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How Long Beach found itself in financial crisis

The damaged Long Beach Boardwalk two and a half months after Sandy. Newsday / Alejandra Villa

The $102 million in state and federal emergency disaster funds given to Long Beach after superstorm Sandy masked financial problems that, with the relief money now drying up, led the city into a fiscal crisis, officials and analysts say.

Long Beach faces a $2.1 million shortfall after making retirement and management separation payments, potential layoffs of city staff, police and firefighters, and a budget that proposes a 12.3 percent tax hike to bridge a $4.5 million revenue deficit next year.

Taxpayers — and state Comptroller Thomas DiNapoli — are asking: How did it come to this?

Long Beach officials in 2017 touted a financial swing from the brink of bankruptcy to being $9 million in the black — a $24.2 million turnaround — but current and former city leaders say the previous collapse was never addressed and stayed hidden because of the disaster relief funds after superstorm Sandy.

“We’re almost where we were before Sandy,” Long Beach City Council President Anthony Eramo said of the current crisis. He also said problems the city faced before Sandy have not gone away. “We knew this would be a tough year and hard decisions would have to be made. . . . I knew the lack of Sandy money would make this a tough year.”

Eramo, DiNapoli, and municipal finance analysts say city officials should have made more difficult decisions such as cutting services and making incremental tax increases in previous years to avoid the larger tax increase proposed this year. The City Council passed a 1 percent tax boost last year — an election year.

The proposed $95 million budget for the fiscal year starting July 1 will mean an average $400 increase for homeowners.

DiNapoli announced last week that his office would audit the city’s finances.

“It is imperative that officials address the city’s declining financial condition during the current budget cycle,” his office said in the annual budget review.

“It’s identical to putting your budget on a credit card. It’s not a sustainable practice.”-Matt Fabian, a partner with Municipal Market Analysts.

The Wall Street bond rating agency Moody’s Investors Service this month maintained the city’s Baa1 rating — considered a moderate credit risk, but issued a negative outlook, citing cash flow challenges “following years of operating deficits and the City Council’s failure to approve budgeted borrowing to pay for operating expenses.”

Lower ratings can mean higher interest rates and costs of borrowing.

“Any time a local government borrows for operating expenses, we view that as a negative,” Moody’s vice president and senior analyst Rob Weber said.

Long Beach has borrowed to cover retirements and other payments for years.

“It’s identical to putting your budget on a credit card,” said Matt Fabian, a partner with Municipal Market Analysts, a municipal research and consulting firm specializing in the bond market. “It’s not a sustainable practice.”

2011 fiscal crisisBack on the brink of bankruptcy

Elements of the current fiscal crisis mirror those in 2011: unbalanced budgets, borrowing to make payroll and separation payments, and reliance on storm relief funding.

Former City Manager Jack Schnirman and the Long Beach City Council declared a fiscal emergency in 2012 after inheriting a $14.7 million deficit and facing $48.3 million in debt from the previous administration.

Long Beach was on the brink of bankruptcy as ratings agencies downgraded it five levels and threatened to reduce its credit to junk bond status. Other city officials faulted the administration for not reining in overtime and relying too heavily on reserves while giving residents a 1.9 percent tax cut in 2009.

The administration responded with a nearly 8 percent tax hike in 2012 and entered a deal with the state to pay the debt over 10 years, which allowed the state comptroller to review the city’s budgets annually for the next decade. The city’s total long-term debt is now $92.2 million.

An audit in 2013 by DiNapoli blamed the city administration for exhausting $21 million in reserve funds with “unrealistic estimates” of revenue and expenses and relied on advances and long-term financing to fund operations.

The city now has about $8 million in reserves, but used $3 million of it this year to cover Sandy recovery expenses while awaiting reimbursements.

Analysts said the city’s declining available funds show a history of budget imbalances, but it still has a positive balance compared with the negative reserves the city had when it was facing near-junk-bond status.

“We’re not anywhere near where we were in 2011-12 and saw negative cash positions. We’re not there yet,” Weber said.

Superstorm Sandy'Easy money' from the government

Long Beach was inundated from the Atlantic Ocean to the back bay, flooding the entire city and destroying the iconic boardwalk.

The city was also flooded with cash from federal and state emergency disaster recovery funds.

As the city sought to rebuild “stronger, smarter, safer,” portions of some projects were not reimbursed with storm money, adding to the debt and budget shortfall.

The city also used the government reimbursements to pay salaries to office clerks and workers completing the rebuilding projects, Eramo said.

Using disaster funds to cover indirect costs such as permanent salaries of workers and office staff so cities don’t have to slash workforce while rebuilding is common, municipal finance experts said.

“Money from the federal government is easy money, but it’s hard to balance a budget with counting it as reoccurring revenues,” Fabian said.

The state comptroller upgraded the city’s fiscal stress rating to “moderate” in 2016, but Schnirman cautioned that a “short-term infusion” of Sandy dollars was not sustainable without a long-term recovery plan.

More than five years after the storm, the city is still waiting for about $7.5 million in state and federal reimbursements. Long Beach officials recently issued a $4 million tax anticipation bond while awaiting reimbursement for boardwalk rebuilding work.

Moody’s stated in its May 4 report that “any expenses that are not reimbursed will result in additional long-term debt.”

BudgetingCity faced hard choices

State officials and credit agencies monitoring Long Beach’s finances said the warning signs of a budget crisis were flagged for city officials but in some cases not addressed.

Schnirman issued a transition memo on Dec. 31 to city leaders that included money-saving recommendations on department changes and cuts, such as restructuring public works, reducing part-time workers, privatizing day care and summer camps, and adding parking meters to increase revenue.

