Updates & Chag Sameach

Once again, a dearth of posts has resulted from me going through a busy period, exacerbated by the Passover preparations for the upcoming Pesach holiday (redundancy intentional; this posting can now be hit by a search of either term). A few updates are in order.


(A) Big Dipper update: During the past month since the Big Dipper Update # 8, the issue has only spread and intensified. NY AG Andrew Cuomo, who is certainly not oblivious to the prospects of making political hay, has issued two press releases during the past week [here and here] announcing various expansions of his probe into the matter. Expect to see some criminal indictments, and maybe, just maybe, some dollars returned to the New York State public treasury.

(B) The Wisniewski case posting from 9 July 2007 (the one where the kid's parents sued the school for expelling him for making death threats to a teacher): The U.S. Supreme Court has denied certiorari, which means that the suspension stands, and the kid (who is now an adult) does not get exonerated for the death threats. Aaron Wisniewski's only hope is for him to accept accountability for his actions. But with facilitative parents who do everything to externalize the blame which rightly rests upon his shoulders, he really doesn't have too much of a chance.


(C) The Passport Snooping post of 23 March 2008: As mentioned, State Department employees get away with doing things that IRS employees can't even daydream about doing. Along such lines, the removal of an IRS employee Shirley C. Albritton for snooping, which was upheld by the Merit System Protection Board, was affirmed by the Federal Circuit Court of Appeals.



The hour draws late, and the holiday will soon be upon us, thus giving me and my wife approximately 2 days to finish our preparations. As usual, I look forward to it, but, as usual, it will take a lot out of me.

Wishing everyone a happy & kosher Passover!

Big Dipper: Update #8

The New York State Union of Teachers has published its take on the double-dipping controversy. This 2-paragraph piece appears in the 13 March 2006 edition of NYSUT's party line paper, New York Teacher, on page 6:

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"Wasteful spending contributes to property tax issues.

NYSUT President Dick Iannuzzi said that Newsday's investigation into school district expenditures on law firms shows that wasteful spending is a contributor to rising property taxes affecting communities statewide.

Because of the property tax increases, some lawmakers are calling for tax caps that would impose limits on the amount public schools could increase spending in any given year. NYSUT has opposed these caps, saying they would curb investment in public schools. They have hurt education in other states where they have been implemented and would lock in disparities that exist among school districts throughout the state, NYSUT leaders say."

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Hold it right there!! It's wrong for the school districts to waste the taxpayers' money on pensions for outside attorneys, but its okay when the NYSUT milks the taxpayers with the teacher pension costs? Milorganite!!!!

Howcum whenever my household has a cash crunch, we have to cap our spending, but when the school districts have a cash crunch the just raise taxes?

Why can't my wife and I just ask our employers for a salary increase whenever our household spending crosses the line?

NYSUT costs the taxpayers far, far more than Larry Reich costs us. Dick Iannuzzi is one big hypocrite!!!

Why can't the school districts and the teacher's unions live within their budgets, just like the rest of us?

Big Dipper: Update #7

Now that soon-to-be ex-Governor Eliot Spitzer has pushed everyone else off the front pages of the New York newspapers (in the case of Newsday, the front 8 pages), the developments of the big double-dipping story are hidden away in the back sections.

Now, it seems that New York State Comptroller Tom DiNapoli has ratcheted things up a bit by requesting all Long Island special districts (school, fire, water, etc.) under his cognizance to name all persons who have been or may have been misclassified, per the IRS standards, as employees instead of independent contractors.

The story thread will be riding the back of the bus for the next week or two until Spitzer is finally sent to his room, which means that everyone connected with the double-dipping affair can do what they need to do (including lawyers who need to make deals for their clients) without the distraction of too much public attention.

Once the Spitzer story tones down, there likely will be some further developments to report.

Big Dipper: Update #6:

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Some more slanted journalism from Newsday (what else is new?). I happen to support the cause towards which Newsday's journalism is slanted, but it is slanted journalism just the same.

The office of New York State Comptroller Tom DiNapoli has issued an official report which finds that Larry Reich was misclassified as an employee of 5 different Long Island school districts. He should have been classified as an independent contractor, and, more to the point, he should not have been logging time as an employee for New York State pension purposes.

The specific finding in DiNapoli's report is "District officials should submit corrected retirement reports to ERS [Employee Retirement System] related to Mr. Reich."

Newsday's headline, however, is "NY Comptroller: Attorney has to Pay Back Pension."

First of all, the DiNapoli report is, at this moment in time, nothing more than a recommendation. The affected school districts have 90 days to come up with some sort of corrective action. The most logical corrective action would, in fact, entail a reimbursement from Larry Reich. But Newsday is a bit ahead of the process.

