Investigation of the Waterfront Commission of New York Harbor

Recommendations

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A consultant was retained to review the Commission’s internal finances, controls, andpolicies, make recommendations regarding the Commission’s finances and records, andprepare a written manual of operations for the Comptroller’s office. The Commissionfurther reported:The Comptroller’s Office has installed Quick Books to modernize theCommission’s accounting system. The Office’s petty cash system hasbeen reformed to ensure accountability and reviewability. Separatebank accounts have been set up for forfeiture funds which will beaudited and reconciled on a timely basis. The Comptroller hasreceived training on the CFR sections pertaining to the handling offederal forfeiture funds. Separate bank and checking accounts will beset up for all future grant monies. A new system to track, record andreconcile overtime payments is being implemented.V. FINDINGS AND RECOMMENDATIONSThe Inspector General found that abuse of authority, neglect of responsibilities,and poor management pervaded the Waterfront Commission under CommissionersAxelrod and Madonna, and Executive Director De Maria. Most significantly, theCommission’s lack of policies led to its failure to meet its obligations to regulatestevedoring companies and fulfill its statutory obligations. The Commission’s auditreports were years overdue, and staff indicated that violations during audits were notcorrected even once they were found. These lapses were evident in the Commission’sinability to issue any permanent stevedoring licenses for at least 10 years.While Audit and Control Director Frank Nastasi complained that he wasunderstaffed, the Inspector General found that his auditors were poorly supervised andlacked any coordination or direction consistent with the functions of the unit.Specifically, audits were unnecessarily comprehensive, reviewing all books and recordsrather than using representative sampling, resulting in the Commission’s inability tocomplete any on time. In addition, Nastasi did not implement basic quality assurancemeasures, such as rotating auditors among companies.The Inspector General found that in one instance, the Commission, in apparentcontravention of the Waterfront Commission Act, actively assisted a convicted felon toavoid required revocation of his license and to continue to operate a waterfrontwarehouse. None of the Commission staff members aware of the scheme brought thematter to the commissioners, although all noted its impropriety.The Inspector General also identified a number of instances of abuse of resources,as well as improper use of influence to assist friends and acquaintances. As LicensingDirector and then General Counsel, Jon Deutsch disclosed internal information to afriend, concealed a prior drug arrest of a stevedoring applicant, improperly participated inthe questioning of the father of a close friend, and improperly interceded on behalf of afamily member of a close friend who was facing suspension of his waterfront registration.57
Commissioner Madonna compelled the Police Division to hire three ineligible orunqualified officers, even assisting one with the required examination. Madonna alsoabused his authority by punishing a whistleblower with reassignment.No official written policy governed use of vehicles, and Commission executivesfailed to report commuting or personal use of Commission vehicles for tax purposes. Inaddition, both Commissioners Madonna and Axelrod obtained multiple parking placards,and Axelrod retained his placards after his term ended. Axelrod also provided an officialparking placard to a friend who had no affiliation with the Waterfront Commission.The Police Division lacked any policies governing the conduct of its detectives,and detectives were not sufficiently trained in the laws of the two states in which theywere police officers. Rather than attending to police duties, police officers were assignedto guard parking spaces for executives in Manhattan under the supervision of twoseparate police chiefs.The Inspector General found the Commission’s comptroller to be irresponsible.Rather than segregating federal grant and forfeiture funds to ensure proper use, hecombined all funds in the Commission’s general operating account and did not accountseparately for expenditure of these funds. The comptroller did not track forfeiture fundsor overtime reimbursements owed to the Commission by federal tax forces in whichCommission detectives participated, nor could he ensure that forfeiture funds were spentaccording to federal guidelines. The comptroller took no responsibility for monitoringpurchasing, expense reports, or other spending.The Commission applied for and received a federal grant of $170,000 from thefederal Department of Homeland Security for a boat that is rarely used, and hascontributed little, if anything, to port security. The Commission also obtained over$600,000 for another Homeland Security grant, “Project Safe Port,” to update its wirelesscapabilities, ostensibly to combat terrorism. Although the Commission reported toHomeland Security that the system was operational at the end of the grant period, theInspector General learned from Commission employees that it was not.Since the Inspector General began this investigation, Executive Director DeMaria, Audit and Control Director Nastasi and Assistant Chief of Police McGowan haveresigned. In addition, Michael Axelrod was not reappointed upon the expiration of histerm, and Jon Deutsch, the former general counsel, was terminated.New York State Commissioner Ronald Goldstock was appointed by New YorkGovernor David A. Paterson and was confirmed by the Senate and assumed his duties onJuly 2, 2008. On September 10, 2008 Commissioners Goldstock and Madonna appointedWalter Arsenault as executive director. The New Jersey Senate had confirmedMadonna’s reappointment on June 21, 2007; however, on August 5, 2009, GovernorCorzine informed the Inspector General that he was removing Commissioner Madonnafor cause.58
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State of New YorkOffice of the Insp
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STAFF FOR THIS INVESTIGATION AND RE
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Personal Use of Waterfront Commissi
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mandated core responsibilities. 2 T
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enforcement officer, he was hired a
Page 11 and 12: II. BACKGROUNDHistoryIn the early 1
Page 13 and 14: Commission regulates the employment
Page 15 and 16: There was virtually no communicatio
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Page 19 and 20: did identify individual instances o
Page 21 and 22: Maria that he “should have been m
Page 23 and 24: Q.: Why did it change?Deutsch: Beca
Page 25 and 26: all the things that has gone on wit
Page 27 and 28: Police Division. That testimony not
Page 29 and 30: had been completed within the curre
Page 31 and 32: epercussions of his felony convicti
Page 33 and 34: Michael DeCotiis testified to the I
Page 35 and 36: offending companies, although Kelly
Page 37 and 38: Web sites were blocked by software
Page 39 and 40: At all of the police academies, the
Page 41 and 42: epresenting the Waterfront Commissi
Page 43 and 44: training facility has been created
Page 45 and 46: Madonna’s other recommended candi
Page 47 and 48: Madonna denied providing the exam t
Page 49 and 50: which car they would drive, they ne
Page 51 and 52: F. ABUSE OF PUBLIC RESOURCESPersona
Page 53 and 54: A Waterfront Commission Vehicle Was
Page 55 and 56: Wolf also attempted to disclaim res
Page 57 and 58: determining the outstanding forfeit
Page 59 and 60: non-federal share of expense, and t
Page 61: comptroller received this informati
Page 65 and 66: Fiscal Management• The Commission
Page 67: JON S. CORZINEState GovernorOFFICE
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Investigation of the Waterfront Commission of New York Harbor

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