Attorney General Cuomo Announces $600,000 In Settlements With Two Law Firms, Albany-based Girvin & Ferlazzo, P.c. And Binghamton-based Hogan, Sarzynski
ALBANY, N.Y. (June 18, 2008) - Attorney General Andrew M. Cuomo today announced settlement agreements with two law firms and their partners ending decades of abuse of the public pension system and calling for payments to the state totaling $600,000.
Albany law firm Girvin & Ferlazzo, P.C., will pay the state $500,000 and the Binghamton law firm Hogan, Sarzynski, Lynch, Surowka & DeWind LLP will pay $100,000 under the settlements, and both will end improper “employment” arrangements they have had with various upstate boards of cooperative educational services (BOCES) and school districts.
“Both of these firms engaged in long-term schemes that cost New York’s taxpayers and warped the very laws their attorneys were supposedly expert in,” said Attorney General Cuomo. “The systemic abuse my office has uncovered in the public pension and benefits systems has wasted millions of taxpayer dollars, and we will continue working to put an end to the abuse and an end to lawyers receiving public benefits they are not entitled to.”
The individual partners at both firms have agreed to forfeit their claims to all pension credits they wrongfully received and forfeit any claims to their member contributions to the pension system. Both firms have also agreed to cooperate in the Attorney General’s investigation into fraud and abuse in the public pension system. They will also cooperate in any potential civil or criminal cases involving former partners at the respective firms, including Hogan founder John B. Hogan and Girvin’s M. Cornelia Cahill.
Girvin & Ferlazzo, P.C.
The settlement with Girvin and Ferlazzo announced today relates to the firm’s improper 19-year employment arrangement with the Hamilton-Fulton-Montgomery BOCES (HFM BOCES).
Starting in 1989, several Girvin Firm lawyers requested, and HFM BOCES agreed, that they be appointed as putative “employees” of HFM BOCES with the title “Labor Relations Specialist.” The lawyers asked to be placed on the HFM BOCES payroll so they could obtain public pension benefits available only to public employees, and so that the school districts served by the BOCES could obtain state aid they were not entitled to.
The Girvin Firm and the school districts served by HFM BOCES would agree annually to an amount for the Girvin Firm’s retainer fees to provide labor relations services. The schools would then pay those retainers to HFM BOCES, which in turn would pay individual lawyers at the Girvin Firm the same amount in the form of “salaries.” It was left to the Girvin Firm to determine which of the partners would be improperly listed as “employees” to receive these “salaries” and what each individual’s salary would be, regardless of whether he or she performed any labor relations work for HFM BOCES
For the entire 19-year period, services provided to HFM BOCES by the Girvin Firm’s lawyers were performed as outside retained counsel, not as “employees,” and none were eligible to receive public pension benefits in connection with the work. In total, 12 Girvin Firm lawyers were improperly listed as HFM BOCES “employees,” which enabled them to receive credits in the state Employee Retirement System (“ERS”) normally reserved for public employees.
Moreover, several of the partners listed as “employees,” Salvatore Ferlazzo, Cahill, and Maureen Harris, never worked on any labor relations matters for the BOCES or any of its component school districts.
Harris, a commissioner with the State Public Service Commission, is no longer with the Girvin Firm. She settled allegations against her in an agreement last month with the Attorney General’s Office in which she agreed to rescind all pension credits accrued in connection with HFM BOCES, forfeit contributions to the pension system, and pay the state $50,000.00.
The settlement requires partners James Girvin, Salvatore Ferlazzo, Kristine Lanchantin, Jeffrey Honeywell, Kathy Ann Wolverton, and Gregg Johnson to cooperate fully with the Attorney General’s investigation and in any future civil or criminal actions against former partner M. Cornelia Cahill and all other non-settling current or former partners of the firm.
Attorney General Cuomo said, “The Girvin firm considered it a perk of partnership to collect public pension benefits they weren’t entitled to. Some partners collected benefits as purported ‘employees’ while not providing any of the services for which they were being compensated. This settlement will make New York’s taxpayers more than whole while holding the firm accountable for this egregious conduct.”
