Oceanside Sanitation District No. 7's board of commissioners announce $300K settlement with former supervisors

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The Oceanside Sanitation District No. 7 board of commissioners announced a $300,000 settlement in its lawsuit against former supervisors Michael and Charles Scarlata at its board meeting on March 7, pending their signature on the agreement.

The Scarlatas were accused of collecting more than $800,000 in illegal deferred retirement payments after audits were completed by the state and county comptrollers.

“Finally, the taxpayers have been reimbursed for money that was inappropriately paid to the Scarlatas,” said Austin Graff, one of five commissioners on the board, “and the taxpayers win because the district is receiving money.”

As part of the settlement, the Scarlatas agreed to pay $200,000 within a month of the settlement and three payments over a three-year period until the other $100,000 is collected.

Before becoming a commissioner, Graff, an attorney, represented former sanitation employee Joe Samoles when he unsuccessfully sued the Scarlatas in Nassau County Supreme Court in 2015 to recoup the funds. After that, the board of commissioners filed its own suit against the Scarlatas, and the settlement was finalized on March 7, pending their signatures.

Michael Hopkins, of the Garden City-based law firm Hopkins & Kopilow, represented Michael Scarlata and his son, Charles, in the case. Calls to his office requesting comment had not been returned at press time.

The elder Scarlata received $391,000 in deferred payments from 1998 to 2013, according to a report by State Comptroller Tom DiNapoli. The report found that Charles Scarlata received $421,353 in payments in 2012 and 2013, after he retired. In addition, the comptroller determined that the district had entered into a series of contracts with Assistance Corp., for which Michael Scarlata received additional money. In July 2015, the board approved a resolution to suspend Michael Scarlata and review his contract as well as the comptroller’s audit. That December, the board voted to cut its ties with Assistance Corp.

DiNapoli’s office alleged that more than $800,000 in deferred retirement payments made to the two men violated New York finance law, which is separate from criminal law, and recommended that the district do everything in its power to recoup the money.

Graff said that a deferred compensation plan is not authorized under state statute, and noted that former board Chairman Joe Cibellis was among the members that approved it. Graff defeated Cibellis in a contested race for commissioner last summer, after a three-week delay in the outcome.

Samoles said that even though his lawsuit was dismissed, he was pleased to see a settlement reached by the board. He filed his suit in conjunction with former sanitation employee Dennis Rockefeller, and it included Cibellis as a defendant, alleging that he and other board members had blocked efforts to reclaim the payments.

Ultimately, Judge Lewis Lubell threw the suit out last March. In the decision, Lubell described the plaintiffs’ efforts as “laudable” but dismissed the case on grounds that Sanitation No. 7 — an independent district under the Town of Hempstead’s umbrella — is not categorized as a county, town, village or municipal corporation. Graff had sought to designate it as such.

Graff said the commissioners pursued their lawsuit shortly afterward, and had settlement discussions with the Scarlatas in January before settling on March 7.

“It’s good that the taxpayers are getting back money,” Samoles said, “ [and] that these commissioners are doing a very, very fine job.”

Samoles added that he intended to run for commissioner in June, when Tom Lanning’s seat is up. At the board’s February meeting, Lanning asked current board Chairman John Mannone to step down in protest of the firings of former longtime employees Douglas Hernandez and Dan Faust. The two were fired publicly at a December meeting because board members uncovered their knowledge that Cibellis remained on the district’s dental plan from July 2016 through January 2017, even though he was no longer making contributions for the benefits. Faust and Hernandez have denied the claims and filed wrongful termination suits against the board, which are pending.

At the March 7 meeting, Lanning also asked Commissioner Matt Horowitz to step down amid a sexual harassment lawsuit that was filed by Jacqueline Urli, a secretary at the district, against all of the commissioners. The board denied the claims in a joint statement. The suit is pending.

Graff praised Samoles for pursuing the initial lawsuit against the Scarlatas, which eventually created momentum toward the settlement. “Until Joe Samoles pursued this, the district was not pursuing it,” Graff said. “It took a taxpayer to push this district to pursue the claim against the Scarlatas.”

Peter Belfiore contributed to this story.