A special counsel’s review found no apparent criminality in Village of Saddle Rock Mayor Dan Levy’s cashing of village checks to pay three employees of village contractor Next Capital Corp., including his daughter, but questioned Levy’s judgment.
The mayor’s actions “may reflect poor judgment and a failure to appreciate the potential public perception of his actions,” wrote special counsel Christopher J. Prior. “However, none of those actions, based upon the assumptions set forth above, appear to involve criminality.”
Prior cautioned that his analysis was based solely on information provided to him by the village, and that an independent investigation could reach different conclusions.
The report, which was addressed to Deputy Mayor Avery Modlin, also found that village trustees likely did not violate municipal conflict-of-interest law in their hiring of Levy’s daughter to write a computer program for the village, but Prior warned that a court could find violations if it used a more expansive reading of the statute.
The 21-page confidential analysis by Prior, which was commissioned by village trustees after media reports in June that the Nassau County District Attorney’s Office had begun an investigation into the village’s payments to Next Capital, was made a public record by the village earlier this month.
Prior, who was also consulted by the village after auditing firm Satty, Levine & Ciacco CPAs raised questions about Levy’s cashing of village checks to Next Capital in July 2012, wrote that, assuming the truthfulness of information provided by the village, the actions of board members did not appear criminal.
The report also highlighted other aspects of the contract including a “puzzling” lack of profit for Next Capital in the arrangement and potential issues with the Next Capital failing to withhold taxes for its employees.
Prior recounted in his analysis that he first learned of the transactions during a conference call with Modlin, village Trustee David Schwartz, village attorney James Murphy and John Lundy of Satty, Levine & Ciacco CPAs after “Satty, Levine & Ciacco CPAs became concerned about the propriety of the Village Mayor’s conduct with respect to payments owed to [Next Capital Corp.] for work that it performed for the Village.”
Among the assumptions Prior relied on during his review were the accuracy of affidavits signed by Levy, Next Capital’s owner Yaniv Erez, and employees of Next Capital including Levy’s daughter.
Those affidavits, commissioned last year after Satty, Levine & Ciacco first raised concerns about the mayor’s cashing of checks made out to Next Capital, include testimony that Erez authorized Levy to cash the checks on his behalf and that all the funds were properly distributed to employees. In a phone conversation with Blank Slate Media, Erez described Levy as a personal friend.
Prior’s report found that the village authorized the hiring of Sari Levy, the mayor’s daughter, in May 2012 as a part-time employee of the village, and paid her $3,007.50 to write a computer program allowing the village pool to use a photo I.D. card system. Despite being hired by the village, Sari Levy was paid as an employee of Next Capital, with the mayor cashing her checks and distributing the funds to her.
Prior said he could not determine exactly why she was not treated as an employee of the village, but found that the board’s later authorization of payments to Next Capital for photo I.D. work cleared them of any misconduct.
Prior found that, because the total payments to Next Capital were under $35,000, the village did not need to hold a competitive bidding process for the work. Prior said he did not obtain records proving that the village sought out alternative bids in compliance with its own procurement policy, but wrote that he was told such a process did take place and that failing to seek bids would not have been criminal behavior.
“While the village records that I reviewed do not address whether the Village obtained or attempted to obtain three quotes for the facility maintenance work, you advised me that Mayor Levy orally confirmed to you that he obtained quotes from other prospective bidders, before the July 7, 2011 resolution was adopted, and that [Next Capital] offered the lowest terms,” wrote Prior.
Modlin told Prior that the village had become more attentive to its procurement policy since auditors asked the board to increase compliance in December 2012, according to Prior’s letter.
Prior’s analysis also addressed a lack of invoices forward to auditors after their initial concerns in July 2012.
Prior wrote that documentation forwarded to him and signed by then-Village Clerk Donna Perone substantiated the work done by Next Capital. According to the report, Levy, Modlin and Schwartz told Prior that Perone was not re-appointed as clerk in April due to concerns about her performance, including alleged failure to file tax documents with state and federal agencies and lack of cooperation with auditors.
“Under the facts and circumstances of this matter, as set forth in the affidavits, there appears to be neither the necessary intent nor wrongful conduct on the part of the mayor to establish a violation,” Prior wrote.
The legitimacy of invoices eventually provided to auditors was questioned at the June trial of former village trustee candidate Sasha Masri, who was convicted of attempted assault for a fight with Levy that occurred after an argument about village finances at an October 2012 board meeting.
Perone testified under oath during the trial that Levy had instructed her to create invoices after-the-fact, and that no invoices were created as the work was being done.
The analysis also highlighted possible issues with the contract that, Prior wrote, were beyond the scope of his inquiry, including Next Capital’s apparent lack of any profit from the transactions.
“While there may be plausible reasons for [Next Capital] to have entered into contracts providing no profit to [Next Capital,] {e.g., providing work for [Next Capital] employees who otherwise might be idle), that aspect of the [Next Capital] transactions is puzzling,” wrote Prior.
Levy’s cashing of checks was also not criminal based on the affidavits which present him as an authorized agent of Next Capital who distributed all the fund to workers, according to Prior’s report.
Prior also addressed possible conflicts of interest in the village hiring the mayor’s daughter to do work for the village. The analysis found that though Sari Levy was paid as an employee of Next Capital, she was not an officer, director or shareholder of the company, and so the village did not directly enter a contract with her – clearing the village of one standard of conflict of interest.
State law also broadly defines conflict of interest if the mayor had received a “direct or indirect pecuniary or material benefit” from the contract – which, Prior wrote, could potentially apply if the $3,007.50 paid to Sari Levy was used to benefit the mayor’s household.
But, wrote Prior, villages are allowed to directly hire family members of officials, and the apparent confusion between Sari Levy’s original hiring as a village employee and her later payments as a contractor make it unlikely that the board committed a knowing violation of the law.
“I do not find a reasonable basis to conclude that any action or omission by the mayor or by any board member, as addressed herein, could reasonably be expected to result in criminal liability, except in the narrow instance of [state conflict of interest law] as I describe above – and there, only if a court disagreed with my analysis of a prohibited ‘interest,’ and determined that the mayor had such an interest in any contract between the village and [Next Capital,]” wrote Prior.
The village and Next Capital worker Marlon Ebanks did not return requests for comment for this article.
Efforts to reach Modlin, Levy and Schwartz were unavailing.
