Poughkeepsie Journal
Friday, September 6, 2002
The lawsuit, filed Wednesday in federal court in White Plains, alleges that a scheme backed by former town and Dutchess County GOP Chairman William Paroli Sr. -- with the blessing of the town board at the time -- fraudulently inflated the sale price of the Tucker Drive facility to $6.95 million in what the complaint called a ''sham.''
Supervisor Joseph Davis said he hopes the lawsuit brings an end to a saga of corruption and greed that stained the town's reputation after the first arrest of a town official in 1998. A four-year state and federal investigation led to the conviction of Paroli and four former town employees on graft-related charges.
''What's my main goal?'' Davis said. ''Closure. So we can move on and address the business of government and the business of running the town.''
Suit could be costly
The suit could take years to litigate and could cost the town an estimated $500,000 in legal fees.
The sale, a key part of the investigation into town corruption, was completed in 1996 when the town purchased the building from Thomas and Betty Espie.
The price rose from just over $5 million to $6.95 million at closing, and repairs and other costs have since hiked that figure to more than $7.5 million.
The Espies, who have denied any wrongdoing, are named as defendants in the suit along with Paroli, former town Water Superintendent Fred Andros and the estate of former Town Assessor Basil ''Bill'' Raucci.
Contractors who worked on the project were also named as defendants, accused of funneling bribe money to Paroli, Raucci and ultimately the GOP in exchange for getting contracts to perform work on the facility.
Betty Espie said Thursday she had not reviewed the suit, but again denied any wrongdoing. She specifically denied that the couple paid a $100,000 bribe to Paroli in order for the deal to go through.
That allegation is part of the lawsuit filed in White Plains.
''I don't think anybody has done anything wrong, to tell you the truth,'' Espie said Thursday.
The suit also names two former town attorneys, Patrick Moore and Frank Redl, as defendants. It accuses them of allowing the
allegedly sham lease to be approved. The lease arrangement allowed the town to circumvent the Wicks Law, which requires competitive bidding on various aspects of municipal projects.
''The defendants, through fraudulent and deceptive means conspired to achieve personal benefit and enrichment through a conspiracy powered by bribes, kickbacks, overcharges, sham leases, and efforts to circumvent'' state law, the suit alleges.
Neither Moore nor Redl could be reached Thursday.
The suit also names as defendants the town board members who served on the governing body prior to and during the time of the sale.
Some of the allegations in the suit include:
- State law was circumvented by characterizing the transaction as a lease with an option to buy, when in fact town officials never intended to lease the property, rendering the lease a ''sham.''
- The Espies made a $100,000 payoff to Paroli to seal the deal for the facility, using Roy C. Knapp & Sons, a contractor on the project, as a conduit.
- Hayward and Pakan Associates, architects on the project, made a $10,000 payoff to Paroli to secure work on the project.
A person who answered the phone at the firm Thursday declined comment.
- Knapp & Sons made a $27,000 payoff to Paroli in exchange for gaining work on the project. Company officials at Knapp could not be reached.
- That in the spring of 1996, the entire town board and Moore met illegally at Paroli's home, where it was agreed, at Paroli's direction, that the purchase price and lease agreement would be increased by $1.6 million and approved by the board.
Paroli, who served federal prison time after pleading guilty to a corruption charge in 2000, declined comment Thursday.
The charge he pleaded guilty to did not involve the police and court facility purchase, and many of the defendants in the town's suit were never charged by authorities in the wake of the four-year investigation.
Former Supervisor Thomas Murphy, also named as a defendant, could not be reached Thursday.
Mary Percesepe, a former town board member named as a defendant, said she had not seen the suit and would not comment.
1996 memo detailed
Circumventing the Wicks Law seems to be a key part of the town's case.
The suit cites a July 1996 memo from Moore to the town board in which he refers to the lease agreement.
''The monthly lease figure (under the amended lease agreement) is $80,000,'' Moore wrote. ''However, in order to render the arrangement a legal one, we cannot and should not say publicly that we do not intend on paying any rental monies. In order to legally conclude this matter, we cannot publicly state that it is not our intention to lease the facility at any time, even though that is the case.''
The town is represented by the Albany law firm of DeGraff, Foy, Holt-Harris, Kunz & Devine. The firm was hired earlier this year to review the potential case after Manhattan attorney Richard Pu recommended going forward. The town board wanted a second opinion before deciding how to proceed.
Part of the suit also claims officials violated RICO, or the Racketeer Influenced and Corrupt Organizations Act, usually used to prosecute organized crime figures.
Raucci, the former town assessor described by authorities as Paroli's right-hand man in the corruption scheme, committed suicide in 1997 after being questioned by authorities about his role in the scheme.
Andros is in state prison after being convicted of murder in the shooting death of former town personnel director Susan Fassett. Authorities have said they do not believe Fassett's murder and the corruption scandal were connected, except for the involvement of Andros in both.
The scandal led to Democrats taking control of the town board in 2000 for the first time in nearly a decade. The GOP regained control of the board in November and decided to proceed with the lawsuit after months of deliberations and recommendations from attorneys.
