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A joint investigation by the NYS Office of the State Comptroller’s Investigations Unit and the U.S. Department of Housing and Urban Development’s Office of Inspector General.
Introduction A joint investigation by the Office of the State Comptroller‟s Investigations Unit and the United States Department of Housing and Urban Development, Office of Inspector General (“HUD OIG”) found that Roger Rosenthal (“Rosenthal”), former Comptroller of the Troy Housing Authority (“THA”), with the assistance of then THA Executive Secretary William Meissner (“Meissner”) collected in excess of $207,000 in payments and reimbursements from the THA while simultaneously collecting a public pension absent lawful approval. The investigation further found that purported “consulting agreements” belatedly produced, in response to the Comptroller‟s Office inquiry, by Rosenthal in order to justify his post-retirement earnings are of dubious authenticity. Among other indications undermining the legitimacy of these documents, the investigation uncovered an email from Rosenthal to Meissner dated a month before these documents were produced in which Rosenthal clearly informed Meissner that he had only had supposed “verbal” contracts with the Authority as opposed to a formal written agreement. Additionally, the investigation confirmed that the letterhead of one of the documents submitted was not developed or utilized by the THA until after the purported date of the signature on the document itself. This investigation was conducted with the full support and assistance of the current THA Administration. These findings will be referred to the Office of the New York State Attorney General for appropriate action. The Investigation The THA is a public benefit corporation created pursuant to the New York State Public Housing Law to provide affordable housing to individuals and families of low and fixed incomes in Troy, New York. As it receives substantial federal funding, the THA‟s operations are governed by both federal and New York State law and regulations. The THA is governed by a seven-member board and its daily operations are supervised by an Executive Secretary. The THA also employs a full-time Comptroller, a competitive Civil Service position. On May 8, 2000, Rosenthal was hired as THA Comptroller. Prior to his employment with the THA, Rosenthal had served in public positions since the 1970s and is a Tier 1 member of the New York State and Local Retirement System (“Retirement System”). On June 10, 2005, Rosenthal informed the Retirement System of his intention to retire effective July 2005. Like all other retirees, Rosenthal was conspicuously informed by the Retirement System on his retirement application that subsequent to his retirement, his public employment “must cease” and that there were legal limits on any post-retirement public earnings he could garner. Specifically, as a Tier 1 retiree, Rosenthal required Civil Service Commission approval to earn in excess of $30,000 in public salary post-retirement and further required Retirement System approval of any purported consulting agreements between him and a public employer. Subsequent to Rosenthal‟s departure, the THA appointed Starr Pombrio to the full-time competitive Civil Service position of THA Comptroller. Pombrio advised that shortly after her hire, William Meissner, then serving as an accountant at the THA, informed her that prior to her
hiring, Meissner had proposed the idea of paying Rosenthal, whom he had developed a friendship with, to serve as THA Comptroller on a per diem basis, but that the THA Board had rejected his proposed arrangement because it viewed it as “Rosenthal being greedy” in wanting to collect earnings on top of his pension. Pombrio advised that although he was ostensibly her subordinate, Meissner resisted her efforts to improve the control environment at the Authority or accede to her supervision. Pombrio‟s description was corroborated by Mario Musolino, who then served as THA Executive Secretary, who stated that Meissner “made life miserable” for Pombrio. Substantially due to Meissner‟s behavior, Pombrio voluntarily resigned her position in July 2006. At the time Pombrio vacated her THA Comptroller position, the THA was already late in its submission of a major financial report to HUD critical in its quest to remove the “troubled housing authority” designation HUD had placed on the Authority. With Pombrio gone, Meissner proposed hiring Rosenthal as a consultant to compile this report. As a new open competitive examination had not yet been scheduled, Musolino agreed to Meissner‟s proposition to hire Rosenthal for a short duration for the limited purpose of composing this time-sensitive report. Rosenthal was subsequently retained to perform the same limited service for the 2006 HUD reporting. Upon Musolino‟s resignation from the Authority, in March 2007, Meissner was appointed THA Executive Secretary and on December 7, 2007, entered into a two-year contract with the THA. With Meissner now serving as Executive Secretary, Rosenthal continued to bill the THA for services, not merely for the two months anticipated in order to complete the HUD report, but for approximately three years, totaling in excess of $207,000 in payments and reimbursements. Indeed, upon Meissner‟s assumption of the Executive Secretary position, Rosenthal expanded his role far beyond his limited agreement with Musolino to essentially encompass the duties of the THA‟s Comptroller, a full-time competitive Civil Service position, even declaring himself on numerous official THA documents and correspondence as the Authority‟s “Acting Comptroller.” In addition to remuneration for personal services, payments to Rosenthal during this period by the THA also included $16,000 in advances and reimbursements, authorized by Meissner, for purported expenses including air fare, hotel stays for conferences in Florida (where both Rosenthal and Meissner maintain second homes) and Boston, gift cards, meals and mileage reimbursement. Moreover, despite the THA providing him office space and equipment, Meissner allowed Rosenthal to bill the THA for ostensibly performing consulting services from his home in Florida, where he routinely spent several months throughout the year. During the entire period he earned over $200,000 from the THA, Rosenthal also received a public pension. As a member of the Retirement System, Rosenthal was not legally permitted to earn salary over the $30,000 statutory limit as a public employee without approval of the Civil Service Commission. Furthermore, although as a Tier 1 member of the System he could enter into a legitimate consultant contract with a public employer, any such contracts are required to be in writing and pre-approved by the Retirement System to ensure that the employment was truly a consultant arrangement and not designed to circumvent the proscriptions on “double-dipping” contained in New York State law.
In January 2009, a new competitive examination was held for the Comptroller position and a Civil Service list generated. Deborah Witkowski, the current THA Comptroller, scored high enough on the examination to be suitable for appointment. Unbeknownst to her, in or about late September/early October 2009, Meissner approached then Troy City Mayor Harry Tutunjian and Daniel Crawley (then Deputy Troy City Mayor, now THA Executive Secretary) and informed them of his desire to hire Witkowski, who at the time served as Troy City Comptroller, as the THA Comptroller. Approximately one week later, Witkowski received a telephone call from Meissner and Rosenthal expressing “their” interest in hiring her because Rosenthal (described as the current “consultant comptroller”) wished to “officially” permanently relocate to Florida. After salary negotiations with Rosenthal, Witkowski accepted the THA Comptroller position effective May 3, 2010. Despite their agreement and her resignation from her current position, on the morning of January 5, 2010, apparently while driving to Florida, Rosenthal telephoned Witkowski and advised her that Meissner was rescinding the THA Comptroller job offer. Rosenthal explained that the offer was being retracted because Meissner had been denied a raise by the THA Board, comprised of a majority of Mayoral appointees. Crawley elaborated that Meissner had indeed suggested to Crawley and the Mayor that the Administration exert its perceived influence over the THA Board to approve Meissner‟s raise and contract extension, but after the Mayor and Crawley refused to do so, the job offer to Witkowski was cancelled by Meissner. Instead, with Meissner‟s approval, Rosenthal continued to bill and receive payment from the THA for his purported contractual consulting services through April 2010 on top of his $3,953.59 per month pension. Despite receiving explicit instructions upon his retirement and annually thereafter regarding his responsibility to inform the Retirement System of any post-retirement earnings from a public entity, Rosenthal never informed the Retirement System of his “consultant” arrangement with and payments from the THA. Once the Retirement System learned of this arrangement in 2010, it contacted the THA and requested copies of any contract between the THA and Rosenthal. Remarkably, the Authority could not provide any documentation and the Retirement System was directed by the THA‟s Head Account Clerk to contact Rosenthal, the supposed consultant, himself. Meissner was terminated from his Executive Secretary position by the THA Board at its April 21, 2010 meeting, and Thomas Hulihan was appointed acting head of the Authority. At that same meeting, for the first time, Rosenthal handed Hulihan a copy of a purported written “Consulting Agreement” between him and the THA ostensibly effective January 1, 2010 through December 2010 and purportedly signed by Meissner and Rosenthal on December 28, 2009 and March 5, 2010 respectively. Hulihan delivered this document to the Retirement System but noted that, to his knowledge, no one at the THA including counsel had ever seen, much less approved, the purported agreement. Hulihan further highlighted that the authenticity of the document was seemingly undermined by an email from Rosenthal to Meissner dated February 24, 2010, wherein Rosenthal unequivocally stated to Meissner that his arrangement had always been “verbal” and that he never had a contract. On June 30, 2010, Rosenthal mailed to the Retirement System several other materials including: (i) a two-page document entitled “Independent Consulting Agreement,” ostensibly effective April 1, 2007 through December 31, 2007 and purportedly signed by Meissner and