Schnirman said at the time he told the council that hard choices would have to be made, including proposals such as cutting the city’s 17-member paid fire department. The City Council rejected layoffs, and settled on fee inceases and tax hikes averaging 2.3 percent since Sandy.

“These are not the same problems we faced in 2011. The city is in a different place now and has come a long way,” Schnirman said in an interview last week. “The city funded a recovery after Sandy, taking the burden off taxpayers.”

DiNapoli’s office in April listed the city as being in significant fiscal stress, signaling a “deteriorating financial condition” and warning of significant tax increases.

City officials responded to the rating by noting the fiscal stress was due to Sandy funds that had not yet been reimbursed.

DiNapoli’s office determined this year’s proposed budget had balanced revenue projections of $41.5 million, “but does not include measures to improve financial condition.”

The comptroller’s office has cautioned the city for years to reduce overtime, which has averaged around $3 million for the past five years — about $300,000 more than budgeted last year.

The past two budgets have counted on $900,000 in sewer runoff fees from a contested $336 million 522-unit oceanfront apartment development starting construction on the Superblock parcel, a prime piece of undeveloped land along the boardwalk. The project stalled and the fees were not paid. The revenue stream was scratched from this year’s proposed budget as the future of the project remains uncertain.

Acting City Manager Michael Tangney said the lost funds contributed to a $1 million shortfall in revenue in last year’s budget, combined with another $200,000 shortage in the city’s recreation fees.

The state comptroller’s April review found that personal service contracts and employee benefits make up 75 percent of the city’s annual $41.5 million revenue and almost 12 percent in debt interest from bonds.

“With these costs accounting for 87 percent of revenue, there is limited ability to finance operations and maintain infrastructure,” comptroller officials said.

Borrowing'The practice will saddle future taxpayers'

Long Beach issued deficit reduction bonds in 2014. The city has since reduced its operating funds by $3 million — to $8.4 million, according to Moody’s.

“The city had a financial position that was relatively healthy, but since that point, we’ve seen reserves decline and significantly,” Moody’s Weber said. “Basically, the liquidity over the last few months has dropped far more significantly than we anticipated.”

Moody’s said in its May 4 report that the city’s bond rating could be downgraded if its 2018 financial results are worse than anticipated, if available cash deteriorates, and if reserves are relied on to balance the budget.

Long Beach has counted on balancing its budget using borrowing and issuing bonds to pay for operating expenses such as separation payments, Moody’s and state officials said.

The state comptroller’s office said budgeting for “termination salaries is somewhat misleading as they also include cash payments for accrued leave to employees that remain employed by the city.”

Long Beach officials said union and nonunion employees for decades have been allowed to be paid for accrued time to reduce larger payouts to retirees later.

The payouts have averaged $2.6 million over the past three years, according to the comptroller’s review. A Moody’s report said the city will need to use an additional $1.75 million in previously approved bonds to cover separation payments and Sandy expenses this fiscal year through June.

Comptroller officials warned that if the city could not fund operations, the city could face a $2.1 million shortfall heading into the next fiscal year.

“The city’s continued practice of borrowing to fund these operating costs is not fiscally prudent,” comptroller officials said. “The practice will saddle future taxpayers.”

What's next?A six-point plan

City Council members Anthony Eramo and Chumi Diamond have crafted a six-point plan to address the city’s finances.

1. Work with the comptroller’s audit team to improve budgeting practices.

2. Budget real dollars from city revenues for future separation payments and earned-leave obligations.

3. Require all separation or earned leave obligations more than $5,000 to have City Council approval.

4. Audit 2018 separation payments and pass legislation that limits the city manager’s authority for future payments.

5. Take remedial action if separation payments were miscalculated.

6. Ban anyone convicted of a crime against the city from receiving any separation pay or accrued time.

Laura Curran’s First 100 Days in Office: By the Numbers

Since taking office, Laura Curran, Long Island’s first female county executive, has had to focus on urgent county finances, the broken property assessment system and a barrage of late winter storms that required attention.

Read more about what Curran’s faced and her challenges to come here.

Here’s a snapshot of her term by the numbers:


days in office

Nassau County Executive Laura Curran, 50, a Democrat from Baldwin, took office Jan. 1 after winning by a 3 percent margin in a hard fought race against former state Sen. Jack Martins, a Republican from Old Westbury. A mother of three who cast herself as a political outsider, she was a member of the Baldwin school board and was most recently a two-term county legislator. Of her first 100 days, she says: “You know what’s surprising? How much I actually love the job.”



The storms bringing heavy, wet snow, wind and ice meant Curran and her administration were busy clearing thousands of miles of county roads, responding to emergencies, with hundreds of homes without power. Next she will focus on resurfacing the roads, now riddled with potholes, because “those are the kinds of things people expect from their county government,” she said.

$45 million

in a legal judgment

During Curran’s second week in office, the county finds out it must pay damages and legal fees when the U.S. Supreme Court declines to hear Nassau’s appeal of the 2014 award to John Restivo and Dennis Halstead, whose convictions in the rape and murder of Lynbrook teenager Theresa Fusco were overturned after they had spent nearly 18 years in prison. Curran and the legislators had to decide on whether to borrow the money or pay for it out of a reserve fund. The Republican-controlled legislature approved a request for $23 million in borrowing. Former County Executive Edward Mangano in 2016 set aside $45 million in a reserve account. A federal court ordered the county to show it was able to pay the judgment using reserve funds or bonds.


executive orders

Curran signed three executive orders in her first 100 days in office. Two of them were steps toward fulfilling her campaign promise of addressing what she called “the culture of corruption” in Nassau County government. The first one bars appointed members of her administration from holding a leadership position in a political party or donating to her campaign. The second one establishes a zero-tolerance policy for gift-giving between vendors and county employees and introduced a new administrative program to promote standards of ethical contracting with outside firms. The third of Curran’s executive orders limits assessment increases caused by reassessment to 6 percent a year or 20 percent over five years for residential properties, in alignment with state law. Three members of her own party voted against the plan on concerns it would negatively impact property-owners who do not regularly grieve their taxes.

