New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending April 22, 2017

New York State Comptroller Thomas P. DiNapoli announced the following audits and reports were issued during the week ending April 22, 2017

Source: Office of the State Comptroller

Links to material posted on the Internet highlighted in COLOR

Assistant Director Affiliated with Queens Pre-School Provider Pleads Guilty to Stealing $5 Million Intended for Special Needs Students

New York State Comptroller Thomas P. DiNapoli and Queens District Attorney Richard A. Brown announced that Rabbi Samuel Hiller, the former assistant director of Island Child Development Center, once one of New York City's largest providers of special education services to pre-schoolers with disabilities, pleaded guilty to stealing $5 million in city and state funding between 2005 and 2012—money that was intended for special needs students between ages three to five.

Volunteer Fire Company Treasurer alleged to have embezzled over $55,000 of the fire company's funds for personal use

On April 18, 2017, Comptroller Thomas P. DiNapoli and Attorney General Eric T. Schneiderman announced the arrest and arraignment of Gail E. Cesternino, for allegedly embezzling over $55,000 from the West Ghent Volunteer Fire Company. The indictment  charges Cesternino with Grand Larceny in the Second Degree and thirteen counts of Falsifying Business Records in the First Degree. It should be remembered that these charges against Cesternino are merely accusations and she is presumed innocent unless and until proven guilty in a court of law.

According to the Indictment and papers filed in court on April 18, 2017, Cesternino is alleged to have used her position as the Fire Company's Treasurer to regularly withdraw cash, issue herself checks and charge personal expenses on the Fire Company's credit card, including purchases for her personal sales business.

The indictment is the result of an investigation conducted by the State Comptroller's Office Division of Investigations and the Attorney General's Public Integrity Bureau.

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.

The Comptroller's investigation was conducted by the Comptroller's Division of Investigations working with the Division of Local Government and School Accountability.

Assistant Attorney General Bridget Holohan Scally of the Attorney General's Public Integrity Bureau is prosecuting this case under the supervision of Public Integrity Bureau Chief Daniel Cort and Deputy Bureau Chief Stacy Aronowitz.

This matter was investigated by the State Comptroller's Division of Investigations, along with Mark Spencer of the Attorney General's Investigators Bureau, which is led by Deputy Chief Antoine Karam and Chief Dominick Zarrella. Legal Analyst Sara Pogorzelski worked on the matter as well.

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 filing a complaint online at investigations@osc.state.ny.us, or by mailing a complaint to: Office of the State Comptroller, Division of Investigations, 14th Floor, 110 State St., Albany, NY 12236.

Department of Audit and Control auditors halt payment of suspicious 2016 tax refunds

On April 17, 2017, State Comptroller Thomas P. DiNapoli announced that his office stopped $21.3 million in questionable or fraudulent personal income tax refunds from being paid so far in 2017.

DiNapoli’s office paid out 4.6 million state refunds totaling $4.4 billion to date. Another 471,000 refunds totaling $466 million are expected to be paid in the coming days.

The Comptroller said: “My auditors are committed to safeguarding the funds of honest New Yorkers ... [w]e’ll stay one step ahead of the schemes used by tax cheats, and look to ensure only legitimate refunds are paid.”

DiNapoli’s office audits New York state personal income tax refunds prior to payment. The Comptroller’s auditors work cooperatively with the Department of Taxation and Finance to stop questionable refunds and to ensure timely payment of legitimate refunds. DiNapoli’s auditors perform their review after the department completes its own tax return audit.

The majority of questionable refunds stopped were for returns filed by taxpayers who claimed refundable credits based on incorrect information such as fake or inflated dependents or understated income. Auditors also stopped over $2.2 million in refunds that were linked to unscrupulous tax preparers filing false returns. Other popular scams include using questionable social security numbers and intentionally misstating deductions. 

Municipal Audits released

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

Village of Endicott -- Budget Review

Village of Hempstead – Budget Review

Town of Hoosick -- Departmental Cash Collections and Sales Tax Allocation

Town of Lake Pleasant – Credit Cards  

Town of Newfane – Supervisor's Financial Records and the

Village of Sandy Creek – Cash Receipts and Disbursements

New York State Comptroller announced the release of the following State Audits

Office of Information Technology Services (OITS): Security and Effectiveness of Division of Criminal Justice Services' Core Systems (Follow-Up) (2016-F-28)

An initial audit issued in February found that OITS did not have established policies and procedures for backup of key division systems. In a follow-up, auditors found OITS officials have made some progress in correcting the problems identified in the initial report. However, improvements are still needed.