Rosenthal on April 2, 2007; (ii) a two-page document entitled “Independent Consulting Agreement,” ostensibly effective January 1, 2008 through December 31, 2008 and purportedlysigned by Meissner and Rosenthal on January 9, 2008 and January 7, 2008, respectively; (iii) a two-page document entitled “Independent Consulting Agreement,” ostensibly effective January 1, 2009 through December 31, 2009 and purportedly signed by Meissner and Rosenthal on January 12, 2009 and January 6, 2009, respectively; and (iv) a letter purportedly signed by Meissner on April 2, 2007 referencing, among other things, a “…fully executed consulting agreement between you and the Troy Housing Authority for the remainder of 2007.” In addition to the aforementioned electronic communication secured during the investigation in which on February 24, 2010 Rosenthal admits to Meissner that no formal contract ever existed, additional records obtained by the Comptroller and HUD OIG revealed that the letterhead upon which the supposed “April 2, 2007” letter from Meissner to Rosenthal is captioned did not even exist in April of 2007 and was not developed until May 25, 2007. When asked by the Comptroller‟s Investigations Unit and HUD OIG as to the nature of Rosenthal‟s “consulting contracts,” Meissner initially claimed that, “At first there was no written agreement,” but that there were subsequent written agreements that were not located because, allegedly, “Someone cleaned out my old office and threw out all the contracts.” Notwithstanding his assertion, when confronted with the February 24, 2010 e-mail exchange between him and Rosenthal, Meissner abruptly discontinued the interview and requested legal counsel be present for any further questioning regarding Rosenthal. Subsequent attempts to further question Meissner through his attorney have been ignored. Compounding the apparent unlawful nature of Rosenthal‟s receipt of over $200,000 in post-retirement earnings, Rosenthal admitted to investigators that during post-retirement tenure for the THA he accepted gifts from THA vendors consisting of various fully-paid golf outings he attended with Meissner. When asked how his behavior comported with the prohibitions on accepting gifts from vendors contained in federal law, Rosenthal, the self-described THA “Acting Comptroller,” justified his actions by maintaining he was merely a consultant and the rules did not apply to him. During the investigation of Rosenthal‟s double-dipping, further evidence was uncovered that Meissner may have submitted false timesheets to the THA and earned salary for time he was actually on vacation, sometimes overseas. In fact, according to THA records, Meissner took no vacation leave for a period of years but approved his own “sell back” of the supposed unused leave time amounting to over $32,000. When asked to explain these instances, Meissner offered a series of not wholly inconsistent explanations. Conclusion The Investigation determined that, with the assistance of Meissner, Rosenthal accepted over $200,000 in improper, unauthorized post-retirement earnings. Investigators further find that the documentation submitted by Rosenthal in an effort to justify these earnings is highly suspect and of very dubious authenticity. These findings are being referred to the Office of the Attorney General for its review.
THOMAS P. DiNAPOLI STATE COMPTROLLER
110 STATE STREET ALBANY, NEW YORK 12236
STATE OF NEW YORK OFFICE OF THE STATE COMPTROLLER FINAL REPORT August 2012 I. Summary of Findings
A joint investigation by the Office of the State Comptroller‟s Investigations Unit and the United States Department of Housing and Urban Development (“HUD”), Office of Inspector General (“OIG”) found that Roger Rosenthal (“Rosenthal”), former Comptroller of the Troy Housing Authority (“THA”) with the assistance of former THA Executive Secretary William Meissner (“Meissner,”) collected in excess of $207,000 in payments and reimbursements from the Troy Housing Authority while simultaneously collecting a public pension and without receiving approval required by law. The investigation further found that purported “consulting agreements” belatedly produced to the Comptroller‟s Office by Rosenthal to support his earnings after an inquiry into his post-retirement compensation had been commenced are highly suspect and are of dubious authenticity. In fact, no record of these agreements, much less of documentation regarding an underlying process, were found at the THA. To the contrary, email evidence reveals that Rosenthal informed Meissner shortly before the examination began that he had only had supposed “verbal” contracts with the Authority. The Office of the New York State Comptroller and HUD OIG will refer these findings to the New York State Attorney General for appropriate action.
The Troy Housing Authority (“THA”)
The THA is a public benefit corporation created pursuant to the New York State Public Housing Law and having its principal executive offices located at One Eddy‟s Lane, Troy, New York. The THA serves to “provide decent, safe and affordable housing to individuals and families of low and fixed incomes as they strive for self-sufficiency”, and “[p]resently, the Troy Housing Authority manages 1,273 units of Low Income Public Housing, 791 Tenant-based Housing Choice Vouchers and 134 Project-based Housing Choice Vouchers.”1 The THA is governed by a seven-member Board of Commissioners (“Board”). Five of the members are appointed by the Mayor of the City of Troy with one member being appointed each April to a five-year term. Two members are elected by THA tenants and serve two-year terms. As the THA receives substantial federal funding, THA‟s operations, policies and procedures are governed by both Federal and State law. Specifically, in addition to the requirements of New York State law, “[a]ll operations are regulated and evaluated by the U.S. Department of Housing and Urban Development (HUD).”2 While the authority to direct the
See http://www.troyhousing.org/ Id.
THA‟s operations, policies and procedures are vested in the THA Board, routine day-to-day operations of the THA are conducted by an executive management staff headed by the THA Executive Secretary and THA Comptroller. The THA Executive Secretary is a full-time, exempt jurisdictional class3 Civil Service position. The Executive Secretary is appointed by the Board and serves for a fixed term, pursuant to an employment agreement. The THA Executive Secretary serves as the chief executive officer of the THA and is delegated the responsibility and authority to conduct day-today THA operations by the Board, however, is at all times subject to the direction and control of the Board. The THA Comptroller position was established in 2000 by the City of Troy Municipal Civil Service Commission as a full-time position, pending jurisdictional classification by the New York State Civil Service Commission. On June 30, 2003 the position was formally classified into the competitive jurisdictional class4 and at its creation, carried an annual salary of $73,513 per year. As a position in the competitive classification of the State‟s Civil Service, applicants are graded and ranked after a competitive examination with defined rules governing the order with which people may be selected from the applicant pool. The Comptroller serves as the THA‟s chief financial officer overseeing all financial, accounting and budgetary functions. Additional THA Comptroller duties included directing THA information systems, human resources, and administrative support services, as well as ensuring compliance with uniform procurement and contracting policies. The THA Comptroller reports directly to the THA Executive Secretary.
The New York State and Local Employees’ Retirement System
Officers and employees of the THA are members of the New York State and Local Employees‟ Retirement System (“Retirement System”). The Retirement System is a public pension system that manages retirement benefits for New York State and local retirees. Retirement System members are classified into “tiers” based upon the year the member joins the Retirement System. There are currently six tiers5, with each tier having somewhat different benefits packages and applicable requirements. The Retirement System receives mandatory contributions from its members, as well as from the members‟ employers.6 A. Post-Retirement Public Sector Employment The post-retirement public sector employment of members of the Retirement System is strictly regulated by New York State Law. Section 150 of the Civil Service Law prohibits a Retirement System member who is collecting a public pension (“Retiree”) from returning to public service and collecting a salary unless this post-retirement employment falls within certain exceptions provided by law. The practice of earning a salary from a public employer while also receiving a public pension is commonly referred to as “double-dipping.”
The exempt class of Civil Service consists of positions for which competitive examination is not required and is generally comprised of management and other positions involving performance of duties that require the exercise of authority or discretion at a high level. Candidates for appointment must meet minimum qualifications established by the appointing authority. 4 The competitive class consists of all offices and employments in the classified services that are not in the exempt, noncompetitive or labor class. Civil Service Law requires that, as far as practicable, positions in the competitive class be filled through a competitive examination process that ascertains the relative merit and fitness of each candidate. 5 Tier 6 was enacted by the State legislature on March 15, 2012, and became effective for new employees on April 1, 2012. 6 Tier 1 employees were not required to make mandatory contributions to the Retirement System. Certain benefits may differ for Police and Fire retirees as well.
