29STATE OF NEW YORK
STATE ETHICS COMMISSION
IN THE MATTER OF
ALAN G. HEVESI,
THE STATE OF NEW YORK
/ NOTICE OF
JURISDICTION OF THE COMMISSION
The Commission is authorized by Executive Law §94(12)(a) to commence inquiries into possible violations of Public Officers Law §§73, 73a, or 74. Pursuant to Executive Law §94(16)(d), the Commission is authorized to conduct any investigation necessary to carry out the provisions of §94. Pursuant to this power and duty, the Commission may administer oaths or affirmations, subpoena witnesses, compel their attendance and require the production of any books or records which it may deem relevant or material.
In cases where the Commission finds a violation of §73 or §73-a, the Commission is empowered to conduct a hearing and make a final determination of wrongdoing. In cases involving violations of Public Officers Law §74, the Commission’s role is limited to determining whether there is reasonable cause to believe that a violation of the Code of Ethics has occurred.
Executive Law §94(12)(b) provides that if the Commission determines that there is reasonable cause to believe that a violation has occurred, it shall send a notice of reasonable cause: (i) to the reporting person; (ii) to the complainant if any; and (iii) in the case of a statewide elected official, to the Temporary President of the Senate and the Speaker of the Assembly.
Public Officers Law §74 contains the Code of Ethics for State officers and employees. Subdivision 2 sets forth the rule with respect to conflicts of interest; it provides, in pertinent part:
No officer or employee of a state agency . . . should have any interest, financial or otherwise, direct or indirect, or engage in any business or transaction or professional activity or incur any obligation of any nature, which is in substantial conflict with the proper discharge of his duties in the public interest.
Public Officers Law §74(3) sets forth standards which include the following:
d. No officer or employee of a state agency . . . should use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others.
. . . .
h. An officer or employee of a state agency . . . should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust.
Public Officers Law §74(4) states, with regard to violations of §74, that:
In addition to any penalty contained in any other provision of law any such officer, member or employee who shall knowingly and intentionally violate any of the provisions of this section may be fined, suspended or removed from office or employment in the manner provided by law.
POWERS AND DUTIES OF THE OFFICE OF
THE STATE COMPTROLLER
The New York State Constitution establishes certain “department heads,” including the head of the Department of Audit and Control who shall be the Comptroller (NY Const, art V, §4). The State Constitution provides that the Comptroller shall be required: (1) to audit all vouchers before payment and all official accounts; (2) to audit the accrual and collection of all revenues and receipts; and (3) to prescribe such methods of accounting as are necessary for the performance of the foregoing duties (NY Const, art V, §1). It further provides that the Legislature shall define the powers and duties of the Comptroller and may also assign to him or her certain other enumerated duties, but may not assign any administrative duties except as may be incidental to the performance of constitutional functions (NY Const, art V, §1; see, State Finance Law §§8, 111; see also, Executive Law § 40).
The State Comptroller is New York State's chief fiscal officer, and is charged with auditing government operations and operating the Statewide Retirement Systems. Responsibilities of the Comptroller include:
· Managing the State's assets and issuing General Obligation debt;
· Conducting management and financial audits of State agencies and public benefit corporations;
· Issuing reports on State finances;
· Overseeing the fiscal affairs of local governments, including New York City;
· Reviewing State contracts, payrolls and payments before issuance;
· Maintaining the State's accounting system and issuing monthly cash financial statements;
· Overseeing the Justice Court and Abandoned Property Programs; and
· Operating the retirement systems for State and local retirees.
I. THE COMMISSION’S INFORMAL ADVISORY OPINION TO THE NEW YORK STATE COMPTROLLER
On May 14, 2003, Alan G. Hevesi, the State Comptroller, submitted a request to the Commission for an informal advisory opinion seeking guidance concerning the application of the Public Officers Law to his proposal to provide security and transportation to his wife in certain circumstances. The Comptroller advised the Commission that while he was City Comptroller “he requested and received clearance” from then City Corporation Counsel Michael D. Hess to provide his wife, Carol Hevesi, with “occasional security and transportation” (E: 12). Citing his “apprehension” concerning “numerous threats over the years,” the Comptroller stated that he had “an appreciable concern” for his wife’s security.
The Comptroller wrote:
I would like to arrange to have a member of my security detail and appropriate transportation made available for Carol’s well being and protection when she is meeting me for official events, and on those occasions when she must travel without a companion and the need for security is apparent in the judgment of those on my staff assigned to make these determinations.
In those instances where the advisability of security is not apparent, I will of course be prepared to reimburse this Agency for any personnel and transportation costs incurred (E: 12).
On May 30, 2003, the Commission responded by issuing an informal advisory opinion to the Comptroller, which cited Public Officers Law §§74(2) and (3)(d), (f) and (h), the provisions of the ethics law applicable to his inquiry (E: 13). The opinion noted that, while “[g]enerally, questions concerning specific issues involving the security and transportation needs of statewide elected officials are best addressed by the agency,” the Commission had previously addressed matters involving the inappropriate use of State resources in situations involving political campaigns and outside activities. Turning to his specific question, the Commission advised that “when independent law enforcement personnel determine through a risk assessment process that security and transportation for Mrs. Hevesi is warranted, Public Officers Law §74 is not violated because the independent assessment vitiates any concern that you are using your State position for some unwarranted benefit.” The Commission cautioned:
However, in those situations when legitimate security concerns are not found to be present, or when the function is unrelated to your official business, you should refrain or reimburse the State for any costs incurred for the use of State resources to avoid the appearance that you are using your position as Comptroller for some unwarranted benefit for your wife [Public Officers Law §74(3)(d)], or that you are otherwise engaged in acts in violation of the public trust [Public Officers Law §74(3)(h)] (E: 13).
