Scandal Cash

Adult-Home Barons Purchased Pataki Inside Track

In the summer of 1994—when one-term state Senator George Pataki was challenging three-term Governor Mario Cuomo—33 owners, operators, and lobbyists tied to the little-known Empire State Association of Adult Homes (ESA) quietly dropped $35,187 into the Pataki campaign committee. In fact, as early as June 15, 1993, when the Pataki candidacy was little more than a gleam in his own eye, the association itself gave the nascent committee a $250 donation.

Eleven days after Pataki was elected, on November 17, the owners of 30 or more large, downstate adult homes left the approximately 250-member Empire State Association to incorporate the Greater New York Long Term Care Providers Association. Led by Slomo Silvian, the founder and longtime chair of Empire State, this splinter group began during the campaign to align themselves with Bart Lawson, the heavyweight head of the most politically wired nursing home organization in the state, the Greater New York Health Care Facilities Association. With the split, two competing lobbying groups, representing homes that "serve" 28,000 elderly and mentally ill residents statewide, were suddenly poised to influence a new administration already predisposed to help.

An early Pataki backer, Lawson, who quickly became a pivotal player on the governor-to-be's transition committee, put together a major fundraising dinner that December, designed to introduce Pataki to the nursing and adult-home Medicaid fat cats already salivating over an administration that loved to talk about deregulation. The glatt-kosher "debt-retirement" dinner at Lou G. Siegel's famous restaurant in the Garment District raised an estimated $200,000, most of it from the nursing home industry, with the biggest donors and the governor closeted away for a private schmoozing session.

But Silvian, who owned the King David and Ambassador adult homes in Long Beach, became the honorary president of Lawson's new association, and donated $10,000 to Pataki (plus $10,000 to the State Republican Committee in June 1995), was the largest individual donor. Other adult-home owners allied with the new Lawson association, like Alfred and Jacob Schoenberger, kicked in $4000. Israel Lefkowitz, an adult- and nursing home owner convicted of bilking Medicaid, contributed $5000. Albert and Harris Schwartzberg, who also once had nursing and adult-home interests, combined for $9000.

Robert Lichtschein, the owner of Surf Manor, gave $5000, while Steve Zakheim, whose King Solomon adult home was only one of his Medicaid-dependent businesses, added $6000. The Bayview, New Whitman Home for Adults, New Fordham Arms, New Broadview, New Gloria, Rockaway, Scharf, Seaview, Wavecrest, South Shore, and Queens Manor kicked in a combined $10,250 in their own names. Even the Seaport Manor, which would become synonymous with scandal during the Pataki era, contributed $1000.

Ben Tenenbaum, a onetime Democratic leader in Long Beach who also owns an adult home there, contributed $1000, objecting years later in a Voiceinterview that Lawson was steering the owners into the Pataki camp. "He was too partisan," Tenenbaum says now. "He was always telling us how close he was to the governor." Lawson and his nursing home association have given $63,500 to Pataki and the state GOP since 1994, and the association eventually retained Al Pirro, the longtime Pataki friend convicted of tax evasion in 2000, and Jeff Buley, the counsel to the state party, as part of its Albany lobbying team.

But it wasn't just the new Lawson group that offered the promise of adult-home industry clout with the incoming administration. By February 9, 1995, a month into the Pataki reign, Robert Balachandran was working in the governor's office as an assistant counsel. Balachandran, his law partner Jim Ryan, and his firm, Coppola & Ryan, each contributed $1000 to Pataki on July 7, 1994, the same day that many of their Empire State Association lobbying clients gave. Fresh from a firm whose biggest lobbying client was the association, Balachandran nonetheless took on the assignment of advising the new governor on adult-home policy.

On February 6, Veronica Coppola, the senior partner in a lobbying firm usually listed among the top five in Albany, wrote a letter to Empire State confirming the terms of their new contract, which more than doubled the annual retainer from $72,000 to $150,000. The letterhead still contained Balachandran's name. Communicating by letter was a formality, since the association's small staff had just closed its own office and moved into the law firm's, another sign of their closely intertwined interests.

The Coppola letter said the firm had "chosen to register" the contract for $125,000 with the state lobbying commission, artificially lowering the fee "for our own public relations purposes." Had the fee been accurately reported, it would have appeared in the commission's public listings as one of the 10 largest lobbying contracts in New York, a dubious distinction that draws the attention of reporters. Misfiling it was an apparent violation of lobbying laws, subject to a $50,000 fine.

On January 30, Marti McHugh, the wife of another associate in the Coppola firm, Patrick McHugh, was appointed to a temporary stenographer title in the governor's office, rising by August to the governor's director of scheduling. After her husband became a named partner in Coppola, Ryan & McHugh in 1996, she wound up an assistant commissioner at the State Department of Health, where her intergovernmental concerns included adult homes.

This combination of contributions and connections had, from the very start of the administration, given a besieged, for-profit industry new hope. With Pataki facing deficits and demanding tax cuts, larger subsidies were unlikely. It's long been virtually impossible to raise the $28-a-day SSI payments that adult homes get per resident, because many elderly outside the homes are affected by the same limit. To operators like Tenenbaum, increasing the $28 per diem was the only issue that mattered. But others had a broader agenda, and the Pataki administration would come through on much of that.

While ways were found to award additional subsidies to favored owners, the fundamental Pataki deal with the homes was an administration asleep at the oversight and enforcement switch, saving the industry the costs of better care. The result is the worst scandal of the governor's two terms, exposed on the front page of the Times on four consecutive days recently in a series written by Clifford Levy that may well win the Pulitzer Prize, despite how much it has been ignored by the other print and TV media.