B. Exceptions to Prohibitions on “Double-Dipping” 1. New York State Retirement and Social Security Law (“RSSL”) §212 The first exception to the general prohibition on double-dipping is that a Retiree is permitted to receive income from a public employer up to a definite statutory salary limit contained in §212 of the RSSL without a suspension in the Retiree‟s existing public pension benefit, provided the Retiree‟s earnings do not exceed the §212 RSSL earnings limits.7 Relevant to this report, the earnings limit for the year 2007 and thereafter is $30,000. According to the statute, if a Retiree wishes to accept reemployment but earn salary below this threshold, §212 provides that the Retiree must “duly execute and file with the Retirement System from which he or she is receiving a retirement allowance a statement that he elects to have the provisions of this section apply to him or her.” This is accomplished as part of the retirement application process for every Retiree. Further, the Retiree may inform the Retirement System of his or her reemployment via U.S. mail, e-mail, or by telephone at any time throughout the year. To assist Retirees in abiding by the law and to remind them of their obligations, every February, Retirees receive a “Retiree Annual Statement” containing a “Report of Post-Retirement Employment” form from the Retirement System. Retirees who have had received post-retirement public employment earnings are required to complete and return the form to the Retirement System for review and evaluation. 2. RSSL §211 Waivers A Retiree may receive permission to, for a finite period of time, earn a public sector salary in excess of the limits imposed under §212 of the RSSL, if the Retiree and the Retiree‟s prospective employer apply for and are granted a waiver pursuant to RSSL §211. This practice is commonly referred to as the “§211 Waiver” process. Under §211, Retirees may seek permission to accept post-retirement employment with a different public entity other than their previous employer and earn compensation in excess of the §212 earnings limits without suspension or reduction in existing public pension benefits, provided specific legal criteria are met. Even with a waiver, Retirees seeking post-retirement employment with the same employer with whom they previously were employed are still subject to earning limitations pursuant to a calculation provided by statute. Relevant to this matter, effective October 7, 2008, this law was amended (Chapter 640 of the Laws of 2008) to further enumerate the criteria that must be met in order for a Retiree to receive post-retirement earnings from a public entity, in excess of the §212 earnings limits without suspension or reduction in the Retiree‟s existing pension benefits. Prior to October 2008, in order for a Retiree to have been granted a §211 waiver, the prospective public entity (public employer) of that Retiree was required to demonstrate to the appropriate reviewing entity8 that:
Public pension Retirees who (i) seek employment for the calendar year in which they will turn sixty-five years of age; (ii) who are lawfully granted a temporary waiver under very specific circumstances prescribed in §211 of the RSSL; or (iii) who do not receive public sector earnings in excess of the §212 earnings limits are lawfully entitled to collect a public pension benefit without suspension or reduction. A Retiree may also elect to suspend his or her benefit and rejoin the Retirement System.
The authorizing agency reviewing applications for a §211 waiver in many cases is the New York State Civil Service Commission; however, when employment is sought with certain entities, other authorizing agencies are identified by the legislature including the Commissioner of Education, the Chancellor of the State University of New York , the Chancellor of the New York City Department of Education, New York City Department of Citywide Administrative Services or the Chief Administrator of the Unified Court System.
the Retiree is duly qualified, competent and physically fit to perform the duties of the position in which he or she is to be employed; there is a need for the Retiree‟s services; there were not readily available for recruitment other qualified persons if the Retiree was to earn more than $1,000; and that the Retiree‟s employment is in the best interest of the government service.
Subsequent to the effective date of the amendments in 2008, in order for a Retiree to be granted a §211 waiver, the prospective public employer of that Retiree must submit a request completed by the public employer and Retiree detailing and evidencing that: the Retiree is duly qualified, competent and physically fit to perform the duties of the position into which he or she is to be employed; the prospective employer has prepared a detailed recruitment plan; the employment is in the best interest of the government; and either there is an urgent need for his or her services as a result of an unplanned, unpredictable, unexpected vacancy and sufficient time is not available to recruit a qualified individual and that such hiring shall be deemed as nonpermanent rather than a final filling of such position; or the prospective employer has undertaken recruitment efforts and has determined that there are no available, qualified non-Retirees.
A §211 waiver may be granted for up to two years as, according to a New York State Department of Civil Service 2010 online summary of the law, “It is not meant to provide a retiree with a second career in a public entity, particularly when it can be shown where there are other qualified non-retired persons seeking promotion or employment.” 3. Returning As a Post-Retirement Independent Consultant/Contractor In 1973, the RSSL was amended by the State Legislature to close a loophole in the previously existing restrictions on post-retirement public sector earnings by public Retirees with consulting contracts between the Retiree and a public employer. This new section, §211(4), states that Retirees returning to public service as consultants are subject to the same earnings limits as those returning as employees. Because the New York State Constitution prohibits alterations to existing pension benefits, this 1973 amendment does not apply to Tier 1 Retirees such as Rosenthal, a subject of this report, but applies to Retirees in the subsequent tiers. In contrast, Tier 1 Retirees, such as Rosenthal, who joined the Retirement System prior to May 31, 1973, are not statutorily limited with respect to earnings from a public entity when serving as consultants. While Tier 1 Retirees may be reemployed by a public entity as a consultant without diminution of pension benefits, a public entity may not circumvent the restrictions on reemployment of retirees simply by labeling the position as an “independent consultant/contractor.” In order to ensure the integrity of the Retirement System and that State law is enforced, putative independent contractor/consultant contracts with public entities other than New York State agencies such as the THA, must be submitted to the Office of the State Comptroller‟s (“OSC‟s”) Legal Division for review and approval, prior to the Retiree receiving compensation for those contractual services. OSC reviews the independent consultant/contractor contract and any other relevant information to determine whether: (i) the Retiree would indeed August 2012 Page 4
be acting in the capacity of a legitimate independent consultant/contractor; or (ii) whether the Retiree would be performing duties typically done by an employee of the public entity. If OSC determines the contract represents a valid independent consultant/contractor relationship, and further, approves the independent consultant/contractor contract, the Retiree may receive unlimited independent consultant/contractor compensation from the public entity without reduction or suspension of the Retiree‟s existing pension. OSC‟s review process concerning a Retiree‟s independent contractor/consultant contract results in a written determination provided to the independent contractor/consultant. Separate applications for each subsequent independent consultant/contractor contract with either a State agency or a public entity other than New York State must be submitted to OSC for review prior to contract approval. Contracts with either a State agency or a public entity other than New York State not receiving prior approval are regulated by RSSL, including earnings limits. C. Penalties for Unlawful Double-Dipping The penalty for unlawfully double-dipping is forfeiture of the Retiree‟s public pension payments for the time period the Retiree double-dipped and the Retirement System reduces or suspends the Retiree‟s pension to recover the payments accordingly. Should the Retiree exceed those earnings limits at any time throughout the calendar year, the Retirement System determines the day the Retiree exceeded the earnings limit, and suspends the Retiree‟s pension for the remainder of the calendar year in which the earnings limit was exceeded.
The THA Investigation
OSC and HUD OIG commenced this joint investigation after receiving parallel complaints alleging malfeasance by Rosenthal and Meissner with respect to their official positions at the THA. Investigators from the Office of the State Comptroller‟s Investigations Unit and a Special Agent for the HUD OIG (collectively referred to herein as “Investigators”) interviewed relevant witnesses and secured and analyzed hundreds of pages of records concerning Rosenthal and Meissner‟s activities at the THA. OSC and HUD OIG further benefitted from the assistance and active support of the current administration of the THA. A. Roger Rosenthal In order to understand the genesis of Rosenthal‟s post-retirement employment, a discussion of the history of the Comptroller position at the THA is required. In December 1999, the THA placed an advertisement in the Troy Record newspaper seeking candidates for the THA Comptroller position, in anticipation of the position being established by the Troy City Civil Service Commission. Mario Musolino (“Musolino”), then THA Executive Secretary, informed Investigators that Meissner, who was serving at the time as an Accountant in the THA, expressed interest in the THA Comptroller position9; however, Musolino determined that Meissner was not a suitable candidate for that position, and proceeded
It should be noted that Investigators uncovered a December 29, 1999 letter from Meissner to the Troy Civil Service Commission objecting to the establishment of the THA Comptroller position, as he asserted that the THA Accountant (the title he held at that time) was the “chief financial officer” in the THA and that the THA could not simultaneously have an Accountant and Comptroller. The Troy Civil Service Commission rejected Meissner‟s assertions stating that “…Mr. Meissner does not recognize the fact, [sic] that the Troy Housing Authority can reorganize at that their discretion.”
