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Nassau DA wants Long Beach officials to waive attorney-client privilege

An August draft audit by State Comptroller Thomas

An August draft audit by State Comptroller Thomas P. DiNapoli's office said Long Beach overpaid at least 10 current and former management employees more than $500,000. Credit: Newsday/J. Conrad Williams Jr.

The Nassau County district attorney’s office is asking Long Beach City Council members to waive their attorney-client privilege so prosecutors can question elected officials and obtain records about questionable separation payouts.

Christine Maloney, chief of the district attorney’s public corruption bureau, sent a letter to the city last week saying investigators cannot conclude their investigation until they learn what legal advice was given to the city and its employees by legal staff and the city’s outside counsel, former federal prosecutor Anthony Capozzolo.

“As you are aware, the Nassau County District Attorney’s Office is investigating payouts that occurred under former City Manager Jack Schnirman,” Maloney wrote in a Nov. 26 letter. “Members of the city council and employees of the city of Long Beach have allowed full cooperation with the investigation. We request that you consider waiving the city’s attorney-client privilege as to any advice given by attorneys, employed by the city, as to separation payouts. This will aid in moving the investigation forward.”

City officials said waiving privilege "may have significant consequences" and "set off a political firestorm" to fire the city's outside counsel.

An August draft audit by State Comptroller Thomas P. DiNapoli’s office said the city overpaid at least 10 current and former management employees more than $500,000, including Schnirman, who received a $108,000 separation payment when he was elected as Nassau County comptroller. The state audit found that Long Beach’s separation payment policies have been out of compliance for more than 25 years.

Schnirman returned more than $52,000 in September after the draft audit said he was overpaid for 662 hours of sick time, exceeding the city’s cap of 30%.

A separate investigation by the Eastern District U.S. Attorney’s office is also  looking into the payouts. Capozzolo was hired in May 2018 and has so far been paid more than $100,000 to respond to a grand jury subpoena and represent the city during criminal investigations.

The City Council is set to vote Tuesday whether to fire Capozzolo, mainly because council members said they believe the city is not cooperating with investigators.

The resolution also directs acting City Manager John Mirando to waive the privilege that would allow officials to disclose their conversations with attorneys to investigators and “comply with all other requests from the Nassau County District Attorneys’ Office, regardless of any potential collateral consequences in the City’s other legal matters.”

Long Beach acting Corporation Counsel Greg Kalnitsky told Maloney that waiving privilege may expose the city to liability in other civil cases. He asked investigators to acknowledge the city has cooperated in the investigation and offered to provide privileged documents through a court order.

Investigators said they were only seeking a waiver regarding separation payouts and said Capozzolo never obstructed the investigation. Investigators said they never contacted Kalnitsky directly, because he was considered a witness in the investigation.

“We are seeking such a waiver because our investigation has shown that employees and former employees … have claimed that they may have relied on the advice of attorneys in corporation counsel’s office when making decisions about separation payouts,” Maloney wrote.

Council members also are set to vote on whether to hire municipal and labor relations attorney John Gross, with the Hauppauge law firm Ingerman Smith, for $265 per hour to recoup payments and any personal liability from staff that authorized payments or “failed to meet their duty to protect the treasury of the city of Long Beach.”

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