A plan by three members of the City Council to hire outside legal counsel in the wake of a recent draft audit and ongoing criminal investigation into the city’s payout practices was scrapped on Monday just hours before Acting City Manager Rob Agostisi announced his resignation.
On Wednesday, Council Vice President John Bendo and Councilman Scott Mandel issued a statement on Facebook and called on the five-member council to fire Agostisi “on the City Council’s terms;" terminate a professional services contract with a former federal prosecutor the city hired last year to represent it amid the investigation; and move forward with hiring of its own legal counsel that would report to the council.
Two weeks ago, State Comptroller Tom DiNapoli’s office provided the city a draft audit which found, in part, that the city had overpaid 10 current and former employees more than $500,000 in separation payouts in the 2017-18 fiscal year — including Agostisi, who received a $128,000 payout — and that the city payouts have exceeded limits set in city code and contracts for at least 25 years. The city has until the end of the month to respond to the findings. Nassau County District Attorney Madeline Singas, as well as the U.S. Attorney’s Office for the Eastern District of New York, are also investigating the city’s payout practices.
City Council President Anissa Moore, Bendo and Mandel had intended to hold a special meeting on Tuesday at 7:30 a.m. to vote on a resolution to hire outside legal counsel to assist in the investigations, help guide the council in how to recoup overpayments that were inconsistent with the city’s Code of Ordinances or collective bargaining agreements — as recommended in the draft audit — and order Agostisi to provide the council with a copy of a confidential separation agreement he had entered into with former City Manager Jack Schnirman within 48 hours.
“We were directed by the D.A. and other authorities to investigate and look into other allegations of improprieties,” Mandel said Tuesday. “Our attempts were blocked by a failure to have support from the majority of the council.”
On Monday, reportedly after a meeting she had with Agostisi that afternoon, Moore informed the council in an email, obtained by the Herald, that she had received a copy of Agostisi’s contract, and stated that the proposed resolution — which required three votes to pass — was no longer necessary. Moore added that the resolution to hire outside legal counsel “was in clear violation” of the City Charter and Code of Ordinances, because it had not been drafted by the city’s own corporation counsel.
“I am here at City Hall in an effort to address the situation,” she wrote. “In light of the fluidity of the situation, I am rescinding my initial request and ask that the council be prepared to discuss the matter as soon as possible.”
Moore did not respond to a request for comment. On Wednesday, Moore attempted to clarify remarks she made in a Facebook post on Monday night announcing Agostisi’s resignation, saying, “The post did not state that any decisions or actions would be made by Anissa Moore. There are still five members on the City Council. When I sent the Facebook post, I believed that I would have additional information to share within a timely manner. I contacted the entire City Council via email." She added that she was informed council members were not available to discuss the issue until Wednesday evening. Councilman Anthony Eramo did not respond to a request for comment.
Council members, administration at odds over retaining outside counsel
At the Sept. 3 council meeting, Moore said that the “new council majority” had retained outside counsel, who would report directly to the council, provide legal advice and “review and draft the appropriate resolutions to take the necessary steps for corrective actions.”
“The audit review released by the comptroller is disturbing and warrants council action,” Moore said at the meeting.
Though the city had already hired former federal prosecutor Anthony Capozzolo to represent it when the investigation began more than a year ago, the three council members had intended to hire attorney John Gross of the Ingerman Smith LLP. Some council members said they had only recently learned of Capozzolo’s involvement and have questioned who he is truly representing: the city and its residents, or individual employees, some who are the subject of the investigation.
“The city had retained a defense attorney without the council’s knowledge and it was unclear what entity that person was representing,” said Mandel, an attorney who worked for Ingerman Smith 16 years ago. “The purpose of retaining the independent legal counsel was really in response to law enforcement authorities, specifically the Nassau County District Attorney saying that there has been a lack of cooperation by witnesses and the production of documents by the city. We really wanted to help move the investigation forward and have independent counsel that the City Council had retained to look into the issue of the payouts and also to get a copy of this contract that was entered into between the [former] city manager and Rob Agostisi that we never knew about or were provided with.”
According to a retainer agreement obtained by the Herald, Capozzolo was hired by former Acting City Manager Mike Tangney in May 2018 at a rate of $450 per hour amid the audit and in connection to a grand jury subpoena.
City officials said that Agostisi, who is also the city's corportation counsel, had recused himself from any role in the investigation to avoid a conflict of interest. They also lauded Capozzolo’s expertise and insist that he is solely representing the city and not any individual current or former employees. The city and D.A.'s office said that Capozzolo has cooperated fully with investigators.
Sources told the Herald that Moore had signed an agreement with Gross last month at a rate of $265 per hour.
“What we were going to do is due diligence,” Gross said. “In other words, the comptroller said you have to go back and get this money — our job would have been to look at contracts … and make a recommendation to the council to say whether payments were made properly or improperly. The council has an independent responsibility that ensures whether it was proper or improper.”
But according to city officials, only the city manager can sign such an agreement, per the city's charter. Gross said that he received an email from Agostisi last week expressing concern and saying that the council did not have the authority to sign the deal. Gross said that he would provide legal services pro bono until he was formally retained at a meeting of the council.
“We prepared a resolution which was submitted to the city clerk, and that was received with some expressions of concern again by Agostisi and the administration, saying that only resolutions drawn by corporation counsel could be submitted to the City Council,” Gross said. “Therefore, we were not appointed to assist in the investigation in the alleged overpayments. We were told that the agreement was not effective. We won’t be paid for those hours, which is fine, and we were informed that a majority [of the council] no longer supported our appointment.”
Bendo and Mandel, however, said that they could not longer trust the advice from the city’s corporation counsel’s office.
“There is case law that if there’s a conflict of interest, the council has the inherent authority to hire counsel,” Gross said.