The managing partners of two upstate New York law firms said Wednesday they have settled with Attorney General Andrew M. Cuomo in his probe of alleged public pension fund abuses because it makes good business sense.
Girvin & Ferlazzo of Albany agreed to pay $500,000 as part of its settlement, by far the largest payment so far by a firm stemming from Cuomo's pension fund investigation. The other firm, Hogan, Sarzynski, Lynch, Surowka & DeWind of Johnson City, has agreed to pay $100,000.
Both law firms pledged to discontinue any arrangements in which its attorneys are classified as employees of BOCES or public school districts for public pension and fringe benefit purposes. Partners at both firms also agreed to give up all public pension credits accrued while doing work for school districts.
"The firm decided to enter into the Assurance of Discontinuance as a sound business decision despite any good-faith disagreement and to forego a lengthy and expensive litigation strategy," said Jeffrey D. Honeywell, Girvin & Ferlazzo's managing partner. "We concluded that the time and effort diverted from serving our clients in pursuing such an effort would not have been appropriate or productive."
Honeywell said the $500,000 payment is "not a fine or a penalty of any kind." Rather, he termed it in a statement "the cost of allowing the review to end and permit us to continue with the business of serving our clients."
Wendy DeWind, managing partner of Hogan, Sarzynski, Lynch, Surowka & DeWind, also stressed that her Broome County firm is admitting no wrongdoing in reaching a settlement with Cuomo.
"The potential cost of litigation and the ongoing investigation as well as the potential disruption to our clients caused us to make the business decision that settlement was appropriate," DeWind said in an interview.
The firms and their partners also agreed to cooperate with the ongoing probe. Cuomo said Wednesday he is continuing to investigate former Girvin & Ferlazzo partner M. Cornelia Cahill and former Hogan, Sarzynski, Lynch, Surowka & DeWind partner John B. Hogan.
"Both parties have agreed to cooperate against the actors who we believe were more egregious in their conduct," Cuomo said Wednesday during a Capitol news conference.
Cuomo is contending that it was an accepted and widespread practice for private attorneys to have been listed as employees of school districts, BOCES and other government entities when providing legal services as independent contractors. Such lawyers should not qualify for public pensions or fringe benefits that public employees receive, Cuomo said.
He added Wednesday that his investigation is bearing out his prediction that abuse of the pension fund and payroll benefits has been common.
"We are finding it in schools, we are finding it in local government literally from one tip of the state to the other," he said.
In fact, Cuomo said, "My entire office could do nothing else but investigate these cases. That's how widespread it is."
Comptroller Thomas P. DiNapoli has moved to rescind the membership of several attorneys from the public pension fund and to take pension credits away from others.
Three partners in the Johnson City, N.Y., firm -- DeWind, Edward Sarzynski and Michael Surowka -- have been removed from the pension system by DiNapoli.
The comptroller also has revoked the pension fund membership of four Girvin & Ferlazzo partners: Honeywell, James Girvin, Kristine Lanchantin and Kathy Ann Wolverton.
Cuomo said Wednesday the settlement with Girvin & Ferlazzo concerns the firm's 19-year arrangement with the Hamilton-Fulton-Montgomery BOCES under which a total of 12 Girvin & Ferlazzo attorneys were listed as employees of the district and earned pension credits.
He contended that Cahill, who has since left the firm and is now with Hiscock & Barclay in Albany, was among those listed as "employees" of the BOCES though she did no legal work for the district.
Cahill, the wife of Court of Claims Presiding Judge Richard E. Sise, did not return a call Wednesday for comment.
Daniel J. French of French-Alcott in Syracuse, who represents Cahill, said in a statement Wednesday that his client "has cooperated with the Office of the Attorney General from the beginning of their inquiry and expects to settle civilly within a matter of days."
Maureen Harris, another former Girvin & Ferlazzo partner listed as an employee of the BOCES district, settled with Cuomo's office last month for $50,000 and forfeited any pension credits she accrued through the district. Harris is a commissioner on the Public Service Commission.
Cuomo Wednesday also highlighted the case of Hogan, who was improperly listed as an employee by as many as six school districts and BOCES at the same time between 1967 and his retirement in 2000. That enabled him to put in for a public pension of $91,752 a year and to collect a total of more than $500,000 from the retirement system since 2000.
Hogan is one of four plaintiffs in a suit in Albany Supreme Court seeking a cessation of Cuomo's investigation and of DiNapoli's revocation of pension eligibility for lawyers. The plaintiffs in Swergold v. Cuomo, 3897-08, contend that Cuomo and DiNapoli are both overstepping their authority.
James Roemer of Roemer Wallens & Mineaux in Albany represents Hogan. Roemer declined to comment on the settlement reached by the partners at the Johnson City firm founded by Hogan.
Roemer is seeking to quash a subpoena Cuomo has issued to Hogan, who continues to collect a pension, as part of the attorney general's investigation.
Girvin & Ferlazzo has eight partners and seven associates. Hogan, Sarzynski, Lynch, Surowka & DeWind has four partners and one associate.
In addition to settlements with other firms and individual attorneys, Cuomo's office has settled with the Buffalo firm of Hodgson Russ. Its attorneys were listed on the payrolls of a number of western New York BOCES and school districts.
Gary M. Schober, Hodgson Russ' president and CEO, said last month the $50,000 settlement was the best thing for his firm.
"We obviously could have dug in our heels and engaged in litigation with the attorney general," he said in an interview. "But we concluded, for all the reasons that any businessman would consider, that it was better for our law firm and our clients to enter into the Assurance of Discontinuance with the attorney general."
Cuomo also has previously reached settlements with the East Syracuse firm of Ferrara, Fiorenza, Larrison, Barrett & Reitz and with Aiello & Cannick of Queens.