Attorney General Cuomo Announces Intent To Sue Long Island Lawyer Lawrence W. Reich For Fraud And Other Claims In Connection With His Illegal Receipt Of State Pension And Health Benefits

ALBANY, N.Y. (June 22, 2009) - Attorney General Andrew M. Cuomo today announced that he has notified Long Island attorney Lawrence W. Reich of his intent to commence litigation for fraud and other claims as part of the Attorney General’s ongoing investigation into local government waste and abuse of the state pension system.

The Attorney General’s Office today notified Reich by letter of the office’s intent to sue him pursuant to New York Executive Law Section 63(12), among other claims, to recover compensation and benefits that Reich received from the State and six school districts to which Reich was not entitled.

The proposed litigation arises from Attorney General Cuomo’s investigation into attorneys and other professionals around the State who have improperly and fraudulently caused themselves to be on public payrolls in order to obtain State pension and other benefits.

“These cases have come to epitomize the kinds of fraud and abuse that occur in local governments and the state public pension system. I made it clear that my office would hold lawyers and other professionals accountable for any illegal manipulations of the system, and seek the return of any publicly-funded benefits they improperly received,” said Attorney General Cuomo. “Lawyers, especially those with a background in employment or labor law issues, know full well the difference between being a retained consultant and a salaried employee, and that only public employees are entitled to public pension benefits. These are straightforward allegations of fraud.”

The Attorney General’s investigation has revealed that Reich is an attorney who, while in private practice, represented multiple school districts in Suffolk and Nassau Counties, and asked six of his school district clients to classify and report him as an employee of such school districts in order to receive pension benefits from the New York State Employees’ Retirement System (“ERS”) and health benefits from one of the school districts.

The State alleges that between 1978 and 2006 Reich was on the payrolls of six school districts, at most times simultaneously, when he should not have been. Those districts included: (i) the Baldwin Union Free School District; (ii) the Bellmore-Merrick Central School District; (iii) the East Meadow Union Free School District; (iv) the Copiague Union Free School District; (v) the Freeport Union Free School District; and (vi) the Harborfields Central School District. At all of these districts Reich was never a true employee but was instead working as outside retained counsel.

In addition, the State alleges that in 2006, Reich submitted an application of retirement to ERS, listing the six school districts, among other public entities, as his public employers. As a result, Reich has collected more than $83,000.00 in pension funds since his ERS “retirement” in 2006.

The sole purpose of his “employment” arrangement at the school districts was to obtain pension and other benefits. In fact, Reich informed four of the six school districts that his “retirement” was in name only; after he “retired,” Reich continued to provide the same legal services to those districts admittedly as an independent retained contractor. The only difference was that the school districts, at his direction, took him off of their respective payrolls and paid their respective retainers directly to his firm.

Attorney General Cuomo’s ongoing statewide investigation of pension fraud abuse includes more than 4,000 local governments and special districts across New York State, all school districts and the 37 Boards of Cooperative Educational Services (“BOCES”). The investigation has already revealed that many lawyers and other professionals had improperly 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.

To date, Attorney General Cuomo’s investigation into fraud and abuse in the public pension systems has returned more than $1.7 million to taxpayers through actions involving the conduct of more than 70 attorneys and other professionals.

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 public.integrity@ag.ny.gov.
The matter regarding Lawrence W. Reich is being by Assistant Attorney General Renée L. Jarusinsky, under the supervision of Special Deputy Attorney General for Public Integrity Ellen Nachtigall Biben and Deputy Chief of Staff Mitra Hormozi.

 

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