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Smithtown paid Jadeco Construction Corp. millions despite ‘poor service’ record

Lifted portions of a sidewalk on Scholar Lane

Lifted portions of a sidewalk on Scholar Lane looking toward the corner of Shaker Ridge Lane on on Friday, April 10, 2015 in the Town of Smithtown. Credit: Joseph D. Sullivan

Smithtown Town Board members awarded millions of dollars in public contracts for concrete work to one of its largest vendors even after frustrated town employees had rebuked the company for missing multiple deadlines that delayed the town’s annual road and sidewalk repair program, records show.

Over the last two years, the town’s board members voted unanimously to award contracts worth more than $2.4 million to St. James-based Jadeco Construction Corp. for sidewalk and curb repairs. Those votes came after town highway department workers had to perform jobs that Jadeco had been contracted to do and after Jadeco had been warned the company’s “constant lethargic approach to work and unacceptable performance” could lead to daily fines of up to $2,500, records show.

Three of the five town board members agreed to be interviewed for this story, including longtime Smithtown Supervisor Patrick Vecchio. They said they were unaware of the problems with Jadeco when they cast their votes and had never seen the town documents detailing some of those issues until a Newsday reporter presented them during recent interviews. (Vecchio was absent when the board voted in 2015 to award Jadeco’s latest contract).

Vecchio blamed the board’s lack of knowledge on former Highway Superintendent Glenn Jorgensen, who in October resigned and pleaded guilty to felony and misdemeanor charges for filing false records in a case involving another contractor, Medford-based Suffolk Asphalt Corp. Jorgensen, who declined to comment for this story, is scheduled to be sentenced Friday in state Supreme Court.

“If the contractor is not performing for the highway superintendent, who’s a separately elected official, then it’s his responsibility to deal with that,” Vecchio said. “I, and the board, don’t know about those problems with the contractor.”

Jadeco’s president, Jacinto “Jesse” DeAlmeida, declined to comment for this story, citing an ongoing lawsuit against the town.

Newsday examined hundreds of town records for this story, including internal memos, legal documents, internal investigative reports, correspondence, payment vouchers and highway department work logs and orders. The documents show that there was widespread knowledge among several of the town’s top department officials when it came to the problems with Jadeco.

Yet board members — who set the highway department’s budget and can vote to approve its contracts — say those concerns never reached them, raising questions about the town’s contracting process and whether the spending of tax dollars has been adequately monitored.

Government contract experts said it is the elected council members who must provide the oversight of tax dollars because of their ability to control the town’s purse strings. In Smithtown, the highway department budget is more than $25 million for 2016, about a quarter of the town’s $101 million operating budget.

“The ultimate responsibility to oversee all of the contracts is with the elected officials who vote to approve those contracts,” said Paul Sabatino, a Huntington-based attorney who specializes in general municipal law. “They’re the ones who are voting to make the award and determination and they’re expending the taxpayer dollars.”

David Lazer, of the Melville-based law firm Lazer, Aptheker, Rosella & Yedid, whose practice includes municipal, corporate and real estate litigation, said such oversight is especially critical when it involves large town contracts.

“Logically, on a multimillion-dollar project, you would think the town board would want to know if its money was well spent,” Lazer said.


A pivotal dispute

In Smithtown, however, even major issues involving Jadeco escaped the board’s attention. Records show Smithtown in 2011 violated state law and town policy by paying Jadeco more than $500,000 for work done without a contract. When the town’s comptroller informed Jadeco the town could not pay for work performed outside of a contract, Jadeco filed a notice of claim — a precursor to a lawsuit — in December 2011 alleging “breach of contract based upon non-payment of invoices.” The town countersued in 2013 to recoup its illegal payments to Jadeco. Those lawsuits are ongoing.

Although Vecchio said he knew Jadeco had sued the town, he did not know the town had illegally paid Jadeco in 2011 until he was informed by a reporter in April 2015.

The dispute between Jadeco and the town proved to be pivotal as it led to lags that worsened a backlog of hundreds of residential sidewalk complaints and stalled the town’s multimillion-dollar road program, which covers repairs to sidewalks, curbs, curb aprons and roads. Curb and sidewalk repair work must be undertaken before road repairs in the same area can start. By 2014, Smithtown officials said $1.4 million of the $6.65 million allocated for that year’s road program remained unused because work was not completed.

An Aug. 6, 2013, notice of noncompliance from Smithtown’s highway department to Jadeco about the company’s “poor service” was carbon-copied to top town officials, including Jorgensen, purchasing director Joseph Kostecki, then-town attorney John Zollo and then-comptroller Louis Necroto.

