Former public officer spent stolen public funds for such personal expenses as vacations, shopping and cooking classes

On June 11, 2021, State Comptroller Thomas P. DiNapoli and Cortland County District Attorney Patrick Perfetti announced that former Pharsalia Town Supervisor Dennis Brown pleaded guilty to stealing $240,000 in public funds and must now pay full restitution. The thefts were discovered through their joint investigation.*

“For decades, the residents of Pharsalia trusted Dennis Brown to safeguard taxpayer money, but instead he treated the town’s funds like a personal piggybank, pocketing over $240,000,” DiNapoli said. “We have no tolerance for abuse of the public’s trust and today Dennis Brown faces consequences for his crimes. My thanks to the New York State Police and to Cortland County DA Perfetti for partnering with us to uncover his corruption.”

“I acknowledge that this disposition was a long time in coming,” District Attorney Perfetti said. “I want to credit Assistant District Attorney Adam Ratner with leading extensive negotiations regarding the recovery of a substantial portion of what we would have been able to prove at trial. I hope that this case serves as a reminder to those who enjoy the honor of public service in that they execute their duties with the responsibility entrusted to them and that the public deserves.”

Brown pleaded guilty today in front of Judge Hon. Frank B. Revoir, Chenango County, to Grand Larceny in the Second Degree, as a crime of Public Corruption. He must pay $240,000 in restitution, of which he has already paid $125,000, and faces a potential state prison term at his sentencing, which is scheduled for Sept. 17, 2021.

Brown, 72, was arrested on April 10, 2019, after DiNapoli’s office, working with the State Police and District Attorney, found that he had inflated his salary and used the town credit card to pay for numerous personal expenses. He used public funds to pay for groceries, cooking classes, liquor store purchases, a subscription, gift shop purchases, clothes, designer handbags, jewelry, home utilities, work on his property and vacations.

He was the longest-serving town supervisor in Chenango County, in office for 35 years, until he lost an election in 2019. At the time of his arrest he was also a paid member of the county’s Board of Supervisors and served on its finance and public works committees. 

* As noted in previous NYPPL reports of such acts of misconduct, there is a term for such breaches of the public trust, "jobbery." Mirriam-Webster defines "jobbery as "the improper use of public office or conduct of public business for private gain".

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Since taking office in 2007, DiNapoli has committed to fighting public corruption and encourages the public to help fight fraud and abuse. New Yorkers can report allegations of fraud involving taxpayer money by calling the toll-free Fraud Hotline at 1-888-672-4555, by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 8th Floor, 110 State St., Albany, NY 12236 or filing a complaint online at investigations@osc.ny.gov.

Employee's claim for indemnification for legal expenses incurred in a criminal action for his alleged "unauthorized purchases using 'agency-issued' credit cards" rejected

A public authority [Employer] filed disciplinary charges filed against an officer of the Employer [Plaintiff] pursuant to Civil Service Law §75 alleging that Plaintiff had made a number of unauthorized purchases using "agency-issued" credit cards. Plaintiff was terminated and subsequently plead guilty to disorderly conduct in satisfaction of the criminal charges brought against him pursuant to §240.20 of the Penal Law.*

Plaintiff then demanded that the Employer indemnify him for, among other things, counsel fees incurred in defending himself in the criminal action by filing a claim pursuant to the Employer's Employees and Directors Liability Policy.** The Employer filed the claim and the insurance carrier declined coverage. The Employer rejected Plaintiff 's request for indemnification, contending it had no duty to indemnify employees outside the scope of its insurance coverage.

Plaintiff next commenced initiated a combined CPLRA 78 proceeding and action for declaratory judgment seeking, among other things, a declaration that he was entitled to indemnification by the Employer for his expenses, costs and counsel fees incurred in defending himself in the criminal action.

Although Supreme Court granted Plaintiff petition to the extent of declaring that Plaintiff was entitled to indemnification under the Employer's internal resolution providing for "indemnification", the Appellate Division reversed that ruling, explaining:

1. It agreed with Supreme Court that Plaintiff had "no statutory right of indemnification" under the otherwise pertinent provisions Public Officers Law §§17[3][a]; 18[4][a]; 19 [1] nor Public Authorities Law §2623 [2] any duty to indemnify Plaintiff would derive solely from a contractual obligation;

2. In the event a party is under no legal duty to indemnify an employee, "a contract assuming that obligation must be strictly construed to avoid reading into it a duty which the parties did not intend to be assumed" and a promise to indemnify "should not be found unless it can be clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances"; and

3. The Employer's resolution pursuant to which Plaintiff claims a right of indemnification states, in pertinent part, that the Employer "agrees at its sole cost and expense to indemnify and hold harmless the members, officers and employees of [the Employer] from all costs and liabilities of every kind and nature as provided in the by-laws" with respect to the individual's "acting [o]n behalf of [the Employer]."

