After scandals, new guidelines for public administrators

After scandals, new guidelines for public administrators

12/6/2011 COMMENTS (0)


Dec 6 (Reuters) - In response to a string of scandals, state court officials have released a set of proposed guidelines for public administrators -- judicial appointees who handle the estates of those who have died without anyone to manage their affairs -- aimed at bringing transparency and accountability to the office.

The report, released last Friday, calls for more comprehensive record-keeping by public administrators and the attorneys who work for them, as well as uniform auditing standards and new rules for hiring outside vendors.

"Throughout the state, there seemed to be a lack of knowledge of the rules," said Suffolk County Surrogate John Czygier, who chaired the 13-member Administrative Board for the Offices of Public Administrators, which drafted the proposals after almost two years of work. "If you make it easier to do, it will get done."

Public administrators, or PAs, are appointed by surrogate judges in 11 of New York's largest counties -- the five boroughs of New York City, plus Suffolk, Nassau, Westchester, Erie, Monroe and Onondaga -- and the proposed guidelines apply only to them. In the state's 51 other counties, county treasurers typically serve as public administrators. In New York City, surrogate judges also appoint attorneys to work part-time in the PAs' offices, while in the other six large counties those appointments are left to the individual PAs.

SERIES OF SCANDALS

The board was convened early last year in response to a series of scandals involving public administrators over the last decade.

In 2002, Brooklyn Surrogate Michael Feinberg was removed from the bench after investigators found he had approved $2 million in excessive fees for Louis Rosenthal, an attorney in his office who was a law-school classmate and personal friend. Feinberg was disbarred in 2005.

In 2008, Rosenthal was suspended from practicing law. He also admitted to writing fee requests to Feinberg on Post-It notes instead of filling out mandatory affidavits. A five-judge panel reinstated Rosenthal's law license in October. At the time, he told Reuters that vague and confusing guidelines were partially to blame for his mistakes.

"We thought the rules were a formality," said Rosenthal, from whom the Attorney General's office is currently working to recoup the excessive fees.

Last year, attorney Michael Lippman was indicted on charges of fraud and grand larceny after allegedly billing more than $300,000 in excessive fees on five estates while working in the Bronx Public Administrator's office. Lippman also illegally received advance fees from a colleague, Esther Rodriguez, without approval from the court, according to the state Commission on Judicial Conduct. Both Lippman and Rodriguez were fired from the Bronx PA's office in 2006.

SURROGATE FACING ACTION

Bronx Surrogate Lee Holzman, who is a member of the panel that drafted the proposed rules, is currently facing disciplinary action for allegedly failing to act when he learned of Lippman's and Rodriguez' transgressions. Lippman had previously served as Holzman's top campaign fundraiser. Holzman's case, which could result in admonishment, censure, suspension or removal from the bench, has been postponed pending the outcome of Lippman's criminal trial.

Holzman's attorney, David Godosky of Godosky & Gentile, called the charges "meritless" and said the judge was even more proactive than the CJC once he discovered what was going on in his office.

Godosky also applauded the proposed rules -- particularly a requirement that attorneys maintain contemporaneous time records detailing their work instead of the current method of "block billing," in which attorneys request fees for blocks of time spent doing multiple tasks.

"These proposals are being considered in order to clarify that this was not the standard before, and to institute a higher standard so no other surrogate has to go through" what Holzman is facing, Godosky said.

The problems have not been confined to New York City, or even to counties with full-time PAs. In July, former Niagara County Treasurer David Broderick agreed to pay $17,000 to settle a case in which he was accused of handing decedents' homes to his wife, a real-estate agent, to sell through her agency. In at least one case, Broderick's wife offered to sell a home to her sister below its market value, according to court documents. Broderick never admitted wrongdoing.

Feinberg's attorney, Harvey Greenberg, did not return a call for comment. Lippman's attorney, Murray Richman, and Broderick's attorney, George Muscato, could not be reached and Rodriguez could not be located. Rosenthal did not respond to an e-mail.

'NOT A 'GOTCHA' TYPE OF THING'

Part of the board's work was to review a 2002 rule that instituted a sliding-scale fee schedule for counsel to public administrators. The panel said the sliding scale, which is mandatory in New York City and optional elsewhere, should be upheld because it establishes uniformity.

"A sliding fee schedule is in the public's best interest in that it provides a uniformity of result with the concomitant benefit of public confidence in the legal fee charged," the board wrote.

The proposed rules would also require public administrators to maintain electronic case-management systems that include the status of each estate, an inventory of all items of value and a record of receipts and disbursements. Another proposal would prohibit relatives of PAs and their employees from being granted contracts with the PA's office.

Czygier said the panel faced a delicate balancing act of producing clear, thorough policies that still allow public administrators to work with the realities of their individual jurisdictions. For example, in Suffolk County, where decedents usually leave behind homes, large bank accounts and other valuable assets, a flat percentage may make more sense than in New York City, where decedents' estates tend to be more modest.

"We tried to come up with a flexible set of guidelines that can be referred to; it's not a 'gotcha' type of thing," Czygier said.

Czygier said he hopes the board, which has been convened only a handful of times since its creation in 1993, will become a permanent fixture in the court system in order to regularly review the policies and their impacts.
"We shouldn't be waiting years for an issue to arise; we should be meeting every year and raising our own issues," he said.

The release of the report triggered a 45-day public comment period that ends Feb 3. The panel will consider the comments at a meeting that day, Czygier said, before issuing final guidelines.

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