New York Attorney General Cuomo Expands Payroll Fraud Probe To Local Governments Across State

Pension Information Sought from More than 4,000 County Governments, Towns, Villages, and Special Districts Across State; Probe Expands to Include Other Professional Consultants

April 15, 2008 -- ALBANY, NY - New York Attorney General Andrew M. Cuomo today announced the expansion of his pension fraud probe to include all forms of local governments across the State of New York and their hiring of lawyers and other types of professional consultants.

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New York Attorney General Andrew Cuomo: Photo by Christine Jackowski (CC)

The Attorney General’s Office is seeking information about more than 4,000 of the state’s county governments, villages, towns, and special districts about their employment arrangements with professional consultants. It is an expansion of Attorney General Cuomo’s ongoing civil and criminal investigation into potentially fraudulent employment arrangements between public school systems and lawyers.

Also, the Attorney General’s Office is now seeking information from all school districts about similar arrangements with non-attorney professionals.

“We have found evidence of fraudulent employment arrangements in which lawyers improperly placed on school district payrolls were able to collect significant pension benefits normally reserved for public servants,” Cuomo said. “Given the clear potential for fraud and abuse, we have every reason to believe similar arrangements exist in other local governments across the state with any number of professionals. When fraud is found we will determine how it occurred and find a way to stop it from happening again.”

The Attorney General’s Office believes fraudulent placement of professionals on public payrolls potentially costs taxpayers tens of millions of dollars by giving public pension benefits to those who otherwise would not be eligible.

The new letter being sent to local governments, school districts, and special districts requests information relating to any attorneys (including those working as labor relations specialists), physicians, engineers, architects, accountants, and auditors who were on payroll in their professional capacity and:

a) were reported to the New York State Retirement System as a full-time employee and also had outside employment or business associations; or

b) were reported to the New York State Retirement System as a full- or part-time employee while also being an employee of, or affiliated with, another firm, organization, or entity that had a contract, retainer, or other agreement for professional services with the local government or district in question.

Previously, the Attorney General’s Office issued multiple subpoenas to lawyers and law firms in Long Island and upstate as part of its ongoing investigation into fraudulent employment arrangements between public school systems and lawyers.

Many of the attorneys in question in that investigation appeared on the payrolls of multiple school districts or BOCES (Boards of Cooperative Educational Services) simultaneously. At least some of the attorneys who appeared on the payrolls did not actually provide legal services for the school districts or BOCES in question.

Many of these lawyers remained on school districts’ or BOCES’ payrolls for such extended periods of time, or were included on the payrolls of so many school districts or BOCES simultaneously, that they accumulated substantial credits in the New York State Employees’ Retirement System. One such attorney, who was listed on the payrolls of as many as seven school districts and BOCES in one year, may have already collected in excess of $700,000 in taxpayer-funded pension benefits.

To execute this investigation, the Attorney General’s Office created a secure Internet site at www.oag.state.ny.us/professionals/questionnaire with password protected questionnaires enabling the 4,000 local governments, school districts, and special districts to respond to the requests for information online. Responses are due April 21.

The Attorney General’s Office urges individuals with knowledge of any questionable arrangements between any local governments, school districts, or BOCES and their outside professionals to contact the Public Integrity Bureau at 212-416-8090 or by e-mail at public.integrity@oag.state.ny.us.

Source: New York Attorney General