Now you see it, now you don't.

New York State Attorney General Andrew Cuomo is investigating the possibility that hundreds of lawyers across New York State have been granted what he alleges are illegal pension benefits from school districts and other governmental entities that improperly enrolled non-employees in public pension funds. On Thursday, Cuomo announced settlements with Hodgson Russ of Buffalo and attorney Maureen Harris of Girvin & Ferlazzo of Albany. He said that a criminal and civil investigation into the Girvin firm was continuing.

The situation became public in February, when Newsday published an article stating that a private attorney, Lawrence Reich, was listed as a full-time employee of five school districts even as he was listed as a partner at the law firm Ingerman Smith and the districts were paying his law firm for his services. That arrangement allowed Reich to qualify for a public pension of over $60,000 and health benefits for life. The arrangement had come to light when attorney Janet Wilson, who had become embroiled in a lawsuit against one of the school district when it had declined to renew her contract, told another partner at Reich’s firm that she planned to notify the state employee retirement system about Reich’s arrangement.

According to a deputy attorney general, Harris was one of at least twelve Girvin attorneys who were on the public payroll between 1991 and 2008. The firm was given the discretion to determine how many and which lawyers would be placed on the public payroll and set the salary that each lawyer would receive, regardless of whether that lawyer was doing any work for the school district. Harris’s attorney said she regarded the pension benefit as “pursuant to a longstanding relationship” her firm had with the district.

This investigation is an example of how something that is accepted as perfectly fine on one day becomes flavor-of-the-month fraud the next day because a prosecutor decides so. It is particularly important that anyone defending such an investigation learn all there is to know about when someone can be considered a public employee. Even if the lawyers were wrong about an interpretation of when that status can be confirmed, it may constitute a complete defense if they believed in good faith they were entitled to the benefits. CR