In the two-and-a-half years since the Town of Poughkeepsie first brought its federal corruption lawsuit against the various parties involved in the town’s 1996 purchase of its police and court facility, the wheels of justice have turned slowly.
In recent days, the pace of proceedings has quickened as a series of developments suggested the town may be inching closer to a resolution that officials hope will help leave the town’s dark history of official and alleged corruption behind for good.
On Wednesday, July 6, Acting State Supreme Court Justice James Pagones dismissed a counter-suit brought by Tom and Betty Espie, former owners of the police and court property, ruling that the statute of limitations had expired and warning that he might declare the suit frivolous later this month.
On Friday, July 8, the Town Board approved a settlement that released engineering firm Hayward & Pakan from its own federal lawsuit. In return, the town will receive a $60,000 payment and an agreement from former firm officials to cooperate with the town’s investigation, in the form of depositions and signed affidavits.
In the lawsuit, the firm was alleged to have made a $10,000 payoff to former town and county GOP chairman William Paroli Sr., in the course of doing architectural and engineering work on the construction of the police/court complex.
Then on Tuesday, July 12, attorneys for both sides of the federal case began taking their first depositions from potential witnesses – former members of the Town Board, who settled with the town last year and agreed to cooperate with the town’s investigation. Federal Judge Charles Brieant, in an effort to move the proceedings along, ordered the depositions at a court session earlier this year.
Suits allege kickback scheme
The town’s suit, filed in federal court in September 2002, alleges that a web of corruption and bribery – involving former town and GOP officials as well as contractors and other local businesses – surrounded the lease, renovation and purchase of the town’s police and court facility on Tucker Drive in 1996, falsely inflating the cost to the town and its taxpayers.
The land deal was part of a larger federal investigation into corruption in the town. That investigation eventually led to the conviction of Paroli and four former town employees on conspiracy and corruption charges, but none of those charges was related to the police/court facility sale.
The town’s suit alleged that a number of officials conspired to falsely inflate the cost of the building to $6.95 million – a price tag that ultimately increased to $7.5 million with cost overruns and repairs.
Of the 23 original defendants in the suit, only seven remain: former town board members Michael Dunagan, Mary Percesepe, Lorraine Tracey, Louis Murasso, Patrick Hinkley, Dennis Leary and former supervisor Thomas Murphy were released from the suit in a $425,000 settlement last year; the estates of former assessor Basil Raucci and former water superintendent Fred Andros, and Raucci’s firm Presidential Homes of New York, were released earlier this year for a lack of funds; and now settlements have been reached with Hayward & Pakan, along with former employees Peter Cantline, John Kane, Roger Mastri, Donald Tomlins and Mark Johnson.
The remaining defendants, beside the Espies and Paroli, are former town attorneys Patrick Moore and Frank Redl, contractor Lawrence Knapp and his firm Roy C. Knapp & Sons.
The countersuit, leveled against the town by the Espies last year, alleges the opposite of the town’s claims, charging the Espies were cheated out of fair market value for their property by town officials who concocted a “Secret Plan” to recoup the cost of their purchase by leasing out excess space at the facility below market value.
In that suit, the Espies claim they actually poured nearly $2 million of their own money into the project, money they claim they never got back from the town. They also claim the sale agreement shields the Espies from litigation regarding the sale of the facility, and called on the judge to order the town to pay for the Espies’ defense against its own lawsuit.
In his decision, Pagones dismissed the Espies’ case because the statute of limitations on their fraud claims – six years from the date the fraud was or could reasonably have been discovered – had expired.
Pagones also wrote in his decision that he believed the Espies and their attorney “have engaged in frivolous conduct” in bringing the suit against the town, based on the criteria that it was without legal merit, its primary purpose was to prolong or delay pending litigation, and it asserted false statements.
Pagones will hold a hearing July 27 on that matter. If he declares the suit frivolous, the Espies could be held liable to pay the town’s legal costs for defending the matter, and suffer a financial penalty.
Ken McCulloch, the Espies’ attorney, called the decision “very disappointing” this week, and planned to appeal it “right away.”
Town looks for closure
Town Supervisor Joseph Davis said this week that while he wasn’t exactly happy with how the case has progressed over the last few years, it was good to see some steps being made. “It’s moving along at its own pace,” he said. “I accept it. Would I like to have things move a lot swifter? Yes.”
When the town first reached a settlement agreement with former town board members last summer, some members of the community expressed concern that the whole truth about the alleged corruption scheme would never come out without a public trial.
But throughout, Davis said, “The federal judge has made no secret about wanting the parties to settle, and the attorneys are taking the judge’s recommendation very seriously.”
He said the town is still committed to uncovering as much information as it can, along with recouping some of the money it claims to have lost on the police/court deal. He said, “Hopefully at the end of this whole process, there’s something that will come out. There are people out there who would like to know what the heck happened, and why it happened.”
Davis noted that all of the town’s settlement agreements have required cooperation from the former defendants. He said, “We want to find a resolution to this thing so we can all recover. The town has gone through a difficult period in past years. The thing now is to try and see if that entire period can be put to bed.”
The town has spent about $450,000 in legal fees on this matter so far, Davis said.