In Big Dipper Update #4 (26 February 2008) I speculated whether Janet Wilson, the Harborfields School District Superintendent, was Newsday's source of a certain document. DiNapoli's report does not directly answer that question, but it does state that "In August 2006, OSC [Office of the State Comptroller] received an anonymous complaint concerning the Harborfields Central School District. Among other issues, the complaint alleged that the District had classified an attorney, Mr. Lawrence Reich, as an employee while at the same time, paying his law firm a retainer for legal services." This is no proof of the Newsday source, but neither is it inconsistent with the proposition that Janet was their girl.

As far as the State of New York and its pension system goes, this presents an opportunity for all the double-dipping school attorneys to resolve their pension issues and avoid criminal prosecution.

But there still is the matter of the Federal grand jury, and the involvement of the IRS. The way I am now calling it: There may well be some tax fraud issues above and beyond the pension adjustment issues.

Nous verrons ce que nous verrons!

BIg Dipper Update: #5

Can't really go into details now, what with my many deadlines and busy schedule.

The sensational Newsday stories by Sandra Peddie, Eden Laiken and Robert Kessler seem to have gone quiescent, at least for now. But there are comments by Newsday's columnists and writers of letters to the editor.

But once the grand jury comes out with a true bill, everything else will likely be pushed aside to make way for the story on Newsday's front page.

Unless ... Peddie, Laiken and/or Kessler have something in the oven right now, some new angle, some new smoking gun document.

But what if? What if the Federal grand jury does not come up with enough evidence for a criminal indictment?

Well, NY AG Andrew Cuomo's office is investigating. There may be some state criminal indictments.

And there may be some civil causes of action as well. Suppose, for example, that in connection with the employment of Larry Reich or Carol Hoffman or any of the other attorneys who double-dipped, one or more of the school districts received more reimbursement from Federal funds than they were really entitled? This might be the basis for a qui tam False Claims Act action by a private party.

[Disclosure: I once had a FCA case in my legal practice. Uncle Sam settled with my client, and it never made the law books or the newspapers. The rest of the story, interesting as it may be, must remain in the attorney-client privilege file.].

And the involvement of the IRS guy, as noted in the 20 February posting, leads me to belive that there may be evidence of more than just a mix-up of the wrong colors of money.

Big Dipper: Update #4

For a guy who is now busy trying to meet multiple deadlines, I've been nailing up quite a few posts to this Blog the past few days.

A Lexis-Nexis news search for Lawrence W. Reich brings up 21 hits within the past 2 weeks. More action, more subpoenas, more play in the press. My comments, in no particular order:

A. Until today (25 February 2008), all of those hits were in Newsday, which is not surprising, given the Long Island situs of the story. But today, the New York Daily News weighed in with an editorial. The editorial's angle is to the effect that New York State Comptroller Thomas DiNapoli looks like a smacked toochas for not catching this business with Reich. Regardless of whether one agrees with this viewpoint (I personally endorse it wholeheartedly), the proactive coverage of the story (as opposed to a reprint parroting the story) by a tabloid other than Newsday starts a new bar on the Gantt chart. It is no longer a Newsday exclusive.

B. One of the Newsday hits was Joye Brown's column of 19 February 2008. In that column, Ms. Brown states that the smoking gun letter to Reich from Harborfields School District Deputy Superintendent Joe Dragone was denied to Newsday's Sandra Peddie when she requested it pursuant to New York's Freedom of Information Law, but Peddie "obtained it elsewhere." I wondered about that, but now it all fits. Today's Newsday carries a story, under the by-line of Sandra Peddie and Robert Kessler, which essentially reports that last July, current Harborfields Superintendent Janet Wilson, who is now suing the Harborfields District over her nonrenewed contract, disclosed the matter of Reich's double dipping to her attorney, who then reported it to the Ingerman Smith law firm, of which Reich's was then a partner; and that the report set into motion a chain of events that led to Reich's resignation from the firm.

Query: Was it Janet Wilson who was Ms. Peddie's the "elsewhere" source for the document? Without drawing any definitive conclusions, I will note that (1) when I was with the IRS, almost all of the tax snitch cases I dealt with involved an ex-spouse, a spurned mistress or a fired employee; and (2) a school district superintendent who feels insecure regarding his or her continued employment is far, far better postured to copy documents without arousing suspicion than is a wife or husband who suspects the fidelity of his or her spouse.

C. The function of every business organization is dependent upon the social interactions of its members. It seems that while Sandra Peddie seems to be Newsday's point woman for the Reich case, Robert Kessler and others seem also to be in on the case, and, as alluded to above and in prior posts, other Newsday journalists who are not per se assigned to the Reich case seem to be socially interactive with Peddie and Kessler and others who are. This is the way a newspaper ought to run. But the corollary is that the collective Newsday organization probably has more -- lots more -- arrows in its quiver, which will be selectively and measuredly shot in a manner to best groom the story for Pulitzer Prize consideration or the like.


