December 13, 2002

Expanded Lawsuit Alleges Espies Concealed $1.6 Million

Along with adding specific allegations of negligence against former town officials, the Town of Poughkeepsie's "amended" federal lawsuit has swollen to include 21 more pages of detail to back up its original allegations.

A copy of the amended complaint obtained by The Poughkeepsie Beat on Thursday, alleges that defendants Thomas and Betty Espie, who sold the refurbished warehouse on Tucker Drive to the town in 1996 for $6.95 million, transferred $1.6 million out of their bank account to "an undisclosed location" shortly after the town took possession of the building on Sept. 18, 1996.

The lawsuit had earlier alleged that the Espies conspired with former town and county Republican Committee chairman William Paroli Sr. and other former town officials to fraudulently inflate the price of renovations to the facility by $1.6 million. However, the new document, filed recently in federal court, alleges for the first time that a specific transaction involving the funds existed and that the Espies collected the overcharge and then purposefully tried to conceal it. Reached at her home on Thursday, Betty Espie declined an opportunity to comment.

"...Immediately after the September 18, 1996 closing, defendants Thomas Espie and Betty Espie transferred $1,600,000 out of their bank account to an undisclosed location, in an effort to disguise and conceal said funds, which were the result of overcharging the Town by $1,600,000. Plaintiff is not privy to the specific details of this transaction other than that it occurred, but believes its characterization of the events surrounding the transfer to be true based on the timing of the transfer, as well as the fact that the amount transferred equaled exactly the amount of the overcharge believed to have taken place in this transaction," states section 125 of the amended complaint.

Earlier sections of the complaint state that, in May, 1996, the Espies had requested a $1.6 million increase to the previously agreed upon purchase price to cover increased costs associated with renovating the 120,000-square-foot warehouse. "Upon information and belief, the representations made by Defendants Thomas Espie and Betty Espie to the effect that the renovation costs had increased were false and made with the intent to defraud the Town of $1,600,000," the complaint states, adding that the actual amount spent on the renovations were "less than the amount originally provided for renovations in the original Purchase Agreement."

Although the Federal Bureau of Investigation conducted a four-year investigation into government corruption in the Town of Poughkeepsie in the late '90s, the Espies, although questioned, were never charged with any wrongdoing. Several former town officials and Paroli Sr. were eventually convicted of various charges, but none of them directly involved the Espie building transaction.

In a related development, a group of Democratic county legislators on Nov. 18 sent a letter and supporting material to James Comey, U.S. Attorney for New York's Southern District, requesting that he convene a grand jury in investigate the matter further. "We seek to have the grand jury consider issues of criminal culpability that have not been addressed either by a four-year FBI investigation or by the pending civil RICO (Racketeer Influenced Corrupt Organizations) action," states the letter, which is signed by Minority Leader Roger Higgins and legislators Leonard Babiarz, John Ballo, Fran Knapp and Kristen Jemiolo.

An earlier request that Dutchess County District Attorney William Grady convene a local grand jury was denied with Grady advising that the matter belonged in a federal jurisdiction.

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