Huntington Town Councilman Mark Cuthbertson sponsored and voted for a zoning change to allow construction of condominiums at Oheka Castle in March 2012, but did not disclose that, the same week, he was working with Oheka Castle owner Gary Melius and his daughter on two court-appointed receiverships.
The court appointments on commercial properties in foreclosure earned Cuthbertson, Gary Melius and Kelly Melius more than $284,000 in fees and expenses, court filings show. Cuthbertson said he saw no need to disclose those ties before casting a vote in Gary Melius' favor because they only had what Cuthbertson called a "parallel relationship." He said it was a judge's decision, not his, to appoint Melius and his daughter.
Huntington's town ethics code makes no such distinction. It specifically bars board members from exercising any discretion on a matter before the town that involves a person or business entity "they have been connected with" during the previous five years.
Court records show that Cuthbertson, the court-appointed receiver for an Islandia medical office building in foreclosure, retained Gary Melius in August 2009 as the building's property manager. Cuthbertson also sought to hire Melius' company, Kellum Realty, as the broker for the same property.
The Islandia receivership lasted until March 2012. The same month, Cuthbertson recommended Kelly Melius to be property manager on a separate receivership in Ronkonkoma that lasted until April 2013.The town's code also requires board members to report on their annual financial disclosures any ties to people or entities having business with the town. Cuthbertson, who maintains a private law practice, did not include his business with Melius on his financial disclosures.
Because of Newsday's inquiry, Cuthbertson said he asked the town ethics counsel, James Matthews, whether there had been a conflict of interest he needed to disclose.
Matthews told Newsday he saw no conflict. As is the case in other municipalities, Matthews' retainer as outside counsel is approved by the town board.
"The fact is, there is no business relationship," Matthews said. "It's just a court appointment."
Matthews said his opinion is not official because Cuthbertson did not seek a formal opinion.
Hofstra law professor Monroe Freedman called that distinction "ridiculous" and said Cuthbertson's failure to disclose his ties to Melius clearly violated the town code.
"It's hard to see it as anything other than a violation," he said.
The receiverships illustrate the often-hidden relationships between political power brokers and elected officials. Cuthbertson is a Democrat who has run for office with the backing of the Independence Party since 1997. Melius is an influential member of the Independence Party, a minor party that can make the difference between winning or losing a local race. Melius is also Cuthbertson's largest individual campaign contributor, with $31,300 in donations since 2002.
Supreme Court Justice Thomas Whelan, the judge who presided over both receiverships, is an Independence Party member. Whelan's political patron is Frank MacKay, the state Independence party leader who is also on the Oheka Castle payroll as an executive, earning between $100,000 and $150,000 a year.
Whelan, Melius and MacKay declined to comment.
Cuthbertson said he could not remember how he got appointed to the receiverships but that he did not discuss them with Whelan in advance.
He said he did not know Whelan well but "had seen him around." Cuthbertson said he is friendly with Melius but does not consider him a friend.
"It's no secret that he likes the company of politicians and other community people and we have gotten to know each other," Cuthbertson said of Melius.
Cuthbertson said politics was not a factor in his selection as receiver, but he acknowledged that politics does play a role in the court system.
Judges "are all political to a degree," Cuthbertson said. "None of the Supreme Court judges are getting there without support of a political party. In that sense, they are all political."