$2.2 million

to be borrowed

The amount she requested to borrow to pay two firms to reassess all county properties. The request was approved by the County Legislature.

$3 billion

county budget

Nassau’s $3 billion budget could have a deficit as large as $104.7 million in fiscal year 2018, according to an analysis from the Nassau Interim Finance authority, the state-appointed board that controls the county’s finances. Curran appeared before the board in April saying she was “looking forward to a good relationship going forward” with NIFA. “You have seen the budget that we have given to you and [I’m] hoping that you find it acceptable,” she told authority members, “and of course we are open to conversation and flexibility.”


signs with her predecessor’s name

Shortly after the election, Curran asked the administration of outgoing County Executive Edward Mangano to keep her name off all official signs, fulfilling a campaign promise. Mangano’s name appeared on about 700 signs across the county, his chief of staff said at the time. The process of removing his name or replacing the signs is ongoing.

-With Scott Eidler and Robert Brodsky

Nassau tax assessments: How even some winners lost out

Since Nassau County’s assessment system overhaul began, thousands of homes each year have been granted what are essentially automatic assessment reductions by the county’s Assessment Review Commission. Thousands of other homes, though, are excluded from the overhaul component that leads to the automatic reductions, called Carry Forward.

A Newsday investigation published earlier this year exposed a shift of $1.7 billion in taxes from property owners who won assessment challenges filed since the overhaul began in 2010 to those who did not, revealing what effectively have become two systems of taxation that are separate and unequal.

But Newsday’s ongoing probe of the overhaul has also uncovered disparate treatment even among those who did challenge regularly.

Thousands of homes have been deemed ineligible for essentially automatic assessment reductions of 5 to 9 percent each year granted under the largely unknown overhaul component called Carry Forward because they failed to meet changing criteria that have not been made public.

The excluded properties most frequently end up with smaller reductions or none at all, which often results in them having years of higher assessments and smaller tax savings than they otherwise would have had.

The chart below shows how much typical homeowners saved from 2010 to 2015, depending on when they first appealed their assessment during the overhaul.

Note: Savings amounts listed in the chart exclude tax firm fees Newsday calculated at 45 percent of first-year tax savings even though most large firms charge 50 percent. Newsday defined the “typical” homeowner as one whose savings and fees were in the middle or median of each group.

360 View: A summer day at Jones Beach

360 view: A summer day at Jones Beach

Watch as a Jones Beach lifeguard walks us through a day at the beach.

Alt Video TextPlay 360° Video

On Sunday, Aug. 27, 2017, Jones Beach Field 6 lifeguard captain Donald Kramer walked us through what a day is like at the beach, what he has to watch for in order to keep swimmers safe and how much fun it is to work at the beach. Many lifeguards, he said, consider it the best job they’ve ever had. (Credit: Newsday / Chris Ware)

Note: On mobile devices, the 360-degree video experience can be viewed only in the YouTube app.

360 View: Karaoke tailgating at the Jimmy Buffet concert at Jones Beach

360 View: Karaoke tailgating at the Jimmy Buffet concert at Jones Beach

The rain didn’t stop Jimmy Buffett fans from singing “Cheeseburger in Paradise” while tailgating in the parking lot at Northwell Health at Jones Beach Theater before his concert on Tuesday, Aug. 15, 2017.

Alt Video TextPlay 360° Video

The rain didn’t stop Jimmy Buffett fans from singing “Cheeseburger in Paradise” while tailgating in the parking lot at Northwell Health at Jones Beach Theater before his concert on Tuesday, Aug. 15, 2017. (Credit: Newsday / Raychel Brightman)

Note: On mobile devices, the 360-degree video experience can be viewed only in the YouTube app.

360 View: Walk the historic staircases of Sea Cliff

360 View: Walk the historic staircases of Sea Cliff

Watch as Sea Cliff administrator Bruce Kennedy tours the village’s historic staircases that lead to the beach.

Alt Video TextPlay 360° Video

Sea Cliff administrator Bruce Kennedy tours the village’s historic staircases that lead to the beach on Friday, July 21, 2017. Some staircases are under construction, part of a multiyear project to restore and rebuild the structures. (Credit: Newsday / Raychel Brightman, Danielle Siegel)

Note: On mobile devices, the 360-degree video experience can be viewed only in the YouTube app.

360 View: 2017 Long Island Marathon starting line

360 View: Start of the 2017 Long Island Marathon

Nassau County Executive Edward Mangano sounded the horn to send the runners on their way.

Alt Video TextPlay 360° Video

Watch as thousands of runners took off at the start of the Long Island Marathon on Charles Lindbergh Boulevard in Uniondale on May 7, 2017. (Credit: Newsday / Jeffrey Basinger)

Note: On mobile devices, the 360-degree video experience can be viewed only in the YouTube app.

360 View: Glen Cove graffiti mansion tour


360 View: Glen Cove graffiti mansion tour

Nearly 150 artists from around the world painted the 9,000-square-foot house.

Alt Video TextPlay 360° Video

Take a 360 tour of a graffiti mansion, curated by The First City Project, a community group that invited artists from the area and around the world to turn a historic Glen Cove home into a canvas. (Credit: Newsday / Jeffrey Basinger)

Note: On mobile devices, the 360-degree video experience can be viewed only in the YouTube app.

Nassau Coliseum in Uniondale: From the Islanders to more than 31 Billy Joel concerts

It was the Islanders’ home. Billy Joel played there 31 times. Take a look at the memorable events at Uniondale’s Nassau Veterans Memorial Coliseum over its 43 years.

