ALBANY, NY (11/05/2010)(readMedia)-- New York's Battery Park City Authority (BPCA) squandered more than $300,000 on parties, gifts, and free lunches, as staff complained of favoritism by top executives, a report released today by Inspector General Joseph Fisch concluded.

The Inspector General targeted wasteful spending of public funds from 2005 through 2008 on items from $100,000 on executive lunches to $16,000 open-bar parties and inappropriate charitable donations including a $100,000 gift to Auburn University Foundation, in Alabama.

In response to the findings, which the Inspector General shared preliminarily with BPCA in January, the BPCA Board of Directors underwent a substantial membership change and Chairman James Gill and CEO James Cavanaugh resigned. William Thompson, Jr. was appointed to the board, elected Chairman and the Authority reformed its practices, eliminating abuses related to meals, parties, cars and charitable donations. Cavanaugh was replaced by Gayle Horwitz as president and CEO.

"Such excessive spending by a state authority was outrageous," Inspector General Joseph Fisch said. "However, I was very pleased at the appointment of William Thompson, Jr. as new Chairman and commend him for his prompt and positive response to our recommendations. I am confident that Battery Park's policies are now in line with state guidelines."

The Inspector General launched his investigation after receiving a complaint which alleged "fraud and corruption" involving Gill, Cavanaugh and Senior Vice President of Operations Laura Wilson Kimball. The complaint included allegations that as a result of a romantic affair between Kimball and Cavanaugh, her boss, Kimball received undue perks. It also accused them of a retaliatory firing of Controller Debra Bogosian, with whom Kimball was feuding. The complainant also alleged that Gill was inappropriately assigned a car and driver when he was supposed to serve without compensation.

Launched in 1968 to convert a 92-acre stretch of lower Manhattan into a balanced neighborhood, BPCA generated more than $270 million in revenue in 2008. By law, its extra income is remitted to the public.

During the investigation, the Inspector General learned that Bogosian was given a $56,304 severance package in exchange for signing a "non-disclosure" agreement which barred her from claiming any misconduct at the Authority – even to law enforcement, unless subpoenaed – in violation of state public policy. In addition, Cavanaugh and Kimball – who received $28,000 in raises from Cavanaugh in three years – refused to answer questions by the Inspector General about their alleged affair. Under state law, such a refusal is cause for removal or other penalty. Cavanaugh resigned, Kimball was docked one week of annual leave, and her position in the executive chain of command was reduced.

In addition, the Inspector General concluded that:

1. BPCA spent more than $300,000 on parties, lunches and gifts from 2005 to 2008, including $30,000 on employee meals, $13,000 for annual catered summer picnics and $14,000 for annual holiday parties for a 60-person staff and guests. In response to the Inspector General's report, Chairman Thompson directed the Authority to spend within the guidelines used by other state agencies and the state Comptroller.

2. BPCA gave $4.2 million in charitable contributions from 2004 to 2008 while failing to properly report donations to the state Authorities Budget Office. Many recipients – from the Yonkers Puerto Rican Day Parade to the Queens Botanical Gardens – had little or no connection to BPCA's mission. In response to the report, the board formally agreed to limit contributions to entities related to its mission.

3. BPCA spent more than $300,000 from 2003 to early 2009 to lease an apartment at the Solaire in Battery Park City. The Inspector General found no evidence to support the allegation that it was used as a "love nest."

4. Gill received improper compensation in the form of a vehicle valued at nearly $19,000, and a driver, which violated Authority statute requiring board members to serve without compensation. In response, BPCA hired an accounting firm to determine the value of this fringe benefit. Gill cooperated fully with the Inspector General's investigation and he began to reimburse the Authority for his use of the vehicle prior to the Inspector General's investigation. Thompson does not use an Authority vehicle or driver.

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Posted Friday November 05, 2010 at 11:30 am by New York State Inspector General
Last Updated Thursday March 17, 2011 at 01:36 pm