Rye Golf Club manager Scott Yandrasevich and his wife, Anna, bilked the city of hundreds of thousands of dollars using a private staffing company they controlled, according to a four-month investigation at the city-owned facility.
A report released by the city Wednesday alleges that Yandrasevich and his wife used RM Staffing and other "shell" companies they created to divert money intended to staff and to operate the club's restaurant into their own pockets.
Mayor Doug French called the findings of the investigation Rye's "Madoff moment" -- referring to disgraced Wall Street financier Bernie Madoff, who was able to pull off the largest Ponzi scheme in history under the noses of regulators.
"It is the city's Madoff moment, where wrongdoing went unnoticed and where there wasn't one break in the chain but several," French said. "While we will pursue all avenues for restitution, we will also work to restructure our enterprise fund models and restore credibility."
Yandrasevich, 48, was placed on paid leave in October, after he was accused by club members and city officials of misappropriating funds and having a conflict of interest. He resigned last month and was given until the end of this month to vacate the clubhouse, where he has lived for the past decade. He couldn't be reached for comment Wednesday.
Although Yandrasevich told city officials that his "consulting" work for RM Staffing was limited to reviewing contracts, the investigation found that he was "deeply involved" in the details of RM Staffing's business and controlled its finances. He convinced the owner of a local graphic design company, Suzanne Ruggiero-Madeo of Studio Y, to open the company under her name.
Rye officials have turned their findings over to the Westchester County district attorney's office for possible prosecution and have said they will consider civil litigation to recoup the loss of taxpayer dollars and the cost of the investigation.
"We are reviewing materials sent to us by the city's Police Department regarding their investigation," Lucien Chalfen, a spokesman for the DA's office, said Wednesday.
The report found that Yandrasevich's wife received a salary of $175,000 a year from RM staffing, and some additional payments. The couple used the money to buy two boats and a house, the report said. In April 2010, she used an RM Staffing check to pay off $6,891 in personal debt, it stated.
Meanwhile, the Yandraseviches refused to give pay raises to staff members they employed at the club's restaurant, even as they billed the city for three times the average $10 hourly wage that some waiting staff and others were being paid.
Invoices submitted to the city "lacked even basic details" about what staffing services had been provided, according to the investigation. All told, the city paid more than $7.4 million to RM Staffing from April 2007 to Sept. 2012.
"There were no names or dates or hours tied to specific workers; instead, the invoices listed only total numbers of staff and total hours," the report stated. "Over time, the total amounts invoiced increased."
The investigation determined that other city employees were not involved in the scheme, but it faulted former and current city officials for not doing enough to verify the payments from the staffing company or question the finances.
"There appears to have been no effort on the part of the Finance Department or by any current or former city manager to scrutinize the accuracy of the invoices or review them for potential fraud," the report stated.
The investigation also found that Yandrasevich hired lifeguards for the golf club's pool and arranged for them to live together at a small apartment owned by his friend, Joe Pacelle, who owns Fairway Auto in Mamaroneck. The staffing company paid $4,750 per month in rent, which was billed to the city.
Pacelle didn't return a phone call seeking comment.
What's more, Yandrasevich also allegedly used golf club staffers to expand RM Staffing's operations to restaurants at the Morris Yacht and Beach Club in the Bronx and at the Oak Hills Park Golf Course in Norwalk, Conn. in 2010 and 2012.
Regardless of whether Yandrasevich, will face prosecution for the alleged wrongdoings, he still will be eligible to collect as-yet-undetermined pension benefits from the state retirement system. He was being paid $106,080 a year plus benefits.
The city's investigation was conducted by the City Council and included a lengthy review of subpoenaed bank and accounting records, invoices sent to the city and more than 40,000 emails sent from Yandrasevich's computer and city email account.
Council members were helped by outside legal firms -- Brune & Richard LLP and Breen & Associates LLC -- which were hired in October. As of mid-February, the city had racked up more than $278,760 in legal fees and other costs relating to the golf club debacle.
The club, which features an 18-hole golf course, pool and restaurant at Whitby Castle -- built as a private residence in 1852 -- has been owned by the city since 1965 and is run by a manager and board of directors.
Memberships to the club cost more than $4,500 a year for access to the golf course and amenities. Members do not have to be city residents. The city collects more than $400,000 a year in revenue from the club, including restaurant proceeds.
The results of the investigation are posted on the city's website, http://www.ryeny.gov.