NEW SCOTLAND — The state comptroller claims to have uncovered corruption in the Voorheesville School District.

At a press conference Tuesday, Comptroller Alan Hevesi accused former Superintendent Alan McCartney and former Assistant Superintendent for Business Anthony Marturano of making improper payments to themselves totaling $216,000.

McCartney, who was lauded at his retirement in July 2005 for leaving the district in good financial standing, paid himself an extra $127,338 over the course of his 16 year tenure, the comptroller said.

McCartney wrote his own contract, and then broke it, the school board president said.

Marturano is accused of collecting $89,069 over the 11 years of his employment, until his retirement in 2002. He denies it.
"I cannot say in strong enough terms, I did not do anything improper," Marturano told The Enterprise on Wednesday. "I’m shocked and surprised by the whole thing...My good name is now mud."
"Dr. McCartney and I were devoted to that school," Marturano said from Port St. Lucie, Fla., where he moved after retiring.

McCartney, who lives in Voorheesville, did not answer his phone this week.

"Outraged"

Of the $216,000 identified, $167,000 of the payments were for benefits they were not entitled to, Hevesi said, including payments when the administrators appeared to be traveling for personal reasons to Las Vegas, Chicago, and Nashville.

He also identified an instance when McCartney gave himself compensatory time for showing up on a snow day when all other business office employees were either required to work or take vacation time.

The remaining $49,000 was paid without proper notification or documentation or was made under inappropriate clauses in their employment contracts, Hevesi said.

Hevesi also said that McCartney and Marturano authorized virtually all of these payments to themselves without the school board’s knowledge or approval.
Joseph Pofit, the school board president, said the board is "outraged" the former officials would purposefully manipulate people and internal controls to enrich themselves.
The district on Tuesday filed two suits—one against each administrator—to try to recap the funds. The court papers say that, by reason of the board’s "long standing-fiduciary relationship" with McCartney, it relied on him "for information concerning compensation and overall management of district personnel."

Board members have taken no responsibility for approving many of the payments.

They claim that McCartney and Marturano where purposely deceitful, and well aware what they were doing was not allowed.

When McCartney’s and Marturano’s contracts were up for renewal, the lawsuits allege, in 2002 and 1999 respectively, both men convinced the board that they were entitled to being reimbursed for unused sick time, so the board, through resolution, approved paying them extra money in their salaries over the course of three years before retiring. This also boosted their retirement packages, the school district claims in a suit filed against the two administrators.

Marturano’s denial
The state is throwing mud and seeing where it sticks, Marturano said. "I’m just devastated."

When he first heard of the allegations—that he collected extra vacation and sick leave compensation without permission—he thought it would all be settled quickly once his contract was reviewed, Marturano said.
"It’s all spelled out in the contact," Marturano said. He didn’t do anything that was not permissible, he said.

Neither the school district nor the school board president have released copies of the two administrators’ contracts, although Robert Freeman, executive director of the state’s Committee on Open Government, told The Enterprise the contracts are "absolutely" a matter of public record.
Marturano said that it’s a shame that the state and the district are clinging to "baseless" accusations. He said that he hopes "people who know us up there, will be supportive — not believe these lies."
"Getting paid for unused sick time and unused vacation time was a part of my contract approved by the board," Marturano said. "I don’t understand where this is coming from....Nothing under-handed was going on."
He said he is disappointed in the school board for jumping on the band wagon of the state’s "witch hunt."
"In my career I’ve saved them millions of dollars," he said of the district.
After corruption was found on Long Island, the state comptroller’s office wants to look on top of things, but instead is "picking at good people in the process," he said.
"We spent many days and nights devoted to our profession," Marturano, said of himself and McCartney.

He said he can’t believe how the Voorheesville School District is now thanking them.
"My family went without my time so I could take care of the kids at Voorheesville" and run the business end of things, Marturano said.
He said he spoke to McCartney on the phone and they told each other that they were going to fight this vocally. "We can’t lie down and take this," Marturano said.
"I did not do this. I just did not do these things," he said.

Audit findings

In a Jan. 24 letter to the current Voorheesville superintendent, Linda Langevin, and to the school board members, Assistant Comptroller Steven J. Hancox detailed the audit findings.

The audit focused on the period from Aug. 1, 1989 to July 15, 2005 for McCartney and from Jan. 14, 1991 to Aug. 2, 2002 for Marturano, Hancox said.

McCartney received $141,400 in base salary for the 2004-05 fiscal year and Marturano received $95,967 in base salary for the 2001-02 fiscal year, the last full years of their employment with the district.

In addition, Hancox wrote, the district provided various other benefits over the years. For example, in his last year, McCartney had 100 percent of the purchase of his health insurance paid by the district; Marturano had 90 percent. McCartney had 35 days of vacation and Marturano had 30. Each had 15 days of sick leave and $1,500 annual reimbursements for payments made to their tax-sheltered annuities or disability insurance.

