Governor Cuomo announces refund checks have been issued to retirees deceived by Future Income Payments LLC

Governor Cuomo announces refund checks have been issued to retirees deceived by Future Income Payments LLC

Office of the Governor

As part of consent order with New York State's Department of Financial Services [DFS], Future Income Payments, LLC [FIP] is repaying more than $500,000 to New York pensioners

On May 15, 2017 New York State's Governor Andrew M. Cuomo announced that refund checks totaling $541,835, as well as loan forgiveness information, were issued to 115 retirees deceived by pension advance company FIP as required by FIP and its owner Scott Kohn.

FIP was not licensed to make loans in New York, nor was it licensed as a money transmitter. An investigation by DFS found that the company solicited and made loans to retired consumers at high interest rates in exchange for retirees assigning away several years of their pension benefits to pay for the unlawful loans.

The consent order resolved the investigation by DFS, which found that FIP made loans in New York State without a lending license, charged a usurious rate of interest on loans to New York pensioners, transmitted money to and from New York State without a money transmitter license, misrepresented to New York pensioners the legal status of the transactions by characterizing the loans as sales of an asset, and omitted the annual percentage rate of the loans. The refunds were mailed Friday, May 12, 2017 to 108 New York residents and seven former residents.

In addition to mandating the refunds, the consent order requires FIP to pay a $500,000 fine and stop engaging in all consumer-related transactions within New York State and with any New York resident. FIP was also required to reduce the total amount owed by pensioners to the actual value of the lump sum that was advanced and forgive amounts due above that amount, resulting in forgiveness of more than $6.3 million across 292 transactions.

New York pensioners who entered into agreements with FIP will receive a letter from the third-party administrator, Rust Consulting, Inc. Consumers who entered into an agreement with FIP and do not receive a letter or need more information should visit www.nyfipsettlement.com or contact Rust Consulting, Inc. at (866) 317-8866 or info@nyfipsettlement.com.

DFS urges anyone who suspects that they have been the victim of a pension advance scheme to contact the DFS Consumer Help Line at (800) 342-3736 or log onto www.dfs.ny.gov for assistance.

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Some exceptions to the Doctrine of Exhaustion of Administrative Remedies

Some exceptions to the Doctrine of Exhaustion of Administrative Remedies

Police Benevolent Assn. of N.Y. State, Inc. v State of New York, 2017 NY Slip Op 03588, Appellate Division, Third Department

Civil Service Law §64 bars temporary appointments to positions in the competitive class excess of three months, subject to certain exceptions, including, but not limited to, when an employee is on leave of absence from the position.

The Police Benevolent Association of New York State, Inc. [PBA], the bargaining representative for individuals employed as university police officers [UPO] at the State University of New York [SUNY] brought an Article 78 action seeking an order, among other things, annulling the temporary part-time appointment of an individual [Employee] as a UPO by SUNY's College of Environmental Science and Forestry. PBA contended that SUNY's appointment of Employee as a temporary part-time employee violated Civil Service Law §64.

Supreme Court granted SUNY's pre-trial motion to dismiss PBA's petition on the ground that PBA did not exhaust its administrative remedies. SUNY cited  an appeal of a grievance filed by PBA pursuant to the relevant collective bargaining agreement [CBA] then pending before the Governor's Office of Employee Relations [GOER] in support of its "failure to exhaust administrative remedies" in support of its motion to dismiss PBA's Article 78 petition.

PBA appealed and the Appellate Division reversed the Supreme Court's decision, finding that the exhaustion of remedies principle was inapplicable here because the matter was "ripe for judicial review."

Although the court observed that  "[A] determination made by an administrative agency must first be challenged through every available administrative remedy before it can be raised in a court of law," it said that this rule does not apply where [1] "an administrative challenge would be futile" or [2] where "the issue to be determined is purely a question of law."

The Appellate Division noted that PBA's Article 78 petition did not challenge the grievance determinations by SUNY processed pursuant to the grievance procedure set out in the CBA and that an appeal concerning those decisions were then pending a determination by the Governor's Office of Employee Relations.*

Rather PBA's Article 78 action challenged the appointment of Employee on the ground that it violated Civil Service Law §64. As PBA does not allege that SUNY violated the CBA, but instead alleges a statutory violation, it was not required to use the CBA's grievance procedure.

Indeed, said the court, "Article 7 of the CBA limits the grievance process to three types of disputes: first, concerning the application and/or interpretation of the CBA; second, concerning a term or condition of employment; and third, concerning a claim of improper or unjust discipline. However, none of these provisions "can be reasonably viewed as applicable to an (alleged) unlawful appointment by SUNY" in violation of §64 of the Civil Service Law.

As the cited provisions in the CBA are inapplicable with respect to adjudicating the alleges violation of Civil Service Law §64, use of the grievance process to challenge the appointment on statutory grounds would have been futile. As Employee's appointment was final, resulting in an alleged injury to PBA and, or, collective bargaining unit members, and because the question presented is "purely legal," the Appellate Division ruled that the matter "is ripe for judicial review" and Supreme Court erred in granting SUNY' pre-answer motion to dismiss.