The notice stated that “not one single road on the work order has been completed. Jadeco Construction Corporation has been asked to supply additional crews to get the work completed, but has failed to act upon that request.”

Seven months later — after Jadeco completed the work late — Kostecki again selected Jadeco as the “lowest responsible, responsive bidder” for 2014 concrete bids. The company bid $1,849,000.

Board members said they rely heavily on advice from Kostecki, who is tasked with vetting bidders and making bid recommendations in consultation with department heads. In Jadeco’s case, Kostecki didn’t share any problems about the company’s performance and the board didn’t discuss their performance before casting votes, Councilman Edward Wehrheim said.

Kostecki did not respond to calls for comment.

Councilman Robert Creighton, who lost his bid for re-election this year, said he could not recall any discussions about Jadeco’s inability to fulfill the contract. Councilman Thomas McCarthy and Councilwoman Lynne C. Nowick declined to discuss Jadeco, citing pending litigation.

Wehrheim said he only knew of Jadeco — a town contractor for more than two decades — to have a reputation for professional work. But after a reporter showed him town documents concerning problems with Jadeco’s performance, Wehrheim acknowledged that board members “should be much more active” when they convene to discuss town business.

“It should be laid at the feet of the town board,” he said. “That’s what these work sessions should be for. Not 30 seconds, then let’s hit the road.”


Longtime contractor

Smithtown is one of eight towns on Long Island with an elected highway superintendent, not someone appointed by the town board. The Smithtown highway superintendent decides how to spend the money allocated by the town board, within fund limits, and unlike other town department heads, has the power to hire and fire employees.

Jorgensen worked for the town’s highway department for more than 35 years before retiring in 2006 as a maintenance crew leader. He was first elected Smithtown’s highway superintendent in 2009 and was re-elected in 2013.

Jadeco’s work in Smithtown predates Jorgensen’s tenure as highway superintendent. The company has secured bids from Smithtown, earning it more than $20 million over the past decade, according to an analysis of the town’s check register. Although the town does not maintain contractor records prior to 2008, the company has worked under contracts with Smithtown since it was founded in 1994, according to a deposition of the company’s president, DeAlmeida.

Vecchio said he has known DeAlmeida for at least 20 years and that the pair are former friends who used to play golf together. But the two have stopped speaking due to the ongoing lawsuits, Vecchio said.

Wehrheim said he has also played golf with DeAlmeida but does not have a personal relationship with him.

“Friendship had nothing to do with his work with the town,” Vecchio said. “Jadeco has won the bids for almost every year that I’ve been here. He bids the lowest.”

DeAlmeida also has ties to Jorgensen. The pair live on the same block in St. James, and Jorgensen’s 2009 disclosure documents show he received income from Expo Industries Inc. before he was elected highway superintendent. State incorporation records list DeAlmeida’s brother, Albino, as the “agent of the corporation.” Jorgensen’s disclosure forms do not indicate how much he earned from Expo Industries or what his job entailed.

Robert Medwig, who worked in the town highway department for 34 years and supervised Jadeco’s work before retiring last December, said Jorgensen would yell and complain to Jesse DeAlmeida about his company’s delays but “didn’t want to put anything in writing that was going to hurt Jesse.”

Creighton described Jorgensen as a “nice guy” who knew how to connect with voters. Creighton recalled Jorgensen showing up late to a civic association meeting after a storm, covered in tree debris. Jorgensen had seen a tree blocking a road, and instead of calling town workers, he got out of his vehicle and cut away the tree himself.

Residents at the meeting were impressed, Creighton said, but Jorgensen’s lax management of the highway department was problematic.

“His management style was no style,” Creighton said. “I don’t think he knows how to run an organization at all.”

Besides the Jadeco lawsuit, Jorgensen’s tenure included other incidents that pointed to a need for more oversight.

Suffolk Asphalt Corp., the town’s road-paving contractor, filed a lawsuit against Smithtown this spring over claims it was not paid more than $1.8 million for work it performed — including the cold-weather paving project for which Jorgensen pleaded guilty. In addition, the town last month settled a sexual harassment complaint filed in 2014 by Jorgensen’s former personal secretary by paying her $75,000.

As of early November, the town had spent more than $41,000 on outside counsel to litigate the Jadeco lawsuit and about $8,400 on outside council for the harassment case, legal bills show. The town is using its own attorneys to litigate Suffolk Asphalt’s case.

Vecchio said Jorgensen’s failure is the “absolute, perfect reason why highway superintendents ought to be appointed, and not elected.”


Beginning of trouble

The town’s problems with Jadeco date back to 2010, when Kostecki extended an annual agreement with the company for a year. The extension called for the contract to last from June 17, 2010, to June 30, 2011 — 13 days longer than the one-year period that is allowed in the bid specifications, records show.

