Two former Oceanside sanitation commissioners paid back nearly $300,000 as part of a settlement with the sanitation district after the state comptroller said they received more than $800,000 in illegal payouts.
Michael and Charles Scarlata agreed to the settlement with Hempstead Sanitary District No. 7, a special tax district that provides trash pickup in Oceanside, after they received deferred retirement payments from 1984 to 2013.
State Comptroller Thomas P. DiNapoli’s office urged the district to recoup the $813,296 in retirement payouts in a 2014 audit, finding the payments were made illegally by the sanitation board.
The comptroller's report said taxpayer dollars were misused because the board had no legal authority to issue payments, violating New York finance law.
Sanitation officials said following the audit that the district no longer issues post-employment payments.
The sanitation district sued the Scarlatas in 2017 seeking repayment. The board reached a $300,000 settlement with the Scarlatas in March, Oceanside Sanitation Commissioner Austin Graff said.
The Scarlatas, both of Oceanside, returned $200,000 to the district Monday and paid $85,000 last week. The pair received a reduction for paying in full within the first three years of the settlement, Graff said.
The sanitation district may use the money to reduce budget expenses next year or lower taxes, Graff said.
“It was a long time the district paid the money and we did the best deal we could to end the lawsuit and recover money for taxpayers,” Graff said.
An attorney for the Scarlatas could not be reached for comment.
Michael Scarlata signed an agreement with the board in 1988 to be paid an additional $20,000 annually for 15 years if he retired at any point after March 1, 1996. If he didn’t retire, the deferred payments would be increased 10 percent each year after.
He retired in 1998 and collected retirement payments of $26,217 until 2012 when he received a final $51,122 payout, for a total of $391,000.
Michael Scarlata was hired as a consultant in 2013 to a five-year, $240,000 contract. He was fired by the board in 2015.
His son, Charles, signed an agreement to be paid $25,000 annually over 15 years if he retired after March 1, 2008, with the same 10 percent increase of deferred payments if he stayed. The board paid a $421,353 lump sum Jan. 15, 2012, before he retired in October 2013.
“I believe it was part of political corruption in the Oceanside sanitation district and the current board is trying to wipe out corruption from the district," Graff said.