Hancox’s letter detailed these types of inappropriate payments and benefits:

— Excessive payments for unused vacation leave: Despite contracts that limited payment for unused vacation days, McCartney authorized $84,283 — an extra 135 days — for himself and he authorized $35,968 — an extra 92.5 days — for Marturano in excess of the amounts allowed.
— Absent without leave: By comparing leave records with cellular phone bills, the comptroller’s office determined McCartney "or minimally his cell phone" was out of town at least 16 days on nine occasions when he did not charge leave or have approval to leave for district business.

— Stipend payment not repaid as required: In exchange for unused sick leave, the board authorized annual stipend payments totaling $20,000 to Marturano in his last three years. Although the board resolution stated that the stipend was in exchange for unused sick leave, Marturano’s contract did not allow him to exchange unused sick leave, so the stipend paid for something the district wasn’t required to pay.

— Improper compensatory time and snow days: Although not authorized by their contracts, McCartney charged 15 and Marturano charged 21 compensatory days for absences during the audit period. The cash value of these unauthorized absences totaled $7,268 for McCartney and $7,482 for Marturano.

— Personal leave: Effective July 1, 2000, McCartney’s contract no longer provided him with the personal-leave benefits that had been included in previous contracts. However, he ignored his contract and charged nine personal days for absences after that date, which had a value of $4,397.
In addition to these "inappropriate" payments, Hancox’s letter also outlines several "improperly authorized" payments and benefits:

— Lack of notification for unused vacation days payments: McCartney generally sent his payment requests directly to the payroll clerk who processed the information. McCartney then approved the payrolls containing his leave payments. Marturano generally made his request to McCartney, who approved it and forwarded it to the payroll clerk.

— Improper employment contract provision: During the 1997-98 through 1999-2000 fiscal years, the board authorized $4,500 in reimbursement payments to McCartney for annuity and disability insurance benefits by cross-referencing his contract to the district’s collective-bargaining agreement for administrators. However, Education Law had been changed in 1996 to prohibit references in a superintendent’s contract to any other employees’ contracts, so, effective in 1997, the board could not authorize reimbursements in this way.

— Undocumented reimbursement: Marturano’s contract provided him with reimbursement payments for annuity and disability insurance benefits. Unlike McCartney, who submitted documentation showing that he incurred these expenses in order to be reimbursed by the district, Marturano did not submit documentation for $7,637 of his reimbursement payments.

Hancox concludes his letter with four recommendations:

— The board should continue to aggressively pursue collection of the payments and leave benefits;

— The district’s audit committee should develop written procedures, describing how it will monitor the administrative leave benefits provided to the district’s superintendents, and the board should adopt the procedures;

— The current superintendent should ensure all leave benefits provided to employees are in accordance with contracts; and

— The board should request that its attorney review any written contracts prior to approving the agreements.

Hevesi’s view
"This is appalling... and an abuse of the taxpayers’ dollars," Hevesi said at the press conference. The district’s most senior officials "took advantage of a weak system of internal controls."
"We think this is disgraceful," he said.

A bad decision was made by the state 30 years ago to stop auditing school districts, Hevesi said. After scandals on Long Island, audits commenced there. About a third of the districts were poorly managed, and another third were found to have corruption, Hevesi said. He believes that corruption will be found across the state.

Where no one is watching, there is an increase in corruption, Hevesi said.

He commended the Voorheesville School Board for jumping in angrily when it found out about the wrongdoing. The district ran its own investigation and detailed audit, he said.
"We are very, very angry at this," Pofit said on Tuesday. "No board expects to uncover this type of deceit. A crime has been committed against the school and the community."
"We are outraged when someone cavalierly...uses taxpayers money as if it was a personal account," Pofit said. In no way was McCartney eligible for 35 days of vacation for just two weeks of additional work, he said.

While they are individually small checks, it all adds up to a significant amount of money. Pofit said the board had calculated the misspent money amounted to a 3.5 percent tax increase.

The district has a spotty history of passing its annual budget.

The allegations have been forwarded to Albany County District Attorney David Soares.

While the district did have, as required by the state, external audits done each year, such audits are only surface reviews; they don’t dig deep enough, Pofit said.

McCartney and Marturano were very clever, Pofit said. The superintendent was able to request a check; he would tell the treasurer or payroll clerk to cut him a check, saying that the board approved it; and then sign the check himself, Pofit said.
"We were dumbfounded" Pofit said. "Maybe, after a while, someone feels entitled." The board does feel personally betrayed, he said.