to advertise for the position in the Troy Record newspaper. Musolino stated that he received approximately fifty resumes from which he conducted approximately ten candidate interviews. Rosenthal submitted an application for this position. Prior to his service in the THA, Rosenthal had served in multiple public service positions within New York State government throughout the 1970s, 1980s and 1990s; the most recent position having been an Assistant Deputy Commissioner within the New York State Department of Taxation and Finance from January 1996 through January 2000. Rosenthal‟s membership in the Retirement System was effective on June 1, 1972; thus placing him in Tier 1 of the System. Although not a certified public accountant, preferred under the posted job qualifications, Musolino advised that he selected Rosenthal to fill the THA Comptroller position because Rosenthal possessed the requisite educational credentials and experience Musolino sought. On May 8, 2000, Rosenthal officially assumed the THA Comptroller position, pending the position‟s final jurisdictional classification, and performed all duties inherent to that position including supervision of Meissner, who at that time held the title of THA Accountant. Musolino recounted that during Rosenthal‟s and Meissner‟s mutual employment in the THA, the two became “friends outside of work” and to the best of Musolino‟s knowledge, had a shared interest in, among other things, golf. Rosenthal had a direct-reporting relationship to Musolino, who characterized Rosenthal‟s work to Investigators as “fine, good.” Email correspondence unearthed by Investigators confirms that Meissner and Rosenthal enjoyed a social relationship outside of work. Subsequent to Rosenthal‟s initial appointment to the THA Comptroller position, the position was formally classified into the competitive jurisdictional class, and consistent with Civil Service Law, an examination was offered on January 11, 2003 to permanently fill the position Rosenthal had been occupying since May 8, 2000. Four candidates, including Rosenthal, took the examination, with Rosenthal earning the second highest examination score of the four candidates. The Troy City Civil Service Commission established an eligible list of candidates, which would be valid from March 25, 2003 through March 25, 2007. The eligible list consisted of all four candidates, ranked highest to lowest by examination score, as all four candidates earned sufficient scores on the examination permitting their employment. Consistent with the Civil Service Law, canvass letters were sent to all four eligible candidates on March 26, 2003, for the purpose of ascertaining each candidate‟s interest in the position. Records obtained by the Investigators indicate that pursuant to the initial 2003 canvas, all four eligible candidates expressed interest in the position; however, additional notations on the records indicate “no action taken” for two of the four interested candidates (the highest and lowest scoring candidates), an “Appointed 4/7/03 Deputy Comptroller For Financial Operations” notation for the third highest scoring candidate and an “Appointed” notation for Rosenthal. Ultimately, Rosenthal was again selected and formally appointed to the position on June 30, 2003, and remained in that position for the next two years. On June 10, 2005, Rosenthal notified the Retirement System of his intention to retire from public service, effective July 2005, and began the retirement process by completing and submitting to the Retirement System an Application for Service Retirement. Rosenthal, like all prospective Retirees, was conspicuously informed on his Application for Service Retirement of the applicable laws governing post-retirement employment and was directed to contact the Retirement System, should relevant questions arise. Like all Applications for Service Retirement, August 2012 Page 6
the Application Rosenthal submitted to the Retirement System contained the information set forth below:
On June 14, 2005, in anticipation of his impending retirement from the THA, Rosenthal composed a memorandum to now-former Troy City Civil Service Commission Chairman Steve Coffey formally stating that he would be vacating his position as THA Comptroller, effective July 1, 2005 and thus requesting, on behalf of the THA, a copy of the current Civil Service list (of eligible candidates) for the THA Comptroller position. The memorandum is reproduced below:
As THA Comptroller, it was incumbent upon Rosenthal to draft this memorandum seeking from the Troy City Civil Service Commission a current list of eligible candidates to replace him upon his impending retirement from the THA due to the facts that (i) the human resources component of his THA Comptroller position dictated that he take steps to seek a replacement to fill the impending vacancy; and (ii) as such, he knew that the competitive jurisdictional classification of the THA Comptroller position required him to seek that replacement from the original 2003 Civil Service list of remaining eligible THA Comptroller candidates. Records obtained by the Investigators demonstrate that three of the 2003 eligible candidates were re-canvassed on June 15, 2005. Of the three eligible candidates re-canvassed, two declined the position and the third indicated interest, but records indicate a “no action taken” notation assigned to the third eligible candidate. Approximately one month later, on July 12, 2005, Rosenthal officially retired and shortly thereafter, began collecting his $3,686.33 per month public pension,10 and accepted a position with a private sector corporation; however he
Rosenthal and other similarly situated Retirees subsequently were provided with cost of living adjustments increasing Rosenthal‟s benefit to $3,953.59 as of November, 2007.
remained in regular contact with several THA employees including Meissner. Rosenthal‟s annual salary upon his retirement was $73,513. At the time of Rosenthal‟s departure, the THA Comptroller position was left vacant. As the Civil Service list of eligible candidates had been exhausted, a new Civil Service examination was necessary to establish a new list of eligible candidates to permanently fill the position. In the meantime, the THA sought candidates to provisionally fill the title, until such time an examination could be given and an eligible list of candidates be established. Musolino advised Investigators that once again, Meissner expressed interest in filling the position; but, Musolino again determined that Meissner was unsuitable to fill the position, in part because Musolino did not believe Meissner possessed the managerial style and temperament conducive to the effective execution of the THA Comptroller‟s obligations. Musolino recalled receiving a number of resumes; however, fewer than he received during the initial candidate search which resulted in Rosenthal‟s appointment. As part of his search, Musolino received a resume from Starr Pombrio (“Pombrio”). Because she possessed the requisite educational credentials and prior public sector experience Musolino sought, he provisionally appointed her THA Comptroller on October 17, 2005. Near-simultaneously, the Troy Civil Service Commission announced an open competitive examination to be held on January 7, 2006 to establish a new eligible list of candidates to permanently fill the THA Comptroller vacancy. Pombrio and one other candidate took the examination. While both candidates earned passing scores, Pombrio earned the higher of the two passing scores. On March 27, 2006, Pombrio was permanently appointed the THA Comptroller at an annual salary of $65,031. Pombrio‟s tenure, however, was short-lived. Musolino advised Investigators that throughout Pombrio‟s tenure in the THA, Meissner and Pombrio “clashed” and that Meissner “made life miserable” for Pombrio by, among other things, intentionally failing to provide Pombrio answers to questions, relevant and material to the execution of her official duties. Musolino stated that these actions substantially contributed to Pombrio‟s vacating the THA Comptroller position on July 26, 2006, and, in his opinion, further contributed to the THA‟s designation by the U.S. Department of Housing and Urban Development as a “troubled housing authority,” the lowest performance rating available. Pombrio corroborated Musolino‟s description of her relationship with Meissner. Relevant to Rosenthal‟s post-retirement employment, Pombrio recounted an exchange between her and Meissner, which occurred shortly after she assumed the THA Comptroller position. At that time, Meissner informed Pombrio that subsequent to Rosenthal‟s retirement but prior to her hiring, he had proposed the idea of paying Rosenthal to serve as THA Comptroller on a per diem basis, but that the THA Board rejected this proposed arrangement because it viewed it as “Rosenthal being greedy” in wanting to collect earnings on top of his pension. Pombrio advised Investigators that throughout her tenure, the THA never retained consultants for THA positions, but rather sought “temps” from a temporary employment agency to temporarily bridge periods of staff absence. In Pombrio‟s experience, a consultant arrangement of this nature between the THA and Rosenthal would have been an entirely unique situation. Pombrio informed Investigators that, although titularly her subordinate, Meissner consistently resisted her attempts to improve the control environment surrounding the finances of the THA. Among other impediments, Pombrio stated that Meissner routinely hindered Pombrio‟s efforts to comply with a major HUD directive requiring the THA to change its financial reporting to a project-based accounting model; a major undertaking as this reporting required close collaboration with numerous THA departments (including Meissner‟s) and differed August 2012 Page 9
significantly from past THA financial reporting practices. Pombrio advised that Meissner‟s resistance contributed to the THA‟s being late in its reporting to HUD and likely contributed to THA‟s “troubled housing authority” designation. Pombrio advised Investigators that Meissner‟s conduct factored heavily in her decision to resign the Comptroller position and seek employment elsewhere. B. Rosenthal Returns to the THA While Receiving a Public Pension At the time Pombrio vacated her THA Comptroller position, the THA was already late in its submission of what Musolino characterized as a “major financial report” to HUD: one action required in furtherance of the THA‟s goal of removing its “troubled housing authority” designation. In light of the fact that a new open competitive examination had not yet been scheduled to fill the vacant THA Comptroller position (the THA employee who would typically be charged with completing such a report for HUD), and the sense of urgency to complete the HUD report, Musolino began considering an idea Meissner proposed: bringing Rosenthal back to the THA in a temporary consulting capacity, at approximately $40 per hour, for the sole purpose of completing this single report.11 Musolino advised Investigators that during his deliberative process concerning Meissner‟s suggestion of retaining Rosenthal as a consultant, he considered the various factors with respect to entering into any agreement with Rosenthal including: (i) Rosenthal was now a Retiree collecting a pension from the Retirement System, and as such would be subject to certain maximum annual public sector earnings limits, that if exceeded, could have, under certain circumstances, potentially diminished his pension benefit; and (ii) that the THA is bound by competitive bidding requirements, if the amount of the services procured (in this case, Rosenthal‟s services) exceeded certain dollar thresholds. As referenced by Musolino, as a recipient of HUD funding, the THA is required to abide by applicable HUD rules and regulations governing procurement practices contained in Title 24 of the Code of Federal Regulations. These regulations generally require that “[a]ll procurement transactions will be conducted in a manner providing full and open competition.” Relevant to this report, the regulations include, as an example of practices which are “restrictive of competition”, “noncompetitive awards to consultants that are on retainer agreements” and “any arbitrary action in the procurement process.”12 Under HUD‟s regulations, the housing agency must “maintain records sufficient to detail the significant history of the procurement,” including documents reflecting the “rationale for the method of procurement, selection of the contract type, contractor selection or rejection, and the basis for the contract price.” Federal rules further require certain provisions to be inserted in contracts entered into by the authority ensuring compliance with certain federal mandates. According to Musolino, since Rosenthal‟s return was only intended to last a short duration and for a discrete purpose, Musolino determined that any public funds paid to Rosenthal for these temporary services did not pose any problem. Specifically, Musolino stated that he determined that these earnings would not: (i) exceed the relevant public sector earnings limit for New York State Retirees and; (ii) that the aggregate amount that would have been paid to Rosenthal under these circumstances would not have reached the dollar thresholds requiring the
It should be noted that during the interview of Rosenthal he advised Investigators that by this time, he had become unhappy working in the private sector, and that his (now late) wife had become seriously ill, so he had a strong interest in returning to the THA.
