December 17, 2016

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending December 17, 2016

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending December 17, 2016 
Source: Office of the State Comptroller

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Waterville Central School District praised in State Comptroller's audit 

 Waterville Central School District, located in Oneida County, is conducting necessary background checks and fingerprinting of employees prior to allowing them to work with students, according to an audit released by New York State Comptroller Thomas P. DiNapoli.

 DiNapoli calls for state procurement reform 

On December 13, 2016 New York State Comptroller Thomas P. DiNapoli proposed changes to New York state’s procurement practices in the wake of criminal charges and allegations of corruption in the awarding of contracts for state economic development projects.

“The alleged contracting and kickback schemes uncovered by federal and state prosecutors show lax oversight over economic development spending,” DiNapoli said. “The state funneled taxpayer money to quasi-government organizations, avoiding scrutiny and sidestepping usual procurement practices. This created an environment ripe for self-dealing and abuse. New York State must take credible steps to reestablish the public’s faith in government and address the broader problems.”

By state law, the Comptroller’s office is responsible for reviewing and approving state agency contracts above $50,000 and certain contracts over $1 million for state public authorities. The Comptroller’s independent oversight helps ensure that the process is fair and gets the best value for taxpayer dollars. In 2015, the Comptroller’s office reviewed 21,381 contract transactions totaling $169.2 billion.

In recent years, executive and legislative actions have eroded the Comptroller’s contract oversight. In 2011, this oversight was eliminated for construction and construction-related services contracts, among other purchases, issued by the State University of New York (SUNY) and City University of New York (CUNY). In 2012, the Comptroller’s oversight of Office of General Services (OGS) centralized contracts was removed.

In 2015, state agencies issued over $6.8 billion in contracts without Comptroller review.

DiNapoli’s comprehensive package of reforms increases independent oversight of contracts, prohibits the state from using state-affiliated not-for-profits to do state business, makes procurement requirements uniform, and toughens ethics and transparency rules. Specific proposals include:

• Restore the Comptroller’s independent oversight for SUNY, CUNY and OGS centralized contracts. Recent allegations show widespread weaknesses in SUNY’s procurement process and lax oversight of its affiliated not-for-profits. Restoring systemic checks and balances taken away from the Comptroller can help prevent future abuses and ensure that everyone is following the same rules.
• Prohibit the use of not-for-profits to bypass procurement laws and transparency. All contracts for state spending should either be held directly by a state agency or public authority and subject to independent oversight. SUNY’s affiliated not-for-profits had lax oversight and poor processes in place that appear to have been manipulated in multiple ways, allowing a non-competitive contracting process to occur and business to be directed to preferred contractors. These entities should not be used for state business or to bypass the routine and well-tested rules and regulations that state agencies follow.

• Require state public authorities to follow the same procurement requirements as state agencies. The procurement rules and approval process are not the same for every entity entrusted with taxpayer funds. Public authorities can adopt their own internal guidelines and do not have to follow state agency requirements clearly set out in law. Having everyone follow uniform requirements helps give assurance of competition, fairness and best value for taxpayers.

• Review contracts over $1 million for the Research Foundation of SUNY.Currently, the Research Foundation is not required to have any independent review of its contracts, which DiNapoli would change. He proposes that his office review contracts over $1 million funded with state dollars.

• Create tougher ethics requirements and penalties for those who abuse the procurement process. DiNapoli would strengthen disclosure of conflicts for employees of state agencies or public authorities, as well as board members and others, engaged in the process. He also wants to prohibit vendors who have violated procurement law from getting state business and create a code of ethics for vendors doing business with the state.

• Increase transparency. To assure a level playing field for all potential vendors, DiNapoli would require state agencies, public authorities and their affiliates to publish in the State Contract Reporter all potential business opportunities, including notice of single or sole-source procurements.

In early November, 2016, DiNapoli took administrative actions related to the bid-rigging and fraud scandal. He put the Empire State Development Corp. (ESD) on notice that any SUNY Polytechnic Institute contracts transferred or assigned to ESD must be submitted to his office for review. He made a series of recommendations to improve the payment process for economic development projects to help prevent against fraud and address the long delays that have occurred with payments made by ESD for projects. He lowered the threshold requirements for review of contracts from $250,000 to $50,000 for SUNY Poly’s contracts and put public authorities on notice of his plan to watch them closely.

As government contracting has grown in size, scope and complexity, the Comptroller’s oversight, which was established more than 100 years ago, has become more important than ever. While DiNapoli’s office legally has 90 days to review contracts, on the average the decision to approve or reject a proposed contract is issued within nine days. The Comptroller's
office is also committed to a high level of transparency and releases a monthly press release disclosing major state contracts and spending approved by his office. It also issues a detailed annual report, “State Contracts by the Numbers,” to inform the public and policymakers of actions taken.

Read DiNapoli’s letter to executive and lawmakers, or go to:

Read the bill memo, or go to:

Daughter sentenced for stealing her deceased father's retirement benefits 

New York State Comptroller Thomas DiNapoli and Attorney General Eric T. Schneiderman announced that Renee Kanas, a resident of Tamarac, Florida, was sentenced in Albany County Supreme Court to 6 months incarceration and 5 years of probation for stealing over $148,000 in New York state pension benefits.  Kanas pleaded guilty to Grand Larceny in the Third Degree, a class D felony, in June 2016.  