Test your Coliseum knowledge


Test your Coliseum knowledge

See what you really know about the Coliseum, from the political rallies to the Islanders.

Kathleen Malone-Van Dyke

The final thaw


The final thaw

Ice painter John Cirola and Zamboni drivers Thomas Walters and Kevin Capobianco participate in one final 'ice out' at Nassau Coliseum, where employees of the arena break apart and melt the rink's ice.

Islanders clean out their lockers


Islanders clean out their lockers

The Islanders began cleaning out their Nassau Coliseum lockers for the final time April 29, 2015, after falling to the Washington Capitals in Game 7 of the Eastern Conference quarterfinals.

Newsday / Alejandra Villa

Islanders history quiz


Islanders history quiz

Have you been following the Islanders since their inaugural season in 1972? Did you witness their four straight Stanley Cup championships in the 1980s? Take our Islanders history quiz.

AP / Bill Kostroun

Down come the banners


Down come the banners

Workers at the Nassau Coliseum took down the banners, including the ones from the Islanders’ Stanley Cup seasons, from the rafters on May 8, 2015, as part of the process of renovating the arena.

What will you miss?


What will you miss?

With the Islanders moving from Nassau Coliseum to Barclays Center next season, what will you miss about the Old Barn?

Jim McIsaac

Memorable concerts


Memorable concerts

A look at some of the top performances – Frank Sinatra, Madonna, Pink Floyd and more – over the past 43 years.


'X Factor auditions'


'X Factor auditions'

Thousands of ''X Factor'' hopefuls descended on Nassau Coliseum when season 3 auditions were held there in 2013.

Howard Schnapp

Final WWE show


Final WWE show

WWE ''Monday Night Raw'' came to the current Nassau Coliseum for the final time on May 25, 2015.

Newsday / Thomas A. Ferrara

'Monday Night Raw'


'Monday Night Raw'

Fans attending the final WWE event at the Coliseum recall favorite wrestling moments that went down at the Old Barn.

