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D.A. issues scathing report on L.B. payout scandal

But Singas decides against criminal charges

Posted

When he was City of Long Beach manager from 2012 to 2018, Jack Schnirman, now Nassau County’s comptroller, allowed millions of dollars in “improper payments” for accrued sick and vacation days to city employees when they left their jobs, either to retire or move on, according to a two-year investigation by District Attorney Madeline Singas.

Additionally, the D.A. said in a summary of findings Wednesday, Schnirman personally accepted “a payment much more generous than provided for by the plain language of [his] contract with the city” and waited a year to return the overpayment, which amounted to nearly $53,000.

 “The taxpayers of Long Beach deserved better,” Singas said.

Brett Speilberg, a spokesman for Schnirman, said, "The closure of the investigation confirms what the comptroller has said all along—he deferred to the city's legal counsel on all personnel questions, including termination pay, and is the only person to voluntarily return the portion of the payment that was called into question by the audit that examined decades worth of practices long predating his tenure in Long Beach."

The district attorney said the findings of her office support those of a long-term financial audit conducted by State Comptroller Thomas DiNapoli’s office, which found the payouts were “excessive and inconsistent with the applicable law.”

“Our exhaustive investigation,” Singas further said, “found that these payments were the result of shocking ignorance of the Long Beach laws and ordinances, the incompetence and negligence of the officials charged with executing them, and a total abdication of oversight by the prior City Council.”

The district attorney, however, said she would not charge anyone criminally in this case. “While we found the justifications offered for these payments to be incredible and inconsistent with the plain language of the applicable laws and contracts,” Singas said, “we found no evidence suggesting the leave balances were unearned, nor did we find evidence of the criminal intent necessary to bring criminal charges.”

New York law sets an “exceptionally high burden to criminally charge public officials with official misconduct,” Singas said.

Nassau County Legislator Denise Ford, a Republican from Long Beach, said, "The people of Long Beach placed their trust in Jack Schnirman to do his job, yet his betrayal underscores the dereliction of his duty. He should be ashamed of the way he conducted the office of the city manager."

The excessive payouts were first brought to light in an April 25, 2018, Long Beach Herald investigative story, “Questions swirl over Long Beach payouts to non-union employees,” and has been reported on by the Herald since then as the story has developed.

The D.A.’s Public Corruption Bureau interviewed more than 30 current and former Long Beach employees and reviewed thousands of pages of records. The investigation was delayed, Singas said, “by the refusal of some critical witnesses to cooperate, and questions of privilege relating to certain records.”

The D.A. found that:

Most city employees said they were unaware of the existence of the Personnel Code, which sets the limits for separation payouts.

Officials charged with following and enforcing provisions of the Personnel Code and other codified laws and rules claimed they were unfamiliar with their contents, and instead relied on past practices to determine separation payouts.

One high-level employee claimed the Code of Ordinances was “merely a set of advisory guidelines” that the city was not obligated to abide by.

The city’s former corporation counsel, Rob Agostisi, negotiated his own contract with Schnirman for a compensation payout and a $119,855 draw-down payment, which was not allowed by the City Charter or Code of Ordinances. The contract included an “improper confidentiality clause” and was not disclosed to the City Council until his resignation in September 2019.

The City Council showed an “inexplicable deference to unelected appointees, even when they acted in open defiance of the council.”

Audits by the New York state comptroller in 1992 and 1997 highlighted deficiencies in city policies over leave payouts, but the City Council “took no meaningful action to correct them.” 

Several City Council members told investigators that they were unfamiliar with the Personnel Code, even after improper payments received widespread attention.

“I am encouraged that the new City Council has appointed an experienced city manager and proposed structural changes to transfer more authority— and responsibility— to the elected government,” Singas said.

In February, the city hired Donna Gayden, a municipal finance expert, as city manager. In September, the City Council gave Gayden a one-year contract, at a salary of $190,000.

Singas also commended the City Council for conducting its own internal audit and taking steps to recoup the overpayments. In July, the City of Long Beach filed a $2.4 million lawsuit against Schnirman and Agostisi, alleging fraud, conspiracy and breach of duty.

That suit, city officials said, would continue.  "There is no connection between the lack of criminal charges and our city council's pursuit of repayment through our lawsuit," City Council President John Bendo said. "They may not be facing jail time in Nassau County, but they will be accountable in court facing the city's civil lawsuits." 

Rick Ostrove, attorney for Agostisi, said the D.A.'s report found that a city official could, "in good faith," have believed the payouts were allowed. "We are confident," Ostrove said, "that the civil case will prove that this was not only a 'good faith' interpretation of the law, but it was the correct interpretation. We look forward to the conclusion of the civil case, which will completely exonerate my client."

Finally, Singas said the City Council must establish a clear set of policies governing payments for accrued vacation and sick time, and review city operations to “identify any other areas where antiquated opinions from former officials or unquestioned longstanding procedures have led to governing and administrative practices inconsistent with laws and ordinances.”

All city employees should familiarize themselves with all City Charter provisions, ordinances, laws, rules and regulations relating to their work, she said. And the city should ensure its Board of Ethics is “constituted, active, and prepared to educate employees and officials regarding the Code of Ethics, conflict rules, and disclosure requirements to guard against future abuses and conflicts of interest.”