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February 25, 2005

Case of Former SUNY Official Points to Ethics Law Loophole

hen Karen R. Hitchcock resigned last year as president of the State University of New York at Albany, she said she was leaving earlier than expected to deal with family concerns.

But at the time, Dr. Hitchcock faced a state ethics inquiry into accusations that she offered to steer a campus construction contract to a developer, who in exchange would pay to endow a university professorship that she could fill once she left her job as college president, according to state officials familiar with the ethics review.

Facing a complaint filed with the state Ethics Commission, Dr. Hitchcock expedited her departure from the state payroll, even surrendering accrued vacation time, the officials said. That action stopped investigators from looking into the complaint because of a loophole in state law that effectively grants most employees immunity when they leave the state payroll - no matter what their actions while on the job.

A lawyer representing Dr. Hitchcock, Michael Whiteman of Albany, acknowledged that he was aware of an ethics complaint involving Dr. Hitchcock but denied all the accusations against her. Now Dr. Hitchcock has a new job, as principal of Queens University in Kingston, Ontario. 

But the timing of her departure from her Albany post in 2004, along with dozens of other cases in the last decade in which state employees suspected of wrongdoing left their jobs, has prompted calls to close the loophole by having the ethics law cover former state employees, as Gov. George E. Pataki first proposed in 1996.

Attorney General Eliot Spitzer, who has announced plans to run for governor in 2006, argued that public officials "should not be allowed to avoid sanctions for misconduct simply by leaving state service."

In the last decade, ethics officials said, there have been about 50 cases that could not be pursued under the ethics code - those found guilty could have faced fines of up to $10,000 and removal from their jobs - after state employees accused or suspected of violating provisions of the ethics law walked away from their positions:

¶A Long Island Rail Road administrator, Rosanne Neville, and her husband, Dennis George, a chief engineer, retired in 2004, avoiding an ethics inquiry after they were accused in a complaint to the Ethics Commission of accepting free tickets to the Viennese Opera Ball at the Waldorf-Astoria and after accepting free meals in New York and Germany. Contacted at her home in Florida yesterday, Ms. Neville said that she and her husband had worked for the state for more than 30 years, loved their jobs and felt that rather than spend a lot of money to prove their innocence, they chose to retire. 

"Our lawyer told us that, 'Look, I can fight this, I can win this, but it's going to cost you over $20,000,' " Ms. Neville said. "We have large families, we have a daughter that we wanted to buy something for. Why would we spend $20,000 on something that was, what we believed to be nonsense?"

¶The New York State Canal Corporation's deal to sell the rights to develop private land along the Erie Canal for $30,000 was plagued by favoritism and illegal ethical lapses, but those linked to the misconduct could not be charged with ethical violations because they had left state service, according to an investigation completed in November by Mr. Spitzer and the state inspector general, Jill Konviser-Levine.

¶A former general counsel in the Department of Transportation, James B. Cantwell, was caught in a secretly recorded conversation saying he would give preferential treatment to a company linked to State Senator Guy J. Velella even if it cost taxpayers money, according to court transcripts. Mr. Cantwell, who was never charged with any criminal or ethical wrongdoing, could not be investigated by the state's Ethics Commission after he retired.

Mr. Cantwell initially declined to comment, but through his current employer said that he had retired from state government for personal reasons that had nothing to do with any potential ethics inquiry. Mr. Velella was convicted of felony charges in the case.

Despite calls to stiffen the ethics law, no one has pushed to get legislation closing the loophole through the Assembly, which is controlled by Democrats, or the State Senate, which is controlled by Republicans. In the Assembly, such legislation never made it out of committee last year, and in the Senate, officials said that it was introduced only as a courtesy to the Ethics Commission and that there had never been any momentum to get it passed.

"The bottom line is that employees should not be able to evade penalties under the ethics law simply because they leave public service," Kevin Quinn, a spokesman for Mr. Pataki, said. 

In recent months, however, the loophole has become a source of growing frustration among those who must enforce the law. The attorney general and inspector general recently complained about their inability to charge former Canal Corporation employees, and the chairman of the Ethics Commission, Paul Shechtman, recently complained about not being able to investigate an employee who abruptly left the state payroll. 

Under state law, complaints, or referrals, to the Ethics Commission must be kept confidential until the commission issues what is called a "notice of reasonable cause," which is similar to an indictment in a criminal proceeding. 

Citing the law, Mr. Shechtman refused to disclose any of the details of the case he had fumed about. But officials in several government offices, insisting on anonymity because of the secrecy requirements in the law and the unresolved nature of the case, said that Mr. Shechtman's ire was directed at Dr. Hitchcock.

In the SUNY Albany case, Dr. Hitchcock's lawyer, Mr. Whiteman, denied that she gave up any accrued vacation time, and said that she did not in any way move to expedite her departure to avoid an ethics inquiry. He said the charge that she tried to arrange a quid-pro-quo deal to ensure a job made no sense, since as a tenured professor, she would be guaranteed a job at the university, even after leaving as president.

"She made no such proposal," Mr. Whiteman said. "She engaged in no conversation along those lines with anyone and she didn't authorize anybody to engage in one on her behalf. She is totally unaware of any such conversation."

Dr. Hitchcock took over as president of SUNY Albany in 1996 and announced her plans to resign in October 2003. During her tenure she developed a very favorable reputation both with the business community in the capital region, and with much of the faculty at the university. She was credited with attracting outside financing that was used to build technology and research centers at the university. 

But when Dr. Hitchcock first announced she would step down, she said she would serve until the end of the academic year. She then announced that for personal reasons she would instead take a leave beginning in January. Her departure sparked a flurry of rumors, most of which revolved around the notion that the SUNY chancellor, Robert L. King, a close ally of Governor Pataki's, had forced her out.

But the officials who spoke on the condition of anonymity said that sometime before her planned departure, Dr. Hitchcock and her husband approached a developer to try to arrange a deal. The developer would get the contract to build housing on campus, and in turn would endow a chair for Dr. Hitchcock. SUNY referred the case to the Ethics Commission, which could take no action against Dr. Hitchcock because, officials said, she departed as quickly as possible to avoid liability.

Former state employees can be prosecuted criminally, if charges are warranted. Officials said that representatives of the Ethics Commission plan to meet soon with the attorney general's office to discuss the prospect of criminal charges against Dr. Hitchcock and any others who may have been involved in the discussions, but added that no decision had been made in that regard.

Mr. Whiteman said Dr. Hitchcock notified university officials of what he characterized as "false allegations" at the time she was appointed principal, which is the equivalent of a university president.

Michael Cooper and Al Baker contributed reporting for this article.