Newsday / Thomas A. Ferrara

Questions on Rice’s early prosecution cases

The Kings County district attorney’s prosecution of Antowine Butts for double homicide imploded and ended in an acquittal in 2000, but not before Butts spent two years in a Rikers Island jail cell. After the case unraveled, Butts alleged that he was a victim of prosecutorial misconduct in a civil rights lawsuit that was settled with New York City. Among those named in that suit: Kathleen Rice, the architect of the case against Butts.
Rice is now one of the most visible law enforcement officials in the state. She followed her rookie tenure as an assistant district attorney in Brooklyn from 1992 to 1999 with more than five years as a federal prosecutor in Philadelphia before becoming Nassau County’s district attorney in 2006. A Democrat who has touted herself as a progressive prosecutor “both tough and smart on crime,” Rice holds a 10-point edge over Bruce Blakeman, her opponent in the November race for the 4th District U.S. congressional seat, according to a Newsday/News 12/Siena College poll. ​ Despite that high profile, Rice has largely escaped attention — including during the current campaign — for starting her career in an office in which prosecutors are alleged to have put some innocent people behind bars with coerced confessions, bogus witness statements, coached lineup identifications and other tactics. Brooklyn prosecutors have moved to vacate the convictions of nine people in the past year due to flawed case-making, and about 100 convictions won during the 24-year tenure of former Kings County District Attorney Charles J. Hynes remain under review by the new district attorney, Kenneth P. Thompson. Rice and the former Brooklyn assistant district attorneys whom she recruited to Nassau County have not been publicly tied to the cases under review, and a spokesperson for the Kings County district attorney’s office declined to reveal the names of the prosecutors involved with the cases. Eric Phillips, a spokesman for Rice’s campaign, wrote in response to questions that Rice has “made efforts to discern” whether she, or any member of her staff who worked in the Brooklyn office, is associated with the cases under review. Rice has “yet to hear of any connections,” Phillips wrote. Besides ending in an acquittal, the failed prosecution of Butts — whose only previous criminal conviction was from hopping a subway turnstile — bears many similarities to the cases being vacated. Rice, through a spokesman, declined to be interviewed for this story. In response to a general overview a reporter emailed to Rice’s spokespeople last week, Phillips sent an emailed statement Friday that read, in part: “Summarizing an award-winning, 22-year career by handpicking and focusing solely on a few unproven smears while omitting discussion of the thousands of cases that counter this slant is a disservice to the public. Adding the DA’s voice to that questionable reporting process would only enhance the credibility of a story that we believe is deeply misleading to readers.” The full statement is available here. To be sure, in a career marked by high-profile triumphs, the vast majority of Rice’s cases show no public evidence of misconduct. However, Rice has downplayed the allegations of prosecutorial misconduct that have emerged on occasion, or her spokespeople cast the criticism as motivated by politics. During her successful run for district attorney nine years ago, Rice said of the Butts case: “Disgruntled defendants sue the DA’s office all the time. Having only one case against me puts me in the baseball Hall of Fame as far as I’m concerned.” A Newsday examination of Rice’s career found at least five instances, including the troubled Butts case, in which Rice was accused of intentional misconduct or of committing a procedural error serious enough to put her case in jeopardy. At least two convictions Rice helped secure have been overturned for those reasons, and at least three sitting or retired judges have rebuked Rice over her handling of a case. A fourth judge sanctioned her in another case. The examination of Rice’s record involved documents never before made public, including the contents of her Brooklyn personnel file — which had been reported as lost — and statistics concerning the dispositions of cases she tried there. Newsday also obtained previously unavailable transcripts of depositions from Butts’ civil suit, including Rice’s and that of the drug-using alleged eyewitness upon whom the case relied. The transcripts show that despite publicly maintaining for years that she was positive Butts gunned down two men in a Brooklyn bodega in 1997, Rice acknowledged uncertainty about the case during her deposition. She conceded that statements from the two key witnesses “didn’t make sense” and “seemed a little strange” and that she argued against pursuing the death penalty for Butts on the chance that he could have been innocent. Still, Phillips wrote in the emailed statement that Rice “believes wholeheartedly that she and her prosecutor colleagues had the right man.”
“Disgruntled defendants sue the DA’s office all the time. Having only one case against me puts me in the baseball Hall of Fame as far as I’m concerned.” –Kathleen Rice, nine years ago
Records and depositions reveal that Rice and detectives locked in on Butts and discounted information pointing to another man who matched the shooter’s profile. Butts’ suit alleged that Rice and detectives coerced witnesses into testifying against him, and one of the witnesses claimed under oath that he was ignored when he protested that the wrong man was being targeted. Rice and the detectives denied the witnesses’ allegations during the civil suit. Experts who reviewed details of several of Rice’s cases at Newsday’s request differed on their assessments of her conduct as a prosecutor. Eugene O’Donnell, a John Jay College of Criminal Justice professor who was once colleagues with Rice in the Brooklyn district attorney’s office but did not work closely with her, said that Rice’s prosecutorial issues reflected “the typical job of the DA.” “There are glaring gaps in the cases, the victims have issues, the witnesses have issues,” O’Donnell said. “It’s baggage city. But you still have to bring the bad guys to justice.” Peter Davis, a professor at Long Island’s Touro Law Center, where Rice was once his student, said the records show she avoided consequences despite failing to disclose favorable information to the defense, which is known as the Brady requirement due to the landmark Supreme Court case Brady v. Maryland. “It seems one pattern is the pattern of Rice suppressing Brady material,” Davis said. “And the second pattern is this pattern of judges not holding Rice accountable.” Pace Law School Professor Bennett L. Gershman, a former Manhattan assistant district attorney and an expert on prosecutorial conduct, said that Rice’s errors stood out. “There are many, many prosecutors out there who have been prosecutors for this long who aren’t saddled with these kinds of problems,” Gershman said. Troubled cases The failed Butts prosecution bears many similarities to the cases currently under review in Brooklyn. There was an absence of physical evidence, an eyewitness who was an admitted crack user, accusations of coercion by authorities, and the involvement of now-retired NYPD homicide Det. Louis Scarcella, who has been the focus the Brooklyn district attorney’s false-conviction probe. Seventy convictions Scarcella helped secure are among the cases under review. During a September court hearing concerning a convicted murderer who claims Scarcella set him up, the former detective noted that it was the prosecutors who oversaw every arrest he made. “During my tenure as a detective in Brooklyn, which was about 19 years, we did not make the arrest,” Scarcella said. “We had to bring it to the Brooklyn district attorney’s office and they authorized the arrest. We did not.” Scarcella declined to comment for this story. He and his longtime partner, Stephen Chmil, were the first detectives at the scene of a double homicide in a Brooklyn bodega on Dec. 30, 1997. Scarcella and Chmil were integral to the case, interviewing witnesses, arranging photo lineups and ultimately arresting Butts, police records show. When Rice first arrived at the bodega, the store’s owner and a teenage employee were still lying behind the counter and in an aisle where they had been shot. “You are there to make sure that things are done correctly,” Rice said of her role during a 2005 deposition. The investigation found its key witness two days later when police arrested Martin Mitchell for allegedly ringing in 1998 by firing a pistol out of an apartment window. Cops found guns, ammunition, a silencer, a police-issued bulletproof vest and scanner, handcuffs and a gas mask in the apartment. Hoping to trade information for favorable treatment, an “intoxicated” Mitchell, according to a detective’s later deposition, tapped his hands on an interrogation room table and said: “I have something big.” Mitchell said, according to a statement taped by Rice, that three men had been involved in the bodega shooting, including a man known as “Black” from Tapscott Street. He said he witnessed the group plan to rob the bodega and was across the street from the Brownsville shop when the murders occurred. Mitchell denied being in on the crime but acknowledged accepting money and crack to keep quiet.
“There are glaring gaps in the cases, the victims have issues, the witnesses have issues. It’s baggage city. But you still have to bring the bad guys to justice.” — Eugene O’Donnell, a John Jay College of Criminal Justice professor

