On Wednesday, former village of Dannemora Mayor Richard Scholl was charged with falsifying time sheets so that corrections officers could claim they were village employees and receive greater benefits form the state retirement system.
Nelson Sheingold, chief counsel to the NY comptroller, tells WAMC North Country Bureau Chief Pat Bradley it is a case of institutional pension fraud:
In a nutshell, corrections officers have a retirement plan where they can retire after 25 years and receive a benefit. Municipal employees, like me frankly, if we don't want to take any sort of penalty, we have to wait ‘till we have 30 years of service and we're over 55 years of age. For most COs, the 25 year plan is great. It's less time that you have to work to get your maximum benefit. But for some COs with lengthy, well over 30 years of service, because under the municipal plan you could keep accruing service credit and raise your pension you're better off retiring out of the municipality, which is the longer plan. So what is happening here is Mayor Scholl used, allegedly used the city to bring in these corrections officer, pay them next to nothing, pay them $200 or less and then falsify records so they could get a better benefit. So effectively, he's subsidizing very cheap public works projects for the city at the expense of the retirement system, which if you extrapolate out could cost the retirement system millions of dollars in the long run.
Is it legal for the corrections officers to have these two jobs at the same time?
It is legal if it's done legitimately and non-fraudulently. For somebody to decide after they've served as a corrections officer that they want to go work for a municipality that is legal. What is illegal is if you have a sham job and you don't truly have bona fide employment. Instead, you either are set up to look like and have the appearance of employee when you're really a contractor, or you don't really get paid, or in this case, where they even dummy up the hours that you supposedly work to make it look like you retired from the municipality.
How pervasive is this sort of scheme across New York? Do you have any idea?
Well, this is something that Comptroller DiNapoli, as a watchdog of the pension fund, has been looking at and cracking down on for the last several years. And what makes this particularly reprehensible and pernicious is the systemized nature of how it was done. So here, you know one thing obviously Dannemora is a town that has a significant prison industry in it with many COs. So here there was a concentration, obviously, which both the COs and the mayor could avail himself of. But we have looked broadly to see if there are any other situations like this. And I know this was already reported the other day we, on the administrative end, closed down a somewhat similar scheme that was going on in the town of Lewis, which is also has, you know, a high, you know, a population that availed themselves of this.
Nelson Sheingold, we know that the former mayor, Scholl, has been charged with this and the COs are still being investigated. What are the potential ramifications for the folks that participated in this?
Well, at a minimum, we are scrutinizing every single one of these applications for the advanced benefit, enhanced benefit, excuse me, that has come across our office. So at a minimum, any CO who did not truly have bona fide, genuine employment there will not be getting the enhanced benefit. Comptroller DiNapoli has been taking action against them and we will continue at a minimum. As to what else can happen the investigation continues.
And my understanding, if I read this right, the COs in Dannemora only worked for two days. I mean, how much falsifying is going on for them to claim retirement after only doing two days of work?
Right. And once again, and I think you hit the heart of it, they were paid for two days. So in many cases, they were actually working longer than that. And they were actually paying for all the materials for these projects as well. So they were getting paid for 16 hours at effectively minimum wage. The most any individual was paid was $200. Yet they were putting in, in many cases, much more time than that completely free to the village. They were putting much more time than that and paying for all these materials. And once again, ultimately, who bears the cost of this scheme if Comptroller DiNapoli didn't catch it? The system and our million plus members.
You mentioned that the investigation is ongoing. Do you know how long it may take to complete?
I couldn't give you an estimate on that. We will look like I said at every single potentially affected retirement application we get.
Former Mayor Richard Scholl was arraigned and is due back in Dannemora Village Court on Feb. 2. His term as mayor ended in March 2023.
