State audit finds fraud, bid-rigging at Central NY DDSO

Throwing a “lollipop.”

That’s what a top official at the Central New York Developmental Disabilities Services Office called it when he used taxpayer funds to overpay vendors who worked on group-home buildings for developmentally disabled people, according to a state Comptroller’s Office audit.

The report, which was made public Tuesday, found that employees at the Rome-based office had spent more than $1 million for 168 rigged contracts from 2003 to 2008.

“This is at minimum a flagrant disregard for the law,” state Comptroller Thomas DiNapoli said in a prepared statement. “These employees are supposed to protect taxpayers, not make up phony bids as part of some bid-rigging scheme to funnel a million taxpayer dollars to favored vendors. And they were so blatant they didn’t even try to cover their tracks.”

The Office of Mental Retardation and Developmental Disabilities, which oversees the other agency, said it was addressing the situation.

“We’ve obviously take the findings very seriously,” office spokeswoman Nicole Weinstein said. “We have put in internal controls that will establish different systems and mechanisms to ensure this doesn’t occur again.”

Weinstein also said the wrongdoing is not related to the care the agency provides for disabled individuals, and relates only to the maintenance of the buildings, or “physical plant.”

The 24-page report outlines a scheme that may have been going on since the mid-1990s, and states the problem was so much a part of the

office culture that one agency staffer told investigators that “it was never their practice to do it the normal way.”

The Central New York Developmental Disabilities Services Office serves eight counties, including Oneida and Herkimer, and provides services to about 3,850 people with mental retardation and disabilities.

Assistant Oneida County District Attorney Matthew Worth said the office is investigating if any criminal charges will be filed.

Meanwhile, the agency’s physical plant superintendent, Scott Risucci, has been placed on administrative leave and other changes have been made to address the situation, the report said.

The report does not name Risucci or the vendors, but the Comptroller’s Office supplied their identities when asked for them by the Observer-Dispatch.

Risucci could not be reached Tuesday.

Freebies and discounts

The report alleges Risucci benefited personally from the scheme, and also helped his friends benefit.
He was placed on administrative leave in February 2008 after Comptroller’s Office auditors found he was running his personal landscaping and snowplowing business from his agency office.

But there was far more than that, the report said.

One of the vendors, Louis Spiridigloizzi, owner of Thermo Heating & Air Conditioning in New Hartford, was Risucci’s neighbor, and one of his snowplowing clients, the Comptroller’s Office said.

Before Risucci began working at the agency, Spiridigloizzi had been awarded contracts there totaling only $559. But after Risucci started working there, Spiridigloizzi was paid a total of $316,893, the report said.

Spiridigloizzi could not be reached.

In another instance, Risucci said he had secured discounts — and possibly free items — for landscaping materials from a vendor he hired for the agency.

The Comptroller’s Office identified that vendor as Norman Gaumer, owner of Clinton-based General Property Maintenance. Gaumer was paid $318,678 during Risucci’s employment. In 2007, Risucci also sold Gaumer his 1995 Ford Mustang, the report said.

Gaumer said he had no comment about the allegations.

Risucci was hired by the agency as a maintenance supervisor in 2000. After being promoted within that category, he became physical plant superintendent in July 2007.

His probationary period for the superintendent’s position now has been terminated, and his current job title is maintenance supervisor III, according to a letter from the Office of Mental Retardation and Developmental Disabilities that was attached to the comptroller’s report.

How it worked

The Central New York Developmental Disabilities Services Office has 197 community-based group homes, 306 family care homes and 23 other program sites, the report states.

The audit explains that staff would often pre-select vendors to win the bidding process, set a “price target” and ask the vendor to submit a bid. Fake bids also were created. At least nine vendors were
consistently favored in this manner, the report said.

“There was widespread knowledge and acceptance of the bid-rigging practice among physical plant staff,” the report said. “New staff reported to us that they were taught by their fellow workers how to obtain fake bids.”

Vendors were familiar with the agency’s purchasing thresholds, and often kept just below them so they were more likely to get the contract.

One of those thresholds was $2,500, and so many purchases were set at $2,495 that agency staff began referring to favored vendors as the 2495 Club, the report said.

The Comptroller’s Office report also got estimates from the state Office of General Services for some of the work the Central New York Developmental Disabilities Services Office contracted for and found often the amounts paid were at least 40 percent higher than the estimates.

In some cases, the difference was higher than that. For example, the installation of a driveway cost the agency $14,750, but the Office of General Services estimated the project’s cost at $7,000.

Weinstein of the Office of Mental Retardation and Developmental Disabilities said the agency now checks for relationships between vendors and staff. The office also has separated the responsibility of awarding contracts from that of overseeing them and expanded its list of vendors so work is better distributed and better prices obtained.

In addition to businesses owned by Gaumer and Spiridigloizzi, other vendors cited in the audit included Northwind Regional Construction Services, Kevin Fahy Kitchens and Murphy Contracting, all of Utica; Bill’s Carpet Warehouse, Gerace’s Carpet Service and Affordable Custom Renovations, all in Rome; and Carpenter’s Construction in Camden.

William DeBlois, owner of Bill’s Carpet Warehouse, denied any wrongdoing and said he was unaware of any by others.

“I was never involved in any false bids,” he said. “My bids were too low for the longest time. I lost money on jobs I’d done for the state.”

Others on the list of favored vendors could not be reached.

Dean Kelly, president of Jay-K Independent Lumber in New Hartford, who was not implicated in the report, said he had long heard it was difficult to get contracts for work on group homes.

“We just never could figure out how to get in to do those jobs,” he said, referring to conversations he’d had with others in the construction industry.