The Commission advised the Comptroller that its informal opinion was advisory, based upon the facts provided in his request letter, and that if he wished to clarify or supply further facts to the Commission concerning the issue, it would be prepared to respond. Until September 2006, the Comptroller had no further communications, written or oral, with the Commission related to Mrs. Hevesi’s transportation and security.
II. THE COMMISSION’S INVESTIGATION
On September 21, 2006, the Office of the State Comptroller’s (“OSC”) toll-free hotline, which is used to report allegations of fraud, corruption or abuse of taxpayer money, received a telephone call from J. Christopher Callaghan, Hevesi’s opponent in the 2006 election for the office of State Comptroller. In that call, Callaghan reported that a State employee’s “sole assignment” was to drive Mrs. Hevesi (E: 18, at Tab G). The media reported on this the allegation over the next several days.
On September 23, 2006, the Commission decided to begin a preliminary review of the matter, and two days later, on September 25, 2006, the Comptroller requested that the Commission review his actions regarding the use of a “single employee” to provide security and transportation to his wife (E: 7). The Comptroller stated that in addition to the past threats cited in his 2003 request, he had received threats in July 2006 stemming from his refusal to approve a $47 million contract with a vendor with ties to organized crime. Based on the advice of his own security staff, the Comptroller stated that he believed that the use of Nicholas Acquafredda to assist his wife with the “rigors of her daily life and providing her with the sense of security she has required” was “appropriate” and “comported both with the informal opinion . . . as well as the applicable sections of New York State’s Public Officers Law” (E: 7).
The Comptroller expressed his regret that he had not, on a continuing basis, made periodic reimbursements to the State for those periods of times where security was not apparent, and stated that he was sending a check in the sum of $82,688.82 to the New York State Commissioner of Taxation and Finance (E: 7; E: 20). The Comptroller explained that this amount was based upon the percentage of time Acquafredda spent with Mrs. Hevesi from 2003 through 2006 compared with his annual salary, plus benefits and interest, and included those times when the need for security was apparent (E: 7). According to the OSC, Acquafredda spent the following percentage of his work time with Mrs. Hevesi: 5% in 2003; 20% in 2004; and 40% in both 2005 and 2006 (E: 7).
On September 29, 2006, pursuant to Executive Law §94(12)(a), the Commission sent the Comptroller a letter advising him that it would conduct a thorough review to determine whether assigning an OSC employee to perform duties involving the security and transportation for his wife constituted a violation of Public Officers Law §§73, 73-a and/or 74 (E: 14). The Comptroller was given fifteen days to submit a response setting forth any information relating to these activities, and was given an opportunity to be heard at the Commission’s Albany office in accordance with §94(12)(a).
The Commission’s letter to the Comptroller also advised him that these circumstances might require him to amend his annual statements of financial disclosure for the years 2001 through and including 2005 because question 13 of the annual statement requires reporting of “any income in EXCESS of $1,000 from EACH SOURCE for the reporting individual and such individual’s spouse for the taxable year last occurring prior to the date of the filing” (see Public Officers Law §73-a [emphasis in original]). On October 17, 2006, the Comptroller amended question 13 of his annual statements of financial disclosure for the years 2003 through 2005 to include income to himself, which he described as “‘in kind’ services of Nicholas Acquafredda.” Executive Law §94(11) permits a filer to cure any deficiency, without penalty, within fifteen days of receiving notification.
In connection with this investigation, Staff has taken sworn testimony of 12 witnesses and has reviewed almost 2000 pages of documents obtained from those involved.
B. Mr. Hevesi’s use of a City employee to provide transportation to Mrs. Hevesi
Mr. Hevesi served as the New York City Comptroller from 1994 through 2001. During this time, Diana Hoffman, Myrna Santiago, Douglas Gladstone, Nicholas Acquafredda, Robert Brackman, Roberta Rubin and Jack Chartier served in the New York City Comptroller’s Office (“NYCCO”) in various capacities (Acquafredda: 9; Rubin: 104-105; Gladstone: 188-189; Santiago: 235-236; Hoffman: 379; Brackman: 741-742; Hevesi: 501-502; Chartier: 655-656).
1. The Comptroller’s request to the City Corporation Counsel for approval to provide transportation to Mrs. Hevesi
In 1998, Mr. Hevesi asked New York City’s then Corporation Counsel Michael Hess whether it was permissible to provide a driver and security for his wife (Hevesi: 514; Brackman: 744-745). The Comptroller received a letter from Hess dated September 28, 1998, stating:
I have reviewed the question of the periodic utilization of a New York City car and driver for your wife. It is my understanding that she has been officially certified by the federal government as a disabled person.
It has come to my attention that you and your family have been the subject of picketing and demonstrations relating to various subjects. In light of those demonstrations and the security concerns related to them, and recognizing your wife’s serious health problems, I think it is appropriate for her to be picked up by the Comptroller’s staff and a City car to join you in public activities and, on an occasional basis, for health related appointments (Hevesi: 517; E: 15).
In his testimony before the Commission, the Comptroller acknowledged that the letter could mean that he was not authorized to use a City driver to transport Mrs. Hevesi to all health-related appointments, but said that he “never understood what ‘occasional’ was.” The Comptroller stated, “[i]f my wife had appointments on Monday and Thursday, which one does she not get coverage for because of ‘occasional’?” (Hevesi: 519-520). He never sought clarification of the letter; he “just assigned staff and had her covered” because he “was concerned about her being covered” (Hevesi: 520), and because he received “no objection” from the City (Hevesi: 524; Rubin: 107).