Dormitory Authority of the State of New York (DASNY): Monitoring of Prevailing Wage Compliance on Construction Contracts (2015-S-99)

DASNY has implemented appropriate controls to meet its specific prevailing wage responsibilities,. However, although DASNY project managers and field representatives visited construction projects, they did not routinely inspect the sites to ensure that prevailing wage rates were posted, as required.

Department of Corrections and Community Supervision (DOCCS): Inmate Sentence Calculation and Release Practices (2016-S-43)

Auditors found DOCCS has appropriate procedures in place to ensure that it accurately determines inmate release dates. Tests of sentencing calculations for a sample of 60 inmates found proper procedures were followed in all the cases selected, and the sentences were accurately calculated. However, DOCCS records showed that during the audit period five inmates were released between two weeks and 12 months early because department procedures were not followed.

New York City Department of Housing Preservation and Development (HPD): Administration of the Article 8-A Loan Program (Follow-Up) (2016-F-24)

An initial audit issued in September 2014, examined whether the loans awarded by HPD under the Article 8-A Loan Program were being used only for qualified projects and their intended purpose and whether loan recipients were complying with the requirements of their loans with respect to correcting violations and making other needed repairs. In a follow-up, auditors determined HPD officials made little progress addressing the problems identified in the initial audit report and additional actions are still needed.

State Education Department (SED): Spotted Zebra Learning Center, Inc., Compliance with the Reimbursable Cost Manual (2016-S-81)

During the 2013-14 school year, Spotted Zebra provided three SED-funded, rate-based preschool special education programs to 43 children from school districts located in Albany, Columbia, Rensselaer, and Saratoga counties. For the three years ended June 30, 2014, Spotted Zebra reported over $2.5 million in reimbursable costs for the rate-based preschool special education programs it operated. Auditors found that the personal service costs tested were in compliance with SED’s requirements. However, they identified $13,058 in other than personal service costs that Spotted Zebra that did not comply with SED’s prescribed requirements for reimbursement.

State Education Department: ACDS Inc., Compliance with the Reimbursable Cost Manual (2016-S-76)

During the 2013-14 school year, ACDS provided four SED-funded, rate-based preschool special education programs to 213 children from school districts located in Nassau, Queens, and Suffolk counties. For the fiscal year ended June 30, 2014, ACDS reported $4,752,257 in reimbursable costs for the rate-based preschool special education programs it operated. For the fiscal year ended June 30, 2014, the personal service costs claimed by ACDS that were tested were in compliance with SED’s requirements. However, auditors identified $30,104 in other than personal service costs that did not comply with SED’s prescribed requirements for reimbursement.

State Education Department: North Country Kids Inc., Compliance with the Reimbursable Cost Manual (2016-S-53)

North County provides preschool special education services to children with disabilities who are between three and five years of age. North Country is reimbursed for preschool special education services through rates set by SED. For the two fiscal years ended June 30, 2014, North Country reported $2.6 million in reimbursable for the rate-based preschool special education programs it operated. For the two years ended June 30, 2014, auditors identified $79,084 in ineligible costs that North Country reported for the programs. The ineligible costs included: $69,272 in other than personal service costs and $9,812 in personal service costs.

Second Circuit Court of Appeals precedent holds Title VII's prohibition of unlawful discrimination based on "sex" does not encompasses discrimination based on "sexual orientation"

Second Circuit Court of Appeals precedent holds Title VII's prohibition of unlawful discrimination based on "sex" does not encompasses discrimination based on "sexual orientation"

Zarda v Altitude Express, USCA, 2nd Circuit, Docket #15-3775;

Donald Zarda,* a skydiver, alleged that he was terminated from his job as a skydiving instructor because of his sexual orientation. He sued his former employer, Altitude Express, alleging that his termination was in violation of Title VII of the Civil Rights Act of 1964 [42 U.S.C. § 2000e et seq.,] and New York State's Human Right Law [Executive Law Article 15].