On June 29, 2011, just before the contract was set to expire, Kostecki authorized Jadeco to complete nearly $1 million in additional work. Jorgensen issued a work order for Jadeco the next day to do work in areas of Commack. Jadeco continued to work off of that order through early October, according to company payroll records submitted to the town with invoices for payment. Jadeco’s work came after its contract had expired, and even after the town board had awarded a $2.1 million bid that August to Laser Industries for the same concrete curb and sidewalk repairs.

The town paid Jadeco in six checks totaling nearly $1 million, citing the June 29 purchase order. Of those checks, more than $500,000 was for work completed after June 17, 2011, records show.

Former town comptroller John J. Morris informed DeAlmeida in a December 2011 letter that his company could not be paid for work performed outside the contract.

DeAlmeida responded by filing a lawsuit against the town in Suffolk County Supreme Court for nonpayment of about $441,000. An amended complaint in 2013 added roughly $336,000 more in damages, stemming from legal costs and personal assets that DeAlmeida said he liquidated to keep Jadeco afloat as a result of the town’s initial nonpayment.

The town in 2013 countersued to recover nearly $720,000 in the estimated amount paid to Jadeco outside of the contract, plus litigation costs. The case, in which both Jorgensen and Kostecki were ordered to be deposed, is ongoing.

Smithtown’s attorney on the case, John M. Denby, declined to comment.

Results from an internal investigation conducted by the town’s public safety department, detailed in a Jan. 23, 2012, investigative report obtained by Newsday, found that Jorgensen knew that Jadeco was performing work after the contract extension had expired. He cited his long-standing relationship with Jadeco and anticipated heavy workload among the factors in his decision to have the company work even after the expired contract, the report showed.

Vecchio and Wehrheim said they had no knowledge of the internal investigation, and Creighton said he couldn’t recall it. Former town attorney Zollo, who ordered the investigation, declined to comment.


A written warning

Despite the ongoing litigation, Jadeco again secured the town’s sidewalk and curb repair contract in February 2013 with a bid of about $1.75 million.

Smithtown highway officials said the town’s decision to withhold money from Jadeco over the prior contract dispute left the company struggling to keep up with assignments, and they lost critical warm-weather time to pour concrete.

Paving season depends on weather conditions but generally stretches from St. Patrick’s Day to Thanksgiving Day, said Marc Herbst, executive director of the Long Island Contractors’ Association, which represents more than 150 heavy construction contractors on Long Island.

By early August 2013, town records show that Jadeco was late in completing at least four work orders issued over a three-month span. When another work order was nearly due, and the company still hadn’t started sidewalk and curb work on several streets, the delays prompted a written warning to Jadeco. Robert Murphy, who at the time was Jorgensen’s deputy highway superintendent, wrote, “It is not a one time incident that has provoked the department to write to you. It is the constant lethargic approach to work and unacceptable performance of these obligations to date that has led the department to take this step.”

Murphy, who has been in charge of the highway department since Jorgensen’s resignation, warned the company that it could face fines of as much as $2,500 for every day it missed its deadlines. Jorgensen did not levy penalties, Murphy said in an interview.

Less than two weeks after Murphy’s letter, records show that as many as seven town workers laid topsoil and seed along Whisper Lane — a job that Jadeco had been contracted to complete on its own. Medwig said Jorgensen directed the town crews to do that work for Jadeco.

“It was decided that we could do it and let Jesse get on with the concrete work,” he said. “If Jesse wasn’t already late, we would have never taken on doing that work. That’s the only reason we made that decision.”

Meanwhile, in dozens of formal written complaints filed to Town Clerk Vincent Puleo’s office, residents describe asking the highway department for years to fix dangerous stretches of sidewalk, with some saying that their children couldn’t ride bikes around the neighborhood and others expressing concern about being sued if someone tripped and fell in front of their property.

“I have been calling the Smithtown Highway Department about the sidewalk since I bought this house in 2009,” one Nesconset woman wrote in a 2014 complaint. “Last Thursday I went for a walk with my husband and tripped over the sidewalk. I am currently 7 months pregnant. Luckily, my husband was there to catch me . . . the sidewalk is a safety issue.”


Pointing fingers

The town opened new contract bids for concrete sidewalk and curb work on Feb. 20, 2014. After Kostecki sent board members a signed recommendation calling Jadeco the “lowest responsible, responsive bidder,” the town board unanimously awarded the bid to Jadeco.

Smithtown Town Attorney Matthew Jakubowski said that litigation alone is not grounds for excluding a contractor, but inadequate performance and a lack of experience are factors in determining whether a bidder is responsible. A department head is generally obligated to approach the town board or town attorney’s office about noncompliance issues with a contractor, but Jakubowski said Jorgensen never expressed any problems to his office.

