JOHNSTOWN - Fulton County supervisors were divided, but they eventually decided Monday to spend $40,000 to try to recover $3 million in bonus money they say was wrongly taken by two former economic development executives.
The Board of Supervisors voted 11-8, with Chairman William Waldron absent, to appropriate the funding to the Fulton County Center for Regional Growth. The weighted vote was 302-227 and followed an 85-minute, closed-door executive session called in part for "pending litigation."
"I think we owe it to the taxpayers to pursue this issue," said Northampton Linda Kemper.
The issue is whether county taxpayers should pay for some of the private CRG's ongoing legal effort to recover the roughly $3 million from fired agency executives Jeff Bray and Peter A. Sciocchetti.
Federal income tax returns from 2010 showed Bray, former Fulton County Economic Development Corp. senior vice president, and Sciocchetti, former Crossroads Incubator Corp. executive vice president, received about $1.5 million apiece in bonuses their boards of directors later said were not approved.
The county board resolution passed Monday states that in mid-2012, the reorganized CRG "began cooperating" with county officials to "reinvigorate legal proceedings to recover certain monies taken by" Bray and Sciocchetti.
The resolution allows the county to spend up to $32,000 for civil proceedings against Bray, Sciocchetti and former EDC accounting firm Bonadio Group. The county also has up to $8,000 available for "excess compensation determinations and recoveries in accordance with" federal tax code regulations.
"After several months of information gathering and research, it is now necessary to hire specialized attorneys and specialized accounting professionals to pursue the cases further," resolution states. "The taking of said monies by the two former executives resulted in serious negative consequences for the ongoing effort to promote economic development for the community and its citizens."
Fulton County and the CRG in October announced a stronger partnership involving more accountability and more funding. Officials at the time said the EDC and CIC were facing financial difficulties and would be dissolved. The county later increased its annual taxpayer allocation to the CRG from $25,000 to $75,000 for 2013. Two county supervisors - Perth Supervisor Greg Fagan and Gloversville 5th Ward Supervisor Michael Ponticello - are now voting members of the CRG Board of Directors.
Gloversville 3rd Ward Supervisor Michael F. Gendron, chairman of the board's Economic Development and Environment Committee, said in a prepared statement that a "devastating" economic development situation was created by the actions of Bray and Sciocchetti. But he said the county and CRG now have a new partnership and are looking ahead.
"We are currently working on that strategy," Gendron said.
Broadalbin Supervisor Joseph DiGiacomo, who voted against the allocation Monday, asked if it was proper for Fagan and Ponticello to vote
"It's kind of why they were put on the [CRG] board in the first place," said county Administrative Officer Jon Stead.
They were allowed, and both Fagan and Ponticello voted for the allocation.
CRG President and Chief Executive Officer Michael Reese was happy with Monday's county vote.
"I was very pleased with what the Board of Supervisors has done," Reese said today. "It speaks to the partnership."
He said recovery of the $3 million would go a long way toward helping economic development efforts in the county.
Reese said the CRG's lawsuit against Bray and Sciocchetti continues.
The Board of Supervisors in November 2010 asked then-Attorney General Andrew Cuomo to investigate the bonuses.
Current Attorney General Eric Schneiderman in March 2012 concluded the investigation and took no action.
Michael Anich can be reached at firstname.lastname@example.org.