* The Appellate Division noted that GOER denied the grievance and PBA made no demand for arbitration.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_03588.htm

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending May 13, 2017

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending May 13, 2017 

Source: Office of the State Comptroller

Click on text highlighted in color  to access the full report

Bombay Clerk Sentenced for Pocketing Justice Court Fees

A North Country court clerk was sentenced for stealing more than $5,680 from Bombay Justice Court while the other court clerk—his mother—was on sick leave, according to State Comptroller Thomas P. DiNapoli.

New York State Comptroller Thomas P. DiNapoli announced his office completed audits of the:     

                    

City of Long Beach, – Budget Review;

Town of Minisink, – Payroll and Fire Protection and Ambulance Contracts;

Village of Tannersville – Water Department Operations; and the

Town of Wales – Financial Management

A guide to cybersecurity

A guide to cybersecurity

Source: InvestmentNews

InvestmentNews reports that "With more data aggregated and housed in the cloud," the threat of a cyber-crime compromising an organization firm is greater than ever. Its "white paper sources 'new data from the 2017 InvestmentNews Adviser Technology Study' that assesses the state of cybersecurity," while also offering practical tips for protecting an organization's operations  and its data.

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Applying the Pell Doctrine in a disciplinary action

Applying the Pell Doctrine in a disciplinary action

Sullivan v County of Rockland, 2017 NY Slip Op 03519, Appellate Division, Second Department

Disciplinary penalties imposed on public employees in New York State must meet the test set out in Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale and Mamaroneck, 34 NY2d 222, generally referred to as the "Pell Doctrine."  Essentially the Pell Doctrine instructs that any permissible disciplinary penalty may be imposed on an employee found guilty of one or more disciplinary charges and specifications by an appointing authority or arbitrator unless the court finds that, considering the circumstances underlying the disciplinary action, such a penalty is "shocking to one's sense of fairness."

The genesis of this litigation was a disciplinary action involving an individual [Employee] who had served with the Rockland County Department of Social Services [DSS] since 1990. The appointing authority initiated disciplinary action against Employee alleging of gross misconduct — "falsification of business records." The Charge served on Employee set out two specifications alleging Employee had made false entries in DSS's computer system.

Following a disciplinary hearing, a hearing officer found that DSS had submitted substantial evidence in support of both specifications set out in the Charge and recommended that Employee be terminated from his position.

The appointing authority adopted the hearing officer's findings and recommendation as to the penalty to be imposed and terminated Employee.

Employee challenged his dismissal and the Appellate Division subsequently determined that  "specification number 2 was not supported by substantial evidence." The court granted Employee's Article 78 petition to the extent of annulling the appointing officer's determination that found Employee guilty of specification number 2, vacated the penalty imposed, dismissal, but otherwise confirmed the determination. The court then remitted the matter to the appointing authority for a determination of the appropriate penalty to be imposed in view of the finding that Employee was guilty of specification number 1.*

The appointing authority issued a new determination based solely on Employee's having been found guilty of specification number 1 and, again, imposing the penalty of termination of employment. Employee again filed an Article 78 petition seeking judicial review the penalty imposed after the appointing authority reconsideration of the matter.

The Supreme Court granted Employee's petition and remitted the matter to the appointing authority for the imposition of a lesser penalty. The appointing authority appealed the Supreme Court's ruling.

Applying the Pell Doctrine, the Appellate Division said that "[a]n administrative penalty must be upheld unless it is so disproportionate to the offense as to be shocking to one's sense of fairness, thus constituting an abuse of discretion as a matter of law." The court explained that "[a] result is shocking to one's sense of fairness if the sanction imposed is so grave in its impact on the individual subject to it that it is disproportionate to the misconduct, incompetence, failure, or turpitude of the individual, or the harm or risk of harm to the agency or institution, or to the public generally visited or threatened by the derelictions of the individuals."

In this instance the Appellate Division found that the penalty imposed was so grave in its impact on the Employee that it was disproportionate to the misconduct, or the risk of harm to DSS or the public.

Thus, under the circumstances of this case, the Appellate Division ruled that the penalty of termination of employment for "this single incident of misconduct" was so disproportionate to the offense as to be shocking to one's sense of fairness, and constituted an abuse of discretion as a matter of law.

As Employee's actions "were not so egregious or of such moral turpitude as to justify termination of his employment in light of his previously unblemished record," the Appellate Division concluded that Supreme Court properly granted Employee's Article 78 petition and remitted the matter to the appointing authority for the imposition of a lesser penalty.

* See Matter of Sullivan v County of Rockland, 121 AD3d 700

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_03519.htm

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Challenging Adverse Personnel Decisions - A 765 page electronic book [e-book] focusing on penalties imposed on public employees of New York State and its political subdivisions found guilty of misconduct or incompetence by hearing officers and arbitrators and the judicial review of such penalties. More information is available on the Internet at http://nypplarchives.blogspot.com.

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