Local government and school audits were issued issued

On September 9, 2024, New York State Comptroller Thomas P. DiNapoli announced the following local government and school audits were issued.

Click on the text highlighted in color to access the audit report.

Hammondsport Central School District – Multiyear Planning (Steuben County) District officials did not develop comprehensive written multiyear financial and capital plans. Their budgeting practice of consistently appropriating $1.4 million in fund balance over three fiscal years is, in effect, a reservation of fund balance that is not allowed by statute and a circumvention of the 4% surplus fund statutory limit. As a result, district officials maintained surplus fund balance levels at more than three times the amount allowed by state law. Auditors also found five reserves totaling $2.3 million had balances in excess of the district’s needs. In addition, while district officials prepared an annual reserve and fund balance plan each January, the plan lacked key pieces of information required by the board’s reserve policy and best practices.

Hammondsport Central School District – Investment Program (Steuben County) The board and district officials did not develop and manage a comprehensive investment program. From July 1, 2022 through Feb. 29, 2024, the district earned $321,190 from its 37 interest bearing bank accounts and 27 certificates of deposit. Had officials considered alternative legally permissible investment options, the district may have earned $738,137. District officials did not create, and the board did not adopt, a comprehensive investment program with written procedures for the investment of district funds or prepare monthly cash flow forecasts to estimate funds available for investment. The board also did not formally solicit interest rate quotes or annually review and re-adopt the investment policy as required by state law.

Town of Berkshire – Board Oversight (Tioga County) Town officials did not ensure non-payroll disbursements were for appropriate town purposes. The board did not segregate disbursement duties, approve all claims or require adequate supporting documentation for 59 claims totaling $51,519, or establish procedures to detect and prevent duplicate payments. In fact, auditors identified $12,465 in duplicate payments. In addition, the board did not annually audit the supervisor’s records and reports or ensure annual financial documents were filed, as required.

Greenburgh Central School District – Tax Certiorari Reserve (Westchester County) The board properly established the tax certiorari reserve fund and maintained it at a reasonable level. However, the treasurer did not adequately track tax certiorari judgments or maintain reliable records, such as a complete and accurate listing of all outstanding tax certiorari cases, which was also noted in a prior audit. The treasurer also did not provide the board with an annual report of all of the district’s reserve funds as required by district policy. Without adequate and reliable records and reporting, the board and district officials have no assurance that the amount in the tax certiorari reserve fund is reasonable or necessary.

Town of Wells – Records and Reports (Hamilton County) The supervisor did not maintain complete, accurate and timely accounting records, and inadequate financial reports were provided to the board. As a result, the board lacked reliable records and reports to manage the town’s financial operations. All nine balance sheet accounts for 2022 and six accounts for 2023 were not accurate. Two accounts were overstated by a combined total of $1.4 million and 13 accounts were understated by a combined total of $451,664. Of the 10 revenue accounts reviewed as of Dec. 31, 2022 and Dec. 31, 2023, two accounts were overstated by a total of $22,987 and two were understated by a total of $7,642. Of the 10 expenditure accounts reviewed as of Dec. 31, 2022 and Dec. 31, 2023, three accounts were overstated by $21,392 and three were understated by $47,964. Auditors also found bank reconciliations were not always performed. As a result, adjusted bank balances did not agree with general ledger cash balances at month-end for 18 of the 40 bank reconciliations auditors performed.

Westchester County – Court and Trust Funds  Pursuant to a court order, certain assets may be provided to the court and then delivered to the commissioner of finance for safekeeping. The commissioner generally established adequate procedures, maintained appropriate records, and properly reported court and trust funds. However, auditors identified $203,279 that improperly remained in the commissioner’s custody that should have been turned over to the Office of the State Comptroller as abandoned property.

Applying the Rule of Necessity

The Rule of Necessity is a judicial doctrine that permits a judicial, quasi-judicial or administrative decision maker or body to decide a case even if he or she or it would ordinarily be disqualified due to bias or prejudice or an appearance of bias or prejudice.

In this action Petitioners brought a combined CPLR Article 78 proceeding and declaratory judgment action against various state agencies and officials [Respondents], seeking, among other things, "to compel the performance of certain official acts and to declare unconstitutional the Ethics Commission Reform Act of 2022, the 2022-2023 state budget and that year's Legislative/Judiciary Budget Bill." Petitioners subsequently sought a preliminary injunction and then filed a motion seeking, among other things, sanctions against Respondents' counsel, disqualification of Respondents' counsel, and disqualification of the assigned Justice and, or, removal of the matter to federal court.

Supreme Court granted Respondents' cross-motion to dismiss the petition and denied Petitioners' requests for relief. Petitioners then moved to reargue the matter. Supreme Court denied that motion and Petitioners appealed.*

The Appellate Division affirmed the Supreme Court's rulings. Noting that Petitioners contended that the assigned Justice was obligated to recuse** himself from hearing the case due to a conflict of interest as the petition raised a challenge to the Legislative/Judiciary Budget Bill, through which he, and similarly situate justices receive compensation, and the court was required to remove the case to federal court. 