24 C.F.R. 85.36(c).
THA to procure such services through a full competitive bidding process. With those facts in mind, coupled with Musolino‟s view of Rosenthal as a “known quantity,” in or about July 2006, he commenced discussions with Rosenthal about retaining him as a consultant to complete the HUD report. THA electronic mail correspondence on the following pages, secured by Investigators in this case, describes the nature of those discussions and substantiates Musolino‟s statements regarding the nature of Rosenthal‟s consultantship with the THA. Notably, the investigation determined that, unbeknownst to Musolino, Rosenthal was secretly sharing the electronic correspondence between himself and Musolino, with Meissner. Rosenthal e-mails Musolino concerning his interest in returning to the THA in a full-time capacity; the e-mail is secretly shared with Meissner:
Discussions between Musolino and Rosenthal continued; however, they discussed ten to twelve hours per week (as opposed to Rosenthal‟s preference of full time) for a discrete period of approximately three months:
Musolino and Rosenthal discussed compensation, to which Rosenthal appeared agreeable:
Musolino and Rosenthal discussed the logistics of Rosenthal‟s return including Rosenthal suggesting Musolino speak to the THA‟s Legal Counsel for the purpose of composing a consultant agreement for the parties to sign. Rosenthal subsequently forwards the e-mail below to Meissner:
The following day, Rosenthal advised Meissner that Musolino did not respond concerning, among other things, the consulting agreement Rosenthal suggested:
Musolino confirmed to Investigators that initially there was some discussion about entering into a formal, written contractual agreement with Rosenthal, but after discussion of the particulars surrounding Rosenthal‟s potential return to the THA with THA‟s Legal Counsel, the determination was made that no written contractual agreement was necessitated, nor was one executed in 2006 or throughout the duration of Musolino‟s tenure at the THA which ended in early March 2007. In October 2006, Rosenthal began performing consulting services to complete the 2005 HUD report for the THA. According to Rosenthal, in or about March 2007, Musolino requested that Rosenthal “do the same job for 2006,” which Rosenthal told Musolino he anticipated would take approximately two months to complete. Rosenthal claimed to Investigators that at this time, he again requested Musolino provide him a formal written contract, but that once again, no formal contract was entered into, as Musolino “left after the election” of former Governor Eliot Spitzer. Prior to his resignation from the THA in March 2007, Musolino became aware of Meissner‟s interest in the THA Executive Secretary position. Musolino informed Investigators that he strongly advised the THA Board that Meissner would be a poor choice to succeed Musolino as THA Executive Secretary. Interestingly, during the investigation, Investigators discovered a copy of the following document wherein Rosenthal, then serving as a consultant, composed what he describes as an “unsolicited” letter, recommending the THA Board appoint Meissner to the THA Executive Secretary position:
Troy Municipal Civil Service Commission records indicate that Meissner was temporarily appointed the THA Executive Secretary on March 19, 2007, and on December 7, 2007 entered into a two-year13 “Executive Secretary Employment Agreement” with the THA. With Meissner now the THA Executive Secretary and notwithstanding his previous verbal agreement with Musolino effectuated solely for the purpose of completing the 2006 HUD report (which Rosenthal advised Musolino would be completed within approximately two months), Rosenthal continued to bill the THA for services, not for two months, but for approximately three years, totaling in excess of $207,000 in payments and reimbursements. In fact, as evidenced by the billing documents reproduced below, despite the THA providing him office space and equipment, Meissner allowed Rosenthal to bill the THA for ostensibly performing consulting services from his home in Florida, where he routinely spent several months throughout the year:
The term of the two-year Executive Secretary Agreement was from January 1, 2008 through December 31, 2009.
As reflected in these billing records, evidence indicates that upon Meissner‟s assumption of the Executive Secretary position, Rosenthal expanded his role far beyond his limited agreement with Musolino to essentially encompass the duties of the THA‟s Comptroller, a fulltime competitive Civil Service position. As discussed above, when the Retirement System receives a putative consulting agreement from a Retiree, it examines the proposed consultantship to ensure that the arrangement is not more aptly characterized as an employment agreement circumventing the restrictions on post-retirement income. In its review, the Retirement System considers numerous factors. In relation to Rosenthal, several aspects of his duties under the Meissner regime are reminiscent of an employee rather than a mere consultant. Specifically, although he did not work set hours, Investigators determined that Rosenthal was provided with an office and secretarial staff and effectively performed all the duties of the THA Comptroller. Moreover, Investigators determined that Rosenthal, a purported consultant, was not only paid for his hours worked on specific projects, but was paid $16,000 in advances and reimbursements, authorized by Meissner, for purported expenses including air fare, hotel stays for conferences in Florida (where both Rosenthal and Meissner maintain second homes) and Boston, gift cards, meals and mileage reimbursement. The following examples illustrate Rosenthal‟s requests for advances and reimbursements:
While public employees are typically reimbursed for employment-related expenses such as mileage, travel, meals, training and conferences, consultants are generally not reimbursed for these types of expenses. Indeed, the expansion of Rosenthal‟s ostensible “consulting” duties, subsequent to Musolino‟s departure, are best reflected in the fact that he even went so far as to refer to himself in formal THA documents as the THA‟s “Acting Comptroller.” The investigation reviewed innumerable letters and other THA materials, both internal and external, in which Rosenthal assumed this title, as an example of which appears below:
Rosenthal‟s Receipt of Gifts from THA Vendors Compounding the problematic nature of Rosenthal serving as self-proclaimed “Acting Comptroller” of the THA without receiving lawful approval, Rosenthal brandished his quasipublic status to justify to Investigators his receipt of gifts from THA vendors. Equally, if not more troubling, Rosenthal stated that Meissner accompanied him on these vendor-sponsored events. Federal regulations expressly state that “[t]he grantee‟s or subgrantee‟s officers, employees or agents will neither solicit nor accept gratuities, favors or anything of monetary value from contractors, potential contractors, or parties to subagreements.” Despite this clear prohibition, forensic analysis of Meissner‟s and Rosenthal‟s THA electronic mail accounts revealed credible evidence, including Rosenthal‟s admissions, suggesting that Meissner and Rosenthal routinely interacted with THA vendors on golf outings apparently paid for by these vendors.
