YONKERS, NY — An association run by the Yonkers firefighters union spent an estimated $1.4 million in state tax money in contravention of a state law from 2014 to 2016, state Comptroller Thomas DiNapoli concluded in an audit released Friday.
The explosive findings bolster previous reports by Tax Watch that revealed the widespread misuse of the what is commonly referred to as the “2 percent fund.”
While the law restricted its use to the aid of disabled and indigent firemen, the Mutual Aid Association of the Paid Fire Department of the City of Yonkers spent the funds on well-paid, healthy firefighters for gym memberships, dinner dances, adoption benefits, co-payments on health-insurance plans and a union newsletter.
Among some key findings by DiNapoli were:
- The association even used the money to pay for lodging for firefighters attending a fireman’s out-of-town funeral, the audit found.
- The association used $104,000 in tax money to pay for dinner dances over three years, with its 2016 gala costing $39,402, DiNapoli found.
- It also spent $63,000 on gym memberships for firefighters in 2016.
The 2 Percent fund
The money comes from New York’s 2 percent tax on what’s called “foreign fire insurance” – homeowner insurance policies written by out-of-state companies. The fund brings an estimated $60 million a year to fire departments statewide.
Yonkers received an average of $600,000 a year during the audit over a 22-month period for the years 2014, 2015, and 2016.
While the audit covered spending for those three years, the association has spent the money in contravention of the state law for decades, union officials acknowledged.
Association officials maintained they were unaware of a 1912 law that set up the association, which was updated in 1962, and restricted how the tax money was spent. The Yonkers firefighters based its spending on state insurance laws that apply to other fire departments that do not have special legislation for their departments.
“Although association officials said they were not aware of the special act and the required use of the foreign fire insurance money, failure to disburse these funds, consistent with the special act, contravenes the purpose of the special act,” the audit stated.
DiNapoli’s report noted that law was the subject of litigation in 1981, and the subject of state comptroller opinions in 1975, 1976, and 1980.
Yonkers Mayor Mike Spano, who called on DiNapoli to audit the Yonkers union, said the report outlining the illegal spending of tax monies called out for further investigation.
“Our firefighters are heroic, but what the union is doing to the taxpayers is not,” Spano said. “Here we have clear violations of state law and no willingness to enforce it. I don’t know where the taxpayer goes for relief.”
Any further action on the Yonkers funds would depend on action by state Attorney General Eric Schneiderman, who so far has remained on the sidelines while the audit took place over the past two years. He was waiting for a referral from DiNapoli, his spokeswoman Amy Spitalnick said Friday morning.
By late afternoon, DiNapoli had decided that the misspending of $1.4 million by the Mutual Aid Association did not require any further by Schneiderman.
DiNapoli spokesman Brian Butry said the comptroller’s investigation found no intent on the part of the firefighter’s union to defraud the taxpayers. The firefighters have insisted they didn’t know the law under which the association was established.
“Because there is no clear criminal intent here, we will not be referring to the attorney general,” Butry said.
DiNapoli took a different approach in Buffalo. Schneiderman stepped in following DiNapoli’s referral to win a felony conviction against Pearlann MacVittie of West Seneca, New York,for grand larceny in her scheme to steal benefits, which occurred over 33 years.
Schneiderman also made state taxpayers whole.
“There was restitution of $300,000,” Butry said.
Association President Barry McGooey, who leads Yonkers Firefighters Local 628, said the union has rectified the matter by winning passage of legislation in 2017 to make the spending legal moving forward. The bill was passed by the state legislature in June, and signed by Gov. Andrew Cuomo in December.
After DiNapoli informed the union of the audit in 2015, the association only spent the insurance funds on administration and group life insurance for active firefighters.
“The special act, which covers ‘indigent and disabled’ firemen has been effectively obsolete for many years and there are no longer individuals who may be classified as such,” McGooey wrote in his response to DiNapoli’s report. “Upon learning of the Special Act of 1912, the board promptly took steps to obtain legislation in Albany.”
Rochester, Syracuse and Buffalo
The findings were part of an audit of how fire departments in Yonkers, Rochester, Syracuse and Buffalo used their foreign fire insurance monies from 2014 to 2016. The report found that Rochester’s program, the result of a 2012 court settlement, were used properly.
But serious problems were also unearthed in Syracuse and Buffalo.
Other findings of inappropriate spending included:
- Buffalo paid $291,000 over more than 30 years to the daughter of a deceased beneficiary who fraudulently collected the money.
- Syracuse paid $390,826 in one-time cash payments to 33 firefighter retirees, with some receiving as much as $27,000.
Spano has long advocated that the city of Yonkers receive part of the foreign fire insurance income, to help pay for the city’s fire service. But that was not part of the negotiations over the bill passed in the final days of the 2017 legislative session.
Cuomo rejected Spano’s plea to veto the bill.
The 2 percent money is shared with the municipal governments of Buffalo and Rochester. Over the 22-month study period, the city of Buffalo received 78 percent of the money,while the city of Rochester received 75 percent of its insurance funds.
All of the 2 percent monies in Yonkers and Syracuse go to organizations controlled by the paid firefighters.