The Appellate Division opined that "these claims lack merit", noting that in a earlier case brought by these same Petitioners, "[t]he self-interest inherent in adjudicating a dispute involving judicial compensation would provide grounds for disqualifying not only [the assigned Justice], but every [Justice] who might replace [him or] her" [See Center for Jud. Accountability, Inc. v Cuomo, 167 AD3d 1406, appeal dismissed 33 NY3d 993; leave dismissed and denied 34 NY3d 961.

Pursuant to the Rule of Necessity, the Justice assigned to this case was authorized to preside over it (see Center for Jud. Accountability, Inc. v Cuomo, 167 AD3d at 1408). As for Petitioners' related claim that the conflict of interest divested Supreme Court of its jurisdiction under Judiciary Law §14, the Appellate Division held the Rule of Necessity provides an exception to that statute, citing Pines v State of New York, 115 AD3d 80, appeal dismissed 23 NY3d 982 .

With respect to Petitioners' claim the Supreme Court should have granted their motion to remove the matter to federal court, the Appellate Division, citing Geiger v Arctco Enters., Inc., 910 F Supp 130, said "the right of removal is vested exclusively in [respondents and a petitioner] simply may not remove an action from a state court".

Further, opined the Appellate Division, Petitioners' requests for sanctions against, and disqualification of, the Attorney General were properly denied, explaining the record shows that "the Attorney General made reasonable arguments which did not in any manner justify the imposition of sanctions" (See 22 NYCRR 130-1.1 [c]; Matter of Doe v Rensselaer Polytechnic Inst., 172 AD3d 1691; Matter of Cobado v Benziger, 163 AD3d 1103). The Appellate Division then noted that Petitioners' contention that the Attorney General should have been disqualified "is likewise unavailing", citing Executive Law §63[1].

* Footnotes in the Appellate Divisions decision indicate: 

1. "Supreme Court dismissed all claims brought by the Center for Judicial Accountability, Inc. on the ground that it was not represented by an attorney, as required for a corporation to bring a civil action; 

2: As no appeal lies from the denial of a motion to reargue, the appeal from the order denying that motion must be dismissed; and 

3: With respect to Petitioners' causes of action challenged the constitutionality of the statutory provisions which created the Commission on Ethics and Lobbying in Government, the Appellate Division noted it had "recently held those provisions to be unconstitutional, albeit on different grounds than those argued by petitioners (see Cuomo v New York State Commn. on Ethics and Lobbying in Govt., ___ AD3d ___, ___, 2024 NY Slip Op 02568".

** Other rulings addressing recusal" noted in NYPPL include:

A board member’s involvement in the disciplinary process does not automatically require recusal of that individual [Birch v County of Madison, County of Madison, 123 AD3d 1324].

Board members who reviewed the recommendations of the Hearing Officer and acted on the charges "were not so personally or extensively involved in the disciplinary process so as to compel the conclusion that they could not fairly consider the evidence and recommendation resulting from the hearing and, thus, that their recusal was necessary" [Matter of Baker v Poughkeepsie City School Dist., 18 NY3d 714].

In Opinions of the Attorney General, 92 Informal 61, the Attorney General, when asked how a member of a city council should conduct himself or herself, the opinion notes that "public officers have responsibility to exercise their official duties solely in the public interest [and] should avoid circumstances which compromise their ability to make impartial judgments." Further, public officers must avoid the appearance of impropriety in order to maintain public confidence in government.

Click HERE to access the Appellate Division's decision posted on the Internet.

 

Claimant's application for unemployment insurance benefits denied because claimant found to have voluntarily left her employment without good cause

Claimant applied for unemployment insurance benefits after she left her job claiming she had left due to "lack of work'.

The Department of Labor issued an initial determination disqualifying Claimant from benefits, finding, among other things, that she had been discharged for misconduct. Ultimately an Administrative Law Judge [ALJ] found that Claimant's testimony regarding her supervisor's behavior did not rise to the level of good cause to justify quitting her job and, thus, determined that claimant had voluntarily separated from her employment without good cause, disqualifying her from receiving benefits. Finding that Claimant had willfully misrepresented the circumstances under which she left her employment as lack of work when she had voluntarily quit without good cause, the ALJ imposed a reduced forfeiture penalty of four effective days.

The Unemployment Insurance Appeal Board affirmed the ALJ's findings that Claimant had voluntarily separated from her employment without good cause and had made willful misrepresentations in filing for unemployment insurance benefits. Claimant appealed the Board's decision.

The Appellate Division affirmed the Board's determination. The court explained, "Whether a claimant has good cause to leave employment is a factual issue for the Board to resolve and its determination will be upheld if supported by substantial evidence" and "Issues of witness credibility, the evaluation of evidence and the inferences to be drawn therefrom are within the exclusive province of the Board".