Under the settlement announced today with the Girvin Firm:
- The Girvin Firm will pay the state $500,000.00;
- The Girvin Firm will discontinue any arrangements in which its lawyers are listed as “employees” of any school district or BOCES;
- The individual Girvin Firm partners will rescind all pension credits they received through their employment arrangements with the HFM BOCES and forfeit contributions they made to the ERS pension system in relation to the HFM BOCES arrangement;
- The Girvin Firm agrees to future monitoring by the Attorney General’s Office of bills sent to school districts, municipalities, and other public sector clients for a period of 3 years; and
- The Girvin Firm and the individual partners agree to cooperate in the Attorney General’s investigation, and in any civil or criminal action, brought against former partner M. Cornelia Cahill or any other non-settling current or former partners of the firm.
Hogan, Sarzynski, Lynch, Surowka & DeWind LLP
The settlement with Hogan, Sarzynski ends the firm’s long-standing practice of listing attorneys on the payrolls of its various school district and BOCES clients so that the lawyers could participate in the school districts’ health insurance plans and receive pension credits with the state Employee Retirement System, a practice that began with founder John Hogan in 1967.
Between 1967 and 2000, Hogan was improperly listed as an “employee” of as many as 6 different school districts and BOCES simultaneously. His “salary” from each “employer” was reported to ERS and the aggregated amount of all salaries was used to calculate his pension benefits. Based on Hogan’s “final average salary” as reported to ERS, which was calculated at $138,693.46, Hogan’s pension benefit was calculated to be as high as $91,752.00 annually. Since 2000, Hogan has collected approximately $500,000.00 in pension benefits.
Hogan also arranged to get health benefits for himself, his partners, and some of the firm’s employees through the firm’s various school district clients. Hogan purposefully manipulated the school districts both for his own personal benefit and for the benefit of the firm.
After Hogan’s retirement as a partner with the firm Hogan, Sarzynski, other members of the firm continued to be improperly designated as employees of various school districts and BOCES, and continued to receive health benefits from the school districts. Today’s settlement with the firm requires partners Edward J. Sarzynski, John P. Lynch, Michael G. Surowka, and Wendy K DeWind to pay a total of $100,000.00 to the State of New York, forfeit any pension credits they earned, and to cooperate in the Attorney General’s ongoing investigation, and any civil or criminal case, against Hogan.
Attorney General Cuomo said, “This firm abused its relations with public schools so its lawyers could receive taxpayer-funded benefits they weren’t entitled to. To think that this practice went on for more than 40 years belies any sense of reason and vividly illustrates a wanton disregard of laws protecting public funds.”
Under the settlement announced today with Hogan, Sarzynski:
- The firm will pay the state $100,000.00;
- The firm will discontinue any arrangements in which its lawyers are listed as “employees” of any school district or BOCES;
- The individual firm partners will rescind all pension credits they received through their improper employment arrangements and will forfeit any claims to monetary contributions they made to the ERS pension system in relation to those arrangements; and
- The firm and the individual partners agree to cooperate in the Attorney General’s investigation, and in any civil or criminal action, brought against former partner and firm founder John B. Hogan.
Attorney General Cuomo’s on-going statewide investigation of pension abuse has expanded to include more than 4,000 local governments and special districts across New York State and all 37 Boards of Cooperative Educational Services (“BOCES”). The investigation has already revealed that many lawyers had remained on public payrolls for such extended periods of time, or were included on the payrolls of so many public sector employers simultaneously, that they accumulated substantial credits in the New York State pension system.
With today’s settlement, lawyers and law firms from Buffalo to Long Island have agreed to pay the state more than $900,000.00, and to rescind public pension benefits they weren’t entitled to in order to settle cases against them.
The Attorney General’s Office urges individuals with knowledge of any questionable arrangements between any BOCES, local governments, or school districts and their outside professionals to contact the Public Integrity Bureau by telephone at 212-416-8090 or by e-mail at firstname.lastname@example.org.
The settlement announced today was handled by Assistant Attorney General Darcy M. Goddard and Mitra Hormozi, special counsel to the chief of staff.