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U.S. attorney’s office subpoenas town for records tied to Malibu Shore Club

Hempstead Town Supervisor Gillen calls for independent investigation into dealings with concession operator


The U.S. Attorney’s Office for the Eastern District of New York subpoenaed the Town of Hempstead on Thursday for contracts and other documents related to all concessions at Malibu Shore Club and other town properties in Lido Beach run by the Dover Group.

The subpoena came a day after Town Supervisor Laura Gillen held a news conference saying that town records showed that the Dover Group — which has operated Malibu since 2009 and runs other concessions — owes the town $531,400 in back rent for Malibu.

Gillen called on the town to hire an independent legal counsel to investigate what she called an unauthorized contract between the town and Dover’s chief executive, Butch Yamali.

Gillen called the contract a “backroom deal” and said she intends to propose a resolution at next week’s Town Board meeting to nullify the deal. She also called for the resignation of town’s Parks and Recreation Commissioner Daniel Lino who, along with Town Comptroller Kevin Conroy and Yamali, extended a deal in April that gave the Dover Group a five-year extension to operate Malibu, without the approval of the town board or the supervisor, Gillen said.

Yamali has previously denied any wrongdoing and has accused Gillen –– a Democrat who is seeking reelection in November –– of politicizing the issue.

Gillen sent an internal memo on Thursday, obtained by the Herald, to town officials informing them about the U.S. attorney’s subpoena, including Conroy, Lino, town attorney Joseph Ra, compliance officer Thomas Willdigg, and Town Clerk Sylvia Cabana. Gillen stated in the memo that she expects all officials to comply with the demands of the subpoena, saying that failure to do so would “immediately” be reported to the Federal Bureau of Investigation.

“Any attempts to, in any way, hinder this investigation, such as by hiding, covering up, deleting, or destroying records related to this investigation will also be immediately reported to the FBI agent in charge of this investigation, with whom my office is cooperating,” Gillen wrote.

The subpoena requires the town to release all documents dating back to Jan. 1, 2001 including emails, contracts, invoices, proof of payments, requests for proposals and bids related to concessions at Lido Beach, Malibu Shore Club, and the Sands Catering Hall operated by the Dover Group and Yamali. The subpoena also states that all documents must be copied and prepared by Aug. 7.

John Marzulli, spokesperson for the U.S. attorney’s office, and a town spokesman declined to comment.

Yamali did not immediately return requests for comment on Thursday. He told Newsday that the town owed him for more than $2 million in capital improvements and that town officials had verbally instructed him not to pay the rent. He said he plans to sue the supervisor for defamation.

“Town of Hempstead taxpayers are owed over a half-million dollars in back rent and tax compensations that were never before disclosed to elected officials or the public,” Gillen said at Wednesday’s news conference.

Gillen added that she wanted the town to hire independent counsel to investigate the contract, which she called a “sweetheart deal.” Gillen said she would propose two resolutions at Tuesday’s board meeting to hire outside legal counsel and void the contract between the town and the Dover Group. Gillen said she wants someone with no ties to Nassau County to investigate the contract.

“This is about doing right by the taxpayers and reversing an unauthorized deal that was negotiated in secret with unelected town employees and without taxpayer’s interests in mind,” Gillen said in a news release. “I am officially putting forth a resolution to retain outside, independent counsel that will both investigate alleged misconduct by anyone else in the town who had a part in the deal, along with recouping the over half-million taxpayer dollars that the vendor has refused to pay the town thus far and representing the town in court if necessary in order to make sure the contract is properly negotiated and all public debts are properly satisfied.”

Councilwoman Erin King Sweeney, the Town Board’s majority leader, said that she supports the hiring of outside counsel to investigate the allegations.

“This alleged failure to pay owed rent, and amend the Malibu contract without the knowledge of the Town Board are unacceptable,” Sweeney said in a statement. “Taxpayers pay their rent, and so should town vendors.”