Federal prosecutors in Brooklyn and Manhattan have opened probes—already indicting a doctor who allegedly performed unnecessary eye operations on the mentally ill referred for cash by an adult home. Assemblyman Martin Luster has already chaired one assembly hearing, boycotted by Pataki officials, and plans a second on June 6, with administration apologists expected.

Included in Levy's findings was the apparent Pataki decision not to enforce a law that went into effect when the new governor took office, requiring a report on every death that occurs in adult homes. Nearly 1000 have died since January 1995, and only three reports have been filed. The same 1994 package of reforms also strengthened the authority of state officials to revoke licenses and impose grave penalties where they found "failures in systemic practices and procedures," but in fact the new powers have almost never been used.

Levy also reported that Pataki cut the state survey staff so severely that the NYC office, for example, went from 25 to five adult-home inspectors. Leaders of the Public Employee Federation testified at a May 10 assembly hearing that the number was down to three. Alan Shulkin, a union leader who works at the State Department of Health (DOH), told the committee that "there are 10 to 12 referrals for enforcement stemming from inspections out of the NYC office alone sitting in Albany, only two of which have been acted on." Half of the city inspections, according to Shulkin, "have not been done" in the 12- to 18-month period required under state law. "We are so backlogged that everything is triaged," complained Shulkin. "Even the triage is triaged."

The Empire State Association Web site boasts how it convinced state officials in the first Pataki year to adopt "a more reasonable" survey process, making "positive, sweeping changes" in "inspection protocols." Owners like Tenenbaum say that inspectors were told to list "minor violations" as mere "findings," what he called a "welcome" softening of inspections.

The oversight and enforcement function was even quietly shifted, with the support of ESA lobbyist Coppola, as part of Pataki's 1996 proposed budget. It moved from the Department of Social Services (DSS), which had become far more aggressive in the final Cuomo years, to DOH. Enforcement has been so weak since that even advocates like former DSS and DOH executive Karen Schimke, who heads the Schuyler Center for Analysis and Advocacy, and has been named to Pataki's new emergency task force on adult homes, told the Voice, "Adult homes were simply not a high priority when they were shifted to DOH. It took quite a while for the agency to transition. There was a lot of laxness."

Pataki even cut the teeth out of the only outside monitor, the state's quasi-independent Commission on Quality of Care for the Mentally Disabled. The commission's founder and former chair, Clarence Sundram, told the Voicethat his agency was so decimated by Pataki budget slashes that the NYC staff went from 15 to three. "No one came out and said to me, 'Don't investigate this or that,' " said Sundram, who worked under Hugh Carey, Cuomo, and Pataki. "But the Pataki approach was very different, especially involving the whole notion of an independent agency. They believed that what all agencies should do ought to come from the governor's office. It was a general philosophy that was clearly understood."

Sundram said that the Pataki team "didn't believe in government interference with the private sector," and that this point of view led to "a reduction in the monitoring" of adult homes and other private, subsidized facilities by state agencies, as well as the cuts in his commission staff. Since Sundram's departure in 1998, the commission has dramatically reduced its own oversight, even failing since 1999 to complete a legally mandated annual report. While Sundram used to regularly issue a half-dozen special investigative reports a year, the commission only released one in all of 2000 and 2001, a report on financial abuses in one home that made no assessment of DOH diligence.

Though the state's top investigator of adult homes and other facilities that were receiving hundreds of millions in public support, Sundram never had a meeting or phone conversation with Pataki. The only time he ever heard from the governor was an acknowledgment note when he resigned three and a half years into Pataki's first term. In sharp contrast, he said he frequently talked with Carey and Cuomo, both of whom "believed in our mission and supported us even though we put out a lot of critical reports" about DSS, DOH, and the Office of Mental Health (OMH), which oversees psychiatric services for adult-home residents. "I don't know if Pataki believed in our mission," he said.

Pataki was reportedly so remote that he also never had a meeting with James Stone, the OMH commissioner he appointed in 1995, until a former adult-home and psychiatric center patient, Andrew Goldstein, pushed Kendra Webdale off a subway platform in 1999. That widely publicized incident forced Pataki to finally come up with full funding for a housing program for the mentally ill launched in the Cuomo era—and supported by then-senator Pataki—that the new governor virtually eliminated from his first, second, and third budgets. The three-year shutdown of new funding for housing, combined with the accelerated reduction of thousands of patients in state-run psychiatric centers, was a boon to adult-home operators, vastly increasing their population.

Lawson insists he had nothing to do with the shift to DOH, an agency where he has long flexed his political muscle. In fact, Tenenbaum says the Lawson breakaway association went out of business within two years, unsuccessful in raising the $28 ceiling. It continued, however, to file as a client of one of Lawson's registered lobbyists through 1998, paying roughly $2000 a month. Schoenberger, Tenenbaum, and others did return to Empire State by 1998, when its executive director left, soon to become the special assistant to the health commissioner.

It's unclear which whisper in what ear produced the policies that have protected and aided an industry that did its best, giving at least $202,426 since 1994, to cozy up to this governor. Cliff Levy has made it depressingly clear, however, that it was the state's most marginalized population—its mentally dysfunctional—that paid the price.


Research assistance: Annachiara Danieli, Jen DiMascio, Peter G.H. Madsen

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