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Press Release

New York State Environmental Facilities Corporation to Pay $500,000 for Falsely Certifying that Members of Former Governors’ Staff Worked on Federal Clean Water Act Grant

For Immediate Release
U.S. Attorney's Office, Northern District of New York

ALBANY, NEW YORK – The New York State Environmental Facilities Corporation (“EFC”) has agreed to pay $500,000 to resolve allegations that it falsely certified that several individuals were working at EFC in support of a federal water-quality improvement grant when, in fact, they were working directly for now-former Governors of New York in positions unrelated to that grant, announced United States Attorney Carla B. Freedman.  As part of the

, EFC admitted that former senior EFC officials caused the state to include in federal funding requests part of these individuals’ salaries and benefits without disclosing that they were hired by, and worked for, the Executive Chamber.

United States Attorney Freedman stated: “The Environmental Facilities Corporation falsely certified that employees were supporting a clean water grant when they were actually working directly for former Governors in unrelated positions.  I am pleased that current EFC leadership was willing to admit what happened, resolve EFC’s liability, and implement new compliance measures that should ensure ethical and legal behavior in the future.  We will continue to use all of our resources to make sure that federal grant administrators follow the rules and that clean water grant money is used to improve water quality for all New Yorkers.”

EFC is a public benefit corporation that provides funding and technical assistance to municipalities, businesses, and state agencies for environmental and public health projects in New York State.  During fiscal years 2009 through 2019 (the “Relevant Period”), New York State, through its Department of Environmental Conservation (“DEC”), submitted applications to the United States Environmental Protection Agency (“EPA”) for Clean Water State Revolving Fund (“CWSRF”) grants.  During this same period, EPA awarded CWSRF grant funds to the state.  EFC and DEC jointly administered New York’s CWSRF program.

The Executive Chamber is the Office of the Governor of the State of New York and includes staff who assist the Governor in managing state government.  As part of the settlement agreement, EFC admitted that “during the Relevant Period, senior Executive Chamber staff asked (now-former) senior EFC officials for EFC to pay the salaries and benefits of several individuals who the then-Governors hired to work in the Executive Chamber in positions unrelated to the CWSRF program (the ‘Subject Employees’).  During the Relevant Period, more than one former senior EFC official agreed to this arrangement.”  EFC further admitted that “the individuals hired to work in the Executive Chamber pursuant to this arrangement were not hired specifically to work at EFC or to support the CWSRF program.”  EFC acknowledged that “one individual whose salary and benefits EFC paid was hired by the Executive Chamber to work on the former Governor’s advance team while another was hired to help run the former Governor’s Washington, D.C. office.”

On eight occasions during the Relevant Period, EFC submitted certifications to EPA that identified one or more Subject Employee by name, title, and costs that EFC incurred to pay them, and falsely represented that such costs bore a “beneficial or causal relationship” to the CWSRF grant.  EFC admitted in the settlement agreement that “it never informed EPA that those individuals worked for the Executive Chamber in positions unrelated to the CWSRF program.”

EFC represented in the settlement agreement that, upon learning of the United States’ investigation, it promptly took steps to ensure that all individuals listed as EFC staff in the CWSRF documentation submitted to EPA worked at EFC in positions related to those grants.  It further represented that it has implemented safeguards in its internal controls to ensure the conduct covered by the settlement agreement will not recur in the future.

Special Agent in Charge Nic Evans of EPA’s Office of Inspector General (“OIG”) stated: “EFC knowingly submitted false information to EPA, resulting in the state accessing federal funds for unintended purposes.  This settlement is an example of EPA OIG’s commitment to ensuring that all EPA grant administrators, including state actors, are held accountable when dealing with taxpayer funds so that the public can have confidence in the integrity of vital programs like the Clean Water State Revolving Fund.”

Special Agent in Charge Janeen DiGuiseppi of the Albany Field Office of the Federal Bureau of Investigation (“FBI”) stated: “EFC falsely certified for a decade that individuals worked in support of the Clean Water State Revolving Fund federal grant, when their actual positions in the Executive Chamber were wholly unrelated.  The FBI takes our responsibility to investigate and pursue those who commit fraud very seriously and we will continue to work with our federal, state, and local law enforcement partners to ensure the protection of these federally funded programs.”

The investigation and settlement were the result of a coordinated effort among the United States Attorney’s Office for the Northern District of New York, EPA OIG, and the FBI.  The United States was represented by Assistant United States Attorney Adam J. Katz.

Updated September 1, 2022