Digital forensic analysis revealed numerous communications over the course of years involving Rosenthal, Meissner and various THA vendors referencing “golf” between Rosenthal, Meissner and these vendors intermingled with discussions of THA business. Pombrio corroborated this information, recounting an exchange in which Meissner informed Pombrio he would not transfer THA funds to a new lending institution despite the opportunity to receive a better rate of return on the THA funds, because he believed this would result in the current lending institution no longer inviting Meissner to attend the annual golf outing sponsored by the current lender. When first questioned by Investigators about whether he accepted any gifts from any representatives of any banks or vendors doing business with the THA, initially Rosenthal stated that he did not, but when further pressed, altered his statement to say, “some banks.” Rosenthal elaborated that representatives of one bank “took Bill [Meissner] and I out once a year” to golf, and confirmed that the bank paid for the outings. Rosenthal further disclosed several additional golf outings he attended with Meissner, paid for by other THA vendors. These events were corroborated after review of THA electronic records. When questioned by the Investigators as to the propriety of these and the other activities with THA vendors he described, Rosenthal asserted that he had no ethical conflict or conflict of interest because he was not an employee of the THA, but rather merely a consultant. Meissner terminated his interview with Investigators in order to consult counsel prior to addressing any questions concerning his participation in these events. C. A New Full-Time THA Comptroller Is Appointed Troy Civil Service Commission records reveal that no competitive examinations were held to establish a new list of eligible candidates to permanently fill the THA Comptroller position until January 10, 2009; almost thirty months after Pombrio‟s departure. Subsequent to the January 10, 2009 THA Comptroller examination, a new list of eligible candidates was established, including Deborah Witkowski (“Witkowski”), the current THA Comptroller. Investigators interviewed Witkowski and current THA Executive Secretary Daniel Crawley (“Crawley”) regarding the circumstances of Rosenthal‟s departure and Witkowski‟s hiring at the THA. According to Witkowski, in or about late September/early October 2009, unbeknownst to her, Meissner approached (now former) Troy City Mayor Harry Tutunjian and Crawley (then Deputy Troy City Mayor) and informed them of his desire to hire Witkowski, then serving as the Troy City Comptroller, as the THA Comptroller. Meissner also informed the Mayor and Crawley that he was willing to work with the Administration concerning a convenient transition period for Witkowski, should she accept the THA Comptroller position. The following day, Crawley informed Witkowski of the discussion that transpired between Meissner, the Mayor and himself. Witkowski advised Investigators that she found Meissner affirmatively approaching the Mayor and Crawley surprising because although she obtained a reachable score on the THA Comptroller Civil Service examination in January 2009 and was canvassed regarding her interest in the position in April 2009, Meissner did not interview her or even discuss the position with her in any way prior to him advising the Mayor and Crawley of his interest in hiring Witkowski. In fact, she was completely unaware at that time the she was even being considered for appointment. Nonetheless, approximately one week later, Witkowski received a telephone call from Meissner and Rosenthal, the supposed “consultant,” expressing “their” interest in hiring her. August 2012 Page 22
Witkowski recalled Meissner specifically telling her that he did not feel a formal interview was necessary, as he was aware of her experience and capabilities from her position in the City of Troy and that she “was the one he wanted to appoint off of the Civil Service list.” Further, Meissner advised Witkowski that his current “consultant comptroller” (Rosenthal) wanted to “officially” move on from the THA sometime in 2010 to permanently move to Florida. Witkowski expressed interest in the position and subsequently entered into salary and tentative start date discussions with Meissner. At the outset, Meissner offered Witkowski an annual salary of $59,000, which Witkowski deemed unacceptable,14 so Meissner advised Witkowski that Rosenthal would get back to her with an amended salary proposal. The following day, not Meissner, but Rosenthal called Witkowski and advised her that he and Meissner discussed her salary concerns and concluded that she could start at a higher salary step, which was comparable with her experience. She advised Rosenthal that she would accept the position and told him she would discuss a plan for her departure from the Troy City Comptroller position with the Mayor. Witkowski agreed to resign from the Troy City Comptroller position in mid-April 2010 to assume the THA Comptroller position on May 3, 2010. Meissner agreed that the May 3, 2010 date would be best as he told Witkowski that Rosenthal, who would be training her, was scheduled to be in Florida from mid-January through mid April and not physically returning to the THA until Monday, April 19, 2010; a May 3 start date would give Rosenthal time to reacclimate himself and be ready to train Witkowski. Meissner also announced to the THA Board and other employees at the THA of his intention to appoint Witkowski. However, on the morning of January 5, 2010, apparently while driving to Florida, Rosenthal called Witkowski and advised her that Meissner was rescinding the THA Comptroller job offer. When Witkowski inquired of Rosenthal as to why Meissner was rescinding the offer, Rosenthal informed her that Meissner had sought a salary increase for himself as THA Executive Secretary but because the THA Board (the majority of which is appointed by the Mayor) had not approved the raise, he was not going to “take care of” Witkowski or “any more of the Mayor‟s staff.” Witkowski stated that she expressed utter dismay regarding the implication of a patronage appointment predicated on such a quid pro quo, as Meissner lead Witkowski to believe that he affirmatively approached the Mayor (and subsequently her about the THA Comptroller position) because of her qualifications, experience, and her standing on the Civil Service list of eligible THA Comptroller candidates. Rosenthal further asserted to Witkowski that if Meissner did not receive the raise he requested, as well as a five-year contract extension, he [Meissner] “would be falling back to the Comptroller‟s position.”15 Witkowski recalled exclaiming to Rosenthal that this situation constituted “extortion” and that she would be discussing the situation with the Mayor, Crawley and Meissner directly. After fruitless attempts to reach Meissner on the same day, she reached him via telephone on the following Tuesday. Witkowski informed him of the details of her discussion with Rosenthal and, according to Witkowski,
In fact, Meissner and Rosenthal initially offered Witkowski almost $7,000 less than the $65,966 Rosenthal earned through payments, advances and reimbursements in his last complete year (2009) as THA‟s “consultant comptroller”.
Contrary to his statement, Meissner never held the position of THA Comptroller. Similarly, despite, as discussed below, later claiming to Investigators that he served as “Acting THA Comptroller” prior to Rosenthal‟s eventual reemployment, Musolino informed investigators that while Meissner and other THA employees filled in on some of the THA Comptroller duties during this time period, Meissner never acted in the capacity as “Acting THA Comptroller.” To the contrary, Musolino advised that prior to Rosenthal‟s appointment, Musolino became aware that Meissner had been referring to himself in written documents as the THA “Chief Financial Officer,” requiring Musolino to admonish him in writing that no such title existed at the THA and, therefore, his use of that designation as a title was inaccurate and inappropriate. Documentary evidence secured in this investigation corroborates Musolino‟s statement.
Meissner replied that “things could change” as there was another THA Board meeting scheduled wherein his raise and contract extension would be discussed “one more time.” Witkowski expressed her anger to Meissner advising him that she believed that he sought her out based upon her experience, qualifications and Civil Service status and that never once during their discussions in fall 2009 was there any mention of the job offer being predicated on a raise or contract extension for himself. She further advised Meissner that she was “truly upset by the thought of being used or extorted for his personal gain.” According to Witkowski, Meissner made light of the situation and told her he would “be in touch” and to “have faith” as he believed things could be changed at the next THA Board meeting. That was the last time Meissner and Witkowski spoke. Crawley corroborated Witkowski‟s version of the events stating that at or about the time this was transpiring, Meissner went to Crawley‟s former City of Troy Office and suggested that Crawley and the Mayor exert influence he perceived they had over the THA Board to approve Meissner‟s raise and contract extension. Neither Crawley nor the Mayor did so, resulting in the withdrawal of the job offer to Witkowski. Witkowski was not hired as the THA Comptroller at that time; rather, Rosenthal continued to bill and receive payment from the THA for his purported contractual consulting services through April 2010 on top of his $3,953.59 per month16 pension while depriving the THA of a full-time Comptroller, a competitive Civil Service position. D. The Retirement System Examines Rosenthal’s Post-Retirement Employment Despite receiving explicit instructions upon his retirement and annually thereafter regarding his responsibility to inform the Retirement System of any post-retirement earnings from a public entity, Rosenthal never informed the Retirement System of his “consultant” arrangement with and payments from the THA. Upon learning of the atypical circumstances surrounding Rosenthal‟s retirement and subsequent return to the THA via notification from (then) THA Board Vice Chairman Jay Vanderburgh in 2010, the Retirement System contacted the THA and requested documents concerning Rosenthal‟s post-retirement earnings. Instead of providing copies of written contracts as should have been previously provided, the THA, via Head Account Clerk, Sue Phalen (“Phalen”) directed the Retirement System to Rosenthal himself:
As stated above, throughout the relevant period of this report, Rosenthal‟s monthly pension payment was $3,686.33 until November 2007, at which time his monthly pension payment increased to $3,953.59 with a cost of living adjustment.