Necroto, who was Smithtown’s comptroller from 2012 until leaving in 2015 to work as Suffolk County’s chief deputy comptroller, said he noticed several issues with Jadeco that he set out to correct in 2014.

Necroto said the company exceeded work quantities and billed the town above what was requested and that the highway department failed to complete proper documentation for their work. “Almost every request, if not every request for payment from Jadeco in 2014, was at issue,” he said.

Necroto said he instituted measures aimed at giving town officials more oversight when it came to Jadeco’s performance, such as requiring a town engineer to inspect the contractor’s work, and asking the highway department to first provide a work estimate before dispatching Jadeco to do a job.

“The taxpayers are taking the beating here,” Necroto said of the problems.

Medwig said Necroto’s policies worsened Jadeco’s work delays and led to more disputes over payments. “Because of longer periods of time without getting paid, he couldn’t hire people to do the work,” Medwig said of DeAlmeida.

Necroto said he never told board members of Jadeco’s performance issues because he lacked evidence of who was at fault: DeAlmeida and highway department officials pointed fingers at one another, he said.

Sabatino, the Huntington municipal law attorney, said that while elected officials rely on the expertise of staff, they must ask the necessary questions.

“If you don’t ask the question at all, you’re not meeting your basic responsibility of controlling the purse strings,” Sabatino said. “You should not approve one penny of taxpayer money without at least making a cursory request for information as to how the money is being spent.”

Per the bid specifications for the 2014 contract, the town had the right to terminate Jadeco’s contract if it refused or failed to supply enough properly skilled workers, or if it failed to complete work within a specified time period.

Instead, Kostecki again deemed Jadeco the lowest responsible bidder this past June. Two days later, the town board voted unanimously to award the company another sidewalk repair contract, estimated at nearly $568,000.

With Adam Playford

Glenn Jorgensen’s rocky tenure as Smithtown highway superintendent began with a drug scandal and ended with his resignation and a guilty plea to felony and misdemeanor charges:

•February 2010 — A month after Jorgensen takes over the highway department, four town highway workers are arrested on town property for drug charges that include heroin possession.

•October 27, 2011 — Jorgensen admits that he violated town policy when he used road-repair funds to fix sidewalks and asks the town board to retroactively approve the $1 million fund transfer. The board ultimately approves the request in a 4-1 vote, with Supervisor Patrick Vecchio voting against it because Jorgensen transferred the funds without authorization.

•January 27, 2012 — A Smithtown Public Safety investigator interviews Jorgensen about Jadeco Construction Corp., a company the town had paid outside of a contract. Jorgensen acknowledges that his department instructed Jadeco to do work that had already been contracted out to another company.

•January to March 2014 — Smithtown Public Safety investigators determine that Jorgensen had five GPS devices installed in town highway workers’ cars without the workers’ knowledge. Investigators find that Jorgensen did not violate the law or town policy because tracking devices are not mentioned in the town’s collective bargaining agreement with civil service workers.

•November 10, 2014 — A Smithtown Public Safety investigator interviews Jorgensen about Aimee-Lynn Smith, Jorgensen’s former personal secretary, whom he fired the previous month. Jorgensen admits that he used sign-language at least twice a week to call Smith beautiful and the investigator found Jorgensen made inappropriate comments of a sexual nature to Smith and threatened to fire her and a highway department worker that she was dating. The town paid Smith $75,000 to settle a sexual harassment lawsuit she filed.

•April 1, 2015 — The Suffolk County District Attorney’s Office charges Jorgensen with tampering with public records; offering a false instrument for filing; falsifying business records; and grand larceny, all felonies. He also faces a misdemeanor charge of official misconduct. Jorgensen pleads not guilty to all charges, stemming from allegations that he falsified documents related to a November paving project by Medford-based Suffolk Asphalt Corp.

•May 2015 — Suffolk Asphalt Corp. files a lawsuit in Suffolk County Supreme Court in Riverhead for more than $1.8 million, alleging that Smithtown breached its contract by failing to pay for asphalt paving, milling and related work completed for the highway department in 2013 and 2014.

•October 16, 2015 — Jorgensen pleads guilty in state Supreme Court in Riverhead to a felony charge of offering a false instrument for filing and a misdemeanor charge of official misconduct. A plea agreement calls for 4 months in jail or a 560-hour community service alternative, and he resigns as Smithtown highway superintendent. Jorgensen is due back in state Supreme Court in Riverhead Friday for sentencing by State Supreme Court Justice Mark Cohen.

— Lauren R. Harrison

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