Friday, August 29, 2014

Former RIOC Chief Financial Officer Steve Chironis Responds To NY State Inspector General's Roosevelt Island Corruption Report - RIOC Directors Respond Too

Image From NY State Inspector General's Roosevelt Island Corruption Report Press Release

Reported August 7 on the NY State Inspector General's (IG) investigation and report on corruption at the Roosevelt Island Operating  Corp (RIOC) during past administration.

According to this excerpt from the IG Report Press Release:
... Three executives of the Roosevelt Island Operating Corporation were engaged in misconduct ranging from steering contracts to relatives and taking kickbacks from them, using RIOC vehicles for personal use, chronic absenteeism, and inappropriate expenses including the use of RIOC funds for unauthorized meals, according to a report released today by New York State Inspector General Catherine Leahy Scott. Inspector General Scott’s investigation, which covered the years 2007 to 2012 focused on Fernando Martinez, then Vice President of Operations for RIOC, former President/Chief Executive Officer Leslie Torres, and former Chief Financial Officer Steven Chironis. As a result of the investigation, all three no longer work for RIOC....

... The Inspector General’s investigation revealed that Martinez received kickbacks for steering a contract to Bright Cleaning Solutions (BCS), Ramos’s company, in November 2008 for shoreline cleanup. He steered another contract to BCS in September 2010 for an office renovation project and received $9,390.

Additionally, Martinez utilized a brother-in-law’s printing company for RIOC projects and hired a second brother-in-law for the position of Parks and Recreation Manager in violation of state ethics policy and RIOC’s anti-nepotism directive. Following the Inspector General’s discoveries, Martinez resigned his RIOC employment in December 2012.

Former President/CEO Torres violated RIOC policy by utilizing a RIOC vehicle for commuting and personal travel. In addition, she inappropriately charged expensive meals to her RIOC credit card, with one lunch costing $355. Finally, Torres was consistently absent from RIOC’s offices, instructing staff to keep her office lit while she was away. She resigned in September 2012.

Former CFO Chironis tacitly approved Torres’s misuse of the RIOC vehicle, and miscalculated her taxable fringe benefit in violation of federal law and state policy. He also permitted Torres to inappropriately charge meals to her credit card, incorrectly classifying them as “business expenses” in violation of RIOC policy. In fact, Chironis and Martinez engaged in the same misuse of their RIOC credit cards shortly after Torres began doing so. Chironis resigned his RIOC employment in August 2013....
Former RIOC CFO Steve Chironis responds to the IG Report writing:
To the Roosevelt Island Community,

What I will say relating to the whole matter is this: Look, I get it, the Martinez “episode” happened under my watch, “the buck stops here,” and I lost my job because of it. However, I would like to state the following:

(1) Fernando Martinez: I was fooled like the rest of us. The “powers that be” gave him their trust, which he ultimately betrayed. Everyone should be allowed a second chance. He has repaid his debt to society, and now has the opportunity to turn his life around, and I sincerely hope he does. If Jesus can forgive him, I certainly can!

(2) I.G.’s reporting of approximately $3,200 of “inappropriate charges” by me: I am stating for the record that all the expenses noted in the report were for legitimate business expenses. All charges were signed off by the President and the Controller. As for the $720 that was spent at my wife’s restaurant, it was fully disclosed prior to going. The occasion was to reward my staff for a job well done upon the completion of the annual budget. Even the one and only time that RIOC took out the POMA (Tram construction contractor) project managers for lunch to celebrate the reopening of the Tram and to discuss ongoing punch-list items was also classified as “inappropriate.” In fact, charges for all business lunches and dinners for the two-year period were “inappropriate,” according to the I.G., but they are typical for a corporate executive who, the I.G. acknowledges, had taken on many of the president’s duties. What they claimed is that the charges had “no value” and were “unnecessary.” This seems to be purely subjective and almost impossible to prove otherwise, as it would be for most business lunches. I also want to note that, at the time of such expenditures, I wasn’t aware of a policy in force restricting such types of expenditures. In fact, almost two years later, in October 2012, the ABO [Authorities Budget Office] issued a recommendation to all State agencies restricting and/or eliminating such expenditures, which most agencies hastily implemented, RIOC included.

(3) Leslie Torres’ “Personal Use of State Vehicle:” I followed the State policy in force at the time (NYS DOB D-750, dated 9-18-2009), which states, “State Officials of Cabinet Rank and Heads of Agencies shall not be assigned a permanent vehicle but shall have ‘unrestricted’ use of their agency fleet vehicles.” It goes on to say that “personal use” must be reported as income. This was done. As to the amount reported, it was based on the miles that Ms. Torres reported to me.

(4) Leslie Torres’ absence from the office: Approximately three months after Ms. Torres started, she submitted her resignation and made a request to the Appointments Office for a transfer. She had a 20-year record in government at mid-management positions, [and had been] asked to head a very political agency, a position that few people wanted and [that was] difficult to fill. I also believe it was portrayed to her as a “temporary” position. This does not justify her actions, but it does reveal that the State was put on notice very early in her administration. It was apparent, to everyone in a position to correct the situation, what was going on.

