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June 29, 2011

New York Attorney General and Comptroller Team Up to Battle Fraud and Corruption Involving Public Money

New York State Attorney General Eric Schneiderman and State Comptroller Thomas DiNapoli have agreed to pool their offices' powers and resources to target public corruption at all levels of government. Their agreement will grant Mr. Schneiderman the power to investigate, and criminally prosecute, cases involving fraud and waste of taxpayer money, which often are discovered through Comptroller audits. This development suggests that Attorney General Schneiderman, unlike his predecessors, intends to make public corruption one of his signature causes.

To create the joint task force, the Attorney General and Comptroller invoked New York Executive Law § 63(3). This relatively obscure statute allows the Comptroller to request that the Attorney General investigate and prosecute any indictable defense relating to laws the Comptroller is "especially required to execute or in relation to any matters connected with" the Comptroller's mission. Given the scope of the Comptroller's duties, the agreement will give the Attorney General broad authority to address wrongdoing involving state or local government spending. The Attorney General also will have jurisdiction over public authorities, which receive significant state funding, issue grants to local governments and economic development agencies, and enter into lucrative contracts with private sector businesses. Other issues likely to be addressed under the agreement are pension padding, no-show construction jobs and abuse of legislative earmarks.

Working with the nearly 700 lawyers in the Attorney General's office, the Comptroller's office will provide additional man power and expertise to carry out the goals of the agreement. Mr. DiNapoli's office has over 400 trained auditors with a sophisticated understanding of how business is conducted with government entities. With the possible exception of the New York County District Attorney, this combination of legal power and investigative expertise far surpasses the resources available to local district attorneys, who are better suited to prosecute so-called street crimes. Unlike his predecessors,

Mr. Schneiderman now can investigate public corruption by issuing subpoenas for records and witness testimony.

Despite its wide reach, the initiative leaves some significant issues in state government unaddressed. For example, the Attorney General still lacks legal standing to investigate criminal violations of election laws, or to investigate members of the New York State Legislature for failure to disclose outside income. Nevertheless, the agreement, at only a month old, is already having an impact. The Attorney General has announced an investigation of a local development corporation in Monroe County and its main contractor over a $224 million upgrade of the county's emergency communication system.

It remains to be seen whether the Attorney General and Comptroller will use their new powers as effectively as Attorneys General Elliot Spitzer and Andrew Cuomo used the New York Martin Act. However, without question, their agreement and joint task force represent a significant change in the battle against public corruption in New York.

If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact any of the members of the Practice Area.


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