Thursday, September 10, 2009
Rubber Stamp’ Legislators Grapple
With Spano/Schwartz Disaster
Last Tuesday morning, September 1, the committee conference room on the eighth floor of the County Office Building was filled to standing room only and spilling into the corridor when the session got underway at 10:10am; a session Bill Ryan, Chairman of the County Legislature, defined with his opening remark, “We have called this meeting of the Committee Of The Whole.”
In attendance were Susan Tolchin, Deputy County Executive, County Attorney Charlene Indelicato, County Legislators, Chairman Bill Ryan, John Nonna, Gordon Burrows, George Oros, Bernice Spreckman, Lyndon Williams, Vito Pinto, Mike Kaplowitz, Peter Harckham, Ken Jenkins, Tom Abinanti, Judy Myers, and William Burton. Additionally there was Stuart Gerson of Epstein, Becker & Greene, retained outside counsel. Absent
were Legislators Lois Bronz, who was ill, Marty Rogowski, who was “out of town”, James Maisano, working at his law office, and Jose Alvarado, in Yonkers “in his district.”
Referring to a meeting two weeks earlier, Ryan informed the packed room, “I committed that we would continue to hold meetings of the Committee of the Whole to put everyone in the best position to work with what the Committee needs to know to deal with this matter.”
There was an unmistakable sense of anticipation in the room, heightened by the unprecedented circumstances; two weeks of prior publicity and mounting anxiety over many unanswered questions.
The Spano Administration, as it turns out, had been negotiating with the federal government, the Justice Department and the Federal Court for some time, perhaps two years, in an effort to avoid getting jammed up as they now are.
Obviously, without consultation with, or revelation to, their Rubber Stamp Partners In Crime, Andy and Larry had been keeping their dealings a big secret, confident that whatever mess they made, their bought-and-paid-for legislature would simply have to go along with the consequences the Federal Court would impose on their constituents, the taxpayers and families they are supposed to represent.
Nevertheless, no one had broken from the ranks to ask the obvious question, “Where was the $52 million spent between 2000 and 2006, so wrongfully calculated and deceptively accounted for that a clique of five shrewd ‘not-for-profit’ litigants calling themselves the Anti-Discrimination Center of Metro New York could stand in for the Justice Department under the terms of the False Claims Act and get the already-much-overtaxed, struggling homeowners and business community of “wealthy” Westchester County caught with their upper and lower body parts (depending on gender) in the wringer.
Attorney Gerson, referring to the $51.5 million that Susan Tolchin would say was “going toward the construction,” declared to the legislators very early on, “You can’t build 750 units for this amount of money, you can’t build 750 units for twice that amount of money. You will vote for it, or
you will vote against it. It is not subject to change.”
Tolchin would then acknowledge a total package of $62.5 million, supposedly including the Anti-Discrimination Center’s $2.5 million legal expenses, plus penalties, but clearly in no way accounting for the County’s past, and ongoing legal and other expenses likely to bring the cost to
taxpayers well over $65 million if the Board votes to accept.
Gerson told the Board, “The number that’s in there now is lower than the original number. It was a spirited negotiation.” he identified Assistant United States Attorney James L. Cott, Chief of the Civil Division of the Southern District of New York as the negotiator for the federal government.
Mike Kaplowitz began, “Everything seems to cut against...” but, was interrupted by Gerson, who told him firmly, “There is no opportunity for change. The Government of the United States needs a sum certain. The money that the County is spending is for the County to leverage outside
Kaplowitz was uneasy, frustrated and feeling hemmed in. Gerson came back with, “It doesn’t say the County is going to build 750 units, but that it will get 750 units built.”
Lyndon Williams then spoke up, questioning whether a cap could be established to insure that the County would not be pushed into additional expenses over time. Mr. Gerson responded to Williams’ concerns, saying, “Neither we (the Spano Administration) nor the government feels
there is any ambiguity at all!”
Vito Pinto asked about the cost of the federal monitor and his staff, and was told it would likely be $250,000 in years one and two, and $175,000 in the years that follow.
Legislator John Nonna began to question what the sources of the so-called “supplemental funds” would be, seeking specificity. Then Peter Harckham moved the discussion toward issues of zoning as they might apply to placement of affordable housing units; and, the phrase “as appropriate” in the language of the settlement, as he put it, “based upon my own experiences as a builder of affordable housing.”
Of course, the notion of zoning problems suggested litigation, and, a response came quickly from County Attorney Charlene Indelicato, who declared, “I do not anticipate litigation. It would be absolutely a last resort.”
But John Nonna now jumped back in, asking, “Who gets to determine whether a proposal is appropriate or not? It looks as though the monitor gets to determine what is appropriate.”
Now, Stuart Gerson came back into the discussion with, “Remember we wanted the monitor. Our view was that we didn’t want the Court.” He went
on to say, when pressed further by Nonna, “I’m not going to say there will never be litigation.” Then, pausing, he clarified his comment with “It’s more likely some other municipality will seek judicial review, not the County.”