Rosenthal‟s Submission of Suspect Documentation In the wake of Meissner‟s termination by the THA Board in Executive Session on April 21, 2010, the THA Board returned to open session and appointed Thomas Hulihan (“Hulihan”) Acting THA Executive Secretary. In his capacity as acting head of the Authority, Hulihan attempted to further respond to the Retirement System‟s inquiry. In a letter responding to the Retirement System‟s requests for Rosenthal‟s post-retirement contracts, Hulihan provided the Retirement System a copy of a three-page document, entitled “Consulting Agreement,” between Rosenthal and the THA, ostensibly effective January 1, 2010 through December 2010 and purportedly signed by Meissner and Rosenthal on December 28, 2009 and March 5, 2010 respectively. Hulihan‟s response letter reported that this purported “Consulting Agreement” was first shown to him on April 21, 2010 and further, that to the best of his knowledge, (i) this was the first time anyone at the THA, other than the purported signatories, had ever been aware of the existence of this agreement and (ii) the document had never been reviewed by THA Legal Counsel or approved by the THA Board. Finally, Hulihan provided a hard copy of an internal THA electronic mail communication between Meissner and Rosenthal; the contents of which strongly suggested that this document did not exist at the time it was purportedly signed by the signatories. Hulihan later elaborated to Investigators that Rosenthal handed him a copy of the purported 2010 “Consulting Agreement” moments prior to the April 21, 2010 THA Board meeting referenced above; the meeting wherein Meissner‟s THA Executive Secretary contract was terminated by the Board. A diligent review of Rosenthal‟s Retirement System file revealed (i) no copies of requests for or approvals of §211 waivers from 2007 forward; (ii) no copies of any “consulting contracts” between Rosenthal and the THA; and (iii) no completed Reports of Post-Retirement Employment card/coupon returned from the Retiree Annual Statements Rosenthal received each year. While Rosenthal failed to report his post-retirement income to the Retirement System, his file did contain correspondence from Rosenthal transmitting his late wife‟s death certificate along with a handwritten note from him dated six days after her passing advising the Retirement System that “Her death should allow my monthly payments to „pop-up‟ to the option 0 maximum benefit.” In light of the foregoing, the Retirement System provided written notice to Rosenthal stating: (i) that the Retirement System had become aware of his unreported, post-retirement public sector earnings, (ii) the laws governing post retirement, public sector earnings and how they may impact his Retirement benefit; and (iii) requesting Rosenthal submit copies of his 2006-2009 “consulting contracts” for review. A copy of the Retirement System‟s request letter is reproduced below:
In response to the Retirement System‟s request, in addition to the “Consulting Agreement” previously provided by Hulihan, on June 30, 2010, Rosenthal mailed (i) a two-page document entitled “Independent Consulting Agreement,” ostensibly effective April 1, 2007 through December 31, 2007 and purportedly signed by Meissner and Rosenthal on April 2, 2007; (ii) a two-page document entitled “Independent Consulting Agreement,” ostensibly effective January 1, 2008 through December 31, 2008 and purportedly signed by Meissner and Rosenthal on January 9, 2008 and January 7, 2008, respectively; (iii) a two-page document entitled “Independent Consulting Agreement,” ostensibly effective January 1, 2009 through December 31, 2009 and purportedly signed by Meissner and Rosenthal on January 12, 2009 and January 6, 2009, respectively; and (iv) a letter purportedly signed by Meissner on April 2, 2007 referencing, among other things, a “…fully executed consulting agreement between you and the Troy Housing Authority for the remainder of 2007.” August 2012 Page 26
As set forth above, federal regulations require documentation be maintained regarding any contracts entered into by an entity such as the THA. In an effort to determine the authenticity of documents Rosenthal submitted, Investigators requested the THA review each of the purported “consulting contracts” as well as the April 2, 2007 letter, purportedly signed by Meissner, and conduct a thorough search of all records, including but not limited to THA records left by Meissner and Rosenthal prior to their respective terminations, and all THA Board minutes referencing Rosenthal‟s purported “consulting contracts.” THA informed Investigators that its search revealed no consulting contracts, for any year, between the THA and Rosenthal, and no reference of any discussions (including but not limited to discussions with THA Legal Counsel), resolutions, and/or actions taken with regard to any purported contracts between the THA and Rosenthal. In light of these findings, Investigators worked with the THA and secured access to all relevant parties‟ THA electronic mail accounts via the THA electronic network. A digital forensic analysis of the accounts revealed electronic correspondence between Meissner and Rosenthal, dated February 24, 2010, wherein pursuant to a request from (then) THA Board Vice Chairman Jay Vandenburgh, Meissner and Rosenthal discuss the circumstances surrounding Rosenthal‟s return to the THA and specifically, the issue of “consulting contracts.” Contrary to substantiating the legitimacy of the “agreements” he submitted to the Retirement System and consistent with Hulihan‟s report of incriminating emails, Investigators unearthed the original email dated February 10, 2010 in which Rosenthal reminded Meissner that not only was his initial agreement with Musolino a verbal agreement, but that “When you took over as the Executive Secretary you asked that I continue with the verbal agreement that Mario and I had,” and further states that “I still do not have a contract…” and to “Let me know…whether you wish Bryan [Bryan Goldberger, THA Legal Counsel] to develop a contract for this year.” A copy of this correspondence is reproduced below:
Further undermining the legitimacy of the documents supplied by Rosenthal to the Retirement System, additional records secured by Investigators revealed that the letterhead upon which the supposed “April 2, 2007” letter from Meissner to Rosenthal is captioned did not even exist in April of 2007. In fact, THA procurement materials indicate that this particular letterhead was not developed until May 25, 2007, and was not procured and ordered by Rosenthal and Meissner until June 6, 2007; approximately two months after the purported date of the letter. Additionally, records secured from the THA confirm that Meissner utilized an older style of THA letterhead (different from the letterhead used upon which the purported April 2, 2007 letter to Rosenthal appears) for external correspondence as late as April 23, 2007, May 11, 2007 and June 6, 2007. THA records indicate Meissner‟s first utilization of the letterhead upon which the Rosenthal letter appears did not occur until July 16, 2007; approximately three months after the purported date of the Meissner/Rosenthal letter to the Retirement System. During an interview of Meissner, Investigators questioned him regarding Rosenthal‟s retirement and subsequent return to the THA. Meissner stated that Rosenthal performed many of the same tasks he did prior to his retirement from the THA, including but not limited to, controlling rent collection and doing reports for Civil Service. When asked by Investigators as to August 2012 Page 28
the nature of Rosenthal‟s “consulting contracts,” Meissner claimed that, “At first there was no written agreement,” but that there were subsequent written agreements that were not located because, allegedly, “Someone cleaned out my old office and threw out all the contracts.” When confronted with the February 24, 2010 e-mail exchange between him and Rosenthal, Meissner abruptly discontinued the interview and requested legal counsel be present for any further questioning regarding the Rosenthal matter. Investigators also conducted an interview of Rosenthal, who stated that upon Meissner‟s appointment as THA Executive Secretary, he advised Meissner that he “wanted a contract,” each year for 2007, 2008, 2009 and 2010. He stated that he (Rosenthal) drafted the “contracts” and that his “contractual” responsibilities were not the same as his prior duties as an “employee” of the THA, in that he would be more of a “resource to advise and make recommendations to Bill Meissner.” He further advised Investigators that he attended a “housing authority training” in Tampa, Florida that the THA paid for, because Meissner directed he attend it for the purpose of Rosenthal being able to train THA staff on what Rosenthal learned at the training. When confronted with the February 24, 2010 e-mail correspondence between him and Meissner wherein he unambiguously stated that he never had a written contract, Rosenthal now maintained that he did not have what he termed “fully executed contracts” with the THA. He characterized Meissner as untimely in the signing of the purported contracts, thus, in his estimation, rendering the contracts not fully executed. (Coincidentally, the supposed “April 2, 2007” letter from Meissner to Rosenthal also contained the phrase “…fully executed independent consulting agreements…”) Rosenthal claimed that he drafted the “contracts” and sent them to Meissner for his signature in the THA. Rosenthal further alleged that the contracts could be found at the THA, but when the Investigators advised him that consistent with his own statements in the e-mail that no contracts existed at the THA, he altered his account and claimed that he maintained copies of the purported contracts at his home in Florida that he could produce. He also stated that he was able to previously produce same to the Retirement System pursuant to its June 4, 2010 request, and an alleged conversation with an OSC representative, whose name Rosenthal could not recall, and who Rosenthal asserts advised him that as a Tier 1 Retiree, his earnings would be unlimited as a consultant, provided he had legitimate consulting contractual agreements. Rosenthal told Investigators he would produce to them copies of the “contracts”; however, to date, he had produced no evidence to substantiate his statements concerning his purported contracts with the THA, nor his purported discussions with the Retirement System concerning post-retirement earnings. In light of the absence of any competitive procurement record relating to the purported “consulting contract” between Rosenthal and the THA, Investigators questioned Rosenthal about whether he competitively bid for the purported contracts, in light of his “contractual” rate(s), relative to competitive bidding thresholds. Rosenthal informed Investigators that he did not competitively bid. When confronted with the fact that as a former Assistant Deputy Commissioner in New York State government, he would be well aware that the “contractual” amounts exceeded statutory competitive bidding thresholds, Rosenthal acknowledged that the purported contracts “should have been bid,” but that it was Meissner‟s responsibility to do so. Rosenthal advised that he was unaware as to whether the THA Board ever passed a resolution concerning his purported contract or was ever formally notified about same.
