The Nassau County district attorney and U.S. Attorney have subpoenaed records in their examination of $350,000 in termination payments made to five employees of the county's Industrial Development Agency, even though all were still employed there.
“The IDA received a subpoena both from the DA’s office and the U.S. Attorney's Office, through the FBI, to produce certain documents related to the termination payments," IDA chairman Richard Kessel said in response to questions about a document tied to the subpoenas. "We cooperated completely.”
The IDA board never voted on the payments, which were made on Jan. 4, 2018. Kessel was not at the IDA at the time.
Officials in the office of District Attorney Madeline Singas have interviewed at least one IDA official who was involved in the termination payments and have requested to speak with another, said a source who requested anonymity because he wasn't authorized to speak publicly.
Then-IDA chairman Timothy Williams signed off on the payments for unused sick days and vacation time, according to an undated memo obtained by Newsday under the Freedom of Information Act.
Williams declined to comment.
Asked about the district attorney's actions on the termination payouts, her spokeswoman, Miriam Sholder, said last week, "This continues to be under review." John Marzulli, a spokesman for the U.S. Attorney for the Eastern District of New York, declined to comment.
The prosecutors' examination comes as the IDA undergoes an audit by the office of County Comptroller Jack Schnirman, which began in February 2018. The IDA's mission is to spur economic growth by offering tax breaks to expanding businesses.
Former IDA executive director Joseph J. Kearney, through his attorney, Joseph Conway, declined to comment.
With Laura Curran, a Democrat, succeeding Edward Mangano, a Republican, as county executive, the IDA issued termination paychecks three days after Curran's inauguration on Jan. 1, 2018. The largest, $138,842, went to Kearney, according to records.
He remained in his IDA post for an additional year before being hired as deputy Republican elections commissioner at the county Board of Elections in January.
IDA administrative director Colleen Pereira received a payout of $73,324; chief financial officer Joseph Foarile, $66,123; business development director Nicholas Terzulli, $60,462; and secretary Cecelia J. Muscarella, $11,465.
Pereira and Foarile still work for the IDA.
Terzulli joined a law firm in March 2018 and represents IDA clients. Muscarella resigned in June 2018 from the IDA.
A change in the political party that controls the county executive’s office traditionally has meant staff changes at the IDA. However, employment law prohibits workers from losing the sick days and vacation they earned, experts said.
What's unusual about the IDA termination payments is their timing, experts said. Such payments usually occur when an employee leaves the payroll.
In 2010, with another change in the county executive's office, the IDA gave termination payments to staff, some of whom were still employed at the agency. Those payments were approved by the IDA board at the time, documents show.
In July 2018, six months after the current termination payments were made, the comptroller's office questioned the payments as part of its audit.
Auditor Linda Leung, in a July 18, 2018, email to Foarile, the chief financial officer, wrote: “Could you please provide an explanation for these payments?” The email and others were obtained by Newsday under the Freedom of Information Act.
On July 19, Foarile replied to the auditor, “The payout is the result of the change of administration and is consistent with prior practice of the IDA.”
Leung then asked for supporting documentation, and after reviewing it, wrote to Foarile the same day: “None of the employees that received the January 4, 2018, payout were terminated. Therefore, we need an explanation why the payout was made.”
Foarile’s attorney, Stephen Scaring, said Foarile “is an employee, and he was doing what he was instructed to do."
IDA staff later located an undated memo signed by then-IDA chairman Williams outlining reasons for the termination payments. The payments were made using fees collected from developers and companies that receive IDA tax breaks, not taxpayer dollars.
The memo was written by IDA attorney Paul O’Brien before the agency received the auditor's questions, according to a source who requested anonymity.
O’Brien is unable to answer questions because he is on medical disability leave from his law firm, said another attorney at the firm.
The memo states that Foarile, the CFO, calculated the employees' payouts as of Dec. 31, 2017, "following ... precedent and utilizing the methodology" in the IDA's employee handbook.
While the IDA handbook outlines termination pay procedures for employees leaving the payroll, it makes no mention of payouts for employees who continue working for the agency, a review of the handbook shows.
“Although no formal board resolution is required because the payouts were made pursuant to the approved Employee Handbook and within budget, this matter may be taken up for ratification at the first board meeting to occur in 2018 when a new board is seated,” the memo states.
The current IDA board hasn’t voted on the termination payments. In April, the board voted unanimously to prohibit future payouts for employees who remain with the agency and to require that the payouts receive board approval.
The Nassau County Industrial Development Agency paid more than $350,000 in unused sick days and vacation to five employees in January 2018 when all were still on the agency's payroll.
Here are the payments:
Joseph J. Kearney, executive director
2017 salary: $191,000
Termination pay: $138,842 for 189 days
Colleen Pereira, administrative director
2017 salary: $96,773
Termination pay: $73,324 for 197 days
Joseph Foarile, chief financial officer
2017 salary: $123,683
Termination pay: $66,123 for 139 days
Nicholas Terzulli, business development director
2017 salary: $120,000
Termination pay: $60,462 for 131 days
Cecelia J. Muscarella, secretary
2017 salary: $41,400
Termination pay: $11,465 for 72 days.
SOURCE: Nassau County IDA documents obtained under the Freedom of Information Act