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Long Beach council rescinds city's response to state's draft audit on separation payouts

City Council president Anissa Moore said the city's

City Council president Anissa Moore said the city's response, submitted by outside counsel, was beyond the scope of State Comptroller Thomas DiNapoli's draft audit, which only examined one year of payouts. Credit: Newsday/Thomas A. Ferrara

Long Beach City Council members voted Friday morning to rescind the city’s response to the state comptroller's draft audit on the city's separation payouts, which said officials in Comptroller Thomas DiNapoli's office overlooked $3.1 million in questionable payments to employees, police and firefighters over the past 20 years.

City Council President Anissa Moore said the response submitted by the city’s outside counsel, Anthony Capozzolo, didn’t take ownership of the city’s practices of separation payouts or address a second state audit detailing the city’s long-term fiscal crisis. She said the city’s response was beyond the scope of the draft audit, which only examined one year of payouts.

The audit found the city overpaid 10 management employees more than $500,000 between 2017 and 2018 that exceeded the city’s code limiting workers to 50 vacation days and 30% of their unused sick time. The audit recommended recouping payments that exceeded city code.

“Although the historical perspective was provided, the city failed to take responsibility and own its actions,” Moore said. “Whenever corruption is present, we must shine the light on it, expose it and condemn it. People have lost faith in their local government. Although the process has failed us, we are now erasing the record that the city has provided. We are now hiding the wrongs. It is unfortunate that we have run out of time to carefully consider what the draft response represents.”

Capozzolo could not be reached Friday for comment. 

Capozzolo's report was written with Greg Kalnitsky, the city’s assistant corporation counsel, and detailed more payments in 2017, but also included an additional $3.1 million in payments made for more than a decade to union, management and PBA employees. The city’s response said employees were allowed to collect full accrued vacation and sick time by rolling over vacation days into sick time. Capozzolo’s report said the city operated under an interpretation of the personnel code that assumed no limits to sick time or vacation drawdowns.

John Bendo, the council vice president, called for a vote to rescind the resolution during a special 7 a.m. meeting, which led to a 3-0 vote by Bendo, Moore and Councilman Scott Mandel. Council members Anthony Eramo and Chumi Diamond were absent.

The council requested an extension of the comptroller’s original Sept. 30 deadline to respond to the draft audit. Officials in DiNapoli's office said they will now grant the city one month to file a different response. The city must do so by Nov. 11.

Council members said last week that they were unable to respond to the audit without different outside counsel.

The council amended a 32-page resolution, including the city’s response to the draft audit and the process detailing correspondence with the state comptroller’s office, and alleging the council majority violated the state’s Open Meetings Law in drafting a letter.

Council members explicitly said the resolution drafted by Kalnitsky was “wildly mischaracterized” and written to justify the city’s response.

"I'm not sure why the process should be concealed," Kalnitsky said.

Capozzolo was hired last year by then-Acting City Manager Michael Tangney to represent the city during the state's payout investigation and during criminal investigations by the Nassau County district attorney and U.S. attorney’s office.

Council members said they were not consulted about Capozzolo's retainer or the audit response. Moore said Capozzolo was not qualified to respond to the audit and only focused on separation payments. She said he did not respond to a second draft audit by the comptroller, which found the city mismanaged funds while recovering from superstorm Sandy in October 2012, resulting in an $8.5 million deficit in the past four years.

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