District sues

The suits filed Jan. 24 in Supreme Court — the lowest-level court in the state’s three-tiered system — are based on the findings of the state comptroller’s audit.
The suit against McCartney states the district is "entitled to recoup the monetary value of...improper payments." The suit against Marturano lists the money to be recouped as coming from "vacation days, compensation days, and other personal leave to which he was not entitled."
Both suits ask for "reasonable attorney’s fees, interest, and the costs and disbursements of this action...."
The suit against both claim that they represented to the school board that they were entitled to compensation for the unused sick days they had accrued although they were "aware that the district had no obligation to compensate [them] for the accrued sick time."
The court papers also claim that representations from each of them "were intended to induce the Board of Education to increase his base salary during the final three years of his employment with the district and thereby increase his retirement benefits."
In the suit against McCartney, referring to the superintendent’s Feb. 11, 2002 contract, the court papers say that McCartney "represented that the inclusion of the stipend would be more cost effective for the district than a lump sum payment made at the end of his employment..."

Board’s role

When asked why the board wasn’t familiar with the limitations of the contracts, Pofit said that contracts sit in a file and the board never really goes back to them, so it was not versed on them.

The board relied on McCartney to do due diligence, Pofit said, and now the district has learned its lesson.

Also Pofit said the board was led to believe that McCartney had or was going to have all his contracts reviewed by a district lawyer. The board has now checked into it and discovered the attorney’s office has no record of reviewing any of McCartney’s contracts, Pofit said. Additionally, McCartney wrote his own contract, and then broke it, Pofit said.

In the contract that McCartney wrote for himself, he was not eligible for any sick-time pay-out, Pofit said. But he convinced the board, in a memo in 2002, that the district was facing a huge liability of $100,000 of back sick time he was owed, Pofit said. He told the board it was a win-win for everyone if they included in his last three years’ salary an additional $12,000 for each year to compensate him.

In a May 2003, The Enterprise wrote about the superintendent’s pay increase. While the raise doesn’t seem reasonable on the surface, it actually represents a very good deal, said Robert Baron, who was the school board’s vice president at the time.
McCartney had accumulated $100,000 worth of sick leave in the course of his tenure, Baron said. The district wanted to keep a capable superintendent on, so the board negotiated the raise, he said. Some money from the sick leave was taken into the schedule and the rest was cleared from the slate, Baron said. "He actually gave money back to the school district," Baron said in 2003.

In the same article, Larry Bonham, of the Voorheesville Taxpayers’ Association, questioned the increase for unused sick days.
This week, Bonham referred to a 1996 Enterprise article where John Cole, then board president, is quoted saying: "... The desire to retain McCartney was unquestioned. The contract extension took two seconds. We had no problem with that....McCartney’s contract calls for an annual evaluation. But we spent about a half hour on what to give him."
For a board to be in the practice of only looking at a contract for two seconds or half an hour, Bonham said, "It sounds like the board is negligent to me."

In 2002, when McCartney claimed he was owed compensation for $100,000 worth of sick leave, Bonham said this week, he opposed that as well at the public board meetings. He said he couldn’t believe that McCartney’s salary had increased by about $30,000 in just two years.
In May of 2002, Cole said: "What the board and the superintendent did is, we have a senior superintendent with 13 years of service now, and several hundred sick days gathered...Part of the increase is just a salary increase of 4 percent. There’s nothing in his contract that gives him other benefits."
Cole went on in the 2002 Enterprise article to say that other districts offer superintendents non-cash payments like cars and transportation allowances, and McCartney just wanted to keep his contract simple. "So there aren’t hidden things in it," Cole said. "He certainly is not the highest-paid superintendent in the area."

Cole, who stepped down as a board member this summer after serving the for 15 years, told The Enterprise this week that he reviewed McCartney’s contract when negotiating a new one.

Evaluations were done at the time of contract renewal, but they were based on McCartney’s performance and duties more than anything else, Cole said.

One of the primary purposes of the raises for 2002 was to reward McCartney for his long service to the district and recognize the market value, Cole said. New superintendents in the area were being hired at a higher rate than McCartney, Cole said this Wednesday.

Pofit had said the district gave McCartney $12,000 more per year in 2002 out of fear of liability and because they were told by McCartney that it was owed to him.

New safeguards

Pofit went through, one step at a time, the way he says McCartney was able to circumvent checks and balances to gain personal benefits.

He would write a check request and submit it to the treasurer, Pofit said, then each check would be reviewed by the current assistant superintendent for business, Sarita Winchell.
Asked if the board is now questioning Winchell’s ability to do her job, Pofit responded, "As of yet, no one else in the business office has been implicated." The district and the state comptroller’s office is focusing on the two administrators first, he said and there are still three more months until the audit is complete.

If other district officials are implicated, the board will pursue action against them as well, Pofit said. No current business office-employees have been placed on leave, Pofit said.

All school districts in New York State are now required to hire an internal claims auditor, someone from outside, who will receive all the checks and do the leg work to see that documentation and approval are adequate. It’s someone who does not work in the business office and will report directly to the school board, Pofit said.

Also, the district has created an audit committee, made up of board members who will review the superintendent’s vacation time, sick leave, and travel, Pofit said.