IDA paid $556,250 to consultant for few results, comptroller's audit says

Nassau County paid a consultant more than $550,000 over five years to build a cybersecurity industry that so far hasn’t materialized, according to an audit by the county comptroller obtained by Newsday.

The county’s Industrial Development Agency hired the consultant to bring cybersecurity companies to Nassau between 2013 and 2017, and to develop a cybersecurity incubator for technology startups, said County Comptroller Jack Schnirman, a Democrat. Republican Edward Mangano was county executive at the time.

The comptroller's auditing team didn’t identify the consultant in its 84-page audit. However, IDA reports filed with state regulators identify the consultant as Brian J. Noone of Syosset.

"Our review of the [IDA] board minutes found no indication that the [consultant] had persuaded businesses to develop or relocate to Nassau County," the auditors wrote. "It is unclear if anything materialized from this consultant’s work."

Noone said he brought two companies to Nassau that hired students from the New York Institute of Technology in Old Westbury, though both companies have since left the county. He also said he helped NYIT qualify for federal research programs and develop a business incubator.

"To say nothing came out of this [IDA contract] is so erroneous ... It borders on ridiculous," Noone said on Monday. "I'm not going to sacrifice my reputation for a couple of dollars." In January 2019, Noone was appointed inspector general for contracts by Oyster Bay Town.

The auditors also faulted Mangano’s IDA for poor oversight of projects that received tax breaks, saying some businesses and housing projects haven't kept their job promises. The audit's findings were based on a review of 26, or 14%, of 181 active IDA projects.

Schnirman said the projects selected for review are "a representative sample" of the IDA's work. In releasing the audit at a news conference on Tuesday, he said, "69% of the projects that we reviewed did not achieve their employment goals in one or more years as required by IDA agreements. Six of the projects didn't meet their employment goals for all four years that we reviewed. And the goals were pretty small, between zero and 13 jobs" per project.

The auditors also found the IDA made termination payments to its employees while they were still on the payroll, the agency’s board didn't provide sufficient oversight, and some IDA employees had conflicts of interest.

The auditors primarily examined IDA operations under Mangano, not his successor, County Executive Laura Curran, a Democrat.

"Most of these activities occurred under a prior IDA administration," said Richard Kessel, the agency's current chairman. "And I'm proud to say ... we have taken numerous actions to ensure the public that this will never happen again."

Noone, the consultant, no longer works for the IDA. "This consultancy contract proved to be a very poor expenditure by the prior agency board and executive director," said Harry Coghlan, the current executive director, in a Nov. 16 letter to the comptroller. "Moreover, the lack of transparency in engaging this consultant is contrary to the approach of our present board and management."

The auditors found Noone was paid a total of $556,250, though "many of the monthly invoices submitted by the consultant for payment had repetitive descriptions of the work performed the month before," they wrote.

In 11 of 12 invoices that Noone submitted in 2016, he charged for introducing the IDA to a company where he was a partner, NOVA Venture Partners, the auditors said. "The consultant was essentially paid to [bring] business to his own business," the auditors said.

Noone responded, "I didn't get paid any money for that. It's totally inaccurate."

The auditors found Noone received three payments before the IDA board approved his hiring in April 2014, which "is exceedingly rare in government," the comptroller said.

Noone responded that he's known then-IDA executive director Joseph J. Kearney since they were teenagers and Kearney suggested Noone seek a consulting contract through the appropriate channel. "I did nothing for the IDA without a contract," Noone said.

Asked about Noone and other audit findings, Kearney said on Monday, "Until I've read the report I have no comment." He now works for the county’s Board of Elections as Republican elections commissioner.

The auditors said Kearney, who also served as the IDA’s ethics officer, "may have" created a conflict of interest in 2018 by living in a Mineola apartment building whose owner was awarded IDA tax breaks in 2013. The owner saved $4.4 million in property taxes in 2019 and has surpassed its commitment to create 20 jobs, state records show.

Kearney was among five IDA employees who together received $350,216 in termination payments on Jan. 4, 2018, after Curran’s election, though all were still working for the agency.

The auditors said the IDA board didn’t vote on the payments for unused sick time and vacation. Newsday has reported that an undated memo from then-board chairman Timothy Williams states that he was told by then-IDA chief financial officer Joseph Foarile that the payments were proper.

Williams, who now serves as the IDA's board secretary and audit committee chairman, declined Monday to comment on the comptroller's findings.

Schnirman also received termination pay before leaving his job as Long Beach city manager in 2018 to become comptroller. He returned $52,780 of the $108,000 payment last year after an audit by state Comptroller Thomas DiNapoli found an overpayment of 662 hours of sick time.

Long Beach has filed a $2.4 million lawsuit against Schnirman and another former city official over termination pay for city employees. Asked how his termination payment differed from the IDA's staff payments, Schnirman said, "The [IDA] audit speaks for itself."

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.