Noting that the language of the internal resolution is ambiguous, the Appellate Division opined that "This ambiguity itself precludes a finding of entitlement to contractual indemnification", citing Hooper Assoc. v AGS Computers, 74 N.Y.2d 487 as the resolution does not convey a clear right to indemnification and Plaintiff was ordered to pay restitution in connection with a guilty plea to disorderly conduct in satisfaction of an accusatory instrument charging intentional criminal conduct. 

Thus, said the court, "Supreme Court erred" in concluding that Plaintiff had an enforceable right to "contractual indemnification."

* Plaintiff was sentenced to 150 hours of community service and ordered to pay $8,026.53 in restitution. 

** Employee did not apply for indemnification pursuant to Public Officers Law or the Public Authorities Law.

Click HERE to access the Appellate Division's decision.

 

Records of a private entity created for the benefit of a public entity may constitute public records subject to FOIL under certain circumstances

Article 6 of the Public Officers Law, commonly referred to as the "Freedom of Information Law [FOIL], requires that an entity subject to its provisions make available for public inspection and copying all its records unless the requested records are statutorily exempt from disclosure. FOIL, however, does not require an entity "to prepare any record not possessed or maintained by such entity" and an entity "may deny a FOIL request upon providing certification that it does not have possession of the requested record or, following a diligent search, that the record cannot be found."

Plaintiff in the CPLR Article 78 action had filed a FOIL request with a public entity [Respondent] seeking various records concerning various apprenticeship training programs sponsored by a union local's [Union] "Joint Apprenticeship Training Fund" for a particular period of time. Respondent granted Plaintiff's request to the extent that it disclosed 425 pages of records within its possession but denied Plaintiff's request for certain records and for "[any] and all documents used or provided to enrollees in each of the programs for training or any other classroom activities related to training."

Plaintiff administratively appealed. Respondent's FOIL appeal officer issued a final determination finding, among other things, that the denial of certain was proper on the ground that Respondent did not maintain those documents. Plaintiff then commenced the instant Article 78 proceeding seeking a court order annulling Respondent's determination. 

Supreme Court partially granted Plaintiff's petition in part, annulling that part of the agency determination as denied Plaintiff's request with respect to certain documents, holsinf that they were subject to disclosure, and Respondent appealed.

The Appellate Division observed that:

1. It is the public policy of this state to develop sound apprenticeship training standards and to encourage industry and labor to institute apprenticeship training programs in order to develop skilled crafts people in New York State's labor force;

2. The Commissioner of Labor [Labor] is responsible for supervising these apprenticeship programs and has established and implemented procedures and standards for the approval and registration of such programs;

3. Pursuant thereto Labor procedures, private entities interested in providing apprenticeship programs[Sponsors] are required to, among other things, register with respondent, "keep adequate records relative to all phases of the operation of the program, including but not limited to job assignments, promotion, demotion, lay-off or termination, rates of pay or other form of compensation or conditions of work, and any other records pertinent to a determination of compliance with the relevant State law and 12 NYCRR.

4. A Sponsor must also submit such records "as may be required by 12 NYCRR 601.5[c][19]".

Addressing the Respondent's argument that the records sought by Plaintiff were created and maintained by the Union in order for it to demonstrate its compliance with Labor Law Article 23 and Respondent's corresponding regulations, the Appellate Division concluded that the question "distills to whether records that are maintained by a private entity for purposes of demonstrating regulatory compliance constitute records held 'for an agency' so as to be subject to disclosure under FOIL."

The Appellate Division opined that "where a state agency delegates a duty to perform an essential service to a private, third-party entity for the agency's benefit," the documents in the possession of the private entity for those purposes are considered to be "kept or held" for the agency and subject to disclosure under FOIL. 

In contrast, observed the court, where a public entity did not delegate such a duty to a private entity nor did the private entity perform any essential service on public entity's behalf, "the mere fact that[the public entity] has the discretionary regulatory authority to ask the [private entity] for the requested documents does not, ipso facto, render all documents that are created and maintained by the [private entity] subject to disclosure" pursuant to FOIL. 

Indeed, opined the Appellate Division, "... to so hold would render any document that was created or maintained by a private entity in order to comply with a corresponding agency regulation requiring the production and retention thereof a 'record' subject to disclosure under FOIL."

Recognizing that "FOIL is to be liberally construed and its exemptions narrowly interpreted so that the public is granted maximum access to the records of government," in this instance the Appellate Division said it did not find "the definition of 'record' to be so broad and all-encompassing as to bring within its ambit any document that a private entity might create and maintain pursuant to a state agency's regulation under the guise that said records are held 'for' that agency" within the meaning of Public Officers Law §§86[4]; 87[2]; 89[3] [a]; Labor Law §§810, 813-a; [or] 12 NYCRR 601.1, 601.8 [c], [or] 601.14."

Accordingly, the Appellate Division held that Supreme Court should not have granted that part of the Plaintiff's petition as sought to require the Respondent to obtain and disclose the requested documents.

Click HERE to access the Appellate Division's decision.

Applying the doctrines of res judicata and collateral estoppel to prevent repetitious litigation of disputes which are essentially the same

In this proceeding pursuant to CPLR Article 78 the Appellate Division reviewed a determination of the Respondent finding a substantiated allegation of physical abuse of a patient by the employee [Petitioner].

