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Lawyer in pension case agrees to settle, will pay $240G

Lawrence Reich, the attorney whose case sparked multiple investigations into pension fraud last year, has agreed to pay more than $240,000 to the New York State attorney general's office to settle his case.

Under the deal, Reich agreed to forfeit any claims to pension credits earned after he was falsely reported as a full-time employee of five Long Island school districts at the same time.

"This lawyer epitomized the systemic waste and abuse in a state public pension system that routinely paid out millions in public funds to private-sector professionals who weren't entitled to them," said state Attorney General Andrew Cuomo. "His claims defied logic."

Reich's attorney, Peter Tomao of Garden City, declined to comment, but said last week, "Cases that have to do with money can always be settled to avoid litigation risks."

Reich's case, first reported in Newsday last year, ignited a public uproar, spurred federal and state investigations, and led to sweeping pension reforms by the State Legislature.

Reich, 69, of Centerport, worked for the state Education Department for 12 years and then went into private practice. But even as his law firm collected millions in legal fees from school districts, Reich also was falsely reported as a full-time employee of five school districts simultaneously, according to records. In 2000, for example, he was credited with working 1,271 days.

Baldwin, Copiague, East Meadow, Bellmore-Merrick High School and Harborfields reported him as a full-time employee. A sixth school district, Freeport, listed him as a part-time employee, according to records.

As a result, he earned a pension of nearly $62,000 a year and health benefits for life. He retired in September 2006, even though he continued working for the school districts, getting paid a retainer, records show.

Under Internal Revenue Service regulations, an individual cannot be paid as both an employee and independent contractor for the same work.

After Newsday's story, the attorney general's office launched a statewide investigation. Comptroller Thomas DiNapoli then began a review and revoked pensions or pension credits of 62 professionals, recouping $1.4 million.

However, because of two rulings by an Albany Supreme Court, the comptroller's office is giving it all back. The court found that the comptroller's office did not provide adequate due process before revoking the pensions. It did not bar the office from revoking them again, but said adequate notice must be provided. The office plans to offer hearings, a spokesman said.

The settlement specifically calls for Reich to repay $180,565.74 in pension payments to the state and an additional $60,000 in penalties. But according to records, because of the 12 years Reich worked for state education, he is entitled to an annual pension of $4,438.44.

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