The United States District Court, Eastern District of New York, found a triable issue of fact with respect to Zarda's contention that Altitude was in of violation of New York law but granted summary judgment to Altitude with respect to Zarda's Title VII claim. The district court, citing Simonton v Runyon, 232 F.3d 33, observed that Second Circuit precedent holds that Title VII does not protect against discrimination based on sexual orientation. 

Considering Zarda's allegations that Altitude violated New York State's Civil Rights Law, the jury found for Altitude.

On appeal, Zarda asked the Circuit Court's three-judge panel to reconsider the Second Circuit's interpretation of Title VII and hold that Title VII’s prohibition on discrimination based on “sex” includes discrimination based on “sexual orientation.” 

The panel declined to do so, explaining that "a three-judge panel of this Court lacks the power to overturn Circuit precedent."

* Zarda died in a skydiving accident before the case went to trial and two executors of his estate replaced him as plaintiff.

The decision is posted on the Internet at:
http://www.ca2.uscourts.gov/decisions/isysquery/bea90438-1fa4-4076-a1ff-2065c27c670d/1/doc/15-3775_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/bea90438-1fa4-4076-a1ff-2065c27c670d/1/hilite/

Exceptions to providing public records pursuant to New York State's Freedom of Information Law [FOIL]

Exceptions to providing public records pursuant to New York State's Freedom of Information Law [FOIL]

New York Civ. Liberties Union v New York City Police Dept., 2017 NY Slip Op 02506, Appellate Division, First Department

The basic rule when seeking public records pursuant to a Freedom of Information Law [FOIL] request is that FOIL provides that all public documents are subject to disclosure. However, where access to the records sought is not barred by law in the first instance, the custodian of the record or records sought may elect to deny access to documents otherwise subject FOIL if it decides that the document requested may be withheld because it meets one or more of the exceptions set out in FOIL.

In this action brought pursuant to FOIL Supreme Court granted the New York Civil Liberties Union's [NYCLU] petition compelling the New York City Police Department to disclose certain records concerning disciplinary actions taken against Department police officers.

The Appellate Division unanimously reversed the lower court's action, on the law, denying the Civil Union's petition and dismissing the action.

Noting that Public Officers Law §87(2)(a) provides that an agency "may deny access to records" that "are specifically exempted from disclosure by state . . . statute," the Appellate Division said that the NYPD disciplinary decisions sought by NYCLU fell within Civil Rights Law §50-a, which makes confidential police "personnel records used to evaluate performance toward continued employment or promotion."*

Although NYPD disciplinary trials are open to the public, the Appellate Division said that this "does not remove the resulting decisions from the protective cloak of Civil Rights Law §50-a." The court explained that "[w]hether the trials are public and whether the written disciplinary decisions arising therefrom are confidential are distinct questions governed by distinct statutes and regulations." In addition, said the court, "the disciplinary decisions include the disposition of the charges against the officer as well as the punishment imposed" [if the officer is found guilty of one or more of the disciplinary charges and specifications], "neither of which is disclosed at the public trial."

In Short v Board of Mgrs. of Nassau County Medical Center, 57 NY2d 399, the Court of Appeals ruled that where there is a "specific exemption from disclosure by State . . . statute," an agency is not required to disclose records with identifying details redacted.  Concluding that Short was the controlling precedent in this action, the Appellate Division held that in view of the provision set out in Civil Rights Law §50-a,  it could not order NYPD to disclose redacted versions of the disciplinary decisions sought by the NYCLU.

* The release of certain public records, such as those identified in Civil Rights Law §50-a, is limited by statute. Other examples of such limitations are set out in Education Law, §1127 - Confidentiality of records and §33.13, Mental Hygiene Law - Clinical records; confidentiality. Otherwise, an individual is not required to submit a FOIL request as a condition precedent to obtaining public records where access is not barred by statute. Submitting a "formal" FOIL request is required only in the event the custodian of the public record[s] sought declines to “voluntarily” provide the information or record requested. In such cases the individual or organization is required to file the FOIL request to obtain the information. It should also be noted that there is no bar to providing information pursuant to a FOIL request, or otherwise, that falls within one or more of the exceptions that the custodian could rely upon in denying a FOIL request, in whole or in part, for the information or records demanded.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2017/2017_02506.htm