Grand jury: Steve Levy misused ethics panel

Suffolk residents comment on the grand jury report that Steve Levy manipulated the ethics commission during his term as Suffolk County executive.Videojournalists: Mario Gonzalez and Meredith Daniels (April 19, 2012)

Steve Levy manipulated the ethics commission during his term as Suffolk County executive to wage attacks on political opponents -- including an attempt to intimidate a legislator -- and to help firms owned by his wife gain contracts with entities that received county funds, according to a special grand jury report released Thursday.

The actions of Levy, members of his administration and the commission constituted a pattern of misconduct that "completely destroyed the ethics infrastructure" in the county, states the report by the office of Suffolk District Attorney Thomas Spota.

"The ethics commission was used as a political sword, to attack enemies of county officials," the report said, "and as a political shield to authorize questionable conduct by certain county officials."

Although the conduct was improper, the report concludes, no criminal charges were filed because there are no penalties for it under county law.

Instead, the report makes 21 recommendations, among them imposing felony penalties for violating the county ethics code, training for ethics commissioners and compelling executive branch officials to refrain from interfering with the commission.

"This grand jury report exposes behavior by public officials acting in the name of the ethics commission that was unprincipled and wrong, but not criminal," Spota said. "Legislators must act to make certain that future public officials can be prosecuted for the behavior uncovered in this report."

In March 2011, in an earlier investigation, the district attorney ended a probe into campaign fundraising when Levy agreed not to seek re-election as county executive and to turn over his $4-million-plus campaign fund.

The report from the two-year grand jury investigation of the ethics commission, which was overseen by Investigations division chief Christopher McPartland, lays out in detail how Levy and key appointees -- among them former County Attorney Christine Malafi and former ethics commission chairman Richard Johannesen -- compromised the integrity of a commission that was intended to serve as an independent watchdog to prevent governmental corruption.

"Sadly, a small but powerful group of Suffolk County employees intentionally undermined 30 years of progressive ethics reform simply for personal and political gain," the report says.

Levy Thursday took issue with the grand jury's findings.

"The report was based in large part on testimony from political detractors of the county executive," who was first elected to the post as a Democrat and then became a Republican.

Reacting to Levy's criticism, Spota said: "After this independent judicial review, the judge authorized the report for filing as a public record. We stand by the grand jury's report."

Malafi and Johannesen did not return calls for comment.

The 56-page report was based on the testimony of 25 witnesses and more than 5,000 pages of evidence.

By law, a grand jury report that issues recommendations does not identify individuals mentioned. Instead, the practice is to refer to them with letters of the alphabet. Newsday was able to confirm the identities of nearly all the people mentioned in the report through interviews with grand jury witnesses, sources and previous reporting. A number of people confirmed their identities.

Among the report's findings:

One commission member, Johannesen, agreed to "be a good boy" and reveal confidential commission business, including personal financial information of county officials, to Levy.

Another member, Thomas Nolan, had a long-standing business and social relationship with Levy's wife, Colleen West, that he did not disclose even as he voted favorably on matters related to her.

Alfred Lama, who served as the commission's executive director until recently, was allowed to collect more than $14,000 in benefits to which he was not entitled. Lama, a retired State Supreme Court justice, also let Levy file the less extensive state financial disclosure form, though the report states that he was mandated to file the more detailed county form.

Malafi drafted ethics complaints against Levy's political enemies, even as she served as the commission's attorney.

Levy pressured then-Deputy County Executive Ben Zwirn to file ethics complaints against Legis. Edward Romaine (R-Center Moriches) and former Chief Deputy Paul Sabatino.

When West wanted an ethics opinion on whether her firms could do business with entities that received county funding, Levy "minimized his marital status in an attempt to demonstrate the absence of a conflict of interest" and indicated he would not benefit from a favorable opinion.

Many of the findings in the Suffolk grand jury report follow disclosures in Newsday. The newspaper reported Levy had not filed a county financial disclosure form for several years; that Lama had obtained benefits to which he was not entitled; and that West had received an ethics commission ruling that her court reporting firms could do business with hospitals that receive county funds.

David Grandeau, who directed the New York State Lobby Commission for 12 years, said it was unremarkable that the ethics commission took such a path.

"It's totally predictable," he said. "Any time you have an ethics agency dominated and controlled by political forces, you have a recipe for disaster."

The ethics commission was set up as an independent body to provide guidance on potential conflicts of interest and other ethics matters. It reviewed financial disclosure forms filed by roughly 650 county employees and rendered advisory opinions. By law, its proceedings were confidential.

