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Court: N.Y. Attorney General May Subpoena Lawyers' Records for Pension Fraud Probe
New York Law Journal
November 17, 2009
New York Attorney General Andrew Cuomo won his bid to subpoena the employment records of two lawyers in connection with his investigation of state pension fund fraud, when an Albany appeals panel last week found that the attorney general "enjoys a presumption that he is proceeding in good faith."
In a pair of unanimous decisions, Matter of Roemer v. Cuomo, 506791, and Matter of Hogan v. Cuomo, 506792, the Appellate Division, 3rd Department, upheld subpoenas seeking records for two lawyers in a probe into whether public agencies improperly classified independent contractors who are ineligible for public pensions as employees.
Last September, Albany attorney James W. Roemer Jr. challenged a subpoena seeking his employment and financial records relating to his representation of municipalities dating back to 1971.
Albany Acting Supreme Court Justice Gerald W. Connolly partially quashed the subpoena, ruling that Cuomo had provided information sufficient to serve as a basis of inquisitorial action going back only to 1984.
The attorney general's office issued a second subpoena confined to that period, which Roemer, of Roemer Wallens & Mineaux, unsuccessfully challenged before Connolly.
The 3rd Department rejected Roemer's appeal.
The information sought by Cuomo was "relevant to the potential violations under investigation and ascertaining the amount of benefits improperly received, if any," Justice William E. McCarthy wrote for the panel in Roemer.
It also noted that Roemer, who has collected a pension of nearly $120,000 a year since 2001, did not contest the "general premise" of information obtained by an unnamed confidential informant who worked for his former law firm, which served as the basis for the subpoena.
According to the informant, Roemer's salary was paid by "local governments, rather than payment for traditional retainers or billable hours, indicating that petitioner did not receive such salaries as an individual employee of the local governments."
Roemer's firm, along with Albany-based DeGraff, Foy & Kunz, represent attorneys who have challenged the investigation by Cuomo and state Comptroller Thomas P. DiNapoli on statutory and due process grounds.
So far, more than 60 individuals, nearly all attorneys, have had their pensions either revoked or rescinded as a result of the probe.
In April, Justice Connolly ruled that Cuomo and DiNapoli have the authority to review and to revoke pension benefits, but only after giving the recipients proper notice of the deprivation.
The panel found that "broad authority" gave Cuomo the leeway to investigate potential fraud and illegality.
In Roemer's case, the subpoena was "issued pursuant to legitimate authority," the panel held, declining to quash it.
'AN ELABORATE ALLIANCE'
Using similar reasoning, the same 3rd Department panel declined to quash a subpoena for the employment records of attorney John Hogan of Johnson City, N.Y., dating back to 1967.
Hogan, of counsel to Hogan, Sarzynski, Lynch, Surowka & DeWind, was listed as an employee of "as many as six school districts at the same time, while also operating a private law office."
Hogan has collected a $138,693 annual pension since his retirement in 2000.
According to the decision by Justice Anthony T. Kane, Hogan "encouraged school districts to name him as an employee receiving a salary rather than paying a retainer to his law firm."
And, Kane wrote, the existence of an "elaborate alliance" to funnel money between school districts that listed Hogan as an employee provided Cuomo with a "legitimate factual basis" to investigate further.
In a footnote, the panel also discounted an argument by Hogan that Cuomo should be investigating the school districts rather than him, because only employers can designate whether someone is eligible for a pension.
That argument was "unavailing," the panel held, because even if school districts were the culprits, Cuomo "could still issue subpoenas for petitioner's records as part of that investigation."
In addition to Justices Kane and McCarthy, Justices Robert S. Rose, Leslie E. Stein and Elizabeth A. Garry served on the panels that heard Roemer and Hogan.
In a statement, John Milgrim, a spokesman for Cuomo, said the rulings "essentially confirmed what the attorney general has been saying all along; it's wrong for lawyers and other professionals to seek or obtain public pension credits when they are actually working as retained consultants." He added, "The excuse that it has been going on for years simply won't work anymore."
George J. Szary of DeGraff, Foy & Kunz represented Roemer.
Roemer represented Hogan.
