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Friday, August 8, 2014

Former RIOC President Steve Shane Comments On NY State Inspector General's Roosevelt Island Operating Corp (RIOC) Corruption Report - Will RIOC Directors Comment?

Reported yesterday on the NY State Inspector General's (IG) corruption investigation of the Roosevelt Island Operating Corp (RIOC). 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....
The IG also reported (Page 1):
... The investigation further found that Martinez received kickbacks totaling over $183,000 for hiring his friend’s janitorial cleaning service....
and (Page 3):
... Martinez was able to effectuate his scheme because he and other RIOC executives failed to follow New York State procurement law and RIOC procurement policy. RIOC procurement policy, which is overseen by the chief financial officer, required RIOC to publish in the State Contract Reporter and competitively bid any procurement contract estimated at $15,000 or more. Instead, Martinez and other RIOC executives improperly invoked exceptions to the competitive process that ostensibly permitted Martinez to select a vendor on a non-competitive basis. In this way, Martinez selected Bright Cleaning Solutions for what grew to be a large cleanup project at Roosevelt Island....
Click here for the full IG Report.

Steve Shane was the President of RIOC immediately prior to Ms. Torres and hired Mr. Martinez and Mr. Chironis.

Yesterday, I asked Mr. Shane:
As you may know, the NY State Inspector General issued a report today finding criminal conduct, kickbacks, nepotism and more at the Roosevelt Island Operating Corp involving former RIOC President Leslie Torres, VP's Fernando Martinez and Steve Chironis.

You are mentioned several times in the report and provided testimony to the Inspector General.

Do you have any comment on this matter...
Mr. Shane replied yesterday:
I have now read the IG's report. I have no comment about the events which occurred after my departure, except as to Mr. Martinez. He was and is a friend. He has expressed his deep regrets for his actions, plead guilty and paid his debt to society. I feel great sadness for him, his wife and three daughters.

As to the matters during my tenure:
1. I had no knowledge of Mr. Smith's relationship and have no recollection of ever hearing a rumor or a direct conversation on the subject. Certainly, no approval on my part.
2. I had no part in the bid process or the selection of Bright Cleaning Solutions ("BCS") or the rating or ranking of the responders to the posted RFP as to their original selection. There was, as was the case for all bidding for State contracts, extra points for minority contractor qualifications, in keeping with standard State policy.

When Fernando and I toured the site to look at the ongoing site clearing, it was obvious to me that the original contract limit lines set to avoid involvement with the State EPA along the actual shore of the East River were inadequate for the vision of Southpoint Park. Garbage in large quantities including refrigerators, tires, slabs of demolition debris, etc. clogged the view and access to the east towards Queens. Expanding the contract limits to the eastern shore was, in my judgment, the right thing to do. BCS was on site doing the original work and seemed the logical party with whom to negotiate an expanded scope, both in terms of expediency and cost efficiency. I authorized Mr. Martinez to negotiate accordingly and I took the result to the Board of Directors for approval and got a unanimous vote in favor after full discussion as to the underlying rationale. The resulting Southpoint Park, in my opinion, continues to justify the process and I make no apologies.

I had no knowledge of Mr. Martinez' relationship with BCS and was proceeding on the contracting process in place.

I directly addressed the issue of ethics and propriety and demanded the Caesar's wife standard of behavior during my tenure.

In direct response to the comment on your blog as to the reason for my sudden departure, I refer you to the members of RIOC's Board in whose hands, chaired by former Commissioner Lawlor, my fate was determined. I challenge anyone to cite any issue of my personal impropriety. I considered my position as President of RIOC as a matter of a trust for which I was fortunate to receive the privilege of serving.
See pages 13 - 24 of the IG Report for Mr. Shane's testimony regarding nepotism involving Mr. Martinez and Mr. Smith as well as the Southpoint Park shoreline bid process.

I also asked the RIOC Directors yesterday:
As you may already know, RIOC President Charlene Indelicato has released a statement in regard to today's report by the NY State Inspector General detailing criminal conduct, corruption, kickbacks, nepotism among other charges during the prior RIOC administration.

Here's the link.

Ms. Indelicato was not working for RIOC during the time detailed in the report, but all the current RIOC Directors were serving.

Does any RIOC Director have a comment or statement on the Inspector General's Report including what monitoring and oversight role the RIOC Board conducted during this period and why did it fail?

Please let me know if there will be any comment from RIOC Board members.

Thank you.
Will update if RIOC Directors comment.