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NY comptroller: Attorney has to pay back pension

BY SANDRA PEDDIE AND ROBERT E. KESSLER | sandra.peddie@newsday.com
robert.kessler@newsday.com

7:47 PM EST, March 7, 2008

Five school districts incorrectly classified a private attorney as an employee, allowing him to obtain a yearly pension of nearly $62,000 to which he was not entitled, the State comptroller said in an opinion released Friday.

As a result, the attorney, Lawrence Reich, will have to pay back the money he has already collected since 2006, said Dennis Tompkins, the comptroller's spokesman.

"He should never have been reported as an employee; he should have just been a contractor. We're asking all five districts to adjust their reporting," Tompkins said.

The comptroller's audit comes three weeks after Newsday reported that five school districts falsely reported Reich as a full-time employee, allowing him to obtain a state pension and health benefits for life. At the same time, records show, those districts paid Reich's law firm, Ingerman Smith of Hauppauge, more than $2.5 million in fees.

The school districts were Baldwin, Bellmore-Merrick High School, Copiague, East Meadow and Harborfields.

Reich's attorney, Peter Tomao of Garden City, issued a statement saying the comptroller's opinion did not state that Reich had acted improperly. He said that Reich was entitled to a pension for the years he worked at the state Education Department, 1967 to 1978, before he began working as an attorney on Long Island for the school districts.

Comptroller Thomas P. DiNapoli's opinion was based on findings that school officials did not supervise or control how Reich performed his work at the districts, that none of them provided him with an office or work materials, and that he had no set hours or time sheets. Those standards are among the ones used by the Internal Revenue Service to determine whether someone is an employee or independent contractor.

After the Newsday story, the IRS, Federal Bureau of Investigation and New York attorney general launched criminal investigations. The probes have expanded rapidly, involving every school district in the state, several law firms, and two of Reich's former partners, Carol Hoffman and Jerome Ehrlich. Both of those attorneys have said they did nothing improper.

Reich, 67, of Centerport, retired from four of the districts in September 2006, with a pension of $61,459. He left East Meadow in 2001. Because he worked 12 years in the state, he is entitled to a small pension, worth approximately $5,000 a year, according to state formulas.

The comptroller's office declined to estimate exactly how much Reich will be required to pay back.

After the comptroller's statement was released, the Bellmore-Merrick High School, Copiague and Harborfields school districts all issued statements saying they would cooperate with the comptroller's office to change their reporting systems.

East Meadow superintendent Leon Campo said his district would "take corrective action." He added that he plans to ask the comptroller's office for guidelines on how to deal with the situation in the future. Baldwin superintendent Thomas Caramore did not return a call.

Several sources familiar with the pension investigation said DiNapoli released the report despite requests in recent days for him not to do so from both federal and state criminal investigators. They argued that it could affect any possible criminal prosecution, sources said.

Tompkins said the U.S. attorney had no "formal objections to our releasing the audit." He declined to characterize any discussions with Attorney General Andrew Cuomo's office.