shareholder records filed as part of a 2013 lawsuit between Melius and John Ruocco, the company's founder.
The shares obtained by Hughes, his wife and his in-laws could have cost nearly $700,000 based on a $2 per share value indicated in court records. However, the amount investors paid for shares was among the issues disputed in court.
The court records include a transcript from a May 2013 shareholders meeting that saw Melius -- who was attempting to wrest control of the company from Ruocco -- nominate Hughes to serve on Interceptor's board of directors. Melius referred to Hughes as "Tommy," said that the investigator was also friends with Ruocco and remarked that Hughes "got me into this."
The meeting, which Hughes attended, ended without a vote on his candidacy after a squabble between Melius and Ruocco's attorney over the voting process.
New York State Police regulations concerning "associations, organizations and outside employment" state that officers cannot engage in activities that "could reasonably be expected" to put them "into conflict with the proper impartial and effective performance of official duties."
Former New York State Lobby Commission executive director David Grandeau, an ethics consultant, said Hughes would have run afoul of state law if he had been named an Interceptor director.
"If he was on the board of directors on a company that was doing business with the state of New York, there would have been a high likelihood that there would be a conflict of interest," Grandeau said.
More information needed
Grandeau said more information about both Hughes' stake in the company and his role in decision-making as a state investigator would be necessary to determine whether he had violated New York State ethics laws just by investing in the company.
"If anything in his state job could possibly hold an interest in the procurement of these products in which he has an investment, that is clearly a conflict of interest," Grandeau said.
Jim Cohen, a Fordham Law School professor, said that Hughes' involvement in Interceptor is a problem.
"It seems to me it's a conflict of interest for a police investigator, almost of any sort, to own stock or assume a position on a board of directors of a company that does business with a state or other governmental entities," Cohen said.
Hughes did not respond to multiple requests for comment. His father-in-law, Kenith Wong, declined to comment but confirmed that he was related to Hughes.
Interceptor was one of seven ignition lock companies whose devices were certified by New York State in 2010, the same year Hughes' wife and in-laws obtained their shares in the company. Hughes and Troop Services Ltd., a company Hughes created two days after New York lawmakers passed legislation making ignition interlock devices mandatory for convicted DWI offenders, obtained shares in Interceptor in March and June 2011, according to the shareholder records.
According to the New York State Police website, Hughes works with a Violent Crime Investigation Team based in Farmingdale.
State Police spokeswoman Darcy Wells said investigators such as Hughes are exempt from filing financial disclosure reports with the New York State Joint Commission on Public Ethics. Wells declined to answer whether Hughes had informed his superiors about his investment in Interceptor, and the agency did not respond to Newsday's Freedom of Information requests for documents.
Others share Melius links
Hughes is one of several public officials who have been tied to Interceptor and Melius, a major donor to both parties, whose political influence bought him a large piece of Ruocco's company.
At least one other New York State Police investigator, Patrick J. Colgan, was also an Interceptor investor. Colgan obtained 10,000 shares in October 2010, according to company records.
"Mr. Colgan did nothing other than buy stock in a company after reading a positive article about it in Newsday," said Colgan's attorney, Brian Griffin. "He has never taken an active role in the company, nor has he seen any return on his investment."
Along with Hughes, Melius nominated state Independence Party chairman Frank MacKay to serve on Interceptor's board at the May 2013 shareholder meeting. And Suffolk Conservative Party leader Ed Walsh, who said he "expected some drama," attended a Feb. 21 shareholder meeting to give his friend Melius "moral support."
Three days later, a masked assailant shot Melius outside of Oheka Castle. The person is still at large.
Citing a criminal action, Spota filed a successful motion three days after the shooting to seal Melius' lawsuit against Ruocco. Newsday reporters had copied the filings in the lawsuit before they were removed from public view and separately obtained Spota's motion to seal the case.
The court records show Ruocco agreed in 2010 to give Melius 2.8 million Interceptor shares if Melius helped in "the enactment or amendment of laws" calling for the technology Interceptor offered.
Newsday reported Friday that Interceptor's market share rocketed after Nassau and Suffolk counties tailored their policies on ignition interlock devices in 2010 in a way that, for months, made Interceptor the only device qualified in Nassau and one of three in Suffolk.
Suffolk Supreme Court Justice Thomas Whelan, a close associate of MacKay's, credited Melius with the passage of Suffolk's law in a December ruling that effectively stripped Ruocco of control of Interceptor and granted it to Melius.
Board remains unknown
Melius said in a letter to investors that he planned to name new directors during the Feb. 21 shareholders meeting, the first since Whelan's decision. It was not known who had been named to the board, or whether Melius had again nominated Hughes and MacKay.
Hughes obtained 75,000 shares of Interceptor in March 2011, according to the court records. Then in June of that year, Troop Services Ltd., Hughes' company, received 250,000 shares. State records show the corporation is based out of a Center Moriches post office box.
Hughes' wife, Christine, his in-laws, Kenith and Patricia Wong, and Christine's sister, Lorrie Beresford, had purchased a combined 19,000 shares in September 2010.
State ethics laws define a state officer or employee's "financial interest" in a private corporation as owning 10 percent of its stock or serving as an "officer, director or partner of that entity."
Though the records indicate that Troop Services Ltd.'s stake in Interceptor represented 1.76 percent of shares, it's unclear whether Interceptor's record keeping was accurate. In his December decision, Whelan noted that, while investors typically bought shares of the company for $2 each, Ruocco's sister Rosemarie Sylvester had received 4 million shares for only $40,000.
"The record demonstrates that [Interceptor's] shares were improperly issued and issued without sufficient consideration," Whelan wrote in that decision.