Nonprofits Undergo Scrutiny
Some residents of 137 Main Street in downtown Brewster are concerned over the future of their residency, owned by the Putnam Community Foundation. Though the Foundation’s lawyer says that the organization is not under any sort of investigation, the 501(c)(3) nonprofit was probed during a grand jury investigation against former Republican state senator Vincent Leibell, who pleaded guilty last week to two federal felonies. The charges involved Leibell’s attempt to influence the investigation into the Putnam Community Foundation.
To date, the Putnam Community Foundation has received nearly $11.2 million in taxpayer-funded grants.
“I feel very comfortable with what the foundation has accomplished and what they will accomplish in the future,” the Foundation’s president, Joseph DiVestea, told the Courier.
Notably, just one week after Leibell pleaded guilty to tax evasion and obstruction of justice against this investigation, Democratic state senator Pedro Espada—a colleague of Leibell’s until the latter resigned from the senate Thursday, December 2— was indicted on corruption charges. Espada is accused of using his own Bronx-based nonprofit organization, Comprehensive Community Development Corporation, also known as Soundview, to embezzle hundreds of thousands of dollars.
During Leibell’s court appearance Monday, December 6, the prosecution disclosed that a community foundation that provided senior housing in Putnam was the subject of a grand jury investigation. Last week, the Putnam Community Foundation’s attorney, William Aronwald, confirmed to the Courier that the Foundation was indeed the organization mentioned in the federal courthouse.
Although Leibell no longer had an official role with the Foundation or another Putnam “nonprofit,” the Hudson Valley Trust, he founded both organizations and directed significant amounts of money to them through member items as a state senator. Both nonprofits operate out of the Lawlor Building in Patterson, which was renovated by the Hudson Valley Trust and houses office space for other nonprofits. It also housed an office for Leibell.
Originally, the founding members of the Putnam Community Foundation were comprised of Putnam County officials but some people close to the nonprofit have told the Courier that Leibell’s nonprofits functioned as a smoke and mirrors act and that Leibell was the one who actually ran the show.
Leibell’s longtime friends originally headed the Foundation—County Legislator Daniel Birmingham was director of the organization and Joseph DiVestea, who is currently the Foundation’s president, was vice president. Richard Kearns acted as secretary and treasurer but was later replaced by former county clerk Joseph Peloso Jr.
According to the 2009 annual filing for charitable organizations, the nonprofit’s executive board consisted of DiVestea, Vincent Murphy, Robert Buckley, Barbara Reitz, wife of Carmel’s Judge Reitz, and Mary Ellen Odell.
Odell, the outgoing county legislator who lost to Leibell in the race for Putnam County Executive, said she was ousted from the board in 2009 for asking questions about the Foundation’s debt.
In June, the Courier reported that the Carmel town board voted unanimously to reduce water and sewer district charges for the Foundation’s property on Stoneleigh Avenue, adjacent to the Putnam Hospital Center, after initial charges levied were deemed erroneous. The Foundation had also not paid its bills for several years. The water and sewer fees on the land were reduced from $378,780 to $207,274.40 because the town listed the property commercial rather than residential. DiVestea is also president of the Putnam Hospital Center.
At the time, Carmel Supervisor Kenneth Schmitt said the unpaid bills had continuously been sent to a bad address. DiVestea had said he was glad the problem had been corrected.
Odell said that while she was on the Foundation’s board, meetings were rarely held, a violation of tax exemption rules for nonprofits under Section 501(c)(3) of the Internal Revenue Code. She added that the subject of the foundation’s debt was never discussed. “I don’t know how they functioned,” she said. “[Ray] Maguire [Leibell’s chief of staff] was clearly running those foundations.”
Many legal documents pertaining to the Putnam Community Foundation were prepared or notarized by former county attorney Carl Lodes. Lodes is rumored to be the person referred to by assistant U.S. attorney Perry Carbone as the “unnamed attorney” who sold Leibell out after the former senator was recorded on a Carmel sidewalk asking the attorney to deny any money transactions between the two.
In 2009, Brewster CPA, Alan Wolfson, performed an annual audit for the foundation. “In my opinion … cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America,” he wrote.
In the Foundation’s financial statements for May 31, 2009, the yetuncompleted construction of senior housing on Stoneleigh Avenue was projected to cost $1,640,716. This project was also expected to receive a grant of $2,000,000 from New York State Economic Development Assistance Program to cover $1,700,000 of direct costs and $300,000 of indirect costs. The grant period expires February 26, 2012.
When requesting tax exemption for the Stoneleigh Avenue property, Putnam Valley attorney Clement Van Ross acted as counsel for the organization and his name appears on several other documents. Van Ross also serves as counsel to the county legislature, allowing him to participate in closed-door executive sessions.
It took three years for Leibell’s senior housing proposal in Brewster to take effect—in 2003, Birmingham had told the Courier that 200 people applied to live at the housing site but only 24-units existed.
In 2003, the 240-unit senior citizen apartment complex off Stoneleigh Avenue in Carmel was proposed after Leibell persuaded the county legislature to sell the land to the Foundation in 1999 for $150,000. Meanwhile, in downtown Brewster, a 24-unit senior housing project had already been approved. The Foundation purchased this Brewster parcel from the county for $75,000.
The deeds for both parcels were prepared by Putnam County Attorney Carl Lodes. According to minutes from the 1999 county legislature meeting, Legislator Tony Hay abstained from the legislature’s vote to sell the Carmel parcel to the Foundation; then-legislator Robert McGuigan was the only legislator to vote against selling these parcels to the Foundation.
Despite inquiries surrounding the Foundation, Leibell’s other nonprofit, the Hudson Valley Trust was said not to have been included in the investigation, as far as its president, Roger Gross, knew.
Gross, also a member of the Southeast town board and the Brewster board of education, told the Courier that the Trust was in the process of being audited for legal purposes because they hired a new accountant.
In addition to funding the renovation of the Lawlor Building and senior housing, Leibell’s foundations have underwritten other projects, such as a secluded, covered footbridge in a Patterson field. The bridge—reported to have cost $230,000 and publicly dubbed the “bridge to nowhere”— was defended this summer by Leibell as a “cost saving” measure after the Courier began investigating. He said that it prevented the construction of a parking lot to give access to an open field, which, according to many locals, is rarely visited by anyone. In June, the Courier discovered that the taxpayer-funded bridge was curiously built with a housing grant from the Dormitory Authority of the State of New York.