Respondent had received a report that Petitioner had abused or neglected an individual under his care. Following an investigation, Respondent found the report of physical abuse to be substantiated as a category three offense and denied subsequent request to amend Respondent's report to unsubstantiated and the matter was referred for a hearing before an Administrative Law Judge [ALJ].

In addition, the Appointing Authority [Employer] served Petitioner with a notice of discipline charging him with seven specifications of misconduct and/or incompetence in connection with this incident.

Pursuant to a collective bargaining agreement in effect between Employer and Petitioner's union, a disciplinary hearing was conducted before an arbitrator [Arbitrator] in December at which Employer was represented by Respondent. In January 2020, the Arbitratorissued a written decision finding Petitioner guilty of certain charges and acting unprofessionally and failing to comport himself as a supervisor, but charges specifically finding that Petitioner's other act of alleged physical abuse were "not deemed to be physical abuse" of the service recipient. The Arbitrator then imposed a penalty of a 10-day suspension without pay.

After the disciplinary arbitration hearing had occurred but prior to the Arbitratorrendering his decision, a hearing was held before the ALJ on Petitioner's request to amend the "abuse finding." During the course of this hearing, Petitioner's attorney informed the ALJ of the parallel arbitration hearing and, after the hearing before the ALJ concluded, notified the ALJ of the Arbitrator's January 2020 decision and contended that "under principles of res judicata and collateral estoppel, the finding of physical abuse should be amended to unsubstantiated."

Ultimately the ALJ issued a recommended decision, concluding that the Arbitrator's decision was not entitled to preclusive effect and that the Employer had established by a preponderance of the evidence that Petitioner had committed the physical abuse alleged. Respondent subsequently issued a final determination incorporating the ALJ's recommended decision in its entirety.

Petitioner then commenced this CPLR article 78 proceeding seeking to annul the Respondent's determination, contending that the ALJ was precluded from rendering a decision under the doctrines of res judicataand collateral estoppel and that the determination was not supported by substantial evidence.

The Appellate Division agreed with Petitioner that the ALJ "erred in not giving preclusive effect to the Arbitrator's determination that [Petitioner's] conduct did not constitute physical abuse.

The court explained that "The underlying purpose of the doctrines of res judicata and collateral estoppel is to prevent repetitious litigation of disputes which are essentially the same," citing Matter of Anonymous v New York State Justice Ctr. for the Protection of People with Special Needs, 174 AD3d 1007.

The Appellate Division noted that Respondent did not dispute that it was in privity with Employer via its representation of Employer in the arbitration proceeding and, as such, had a full and fair opportunity to litigate before Arbitrator. Rather, Respondent contended that the issue decided by the Arbitrator was not the identical issue before the ALJ. The Appellate Division said that it found Respondent's argument in this regard "unpersuasive."

Pointing out that the Arbitrator and the ALJ both reviewed the same videos of the underlying incident and Petitioner's interview, the Appellate Division fund that while both the Arbitrator and the ALJ both agreed that Petitioner had restrained the service recipient, the Arbitrator concluded that Petitioner's conduct did not constitute physical abuse, the same factual issue the ALJ later confronted.

The Appellate Division found that the ALJ "was precluded under the doctrine of collateral estoppel" from rendering a later contrary determination as to whether [Petitioner] physically abused the service recipient in the course of the incident. Accordingly, the court granted Petitioner's application, annulled the Respondent's determination and remitted the matter to Respondent "for the purpose of amending the findings to indicate the report as unsubstantiated."

Click HERE to access the Appellate Division's decision. 

 

Candidate for election to public office held to have participated in acts warranting the invalidation of his designating petition

In a proceeding brought pursuant to Article 16 of New York State's Election Law, Supreme Court granted the Plaintiff's petition and invalidated the designating petition of an individual [Respondent] seeking election to public office. Respondent appealed but the Appellate Division affirmed the Supreme Court's order.

Addressing the merits of Respondent's appeal, the Appellate Division held that Supreme Court properly invalidated Respondent's designating petition on the basis of fraud.

The Appellate Division explained that "As a general rule, a candidate's designating petition will be invalidated on the ground of fraud only if there is a showing that the entire designating petition is permeated with that fraud. However, said the court, even if the designating petition is not permeated with fraud, if the candidate has participated in or is chargeable with knowledge of the fraud, the designating petition will generally be invalidated.

Here, opined the Appellate Division, Plaintiff established "by clear and convincing evidence" that Respondent, as a subscribing witness:

[1] attested that he had witnessed certain signatures on the designating petition even though third parties had signed the petition on behalf of the person named as the signatory on the designating petition; and 

[2] had attested to one signature although he was not "in the presence of the signator[y] when [she] signed the [designating] petition."

Although the Appellate Division stated it did not "ascribe any nefarious motive to [Respondent's] conduct, his actions still constituted a fraud."

Accordingly, it held that Supreme Court "properly determined that [Respondent's] participation in those acts warranted invalidation of the designating petition."

Click HERE to access the Appellate Division's decision.