To his credit, Mike Kaplowitz was becoming increasingly more uncomfortable with the legislators’ lack of options. Gerson, at one point, told the Board with reference to the impact of the settlement, “There is nothing that changes the separation of powers in County Government;” a dubious
conclusion at best.
Kaplowitz, obviously sensing just how boxed-in Spano and Schwartz had left him, and his 16 fellow legislators, next queried Gersen, “Can we wait until we know the Implemental Plan before acting on the settlement?
The devil is in the details.” But Gerson came right back, telling the Board, “You must approve the implementation.” Kaplowitz protested, “This legislation did not have sufficient input.” Then, he asked, “Once we give approval of $51.6 million, is the implementation out of our hands?”
Tom Abinanti, who earlier had expressed a great deal of apprehension, some of which had begun to upset Chairman Ryan, now asked, “What’s the process?”
To which, County Attorney Indelicato quickly responded, “We don’t know;” and, Abinanti declared, “We don’t know either.”
At that point, Chairman Ryan acknowledged the general concern that the Board would need to approve the first $21 million “for bonding purposes.” He referred to the legislators’ task as “looking at this at the eleventh hour and realizing we didn’t have a hand in it.”
The $65 million dilemma Westchester families and taxpayers are now confronted with, and County Legislators are now attempting to wrestle with, grew out of the misappropriation of $52 million in federal block grants and misrepresentations made to the federal government with respect to the use of those funds intended by the government to promulgate and promote affordable, fair housing opportunities throughout the County.
In simple language, Andy Spano, Larry Schwartz and their Administration “knowingly” took $52 million in grants from the federal government, put it into hands and purposes never intended under the terms of the grants, and then repeatedly lied to the government about their failure to do
The Federal False Claims Act, in pertinent part, is reproduced here:
“The False Claims Act (“FCA”) provides, in pertinent part, that:
(a) Any person who (1) knowingly presents, or causes to be presented, to an officer or employee of the United States Government or a member of the Armed Forces of the United States a false or fraudulent claim for payment or approval; (2) knowingly makes, uses, or causes to be made or used, a false record or statement to get a false or fraudulent claim paid or approved by the Government; (3) conspires to defraud the Government by getting a false or fraudulent claim paid or approved by the Government;. . . or (7) knowingly makes, uses, or causes to be made or used, a false record or statement to conceal, avoid, or decrease an obligation to pay or transmit money or property to the Government, is liable to the United States Government for a civil penalty of not less than $5,000 and not more than $10,000, plus 3 times the amount of damages which the Government sustains because of the act of that person . . . .
(b) For purposes of this section, the terms “knowing” and “knowingly” mean that a person, with respect to information (1) has actual
knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of
the truth or falsity of the information, and no proof of specific intent to defraud is required.
31 U.S.C. § 3729. While the False Claims Act imposes liability only when the claimant acts “knowingly,” it does not require that the person submitting the claim have actual knowledge that the claim is false. A person who acts in reckless disregard or in deliberate ignorance of the truth or
falsity of the information, also can be found liable under the Act. 31 U.S.C. 3729(b).
In sum, the False Claims Act imposes liability on any person who submits a claim to the federal government that he or she knows (or should know) is false. An example may be a physician who submits a bill to Medicare for medical services she knows she has not provided. The False Claims Act also imposes liability on an individual who may knowingly submit a false record in order to obtain payment from the government. An example of this may include a government contractor who submits records that he knows (or should know) is false and that indicate compliance with certain contractual or regulatory requirements. The third area of liability includes those instances in which someone may obtain money from the federal government to which he may not be entitled, and then uses false statements or records in order to retain the money. An example of this so-called “reverse false claim” may include a hospital who obtains interim payments from Medicare throughout the year, and then knowingly files a false cost report at the end of the year in order to avoid making a refund to the Medicare program.
In addition to its substantive provisions, the FCA provides that private parties may bring an action on behalf of the United States. 31 U.S.C. 3730 (b). These private parties, known as “qui tam relators,” may share in a percentage of the proceeds from an FCA action or settlement.
Section 3730(d)(1) of the FCA provides, with some exceptions, that a qui tam relator, when the Government has intervened in the lawsuit, shall receive at least 15 percent but not more than 25 percent of the proceeds of the FCA action depending upon the extent to which the relator substantially contributed to the prosecution of the action. When the Government does not intervene, section 3730(d)(2) provides that the relator
shall receive an amount that the court decides is reasonable and shall be not less than 25 percent and not more than 30 percent.
The FCA provides protection to qui tam relators who are discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of their employment as a result of their furtherance of an action under the FCA. 31 U.S.C.
3730(h). Remedies include reinstatement with comparable seniority as the qui tam relator would have had but for the discrimination, two times the amount of any back pay, interest on any back pay, and compensation for any special damages sustained as a result of the discrimination, including litigation costs and reasonable attorneys’ fees.”