D. Notwithstanding the Ingerman Smith law firm's decision last July to rid itself of Reich, it seems that the attorneys there may have fallen somewhat short of the requirements of Disciplinary Rule 1-103, the so-called "rat rule" which requires attorneys in possession of information "that raises a substantial question as to another lawyer's honesty, trustworthiness or fitness as a lawyer" to squeal on their colleagues. There probably won't be any major disciplinary actions against the other Ingerman Smith attorneys who weren't double dipping, but I'm sure that nobody at Ingerman Smith is sleeping too well on account of it.


In Update #3, I stated that "[t]he case will, in all likelihood, get more interesting before it starts to get boring." For the next few weeks, this case is not about to get boring!

Big Dipper: Update #3

I don't presently have time to do extensive commentary, but Newsday has been posting more articles related to the Larry Reich affair, and with by-lines not only by Sandra Peddie. Among the further developments: Two lawyers who formerly were partners in the Ingerman Smith law firm were also being listed, for state pension purposes, as full-time employees of the school districts their firm represented. And at least one school board member has it on good authority that he can expect a subpoena from the federal grand jury.

The case will, in all likelihood, get more interesting before it starts to get boring.

The Big Dipper

The previous post to this Blog addresses the matter of Brenna Stewart, a NYC schoolteacher (who also happens to be (A) a lawyer; (B) a former New York State Court Officer and (C) terrorist/traitor Lynne Stewart's daughter) who now stands charged with various criminal offenses in connection with falsifications for her sick leave.

When the story about Lawrence W. Reich appeared on the front page of the 15 February 2008 edition of Newsday (the Internet edition posts the story at 4:24 PM EST on 14 February, so it didn't appear in the hard copy newsstand edition until the next day), I saw many parallels between his case and that of Brenna Stewart. Reich is an attorney in private practice who was listed by the school district he represented as a full-time school district employee for New York State Employees Retirement System pension purposes. Make that FIVE school districts! Apparently, Reich was not just double-dipping; he was quintuple-dipping!

And, thought I, if they're going after such a small fish (albeit an overweight one) as Brenna Stewart, then they should also be going after Reich, who, (in more than one sense of the word) is a bigger fish. Well, the front page of the next day's Newsday edition on 16 February 2008 reports that a federal grand jury is now interested in Reich's remuneration arrangements.

Now understand that Newsday is not my favorite rag (though I find that home delivery of the tabloid is a far less objectionable alternative than the New York Times), but every so often they break stories that keep various individuals in government honest, which is the way the news media are supposed to operate.


My comments on the matter:

A. Disclosure: A number of years ago, I had a case with Reich's former law firm, now known as Ingerman Smith but formerly known as Ingerman, Smith, Greenberg, Gross, Richmond, Heidelberger, Reich & Scricca. The matter was unrelated, and with an attorney other than Reich.


B. According to the news reports, Reich insists that he didn't know how the papers the school districts were filing with the New York State Employees Retirement System were characterizing him. I know that my wife receives periodic statements from NYSERS with respect to her own pension. Furthermore, it is a matter of public record that Reich was counsel for the respective school boards in the following cases involving school district employees and their compensation and retirement:

Hoerger v. Board of Education, 127 A.D.2d 88, 514 N.Y.S.2d 395 (2d Dept. 1987).

Board of Education v. Nyquist, 36 A.D.2d 199, 319 N.Y.S.2d 661 (3d Dept. 1971).


Methinks he should have had some idea as to what the NYSERS statements he received implied, and the papers filed by the respective school districts which gave rise to such statements!


C. Newsday got much of its info through requests to the various school boards, pursuant to New York's Freedom of Information Law, which basically is analogous to the federal Freedom of Information Act (albeit slightly more protective of the government). The school districts are not very large organizations at the administrative level; they are small enough that FOIL requests of any notability would quickly become known to those school district personnel who may be implicated by such requests. From my own experience with submitting FOIL requests over the years, I have reason to believe that such a process occurred in a larger and more complex New York State governmental unit.

D. Don't be surprised if the New York State Attorney General gets involved in the matter. As reported in the Newsday articles, the folks in Mr. Cuomo's office have effectively admitted that they are aware of the matter, and are determining what action, if any, they ought to take.

E. Though there is the obvious imperative to somehow punish (or at least touch the bank account of) Mr. Reich, there may be repercussions for some of the school district employees and/or administrators involved.

F. The Ingerman Smith law firm may well be in for some flak as well. As reported in the Newsday articles, the firm's correspondence with at least one of the school districts indicates that they knew of, and approved of, and acquiesced in the arrangement regarding Reich.

G. I do not think that we have heard the end of the matter, nor would I be surprised to see more Newsday articles under the by-line of Sandra Peddie, the Newsday reporter who wrote the aforementioned articles. The articles are obviously the result of many months of research legwork. If this matter really does blow up in everyone's face, then Ms. Peddie may be in for some professional accolades. Notwithstanding my gripes against Newsday, I would not begrudge Ms. Peddie one iota if she were to receive a Pulitzer Prize for her reporting.