Hevesi: Where’s outrage?

State comptrollerr presenting audit of Floyd, says culture of negligence’ allowed officials’ misspending

BY KARLA SCHUSTER AND EDEN LAIKIN | Newsday Staff Writers

August 8, 2006

The William Floyd School District is gripped by "a culture of secrecy, corruption and negligence" that led to $7.9 million in misspending and fraud, including no-bid projects, the vendors and key staff hired without contracts and the purchase of life insurance policies that were later cashed in by some top administrators, state Comptroller Alan G. Hevesi said yesterday.

"There was corruption and mismanagement and huge waste - what we can't find is the outrage," said Hevesi, referring to the 50-page audit by his office and school officials' written response, which over 42 pages called the report biased and unfair. "They're trying to spin their way out of the consequences."

The audit, which began after two school officials were arrested in 2004 for stealing, delivers another crushing blow to a district where five administrators have so far been indicted or pleaded guilty to theft or falsifying records.

Hevesi said his auditors will return to William Floyd within a year, and Suffolk District Attorney Thomas J. Spota said a grand jury already investigating school corruption countywide will begin a "second phase" of work this fall that will include examining the audit findings for possible criminality.

"The second phase will be more focused on individual conduct," Spota said. "... I think it's time this administration and school board be held accountable."

Suffolk Comptroller Joseph Sawicki compared the conduct of William Floyd officials to that of executives at Enron and Tyco and called on residents to demand dramatic changes.

"If the residents of the William Floyd School District really want to make a positive impact, they have to call for new leadership," Sawicki said. "[Superintendent Richard] Hawkins and his financial cronies, it's clear, are all in this together."

Among the audit findings is that Hawkins got raises in excess of what he was entitled to by contract, and was reimbursed for expenses including charitable and political donations without prior approval of the school board.

Hawkins, who has not been charged, denied the allegations. He said he does not intend to step down.

"I have nothing to hide or apologize for in connection to my contract," Hawkins said yesterday. "I work very hard on behalf of this entire district and most people know that ... I'm not letting anybody chase me out based on rumor, innuendo or misstatement of facts."

Still, he said some of the donations for which he was reimbursed were submitted by mistake, and that he's willing to repay the district. "I'm embarrassed. They were submitted in error," he said.

Board president Bob Vecchio, who has been on board since 2003 and president since July, said previous panels were guilty only of "procedural mistakes."

"There was absolutely nothing intentionally done to cover things up - no way," he said.

"We've been outraged for three years by what's happened," Vecchio said, referring to the arrests of the five school officials since 2004. "But we've learned from those mistakes and put changes into effect."

But between 2003 and 2005, the audit found that the district awarded $324,214 in no-bid contracts for trash removal, electrical repairs and paving - in violation of state law. During that same period, it paid another $940,451 to vendors who often did not have written contracts, the audit found.

Auditors' tally of misspending in William Floyd, which includes $1.5 million that former assistant superintendent for business Daniel Cifonelli and former treasurer James Wright have pleaded guilty to stealing, is the largest in any school district since Hevesi's office reviewed finances in the Roslyn district last year.

In Roslyn, where six school officials and family members have pleaded guilty to grand larceny, auditors say $11.2 million was stolen over more than a decade.

In William Floyd, auditors began their review looking at the period from July 1, 2003 to June 30, 2005. But Hevesi said as they dug into the records, the audit widened to include items that stretched back almost a decade.

For example: Between July 1995 and June 2004, the district paid seven administrators a total of $3.2 million without any written contracts or any prior board approval. The board retroactively ratified five of those contracts in June 2004, and another two in March 2005. School officials say the contracts were all approved earlier, but in private meetings.

That, auditors said, was a common pattern in William Floyd: Administrators, including Hawkins, would give themselves raises or change their contracts, and the board would approve those changes years later, often in private sessions. The state public meetings law prohibits such action in closed meetings.