FIGHTING PENSION CHEATS: DiNapoli forms unit, outlines tougher rules

Saying that "every dime counts, every nickel matters,"

State Comptroller Thomas DiNapoli yesterday announced tougher reporting rules

and a new compliance unit to weed out pension cheats.

"I want to make sure that only the individuals who deserve a state pension

get a state pension," DiNapoli said at a news conference in Mineola.

The new rules require local governments statewide to pass resolutions

establishing a minimum workday of no less than six hours. The regulations also

call for appointed and elected officials and professionals contracted to

perform certain services to keep a 90-day activity log and make public the

maximum number of days reported to the system each month.

The new compliance unit, which will be staffed by about 20 people, will

monitor who is being reported as employees and how their pension credits are

being counted, DiNapoli said.

In addition, the comptroller's office will continue its review, begun last

spring, of nearly 20,000 professionals in the state pension system, he said.

DiNapoli's announcement came seven months after Newsday reported that five

school districts simultaneously falsely reported private attorney Lawrence

Reich as a full-time employee, entitling him to a public pension of nearly

$62,000 and health benefits for life.

After the story, the state attorney general, FBI, IRS, U.S. Education

Department's Office of Inspector General, the Nassau district attorney and the

comptroller all launched investigations.

Within weeks, New York Attorney General Andrew Cuomo announced his office

had uncovered similar cases statewide, saying, "It was a great scam, and it

went on for years."

[CORRECTION: The New York state comptroller's office revoked attorney Lawrence

Reich's pension. A story Friday misstated which office took action. Pg. A13

ALL 9/30/08] His office has revoked Reich's pension and ordered him to pay

back $83,624. Reich's attorney, Peter Tomao, of Garden City, said Reich

maintains that he acted properly and disagrees with the comptroller's findings.

Several attorneys have argued that their pensions were proper because the

comptroller's office approved them. DiNapoli, who was appointed comptroller in

February 2007, said yesterday that his office had "taken on face value" the

reporting of local governments. "That's why a compliance unit makes sense," he

said.

Newsday also reported that members of elected and appointed boards, which

may meet as little as once a month, frequently are given health benefits and

credits toward a state pension. In addition, records show that at least 14

special districts and one authority have been reporting private attorneys as

public employees.

To date, the comptroller's office has revoked pensions or rescinded pension

credits of 35 professionals statewide - most of them attorneys. Auditors

decided no action was necessary in 680 cases. In all, the comptroller's office

is seeking to recoup $950,000 owed to the state retirement fund, officials

said.

Cuomo's office, meanwhile, has reached settlements covering the actions of

more than 65 attorneys and collected more than $935,000.

In May, Cuomo hosted a rare legislative hearing on the issue in

Farmingdale. Several legislators there said they had received an onslaught of

letters, calls and e-mails from constituents upset about the scandal.

A month later, the State Legislature unanimously approved a sweeping

package of pension reforms. The new legislation, among other things, increases

the penalty for pension fraud and closes the loopholes that have allowed some

retirees to collect six-figure salaries on top of six-figure pensions. The bill

has been forwarded to Gov. David A. Paterson for his signature.

Pension reforms

The state comptroller's pension reforms include the following changes:

Establishes a 20-person compliance unit to oversee pension reporting.

Requires local governments to set a minimum workday of no less than six

hours.

Requires elected and appointed officials, and professionals contracted to

perform certain services, to keep a 90-day log of activities each term. No

pension credits will be awarded if the log is missing.

Requires governing boards to post online or at the main entrance the

maximum number of days each official is reporting to the pension system monthly.

The New York State Comptroller's review of professionals in the state

retirement fund has yielded the following

319 local governments have been audited for improper pension reporting

35 professionals, mostly attorneys, have had pensions revoked or pension

credits rescinded

680 cases that were reviewed required no action

$950,000 is owed to the state retirement fund