Kanas had concealed her father’s death in March 2010 from the New York State and Local Employees Retirement System, and continued to collect his pension benefits for over four years.  Kanas was sentenced for stealing pension benefits intended for her father, Jacob Yudenfreund, from March 2010 through January 2015.  In total, Kanas stole $148,092.24 by accessing a joint bank account she held with her deceased father, liquidating all but $1,207.55 from the account. During this time period, Kanas lived off of the stolen money and, among other things, took multiple cruises, including to the Caribbean.

In May 2016, Kanas was arrested on a warrant by the city of Tamarac Road Patrol and Broward County Sherriff’s in Florida.  After being brought to Albany County, New York to face these charges, in June 2016, Kanas pleaded guilty before Honorable Thomas A. Breslin in Albany Supreme Court. Today, she was sentenced to 6 months incarceration and 5 years of probation, $45,000 in restitution to New York State, and signed a confession of judgment for the remaining amount stolen of $103,092.24.

The investigation was conducted by the New York State Comptroller’s Division of Investigations and the Attorney General. This case is the latest joint investigation under the Operation Integrity partnership of the Attorney General and Comptroller, which to date has resulted in dozens of convictions and more than $11 million in restitution.  Attorney General Schneiderman and Comptroller DiNapoli thank the city of Tamarac Road Patrol and Broward County Sheriff’s in Florida for their assistance.

The Comptroller’s investigation was conducted by the Comptroller’s Division of Investigations, working with the New York State and Local Retirement System. 

The Attorney General’s investigation was conducted by Investigator Mark Spencer, Investigator Casey Quinlan and Deputy Chief Antoine Karam. Forensic accounting was performed by Associate Forensic Auditor Meaghan Scovello. The Investigations Bureau is led by Chief Dominick Zarrella. The Forensic Audit Section is led by Chief Auditor Edward J. Keegan.

This case was prosecuted by Assistant Attorney General Philip V. Apruzzese of the Criminal Enforcement and Financial Crimes Bureau.  The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chief Stephanie Swenton. 

Audits and Reports

Auditors examined whether the costs claimed by the Association for Neurologically Impaired Brain Injured Children Inc. were valid and consistent with contract terms and were properly allocated among the various programs funded by New York City, New York state, and other sources. For the three fiscal years ended June 30, 2013, auditors identified $493,172 in claimed costs that did not comply with state requirements and recommend such costs be disallowed. Among the ineligible charges identified were: $208,063 in facility-related costs for shared space, $152,500 for unallowable payments for lobbyist services; and $48,802 for unsupported and duplicate payments to a contractor.

Department of Health (DOH): Facility Structure, Safety, and Health Code Waivers (Follow-Up) (2016-F-11)
An initial audit issued in June 2015 found DOH’s waiver practices did not effectively ensure that safety and structural risks related to physical plant standards at health care facilities were appropriately addressed. In a follow-up report, auditors determined DOH officials have made significant progress in addressing the problems identified in the initial audit. The initial report’s four recommendations were all implemented.
An initial audit report released in January 2015 identified 5,571 Medicare Part C claims that either had unreasonably high patient cost-sharing amounts or indicated UnitedHealthcare did not cover the service. Auditors reviewed 125 Medicaid claims totaling $151,069 and found Medicaid overpaid 54 claims (43.2 percent) by $61,711. In a follow-up, auditors determined DOH officials have made progress implementing the recommendations made in the initial audit, which included recovering overpayments and instructing providers to bill Medicare Part C claims in accordance with the existing requirements.

Department of Health: Improper Payments to a Physical Therapist (Follow-Up) (2016-F-7)
An initial audit issued in December 2014 found that Medicaid overpaid a physical therapist $146,225 for 3,837 claims that were submitted to the Medicaid program with incorrect Medicare payment information. In addition, the audit questioned the propriety of 5,634 claims totaling $158,990 because the therapist submitted claims using his National Provider Identifier for services that were rendered by other clinicians. 

In a follow-up report, auditors found DOH officials made some progress implementing the recommendations made in the initial audit report. Those efforts included certain steps to recover $116,298 in overpayments. However, at the time auditors completed follow-up fieldwork, none of the overpayments were actually recovered and additional actions were still needed.

Department of Motor Vehicles (DMV): Traffic Ticket Surcharges (Follow-Up) (2016-F-12)
An initial audit report issued in August 2015 concluded that, on an overall basis, the DMV consistently accounted for and reported all traffic ticket surcharge revenue. However, auditors identified certain areas where the DMV could make greater use of the data it maintains to better manage and improve its operations. In a follow-up report, auditors found DMV officials have made progress in implementing the recommendations identified in the initial report. However, additional improvements are still needed.

For access to state and local government spending and more than 50,000 state contracts, visit The easy-to-use website was created by DiNapoli to promote openness in government and provide taxpayers with better access to the financial workings of government.


Subsequent court and administrative rulings, or changes to laws, rules and regulations may have modified or clarified or vacated or reversed the decisions summarized here. Accordingly, these summaries should be Shepardized® or otherwise checked to make certain that the most recent information is being considered by the reader.
New York Public Personnel Law Blog Editor Harvey Randall served as Principal Attorney, New York State Department of Civil Service; Director of Personnel, SUNY Central Administration; Director of Research, Governor’s Office of Employee Relations; and Staff Judge Advocate General, New York Guard. Consistent with the Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations, the material posted to this blog is presented with the understanding that neither the publisher nor NYPPL and, or, its staff and contributors are providing legal advice to the reader and in the event legal or other expert assistance is needed, the reader is urged to seek such advice from a knowledgeable professional.
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