E. Meissner’s Time and Attendance During the course of investigating the aforementioned allegations, Investigators discovered additional information indicating that Meissner may have submitted false time sheets and received payment for hours he did not actually work. Prior to his appointment as THA Executive Secretary, Meissner held two competitive class Civil Service positions at the THA: “Housing Rehab. Coordinator” and “Accountant.”17 Prior to becoming THA Executive Secretary, Meissner received all the benefits contained in the union‟s collective bargaining agreement with the THA. Among the many terms of the union contract is a provision entitling covered employees to carry-over seventy days of accrued vacation hours into a succeeding year. On December 7, 2007 Meissner ceased being the THA Accountant and entered into a two-year18 Executive Secretary Employment Agreement with the THA. As THA Executive Secretary, Meissner‟s employment was no longer governed by the collective bargaining agreement but rather was covered by his contract with the THA. Pursuant to his Executive Secretary Employment Agreement with the THA, Meissner was required to (i) “… devote on a full-time basis his entire working time, attention and energies to the performance of his duties”; (ii) be “at all times…subject to the direction and control of the Board…”; and (iii) “Any and all acts…in the performance of his duties as Executive Secretary shall conform with and be taken within the limitations, standards, policies and directions from time to time established by the Board.” Concerning the issue of leave, the Executive Secretary Employment Agreement dictated that Meissner was to “…receive those other benefits that are available to service grade employees of the THA…” including but not limited to bereavement, personal and sick leave, and Meissner was initially credited with fifteen days of vacation leave. When questioned by Investigators as to his understanding of the difference in leave policies between his time as a competitive class employee and his subsequent service as functional head of the authority, Meissner delineated a sharp distinction with respect to overtime compensation in that once he became an exempt employee he conceded that he was no longer entitled this benefit as he was when he was covered under the union‟s collective bargaining agreement with the THA. Investigators further questioned Meissner regarding his understanding of THA standard policies and procedures with respect to documenting the use of vacation time for all THA employees whether competitive or exempt. Meissner acknowledged that the THA policy for all employees regardless of jurisdictional classification is as follows: a standard form requesting vacation leave must be completed prior to taking leave, and any vacation leave utilized must be deducted from accruals, recorded on the timesheet, and subsequently submitted to the THA for the appropriate pay period. Meissner admitted that he personally completed his own timesheets and submitted them to Phalen to be kept in THA‟s ordinary course of business. During the interview, Investigators presented Meissner with copies of the two THA timesheets reproduced below; each containing the name “William B. Meissner” and reflecting
Notably, as mentioned above, Meissner claimed to Investigators during his interview that he held the title “Acting Comptroller” from February 1994 until Rosenthal‟s initial hire as THA Comptroller. 18 The term of the two-year Executive Secretary Agreement was from January 1, 2008 through December 31, 2009.
payroll periods 6/30/2007 through 7/13/2007, and 7/14/2007 through 7/27/2007. Despite displaying six hours of holiday leave charged for the July 4, 2007 holiday, these time records reflected no other leave accrual deductions, including annual (vacation) leave.
Upon reviewing the timesheets, Meissner acknowledged signing and submitting each time sheet. When questioned by Investigators as to whether he was on vacation from July 12, 2007 through July 19, 2007, he advised that he “might have” taken a vacation during those time periods. Investigators subsequently confronted Meissner with a copy of the e-mail reproduced on the following page wherein Meissner cancels a scheduled meeting due to his “vacation” from July 12 through July 19 for his daughter‟s wedding.
Investigators further secured records from Meissner‟s wife‟s travel agency, Meissner Cruise and Travel, which revealed that he was indeed on vacation out of the country during the relevant payroll periods:
When confronted with the fact that he deducted no vacation time from his leave accruals, despite being on vacation, Meissner provided Investigators conflicting explanations. Initially, Meissner purported that Phalen was supposed to have deducted Meissner‟s utilized vacation leave on his behalf. Meissner subsequently provided a second explanation, now stating that he intentionally did not deduct the vacation leave because he worked in excess of his regularly scheduled number of summer hours (sixty within a two week pay period,) as that “…was part of the job” and followed union contractual guidelines with respect to converting hours worked in excess of the required sixty hours to vacation leave. He further claimed that as THA Executive Secretary, he authorized his own purportedly unused vacation accruals to be carried over into subsequent years, stating that he did not do anything different than did previous THA Executive Secretaries before him.19 When Investigators called into question the inconsistency between Meissner‟s previous statements regarding the distinction between his status as non-union, overtime exempt employee and union employees, he embellished that at the time he was “…doing two jobs,” and worked
When Investigators explored the same issues with Musolino, he advised that during his tenure as THA Executive Secretary, he did not ever, to the best of his recollection, sell back any annual leave time to the THA and certainly not annual leave time which he already used for which he was previously paid.
enough time in excess of the required sixty hours in the preceding two weeks to equal the number of vacation days he failed to deduct from his vacation accruals in the following pay period. Pombrio informed Investigators that throughout her tenure in the THA, Meissner was frequently absent during the regular THA Monday through Friday work week; often on vacation, and at other times inexplicably absent from his office at the THA. Pombrio advised that Meissner would frequently purport to THA staff that he reported to work at the THA on Saturdays; thus allowing him compensatory time which he claimed accounted for his absences during the regular work week. When Investigators confronted Meissner as to how he could possibly carry over vacation time that he actually used, and further, how he could possibly have been compensated for this same purportedly unused vacation time via a so-called vacation exchange, he claimed that he did so in a manner consistent with the union contract, and that all that compensation was “taken away” from him in a settlement with the THA, pursuant to a related civil matter between he and the THA.20 When Investigators requested he clarify what he meant by “…doing two jobs,” Meissner advised that he was referring to the fact that even though Rosenthal was brought back as a “consultant,” he (Meissner), in addition to his other duties as Executive Secretary, “…still did the books” and Rosenthal “controlled the cash,” as Meissner is an accountant and Rosenthal is not. When further pressed regarding Rosenthal, Meissner abruptly ended the interview and requested legal counsel be present for any further questioning. Analysis of records of Meissner‟s time and attendance evinces that these two false timesheets may not have been an isolated event. Examination conducted of documents relevant and material to Meissner‟s duties, time and attendance as the THA Executive Secretary, revealed evidence indicating that Meissner failed to deduct annual vacation leave for time he utilized. In fact, according to THA records, Meissner took no vacation leave for several years and then “sold back” his purported unused vacation time. In total, the investigation determined that Meissner approved his own “sell back” of approximately 91 supposed unused annual leave days totaling over $32,000.
The Office of the New York State Comptroller and United States Housing and Urban Development, Office of Inspector General will refer these findings to the New York State Attorney General for its review.
On April 21, 2010, the THA terminated Meissner for cause, resulting in Meissner filing for arbitration with the American Arbitration Association. Effective October, the parties entered into a settlement agreement, where among other terms, Meissner was reinstated to the THA payroll effective April 22, 2010 through the original contractual ending date of December 31, 2010. Meissner waived any rights to past vacation pay, floating holidays, longevity pay and personal time he earned prior to his return to the THA payroll on April 22, 2010, which Meissner estimated to have been worth $27,322. The settlement agreement further satisfied any and all disputed payments for vacation benefits which Meissner received in the past. THA Officials advised Investigators that they entered into this agreement because it provided the most expeditious method to end Meissner‟s tenure at the THA, absent lengthy litigation.