In later civil depositions, Rice and two detectives suggested that Mitchell’s account struck them as at least partially not credible. Detectives said they suspected that Mitchell was involved in the murders. “We were looking at it that he could have been and probably was part of it,” Det. Robert Schulman said in his deposition. “Of course, the way he was saying it, I mean it sounds like the guy was a lookout,” Det. Stephen Hunter said. In her own deposition, Rice said that Mitchell’s statements were “never shown to be untrue” and that relying on him as a witness had to “be seen in the prism of prosecuting cases in Brooklyn.” “My experience in Brooklyn in a neighborhood like this, you had to deal with witnesses not as credible as you like,” Rice said. Two days later, Rice recorded the interview of another alleged eyewitness to the shooting, a 15-year-old girl who said she saw a masked man nicknamed “Black” fight with the bodega owner before the shots rang out. The girl said she, her boyfriend and her dog followed the three shooters, who discussed the murders within earshot and handled weapons and a wad of cash. ​ Butts’ attorney in both his criminal defense and later civil suit, Bruce A. Barket, said in a recent interview that the girl’s story suggested “she could see through a wall and a mask to identify a person she had never met before.” It was Scarcella who then steered the investigation toward Butts, another detective recalled during a sworn deposition, following a canvass of bodega owners, one of whom said he knew of a neighborhood man nicknamed “Black” who was in a group that robbed bodegas. Police then identified that man as Butts. In the civil suit, Barket alleged that the 15-year-old girl was threatened with her adult boyfriend’s prosecution for statutory rape if she didn’t implicate Butts. The girl was not deposed during the civil suit. Rice and the detectives denied that they coerced her statement. Mitchell would make similar allegations. He later claimed that after he told detectives that Butts was not the right man, he was told to implicate him anyway or face gun charges. “They just kept pushing the issue,” Mitchell said in a 2004 jailhouse deposition while serving an unrelated prison stint. “Tell me if I didn’t agree, they was gonna nail me with the case.” Mitchell included Rice among those who coerced him into implicating Butts. Mitchell recalled her as an aggressive prosecutor who intimidated him with “several threats” of prison time if he lied or didn’t cooperate. Rice and the detectives denied Mitchell’s allegations. A case crumbles A grand jury indicted Butts and charged him with multiple counts of first-degree murder. Though two other men were arrested, they were not charged. Less than two months later, a judge dismissed the charges against Butts on the grounds that the evidence presented to the grand jury was insufficient. However, Rice filed an appeal and the charges were ultimately reinstated. By the time Butts was tried in 2000, Rice had moved on to prosecute federal cases in Philadelphia. The case she helped put together in Brooklyn quickly fell apart. Transcripts of the trial have been sealed, but according to a New York Times account, Mitchell undermined his testimony by admitting that he was high on drugs and drunk within a day of the shooting. When asked what time the crime occurred, Mitchell reportedly replied, “I can’t remember people. How am I going to remember time?” Hynes acknowledged in a letter to The New York Times that flawed witness testimony doomed the case. “The jury acquitted Mr. Butts because two eyewitnesses contradicted their earlier statements to police and prosecutors when they testified at trial,” Hynes wrote. In pursuing Butts, the investigation cleared a known drug dealer nicknamed “Black” from Tapscott Street, records and depositions show. The murders have not been solved. O’Donnell, the John Jay professor and former Brooklyn prosecutor, said that focusing on a primary suspect, even if it means ignoring different leads, is normal. “Sounds like a typical investigation, but it also sounds like something you should be concerned with,” O’Donnell said. “Law enforcement investigators are not looking to create doubt. You don’t set out to say, ‘Let’s weaken our case.’ ” Pace Law Professor Gershman said the evidence against Butts was “very weak.” “It hinges on witness statements which the prosecutor admitted didn’t make sense and were strange,” Gershman said. “What the heck are you prosecuting this case for?” Rice maintained in her deposition that building a case isn’t as tidy as it’s portrayed in the movies. “The fact is, sometimes you have to deal with the evidence that you are given,” Rice said. “It’s not like going to central casting and say, ‘This person is a witness, get me the bloody gun.’ ” Butts accused New York City, the district attorney’s office and several individuals, including Rice, of violating his civil rights in a federal lawsuit filed in 2001. The suit was ultimately settled in 2007 with the city paying Butts $220,000. “Everything I lost I cannot get none of that back, nothing,” Butts said in his own deposition, adding that prosecutors persisted with the case against him despite realizing he was innocent. “Once they point the finger they have to stick with it.” State records show Butts has not been convicted of any crime since he was acquitted for the bodega murders. In a 2010 report by City & State, a media organization that covers New York government and politics, Rice said she was certain Butts was guilty. “From the very beginning, I knew we had the right guy. There was no question in my mind at all,” she said. “Sometimes that happens — sometimes guilty people get acquitted.” In her 2005 deposition, Rice said she “was convinced we had the right person” but whether she could prove it was “a different question.” However, she also said the witnesses’ credibility problems had influenced her to recommend that Hynes not pursue capital punishment. “God forbid there is a mistake, there is no going back from that. You have to be very careful in that process,” said Rice. “I knew it was a difficult case, as most of my cases were.” A driven prosecutor Hynes hired Rice in 1992 at a $30,000 assistant district attorney’s salary. Rice, who was 26 at the time, was a Touro Law Center graduate who had interned at the Manhattan Legal Aid Society and worked as a clerk at a law firm. She had also interned for Nassau County District Attorney Denis E. Dillon, whom she would oust in an election more than a decade later. “Growing up the seventh of ten children, I was strongly encouraged to keep the needs and feelings of others in mind,” Rice wrote in a cover letter for the Brooklyn prosecutor’s job. Personnel records show that in an office with hundreds of other assistant district attorneys, she rose from general criminal court duty to prosecuting sex crimes and, ultimately, homicides. Her new workplace was the deadliest borough in a city reeling from the crack epidemic and record murder rates. Rice prosecuted 295 felony charges through 1999, according to statistics Newsday obtained via a public records request. Rice’s acquittal rate at trial for those felony charges was just over 30 percent, slightly higher than the average of her Brooklyn peers during that era, which was 