I would like to state that I am proud of what was accomplished during my six years at RIOC. Working at RIOC is quite difficult at times; it’s an environment where, quite often, you are caught in the middle between the State and the residents. There are many dedicated, hard-working employees at RIOC who rarely get acknowledged for their accomplishments, but quite often are publically chastised at the first sign of trouble. I realize that my forced resignation was made at a level above RIOC management, and I hold no ill will and wish all at RIOC the best.
RIOC Board of Directors, Margie Smith, David Kraut and Howard Polivy, discussed the IG's Roosevelt Island corruption report with RIOC President Charlene Indelicato during the August 21 Governance Committee meeting (audio web cast of full meeting here).  Directors Smith and Kraut reported:
  • they did not see the IG Report until the day before it was released to the public, 
  • there was no communication between the Directors and IG during the investigation and
  • contact between the IG and RIOC during the investigation was done with the staff.
Ms. Smith also said that she did not know if the IG Report was true or not and noted that after reading the report most of the incidents reported in it occurred prior to Leslie Torres tenure as RIOC President. Mr. Kraut added:
... What happened here makes me angry. I don't know what we could have done to prevent it ... it's a huge betrayal of trust... I don't know what we can do about it in terms of the future. Loopholes often don't appear until someone wiggles through them but I think a place to start certainly is to fine tune our response to the report.
The RIOC Governance Committee Directors agreed to form a committee to respond to the IG Report. Here's video of the RIOC Governance Committee discussion of the IG Report.

Former RIOC President Steve Shane responded to IG Report here.

The full IG Report is here.


CheshireKitty said...

It's really a shame that with all the empty store-fronts Kramer kept insisting on charging rent as the price of a new lease for the thrift shop. Kramer's greed is the reason the thrift shop has ended.

And how realistic is Kramer's and Sachs-Rosenberg's greed? The empty store fronts sit empty: If H-R agreed to let the thrift shop relocate to one of those empty store front and continue to raise money for the poor instead of for H-R pockets, H-R would have lost no money, since it's not making money on the empty store fronts anyway.

But Kramer would rather screw the poor of every ethnic and religious background that the parish helps - even though if he allowed the parish to move into an empty store front he would lose no money in doing so, as those store fronts continue to sit empty! The surpassing evil of that man and his side-kick Ariana!

YetAnotherRIer said...

Did you not read that the parish was rather unwilling to continue the thrift store? If I were the landlord and a tenant can't make up its mind I would move on rather sooner than later.

CheshireKitty said...

The current priest wanted to continue the thrift shop. I sat next to him at the 7/30 RIOC r/e advisory committee meeting and he asked Kramer for a store space. I asked Kramer would he be willing to give the parish a lease for a new store space and he said yes, on tape. Obviously, the understanding is for free rent - given the store is "in business" to help the poor. I followed up with Ms. Villafane. I also spoke to the priest subsequently - neither of them said they didn't want the thrift shop to continue. I complained to elected officials about what Kramer was doing to the community thrift shop on RI and will continue to do so. Its closure is a travesty.

CheshireKitty said...

The poor people on this island have no place to shop - thanks to Kramer's greed. Kramer would rather keep store-front after store-front on Main Street empty, than let the thrift shop have an empty store front rent-free because Kramer doesn't want the parish to operate a business that helps the poor, rather than pour the proceeds into his already bulging pockets.

RIOC has abandoned the poor of RI in not leaning on Kramer to give Father Kallamudy a lease to another store-front. RIOC Board does not represent the poor - a significant sector of our island's population, in removing one of the very few places the poor can afford to shop at.

The removal of the thrift shop and the lies glibly mouthed by Sachs-Rosenberg and Kramer at the RIOC Real Etate Committee Meeting of 7/30/14 that an empty store-front would be given to the parish rent-free exactly as the former store-front was given to the parish by ground-lease holder RIOC, are a disgrace that every resident of RI should complain about - to political, community, and religious leaders of every denomination.

KTG said...

Perhaps the more accurate statement about what is going on is that Hudson Related not (not Kramer who is just a rep) wants to hold local business to a standard for presentation and cleanliness. This was a pretty clear objective when they held a retail forum (3-4 years ago), new retailers won't invest in an area where existing vendors don't see value. Its why the Trelis remodel was pushed for , major issue with hardware store, thrift shop, and hopefully deli at Island House. When I passed by the thrift shop it always seemed haphazardly managed, I made a few donations and found staff pretty gruff in comparison to other shops where I have done this in the past.

Also was the goal of the shop really to provide affordable shopping because that is somewhat usual. If it is meant as a retail business then it should be able to support itself as a retail provider (pay its rent maintain a standard for presentation). Typically these shops are used to provide employment opportunities (Goodwill, Churches) or as a funding mechanism (ex. Housing Works). If it was not meeting one or both of these mandates, could that be the reason why it was deemed not necessary?

Lastly there are multiple thrift shops off of the f train at 25th street and in LIC near Q102 route. Is it so crazy to say that people have to spend 20-25 minutes to get access to thrift shop or similar shopping.

RooseveltIslander said...

David Kramer never said Cabrini Thrift Store would be given empty space rent free.

In fact he said the exact opposite at the 7/30 meeting. Mr. Kramer said:
"We would love nothing more than to sign a lease with Cabrini to have a
thrift store in another space at a mutually agreeable rent and term.
Then what we would want is for the Thrift Store to comply with our
standards for signage and storefront and general appearance which has
been an issue with some tenants."

Why should the Cabrini Thrift store be given rent free space, or even below market rent, and not every other religious or non profit organization on Roosevelt Island that serves a particular need but can't afford to pay market rent?

If you say every group that wants space should get it for no rent or subsidized rent, then you get the same mess that we had when RIOC controlled the space.