Last year, after battling with Levy over ethics issues, the county legislature abolished the three-member ethics commission and replaced it with a five-member panel.

Here are some examples, according to the grand jury report, of how Levy used the commission to further his goals:

 

A COMMISSIONER'S SELECTION

Shortly after taking office as county executive in 2004, Levy reached out to Conservative Party activist Johannesen to be commission chairman.

Before meeting with Levy, Johannesen talked with the county executive's longtime friend and adviser, former Legis. Wayne Prospect. Prospect was later convicted of bribe receiving and conspiracy in a case unrelated to Levy.

Prospect advised Johannesen to tell Levy he would have "confidential meetings" with him about ethics commission work, according to the report.

Johannesen testified that Levy wanted him to give the county executive information from the commission. Johannesen testified that Levy "was really just trying to feel me out to see if I'd be, you know, willing to, I guess . . . play along. You know . . . be a good boy."

Johannesen agreed. The grand jury report found the agreement they struck to be a "pernicious undermining of the Suffolk County's ethics code, rules, regulations and spirit and was totally improper."

Prospect did not return calls for comment.

 

ANOTHER'S TIES

Nolan, an Aquebogue attorney, developed a long-standing close friendship with West through his wife, the report said. He also did business with West, who owns two court reporting companies.

According to the report, Nolan never disclosed his relationship with West -- who attended his daughter's graduation -- even when he voted on opinions favorable to her.

The report found Nolan's independence as an ethics commissioner was "significantly impaired."

Nolan did not respond to requests for comment.

A DIRECTOR'S ACTIONS, BENEFITS

Levy appointed Lama executive director of the ethics commission in December 2004. While Lama was listed as a full-time employee, he actually worked part time. His pay was docked to reflect his reduced hours, and Malafi signed his time sheets.

In Suffolk County, only employees who work more than half of a 37.5-hour workweek are entitled to full vacation and sick pay and health insurance. An audit by Suffolk County Comptroller Joseph Sawicki found Lama had received more than $14,000 in such benefits to which he was not entitled.

Lama and Malafi have disputed the comptroller's findings.

The report found Lama's independence was "significantly impaired" by the arrangement.

Lama allowed Levy to file a state financial disclosure form, which the report says requires "significantly less information" than the county disclosure form. Although the law required Levy to file the county form, Lama did not ask the commission to consider the matter and conducted no legal research, the report said. The grand jury found Lama's action improper.

Lama declined to comment.

Levy said Thursday that he had nothing to do with Lama's time sheets. He said the report was wrong in stating that Lama allowed him to file the state form. Levy said state law required the commission to accept the state form.

 

A COMPLAINT

The case that came the closest to possible criminal conduct, according to the report, involved Romaine. But for the refusal of a Levy aide to carry out the county executive's threats, a crime would have been committed, the report said.

In June 2008, Zwirn charged that Romaine, who had run against Levy for county executive, had a conflict of interest in advocating for the county nursing home because his wife and sister-in-law worked there. Malafi testified that she prepared a complaint against Romaine after Levy and Zwirn approached her about it.

Malafi told the grand jury she was able to do so because her office did not represent the commission on the Romaine case. However, records presented to the grand jury showed the county attorney's office represented the commission on the Romaine case for nearly two years, according to the report.

After the complaint was filed, Levy wanted to know what was holding up action on it. He told Zwirn to urge the commission to take action, and Zwirn did so.

The complaint against Romaine stalled for nearly two years. In that time, his son, Keith, a Brookhaven Town councilman, died of pneumonia. Zwirn, troubled by the tragedy, decided to withdraw the complaint. Zwirn said Levy told him not to do so because "we could use it as leverage against" Romaine, according to the report.

Nonetheless, Zwirn wrote a letter on July 25, 2010, withdrawing the complaint. The complaint was not withdrawn. Instead, the commission voted on the complaint, but did not disclose its decision, the report said.

On Aug. 2, the county legislature was poised to vote on a special committee investigating the ethics commission. Zwirn testified that Levy told him to tell Romaine not to vote for the investigation. Otherwise, he said, they would reinstitute the complaint against him.

Zwirn balked and refused to deliver the message because he thought it was "extortion," according to the report.

That night, Levy called Zwirn and left him a coded message. He asked him if "the guy you talked to wound up getting the grade of an 'A' ah, an 'F' or an incomplete, ah if ya just ah you could just ah, leave that grade on, on my tape if you don't get me, or just leave a message and I'll call ya back and will chat, OK, thanks a lot, bye-bye."

More pressure followed from both Levy and Lama, but Zwirn stood firm. In an interview, Zwirn said, "I believe in good government, and I still try to do that."