26.4 percent. (Nine of Rice’s cases ended in unclear dispositions, according to numbers provided by the Kings County district attorney’s office. If every one of the nine cases ended in a trial conviction, Rice’s acquittal number would improve to roughly 25 percent.) A more detailed breakdown of the office’s statistics, such as by individual prosecutor or by case type, was not available. Phillips, Rice’s spokesman, said using the statistics to compare Rice with her Brooklyn colleagues is not valid. “Kathleen was appointed a federal prosecutor by the US Attorney because she tried the toughest cases in the most elite bureau against the most violent New Yorkers in the city’s most violent era. And she won. Comparing her trial stats on these cases to those of prosecutors going after bad-check writers is not only naive but intentionally misleading,” Phillips wrote in an email. When asked to provide evidence in support of his statement, Phillips provided none. Court case files from convictions Rice secured during the era show she pushed for a sentence of 25 years to life for Jose Gutierrez, who engaged in a shootout that killed an innocent bystander, and branded him a “cowardly punk” who “personifies the senseless stupidity of random violence that plagues our city.” Gutierrez’s attorney in the shootout case, Joseph Ostrowsky, accused Rice of a “litany of prosecutorial misconduct and recklessness,” including withholding from the defense grand jury testimony from three witnesses in the case. One of those witnesses said on the stand that he saw Gutierrez immediately prior to the shooting, testimony for which the defense was not prepared. Both the trial judge and an appeals court agreed that Rice delayed disclosure of the testimony, according to court records. The higher court declined to overturn the conviction, ruling that Rice had been “properly sanctioned” by allowing the defense further cross-examination of three witnesses. Interest of justice Disposition statistics show that one of Rice’s cases in Brooklyn was dismissed in the interest of justice, a circumstance where the judge has determined that pursuing the prosecution would be unjust. No information about the case is publicly available. Under New York State law, cases ending in dismissal or acquittal are automatically sealed from public view. Like every prosecutor, Rice’s successes — the guilty pleas and verdicts — are preserved in court files, while the failures are mostly closed to public scrutiny.
In a recent interview with Newsday, former Kings County Supreme Court Justice Amy Herz Juviler said she once dismissed one of Rice’s cases in the interest of justice. Juviler, who retired in December 1992, had no records to corroborate her recollection of the case, and it is unclear whether Juviler’s case is the same one indicated in Rice’s disposition statistics. Juviler said it was a rape case and that Rice withheld information that the alleged victim was wanted on felony charges. “No jury would have convicted him with felonies hanging over her head,” Juviler said of the victim. “She’s not a credible witness.” Juviler wrote a 2010 email widely circulated during Rice’s failed bid for New York attorney general that criticized Rice for unethical trial tactics. Rice “regularly introduced perjurious statements” and pursued misdemeanor convictions for innocent defendants even after felony cases had fallen apart, Juviler wrote. Phillips called the allegations “politically motivated” at the time and said Rice could not remember the case Juviler referenced. In the emailed statement sent Friday, the campaign spokesman wrote that Juviler “has a long history of coming out of the woodwork when Kathleen’s in the news. Readers should wonder why she won’t tell us the name of this case or why she didn’t take action against Kathleen at the time of this alleged incident.”
“There are many, many prosecutors out there who have been prosecutors for this long who aren’t saddled with these kinds of problems.” — Pace Law professor Bennett L. Gershman
Sex-abuse case Other allegations against Rice appear in an appellate decision involving NYC Emergency Medical Services lieutenant Carlos Ramos, who was convicted in 1995 of sexually abusing a 10-year-old. Ramos’ attorney accused prosecutors of misconduct, stating in the appeal that the prosecution, led by Rice, had withheld information concerning the dates of the alleged attacks. Given those dates, Ramos would have produced records showing he was at work at the time he was accused of abusing the boy, according to the appeal. Kings County Supreme Court Justice John M. Leventhal agreed that prosecutors’ actions “severely interfered with defendant’s ability to adequately prepare a defense and amounted to a denial of due process.” Citing “fundamental fairness and due process,” Leventhal ordered a new trial for Ramos. State records show the charges against Ramos were dismissed in 1997. Leventhal declined to address the accusation of prosecutorial misconduct, saying that “a further hearing would be necessary” to determine whether Rice or two fellow prosecutors had purposefully withheld evidence. Rice defended her handling of the Ramos case during the civil deposition in the Butts lawsuit. Rice said she could not have disclosed the date of alleged abuse because she didn’t learn it until the boy took the stand. In her experience with sex crimes, she said, there was a “difficulty to get children to remember specific dates,” so prosecutors would often charge that the abuse occurred in a general time period. Pace Law Professor Gershman said a prosecutor is responsible for getting such information and then ensuring that it has been turned over to the defense. “She’s preparing a case for trial that could result in a person spending much of the rest of his life in jail and yet she doesn’t ascertain the dates that the abuse occurred?” Gershman said. Less than three years after Rice left Brooklyn to work as a federal prosecutor in Philadelphia, she again faced accusations that she had withheld key information during a trial. A federal appeals court overturned Rice’s conviction of Alfonzo Coward, a felon sentenced to 68 months in prison after he was caught with a pistol in his car, because Rice had failed to reveal why Coward was pulled over in the first place. Rice’s colleagues defended her in court by saying she was “relatively inexperienced.” Two judges rejected that explanation. “We note that the prosecutor’s ‘inexperience’ did not prevent the government from selecting her to handle the obligations of a criminal trial and, indeed, she secured Coward’s conviction,” ruled U.S. Court of Appeals for the Third Circuit. “Nothing suggests that the government in Coward’s case ‘overlooked’ a ‘detail’ by ‘inadvertence.’ This case is not one in which the misinterpretation can be justified because the law was ambiguous or changing.” In a separate ruling, Judge Stewart Dalzell of the Eastern District of Pennsylvania called the defense of Rice’s inexperience a “bald excuse” and a “very odd premise.” He added “the Government seems to suggest that the Fourth Amendment … does not (somehow) apply in Brooklyn as it does in federal district court in Philadelphia, and therefore Ms. Rice could not have been expected to be familiar with controlling law.” Two years after Rice’s handling of the case led to Coward’s early release from prison, Coward was arrested on charges of marrying and having sex with a 14-year-old girl. Those charges were later withdrawn. Rice downplayed the Coward error in an interview with Newsday in 2010. “It was one case in an 18-year career,” she said. Remaking DA’s office “It will be a real prosecutor’s office again,” Rice declared at her victory celebration in November 2005 after seizing the Nassau County district attorney’s office from 31-year incumbent Dillon. She remade the office in part by firing veteran prosecutors and replacing them with former Brooklyn colleagues groomed by Hynes. Rice hired Teresa Corrigan, a Kings County prosecutor for 16 years, to become a bureau chief. Corrigan, now a Nassau County Court judge, wrote in her resignation to Hynes that “it is with great pride that I will be taking everything I have gained from this office and applying it to the problems facing Nassau County.” Former Kings County Assistant District Attorneys Meg Reiss, Sheryl Anania and Mitchell Benson were also given top prosecutorial jobs in Rice’s administration. And Albert Teichman, who was Hynes’ longtime chief assistant district attorney, was hired for the same No. 2 spot in Nassau. Teichman, in his own resignation letter, called Hynes’ administration “one of the finest prosecution offices in the nation.” How Hynes operated his office has become an issue of intense interest due to the ongoing search for wrongful convictions. This past August, the city agreed to pay $10 million to settle a lawsuit filed by Jabbar Collins, whose homicide conviction was tossed amid allegations that prosecutors had threatened and coerced witnesses in his case. Two Eastern District of New York judges, Dora Irizarry and Frederick Block, called prosecutors’ actions in the Collins case “shameful” and “horrific” and criticized Hynes for turning a blind eye to misconduct. Thompson defeated Hynes in an election last year and took over the Brooklyn office in January. Hynes may face criminal charges after a New York City investigation found that he used law enforcement money for campaign expenses. Barket, who represented Butts and another man freed early from a prison sentence following allegations that a Brooklyn prosecutor withheld information during his murder trial, said that Rice’s tutelage under Hynes is especially meaningful when it comes to her handling of Brady material. “She was brought up in an office where violating Brady was a trial tactic,” said Barket, who previously worked as an assistant district attorney for Rice’s predecessor, Dillon. “[Hynes] clearly ran an office that condoned misconduct by his trial assistants. I think she was raised by Hynes and taught a system by Hynes.” Phillips wrote in the emailed statement that Barket is Rice’s “sworn political enemy.” In Nassau County, state statistics show a marked shift in case dispositions in the years under Rice’s stewardship. In the eight years before Rice took office, just over 21 percent of completed trials stemming from felony arrests resulted in acquittal. During Rice’s tenure, that same figure jumped to 30 percent. Suffolk County’s corresponding acquittal percentage has stayed mostly steady over both time periods, rising only from 26.1 percent to 26.6 percent. A spokesman for the Nassau County district attorney’s office, Shams Tarek, called those numbers “false” in a statement to Newsday and instead provided figures which excluded initial felony charges tried as misdemeanors. Those numbers still showed an acquittal rise during the Rice era, from 17.6% to 24.2%. Experts interviewed by Newsday said that the jump in acquittals was troubling and deserved scrutiny. “It could mean you’re trying difficult cases,” Pace Law Professor Gershman said. “Maybe these people aren’t as experienced or competent as they should be. Maybe there is lousy supervision in the office.” John Jay professor O’Donnell said reviewing trial statistics “is an opportunity to assess whether there is a sufficient cadre of skilled trial prosecutors in the office. It is absolutely inarguable that you would like to have the highest conviction rate possible in cases that you bring to trial, and a defendant having a one in three chance of winning a case is a concern.” Brady rules Rice, who was president of the District Attorneys Association of the State of New York until July, has bristled at the accusation that her own prosecutors do not adhere to the law. In August 2012, she fired back after top defense attorney Marvin Schechter penned an editorial in the New York Law Journal accusing local district attorneys of coaching their assistants to hide information favorable to the defense — a clear Brady violation. Rice’s written response called Schechter’s argument “offensive and inaccurate” and said that some Brady violations are human error. “I would have told him what I would do with a prosecutor who willfully and intentionally commits a Brady violation: I would fire him or her on the spot,” Rice wrote. The month following Rice’s vow, a judge removed one of her assistant district attorneys, Martin Meaney, from trying a homicide case because he failed to disclose that a security guard near a murder scene did not identify the defendant in a photo array. “It seems that that Brady violation, unfortunately, does put your credibility into issue before a trial,” Judge Alan L. Honorof told Meaney in the case of Jovany Henrius, who is charged with killing two men in the Woodbury home of his cousin, former NFL linebacker Jonathan Vilma. Touro professor Davis, after reviewing transcripts from the case at Newsday’s request, said the violation seemed clear to him. “This is a very obvious piece of evidence,” Davis said. “Even a layperson could see this.” Meaney, who at the time had been a Nassau County prosecutor for 24 years, had little defense. “With regard to the Brady violation, Judge, I don’t have much to say,” Meaney said in court. “I know the law in the area says that Brady has to be turned over in sufficient time for defense counsel to make use of it.” Judge Honorof, remarking that he and Meaney “have served together in the district attorney’s office,” said he had no choice but to believe his former colleague. “I have known him that long and have that high of a regard for his honesty and integrity,” Honorof said. “So if he tells me something, I’m going to believe him.” Following the remarks, Henrius’ attorney, Michael DerGarabedian, appealed to have Honorof removed from the case due to his relationship with Meaney. Though the appeal failed, Honorof voluntarily recused himself last March to “avoid any conflict or appearance of impropriety.” Tarek, the spokesman for the Nassau district attorney’s office, wrote in a statement to Newsday that Meaney had not been disciplined because he’d been exonerated by an in-house investigation. “We respectfully disagreed with the judge’s finding that this was Brady material and a thorough investigation found there was no willful wrongdoing on the prosecutor’s part,” Tarek said. To read the original comments on this story, click here to view the thread in Disqus. With Matt Clark and Adam Playford CORRECTION: A previous version of this story misstated Kathleen Rice’s status with the District Attorneys Association of the State of New York.