NY Settles Attorney Pension Misuse Charges

June 4, 2008 (PLANSPONSOR.com) - New York state officials have reached a $235,000 settlement with three law firms on Long Island, in Westchester, and in upstate New York as part of a widespread probe of local government agencies improperly giving outside lawyers pension credits.

State Attorney General Andrew M. Cuomo announced that the settlement also calls for all public benefits wrongfully received to be forfeited. Involved in the pact are Ferrara, Fiorenza, Larrison, Barrett and Reitz P.C. of East Syracuse; the New York City law firm of Aiello and Cannick; and Long Island attorney Gilbert Henoch.

Cuomo said the probe by his office focused on   improper employment arrangements with school districts and a Central New York Board of Cooperative Educational Services (BOCES) in which attorneys listed as employees would receive state pension credits even though they actually functioned as outside consultants. The arrangement allowed the BOCES’ component school districts to receive reimbursement from the state for a portion of the cost of the lawyers even though the districts were not eligible to receive that aid, Cuomo charged.

“Systemic abuse in the public pension and benefits systems has wasted millions of taxpayer dollars,” said Cuomo in a statement on his Web site. “We will continue to examine school districts and BOCES throughout the state to ensure that taxpayer dollars are not being wasted by providing pensions to lawyers who are not state employees or other unwarranted perks and benefits. “

The statement said that at various times since 1994, 22 of the Ferrara firm’s present and former attorneys have been improperly listed as employees of the Madison Oneida BOCES.  Of those 22 attorneys, Norman Gross, Henry Sobota, and Marc Reitz received state pension credits in connection with their work.   

The three attorneys have already taken steps to rescind the pension credits they received and forfeit any claim they may have had to recoup employee contributions made to the pension system during that time. 

The Attorney General's Office also charged that since 1997, two lawyers at the law firm Aiello & Cannick, Devereaux Cannick and Jennifer Fremgen, have been improperly listed as employees of the Mount Vernon City School District. Under the settlement agreement, Cannick and Fremgen have agreed to rescind all pension credits they received in connection with their work for Mount Vernon and forfeit any claim they may have had to recoup employee contributions made to the pension system.

Henoch, while employed as an attorney in private practice, was improperly listed as an employee at the Hempstead Union Free School District from 1970 to 1996 and at the East Meadow Union Free School District from 1980 to 1985, receiving health benefits from Hempstead and pension credits in the New York State Employees' Retirement System (ERS) from both.  

Under the settlement agreement, Henoch will terminate his membership in ERS, forfeit any future claims to pension benefits in connection with the years he worked for Hempstead and East Meadow, and forfeit any claims to employee contributions made to the pension system.

Last month, the Attorney General announced settlements in the investigation with the Buffalo firm of Hodgson Russ LLP and Capital Region attorney Maureen Harris, a former partner with the Albany firm Girvin and Ferlazzo, P.C. and a current commissioner with the state Public Service Commission who Cuomo said had similar arrangements (See  Empire State Pension Probe Could Snare Hundreds of Lawyers ).

Officials also announced that Cuomo and state lawmakers are developing bills prohibiting the practice of allowing outside counsel to get unwarranted pension benefits.