The OD reported that details of Hage & Hage LLC.’s substantially discounted but still pricey legal bill for the GroWest investigation were finally made public Friday.
The final tally: $177,118.
The news did nothing, however, to calm the uncertainty surrounding the situation since April. City Comptroller Michael Cerminaro, whose office was held partly to blame by the law firm for failing to recognize the issues at GroWest, Inc., said again his office will not cut the check.
The reason, he said, is that investigations by the FBI and U.S. Department of Housing and Urban Development made the Hage & Hage probe unnecessary.
“Here the proper investigation is still going on, and we have this political investigation to bloody up (Mayor David Roefaro’s) quote-unquote political enemies,” Cerminaro said. “But yet, I’m supposed to pay this guy?”
Cerminaro said he will defend that decision in court, if need be.
Hage & Hage, run by J.K. Hage III, was hired by both the GroWest board of directors and the city in April, though the city alone will foot the bill.
The firm’s eventual report, delivered in August to the Common Council, found widespread misuse of federal money administered to the nonprofit housing rehabilitation agency from 2000 to 2009. It found blame with the agency itself, and with various city departments, and indicated possible criminal activity by former contractors.
City Corporation Counsel Linda Sullivan Fatata, whose office technically represents both the mayor and comptroller, said she would take Cerminaro to court if she must to force him to pay the bill. She pointed out the hiring of Hage & Hage was approved by the city Board of Estimate and Apportionment.
And she said if the situation ends up in court, Cerminaro would need his own legal counsel, meaning the expense of more taxpayer dollars. Ironically, Cerminaro would likely need E&A approval to hire his own lawyer, she said.
“I hate to see it come to that,” she said.
Both Fatata and Roefaro have said the Hage & Hage investigation would pay for itself. The city has sued GroWest, which has a $1 million insurance policy, and it has also taken over civil lawsuits initiated by GroWest against former agency employees and contractors.
“If we recover any of that money, it will more than pay for the bill,” Fatata said.
Roefaro responds
Roefaro said the Hage investigation has a purpose distinct from those by the FBI and HUD. Specifically, he has said, it protects the federal money currently coming to the city, provides an outline for the city to correct past mistakes and puts the city in HUD’s good favor by showing willingness for self-examination. The lawsuits enabled by the Hage investigation extended statutes of limitations that were about to run out, he said.
“If I didn’t do this, it would have cost the taxpayer millions of dollars,” Roefaro said.
Roefaro has bristled all along at the accusations of politics playing a role in the process, more recently saying he is taking his cues from HUD, which has stationed an auditor in the city’s Urban and Economic Development office.
Hage was first hired by the GroWest board, and the mayor said he had no role in the Hage investigation while it was going on. He said Cerminaro should “look at the hundreds of thousands his office has overpaid” instead of the bill, referring to payroll errors over the past year-and-a-half.
“We cannot reward incompetency, and I cannot push this under the rug,” he said. “Mr. Cerminaro will have to accept what is going on and that FBI and HUD are involved or he should resign.”
The bill submitted by Hage, who was hired at a rate of $150 per hour, actually indicated the work by his firm totaled $368,078. It was reduced, according to the bill, by several sizable “courtesy credits” from the firm.
Hage has said his normal hourly rate is more than $400, but that the actual hourly rate for the investigation came to $123.
Council members critical
The executive summary released is critical of both Cerminaro and former Mayor Timothy Julian, who was defeated by Roefaro in 2007. Cerminaro and Julian, both Republicans, have been mentioned as possible political candidates against the mayor in the 2011 election.
On Friday, Council President and Democrat William Morehouse said he was “boggled” by the situation and still objected to the investigation.
“I’m not saying it was, but it was potentially politically motivated,” said Morehouse, adding that he considered himself a friend of Hage and the mayor. “If it smells like and tastes like and looks like, it comes to a point that you really get concerned.”
Common Councilman Rocco Giruzzi, R-3, cited his lack of legal expertise and said he did not have an opinion on the Hage report, but did say he felt “nobody’s worth that amount of money.”
“I just hope at the end of the day there’s justice and the people that are guilty are held accountable,” he said.
Council Majority Leader Lorraine Arcuri, D-at large, questioned whether money recouped in lawsuits will make up for the city taxpayer-funded Hage investigation, or go back to the federal government.
“Not only is this a waste of money, but the use of a private local attorney for this may lead some to question the credibility of the report,” she said. “Worse yet, some may see it as a cover-up. “
What’s next?
Cerminaro said his office will begin formally auditing the bill Monday, and he plans on formally notifying the Corporation Counsel’s Office that he will not pay it during the week.
Fatata said her office will begin working on proceeding with the claims it has already filed against GroWest and the ones it has undertaken against the agency’s former employees and contractors.
She said her office will not initiate new actions any time soon, and that any additional suits will likely commence after the FBI has finished its work.
That means the city will likely not file civil suits against any of its employees. But that doesn’t mean they are completely in the clear, Fatata said.
“Anything with past officials would tend to be more criminal than civil,” she said, declining to elaborate.
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