AT A GLANCE
THE DEFENDANTS
Here are the defendants listed in the Town of Poughkeepsie's suit regarding the
1996 purchase of the town's Tucker Drive police and court facility:
Thomas Espie: Former owner of police/court facility
Betty Espie: Former owner of police/ court facility
Patrick F. Moore: Former town attorney
Frank E. Redl: Former deputy town attorney
William L. Paroli Sr.: Former town and Dutchess County GOP chairman
Frances L. Raucci: Widow of late town Assessor Basil "Bill" Raucci and executor of Basil Raucci's estate
Fred Andros: Former town water superintendent
Lawrence Knapp: Principal with Roy C. Knapp & Sons
Roy C. Knapp & Sons Inc.: Contractor on police/court facility project
Hayward & Pakan Associates: Architectural firm on police/court project
Peter R. Cantline: Partner with Hayward & Pakan
John V. Kane III: Partner with Hayward & Pakan
Roger A. Mastri: Partner with Hayward & Pakan
Donald G. Tomlins: Former partner with Hayward & Pakan
Mark T. Johnson: Partner with Hayward & Pakan
Thomas Murphy: Former town supervisor
Michael Dunagan: Former town board member
Mary Percesepe: Former town board member
Lorraine Tracey: Former town board member
Louis Murasso: Former town board member
Patrick Hinkley: Former town board member
Dennis Leary: Former town board member
Presidential Homes of New York Inc.: Hyde Park company controlled by Raucci and allegedly used to funnel bribe money to Paroli and the GOP
HIGHLIGHTS OF LAWSUIT
The $50 million lawsuit filed by the Town of Poughkeepsie alleges the defendants schemed to defraud taxpayers by improperly raising the cost of the police-court facility. Here are some of the specific allegations included in the lawsuit:
- That in the spring of 1996, "the entire Town Board, and Defendant Moore, met with Defendant Paroli at Defendant Paroli's home, at which meeting it was agreed, at the direction of Defendant Paroli, that the amended purchase agreement and amended lease agreement would be approved by the Board."
- That "Defendants Espie acquired and maintained influence and control in and of the Town Board ... through a pattern of racketeering activity, to wit, Defendants Espie paid bribe(s) to obtain such influence and thereby secure a lucrative contract with the Town, which contract was known to them to be illegal."
- That Presidential Homes, a company in which Raucci was involved, "was a conduit through which a portion of ... $137,800 was funneled to Defendants Paroli and Raucci, among others."
- That Defendants "Roy C. Knapp & Sons Inc., and Knapp were required by Defendant Raucci to make a $27,800 payoff as a 'donation' to the Town of Poughkeepsie Republican Party. Defendants Roy C. Knapp & Sons Inc., and Knapp were told that the payoff was expected in exchange for being awarded the contract for the renovation work at the Espie property."
Source: Journal research
CHRONOLOGY
TOWN SCANDAL
1995
January: Town officials move to purchase a 120,000-square-foot building on Tucker Drive after state officials remove it from a list of inactive hazardous waste sites. The site was once a landfill.
March: The town says it plans to spend up to $5.35 million to purchase the building, owned by Thomas and Betty Espie.
1996
September: The town closes on the property, paying $6.95 million for the building and surrounding land.
1997
October: Town of Poughkeepsie Assessor Basil ''Bill'' Raucci disappears the weekend of Oct. 4-5. Raucci's body is found Oct. 10 in the Hudson River. An autopsy determines the cause of death was drowning.
1998
March 5: Jim Pickles, Town of Poughkeepsie building inspector and director of the building, resigns.
March 11: Robert Kortright, the town deputy building inspector, is arrested by federal officials. In October, he is convicted on one count each of bribery and extortion and is later sentenced to one year and a day in prison, as well as two years of supervised release.
Oct. 14: Pickles pleads guilty to one count of bribery and is later sentenced to four months of confinement to his home, three years of probation and fined $3,000.
1999
May 26: William Paroli Sr., Dutchess County elections commissioner and chairman of the county and Town of Poughkeepsie Republican organizations, is arrested by federal authorities on charges of extortion and bribery. Federal authorities allege that Paroli, Raucci and others extorted money from contractors who wanted to do business in the town.
May 27: Fred Andros, superintendent of the town's water department, pleads guilty to a single charge of conspiracy.
June 16: Businessman Herbert Redl, charged with bribery, signs a deal with the federal government that leads to dismissal of the charge six months later.
Sept. 29: Andrew J. Ceroni, of Hyde Park, pleads guilty in federal court to one count of perjury in connection with the scandal.
Dec. 29: Andros attempts to commit suicide as authorities arrive at his Hyde Park home to serve a search warrant in connection with a murder case. Andros and an accomplice, Dawn Silvernail, would later be convicted for the murder of Susan Fassett. Authorities say they found no credible connection between the corruption scandal and Fassett's murder, other than the involvement of Andros.
2000
Feb. 15: Frank Redl, former attorney for the Town of Poughkeepsie, enters into a deferred prosecution deal with federal prosecutors. Under the terms of the deal, Redl will not be prosecuted if he stays out of trouble for 12 months. Court documents indicate Redl admitted he lied to a federal grand jury.
Feb. 16: George Knapp -- former water maintenance supervisor in the Town of Poughkeepsie -- pleads guilty in federal court to one count of conspiracy to commit mail fraud. He later is sentenced to six months in prison and ordered to pay $37,300 in restitution to the town.
Feb. 18: Paroli Sr., pleads guilty to one count of conspiracy to commit extortion. Federal authorities drop all other charges. He is later sentenced to 21 months in prison, to be followed by two years of supervised release. He also is ordered to pay $19,300 in restitution to the town and a $5,000 fine.
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