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Long Beach's outside counsel will conduct audit, seek to recoup overpayments

A view of the City of Long Beach

A view of the City of Long Beach City Hall which also houses the Fire Department Headquarters on W. Chester St. in Long Beach on Dec. 17, 2014. Credit: Newsday/Steve Pfost

Long Beach City Council members said they have tasked their outside counsel with conducting an internal audit into the city’s payout scandal and seeking clawbacks of overpayments to current and former employees.

Council president John Bendo said during Tuesday’s meeting that the council expanded the scope of the Hauppauge-based law firm Ingerman Smith to analyze separation payments and drawdowns of vacation and sick time to employees that may have violated city code or union contracts.

A state comptroller audit last year found the city overpaid $750,000 to about a dozen management employees for vacation and sick time, including a $108,000 separation payment to former City Manager Jack Schnirman. Schnirman returned $52,000 to the city in September that he was overpaid. 

State auditors said the city’s separation payment policy has not been compliant for 25 years in following city code limits of 50 vacation days and 30 percent accrued sick time. The comptroller’s office cited “lax oversight” and said the elected council should seek to recover any unlawful payments.

Ingerman Smith was retained last year to respond to the comptroller’s audit, and the firm's scope was expanded to conduct an internal audit for the city, Bendo said.

“We want to get to the bottom of this,” Bendo said. “They’re researching options of clawing back payments that violate city code and city contracts. It’s something that should’ve been done a year ago, but we’re doing it now.”

The payouts from 2017-2018 are also under investigation by the Nassau County District Attorney's office and a federal grand jury.

The City Council voted Jan. 11 to waive attorney-client privilege in an agreement with district attorney investigators. The agreement turns over any advice previous attorneys and management were given regarding the payout scandal, Bendo said.

The city is also working with former New York City Mayor Michael Bloomberg’s chief of staff, Peter Madonia, as a pro-bono financial adviser to the city. City officials said Madonia will advise the City Council on management and policy and the search for a permanent city manager.

Madonia and Ingerman Smith attorney John Gross could not be reached last week for comment.

The city is operating with its third acting city manager, John Mirando, since Schnirman left two years ago, but the city has not yet hired a search committee since efforts to find candidates for the job were halted in 2018.  Council members said Mirando has provided everything requested.

The city is also interviewing applicants to replace Corporation Counsel Greg Kalnitsky, who left last week to serve as Glen Cove city attorney.

Bendo said the council is also exploring potential charter amendments that could empower the city council by reassigning duties given to the city manager and executive staff.

“We know expectations are high and folks are eager to see transformation,” Bendo said. “This is going to be a lengthy process. There’s a lot to fix. What we’re doing is being done the right way. We can’t make changes for the sake of making changes.”

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