While Claimant testified that her supervisor had engaged in rude, disrespectful and unprofessional behaviors toward her, had yelled at her and caused unspecified "problems," creating conflict and making her uncomfortable, the ALJ, and the Board, found that, while the supervisor may have acted in a "disagreeable manner" when interacting with claimant, the supervisor never "stepped outside the bounds of propriety." 

Further, the Appellate Division's decision reports that "Despite specific questioning, the ALJ and the Board noted, Claimant "offered only vague and generic characterizations of her supervisor's behavior and failed to recount a single incident supporting her claim that her work conditions became unbearable and that she was forced to resign." The court also observed that "Inability to get along with a supervisor does not constitute good cause for leaving employment."

Finding that substantial evidence supported the Board's factual determination that Claimant made willful misrepresentations when she filed for benefits citing lack of work when, in fact, she left under disqualifying circumstances, including claimant's own testimony acknowledging that she left her employment due to her supervisor's behavior, the Appellate Division said it discerned no basis upon which to disturb the Board's determination.

Click HERE to access the Appellate Division's decision posted on the Internet.

Son ordered to pay the New York State and Local Retirement System the $56,000 he stole from his deceased mother’s Pension Funds

On September 3, 2024, New York State Comptroller Thomas P. DiNapoli and Suffolk County District Attorney Raymond A. Tierney announced that Moses K. Johnson, 63, of Huntington and a former employee of the Town of Huntington, pleaded guilty to Grand Larceny in the Fourth Degree for stealing more than $56,000 of his mother’s public pension payments following her death in April of 2021.

“Mr. Johnson callously exploited his mother’s death to line his own pockets,” said State Comptroller DiNapoli. “I thank Suffolk County District Attorney Tierney for his partnership in bringing him to justice. My office will continue to partner with law enforcement agencies across the state and country to protect the New York State pension system from fraud.”

“The defendant’s actions were not only illegal but morally reprehensible, stealing from his own deceased mother’s pension funds,” said District Attorney Tierney.

“This case highlights the importance of our ongoing collaboration with the State Comptroller’s Office in rooting out fraud and abuse. We will continue to work tirelessly to protect the integrity of our pension systems and bring those who attempt to defraud them to justice.”

Moses’ arrest was the result of a joint investigation by the Suffolk County District Attorney and the Office of the New York State Comptroller.

According to court documents and the defendant’s admissions during his guilty plea allocution, after Johnson’s mother died on April 16, 2021, Johnson failed to notify the bank or the New York State and Local Retirement System of her death and instead, he continued to collect and spend her pension payments.

Between April 30, 2021, and June 30, 2022, Johnson collected a total of 15 unauthorized payments totaling $56,411. The stolen funds were traced from Johnson’s mother’s bank account into his bank account, from which he then spent the money.

Johnson previously worked for the Town of Huntington for over 30 years and worked in the recycling center until his retirement in 2017. As a member of the state retirement system, Johnson was aware of the pension process and knew his mother’s payments should have been terminated with her death.

On October 11, 2023, Johnson was arrested by investigators of the Suffolk County District Attorney’s Office.

On September 3, 2024, Johnson pleaded guilty to Grand Larceny in the Fourth Degree, a Class E felony, before Acting Supreme Court Justice Steven Pilewski. Justice Pilewski ordered Moses to pay restitution in the amount of $56,411. He is due back in court on Dec. 10, 2024.

Concerning obtaining a court order in the nature of a writ of mandamus

In this CPLR Article 78 action the Appellate Division noted that "Mandamus* to compel performance [by a public officer or agency] is an extraordinary remedy that is available only in limited circumstances", citing Matter of Hene v Egan, 206 AD3d 734. The court explained "[M]andamus will lie against an administrative officer only to compel him or her to perform a legal duty". 

Citing Matter of Antwine v Evans, 219 AD3d 480, the Appellate Division said a petitioner seeking mandamus to compel a public official to act must "demonstrate a clear legal right to the relief sought".

The Appellate Division then affirmed Supreme Court's ruling granting the County's motion dismiss the Plaintiff's petition, noting that Plaintiff had failed to identify any legal duty incumbent on the County that would support issuing such a "writ". 

Further, opined the Appellate Division, the action the Plaintiff sought was not a purely ministerial act, but rather an expressly discretionary act, requiring notice, an administrative hearing, and a finding supported by substantial evidence of violation of the relevant provision or provisions of law, rule or regulation.

* Other such ancients writs include a writ of prohibition issued by a higher tribunal to a lower tribunal to "prohibit" adjudication of a matter then pending before the lower tribunal on the grounds that the lower tribunal "lacked jurisdiction"; the writ of injunction - a judicial order preventing a public official from performing an act; the writ of certiorari, compelling a lower court to send the record of a case to the higher tribunal for review by the higher tribunal; and the writ of quo warranto [by what authority]. The Civil Practice Law and Rules sets out the modern equivalents of surviving ancient writs.

Click HERE to access the decision of the Appellate Division posted on the Internet.