A state employee who lives in Slingerlands is under investigation by the state Attorney General’s office on charges of money laundering, grand larceny, and allegedly defrauding the government of more than $1.2 million over the course of nine years.
Search warrants have been executed, and a grand jury is expected to be convened soon to look into the charges against 49-year-old James L. Leggiero.
Investigators believe there is a direct link between a company Leggiero created called VIP Inc. (Very Important Property) and his $79,000-a-year position as auditor with the state Office of Mental Health, or OMH.
In sum, VIP appears to be a sham entity used by Leggiero to engage in an extensive fraudulent scheme, and Leggiero appears to have structured bank accounts and financial transactions to conceal his use and control of the more than $1.2 million in proceeds generated by this scheme, wrote senior investigator Michael Battisti in a sworn affidavit in Rensselaer County Court.
Leggiero worked as a principal auditor in the office of community budget and financial management for OMH and had been an employee with the state agency for more than 25 years.
The investigation began as a routine audit review of local assistance payments of OMH agency vouchers by the state Comptroller’s Office. During the audit, multiple payments to VIP on behalf of OMH were uncovered. The vouch-ers also revealed that VIP had a post office box in East Greenbush as an address and no phone number. Investigators found that the post office box was opened by Leggiero, under his Slingerlands home address. The information prompted the officials from the Comptroller’s Office to call in the Attorney General’s office to investigate the VIP payments.
The investigation revealed Leggiero, in his capacity as OMH principal auditor, allegedly signed off on the VIP payments over a nine-year period from June 1998 to January 2007.
Seventy-eight vouchers submitted by VIP to OMH for payment for purported studies from 2001 through last month were reviewed. VIP was allegedly performing engineering and architectural work to determine if a site had the potential for an OMH-sponsored residential treatment facility. Six discrepancies were identified as inconsistent with similar vouchers submitted by other companies for the same site work.
Most payments made to VIP and signed off by Leggiero regularly exceeded $19,000 per voucher.
`In contrast, the sample set of vouchers generally claimed payments in the range of $2,000 to $5,000,` wrote Battisti.
The affidavit provided in court states none of the VIP payments identifies the town or county of the land surveyed, some even lack addresses and others have false addresses according to the report.
`In one case OSC investigator Stephanie Kelly made efforts to locate 30 and 32 Gick Road, supposed street addresses from a VIP voucher,` wrote Battisti.
`Upon identifying Gick Road in Saratoga Springs, Investigator Kelly conducted surveillance and found that 32 Gick Road did not exist and that 30 Gick Road was a warehouse converted to office space, unsuitable for residential purposes,` Battisti stated.
Other VIP vouchers sought payment for alleged studies of the same location. Financial disclosure statements reviewed by the attorney general’s office of Leggiero and his wife, Kathleen, also an OMH employee, never revealed any interest and income from VIP in the filing with the state ethics commission. There is also no record of any tax filing on behalf of VIP with the state Department of Tax and Finance.
Aside from their Slingerlands home, the Leggieros also own five cars, among them a 1958 Corvette and a Cadillac Escalade, along with a second residential property.
`It seems unlikely that Leggiero would have been able to afford these assets based on his and his wife’s state salaries alone,` said Battisti.
Meanwhile, James Leggiero has been suspended without pay from his job with OMH, and phone calls to the Leggiero residence have not been returned. An agency spokes-woman said OMH is preparing to fire Leggiero.
`This troubling incident clearly reveals weaknesses in some areas of internal financial management at the Office of Mental Health,` said Jill Daniels, spokeswoman for OMH in a prepared statement.
The office is in the process of reviewing all of its internal financial controls to address the problem and to improve accountability. Search warrants on all of Leggiero’s assets and properties are being obtained, and the investigation continues.“