By the next legislative meeting of Aug. 17, the legislature was slated to vote for hiring a special counsel to investigate the commission. Just before the meeting, Frank Tassone, who worked in the county executive's office, handed Romaine a one-sentence letter withdrawing the complaint, according to the report. Tassone urged Romaine not to vote for the special counsel, the report said.

But Romaine voted for the special counsel. The next day, he received a letter informing him the commission had found him in violation of the ethics code.

In an interview Thursday, Romaine said the finding was made even though he was never given the chance to testify. He said that although the commission noted that he had recused himself on nursing home votes, "They had threatened me that they would punish me, and they did punish me."

He added, "I think the report speaks to the character of the former county executive. I think when people read the report, they'll be glad that he's no longer county executive."

Levy said his office was correct in seeking an opinion in the case.

 

ALLEGATIONS AGAINST OFFICIAL

Zwirn was a key player in another ethics complaint initiated by Levy, this one against Sabatino, a onetime Levy ally who left the administration in 2007 after numerous clashes with Levy.

Once again, Levy approached Zwirn, and Malafi prepared the complaint, the report said. The complaint alleged that Sabatino violated a rule that banned former county employees from working on matters that were pending when they left for two years.

Zwirn said in an interview Thursday that Levy pressured him and Levy aides James Morgo and Jeffrey Szabo to sign the complaint. He said while they thought there was a potential conflict, all three men tried to dissuade Levy from filing a formal complaint. "But he put a lot of pressure on," Zwirn said.

A Newsday reporter had the complaint and called Sabatino for comment on Oct. 7, 2008. Sabatino, an attorney who knew the proceedings were confidential by law, was stunned to learned of the complaint from someone outside the commission.

Sabatino asked the commission for a copy of the complaint, but was told he could not see it because of confidentiality rules. Sabatino kept pressing for it and finally got a copy of it in March -- five months after the Newsday reporter called him, he said in an interview.

In December last year, Sabatino received a one-sentence letter from the commission dismissing the complaint.

"Steve Levy crossed the line when he tried to use the power of government to destroy people who disagreed with him," he said Thursday.

Levy said Thursday that his seeking opinions on both Romaine and Sabatino was not politically motivated.

 

A FOCUS ON LEVY'S WIFE

In June 2005, Levy approached Sabatino in a hallway, speaking to him in a whisper. He told him his wife wanted to get contracts with hospitals that do business with Suffolk County and asked if it was a "problem." Sabatino said it was. Levy told him that Malafi disagreed, and they did not discuss it further, the report said.

Levy had a separate conversation with Johannesen on the same matter, according to the report. Johannesen said Levy called him to a meeting at his office in Hauppauge. Once there, Levy asked him to walk outside the office and then told Johannesen that West would be asking for an ethics opinion. Levy "minimized his marital status" in an effort to show that it was not a conflict of interest, the report said.

Levy denied Thursday ever minimizing his marital status. "It is possible that the individual making such a claim was confused over the fact that my wife and I were once legally separated," he said.

On Oct. 14, 2005, West asked for an ethics opinion on whether she could bid on contracts with hospitals that received county funds. The opinion said it would not reasonably create a conflict, as long as West did not draw attention to the fact that she was the wife of the county executive.

Commack attorney Craig Tortora, who was appointed as an ethics commissioner after that opinion was issued, testified that the business relationship was improper and that it was a "no brainer" that it should have been prohibited, according to the report.

West said in an email Thursday, "I sought an opinion from the ethics commission to make certain there were no conflicts."

Anton Borovina was the first legal counsel to an early version of the ethics commission and helped write the county's first financial disclosure law in 1978. He testified before the grand jury on the history of ethics regulation in Suffolk.

Borovina said he was appalled by what the commission had become.

"All agencies are required to uphold ethics; the one most especially obligated to uphold the ethical standard is the ethics commission," he said. "And it's appalling that they conducted business as they did."

With Randi F. Marshall

and Will Van Sant

A key to the county officials named in the report:

A – Anton Borovina
B - Paul Sabatino
C - Richard Johannesen
D - Wayne Prospect
E - Steve Levy
F - John Holownia
G - Thomas Nolan
H - Alfred Lama
I - Christine Malafi
J - Edward Romaine
K - Ben Zwirn

L – Unknown
M - Craig Tortora
N - Bill Lindsay
O - Unknown
P - Unknown
Q - Daina Sindone
R - Frank Tassone
S - Jon Cooper
T - Jim Morgo
U - Ed Dumas

Suffolk County Ethics Commission Grand Jury Report

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