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.

RIRA President Jeff Escobar On NY State Inspector General's Roosevelt Island Corruption Report And Possible Hate Crime Incident Against Roosevelt Island Resident

 Image From RIRA

Roosevelt Island Residents Association (RIRA) President Jeff Escobar had the following to say regarding the recent NY State Inspector General's (IG) Roosevelt Island Operating Corp (RIOC)  corruption report and the possible hate crime incident against a Roosevelt Island Sikh resident now under investigation by the NYPD.

From Mr. Escobar:

Regarding the IG report, please note:

The past administration of then RIOC President Torres, Vice-President Martinez and CFO Chironis was prior to the current RIRA administration, and well before my time as RIRA President. The community thanks the Inspector General for its service and report, and has every confidence that the current RIOC administration will not engage in such practices as identified therein.

As to the Blackwell Park attack:

Roosevelt Island is a diverse community that takes pride in its differences and ability to come together, no matter a neighbor's background. Violence of any sort or form on our Island should never be tolerated, regardless of its basis. News of any attack that occurs on Roosevelt Island is a disturbing one, and we will be asking our RIRA Public Safety Committee to closely monitor and report on the situation.

Still no comment for the RIOC Board of Directors on the IG Roosevelt Island corruption report.

RIRA Island House Common Council member Helen Chirivas added:

The RIOC governance structure is deliberately kept weak by Albany so that Albany leaders can exert maximum control over development decisions. Having a weak structure may suit the Governor and the legislative leaders, when it comes time to making development decisions that may be unpopular with the local populace, but having a such a weak structure also means the potential for corruption is “unlimited:” For every “scandal” that the IG uncovered, there are probably ten more that remain hidden. The RIOC governance structure, as weak as it is, is a recipe for disaster and an invitation to abuse.

And:

I am distressed by this violent attack on a man walking down the street on RI minding his own business – an attack that occurred because of prejudice and hate. He was attacked because he “looked different” or “dressed differently” than those that attacked him. This is prejudice and those that attacked this innocent man must be found and brought to justice for their hateful deed.

We are all brothers and sisters, and cultural differences should be celebrated, not looked upon with suspicion or hate. This is true everywhere, but especially on RI with its large number of residents of all nations employed by the United Nations, an organization dedicated to peace and brotherhood.

(1) I call on RIOC and PSD to immediately disseminate information to the community, perhaps starting with presentations at the school and/or at churches or other community organizations, pointing out that brotherhood is key and dispelling religious, cultural, ethnic, or racial prejudice, which has no place on RI, in NY, or in the US. Despite the monumental and long overdue achievement of electing and re-electing an African American President after approximately 265 years of the existence of the United States, bringing the hope that America had finally entered a “post-racial” age, cultural/ethnic prejudice still unfortunately exists. It is up to us to call for the preservation of our community’s peace and security by requesting that RIOC and PSD immediately implement an education program as outlined above.

(2) PSD needs to allocate officer resources more effectively. If necessary, if there are inadequate number of officers, the NYPD can supplement the presence of officers on the ground. To be the victim of hateful slurs and violently attacked at 8PM – when the sun is in fact still out at this time of year – is unacceptable here, in our community, or anywhere else in the US. Where was PS when this attack occurred? Residents need to be reassured that their reasonable expectation of security on the island is well-founded. Perhaps a Town Hall meeting wherein PSD can describe the measures they take to ensure residents’ security can be held.

It is important to note that no determination has been made by NYPD that a "hate crime" occurred. The incident is being investigated.

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

  Image From NY Inspector General

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.

Blockbuster News, NY State Inspector General Finds Criminal Conduct, Kickbacks, Nepotism, Abuse Of Vehicles And Credit Cards At Prior Roosevelt Island Operating Corp (RIOC) Administration

Reported in March 2012 that the NY State Inspector General's Office

  Image From NY Inspector General

was investigating the leadership and management structure of the Roosevelt Island Operating Corp (RIOC). In December 2013 I asked when the Inspector General's report would be released.

Well, the answer is today.  Here is the full 53 page NY State Inspector General's Report on RIOC, which I am still reading, and below is the press release from the NY State Inspector General   describing the report.

NEW YORK STATE INSPECTOR GENERAL FINDS CRIMINAL CONDUCT, KICKBACKS, NEPOTISM, ABUSE OF VEHICLES AND CREDIT CARDS AT ROOSEVELT ISLAND OPERATION CORPORATION

Inspector General’s investigation results in two guilty pleas and systemic changes to RIOC Policies and Procedures

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.

Additionally, as a result of the Inspector General’s investigation, Martinez pleaded guilty to charges associated with contract steering and kickbacks. He was ordered to pay approximately $86,000 in restitution to the state and sentenced to six months incarceration. An associate, Javier Ramos, was ordered to pay $7,500 for his part in the scheme.

“As my investigation of RIOC makes clear, illegal and unethical behavior was common at the very top of RIOC’s executive chain of command,” said Inspector General Scott. “Officers charged with governing and delivering services to residents and businesses on Roosevelt Island used RIOC to enrich themselves, family and friends to an astonishing degree. This may not have occurred had there been effective oversight at RIOC.”

Charlene M. Indelicato, President and Chief Executive Officer of RIOC said: “RIOC can best represent and deliver important services to the people who live and work on Roosevelt Island only when we maintain a high degree of integrity, accountability and transparency in government. This is why I am very pleased with Inspector General Scott’s completed investigation and grateful for the guidance and recommendations her report provides to ensure past mistakes and misconduct are not repeated.”

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.

Inspector General Scott also found that since May 2011, RIOC has not had an internal control officer, as required by the Public Authorities Law. This position is charged with safeguarding RIOC’s assets, checking accounting data, and ensuring RIOC is adhering to its own policies.

Inspector General Scott recommended that RIOC:

• Follow state procurement laws and strengthen its own policies;
• Review all procurements, monitor credit card usage to ensure conformance with RIOC policy, and issue credit cards only to employees whose daily activities require them;
• Designate an internal control officer; and
• Ensure vehicles are used appropriately and consistently with RIOC’s vehicle use policy.
• Take measures to recoup moneys improperly spent by RIOC employees

Inspector General Scott reviewed her report with RIOC’s new management, which has agreed to take corrective action, including:

• Instituting stronger, more effective oversight measures of state procurement law to prevent unauthorized procurement and strictly bar nepotism;
• Incorporating layers of review and reconciliation of procurements made by RIOC personnel:
• Retrieve and discontinue all credit cards used by RIOC personnel who made unauthorized purchases and act to recoup those purchases from the cardholders;
• Recruitment of an internal control/compliance officer; and
• Revision of the vehicle use policy to reflect state policy which strictly prohibits personal use of
• vehicles and requires travel logs be maintained for each vehicle.

In addition, RIOC has issued demand letters for reimbursement of inappropriate expenditures.

Inspector General Scott thanked Manhattan District Attorney Cyrus R. Vance, Jr. for prosecuting the Martinez and Ramos cases, and for assisting in the investigation.

RIOC was created in 1984 as a public benefit corporation to assume responsibility for the development and operation of Roosevelt Island, a 147-acre state owned island property that sits on the East River between the New York City boroughs of Manhattan and Queens. RIOC is governed by a nine-member board.

A copy of the Inspector General’s report can be found here

UPDATE 8/8 - More info here including comments from former RIOC President Steve Shane on IG Report.