• Conflict of interest problems identified for four board members
• Land sold to Ginsberg’s for $1 used as collateral for $9.5 million loan from board member’s bank
• ABO questions $22K in payments to attorney Bill Better
• Open meetings law violations found; lack of disclosure and transparency termed “troubling”
In a report issued this week, an investigation by the New York State Budget Authorities Office (ABO) into the operations of the Columbia County Economic Development Corporation finds that CEDC has serious problems with conflicts of interest, as well as failing to comply with open meetings law.
Specifically, the report identifies “four current or former members of the CEDC board as having potential conflicts of interests concerning the property transaction between CEDC and Ginsberg Foods.”
The four named parties are Ginsberg’s CEO David Ginsberg, Crawford & Associates President David Crawford, Kinderhook Bank President Robert Sherwood, and attorney Bill Better. Ginsberg is a former President and board member of CEDC, while the others are current board members, with Crawford serving as President.
The findings include that all four failed to provide written disclosures of their financial interest in the Ginsberg’s huge new project in Ghent, while it was under review by CEDC.
Perhaps most explosively, the report notes that Sherwood’s bank “provided Ginsberg Foods with two loans totaling $9.5 million for its proposed expansion project” using the CEDC property as “collateral for the loans.” The ABO writes:
“A review of meeting minutes since April 2014 show that Mr. Sherwood was present at seven of the twelve board and Executive Committee meetings when the Ginsberg Foods project was discussed. However, there is no record of Mr. Sherwood disclosing his interest in the project during these meetings. Of more concern, Mr. Sherwood voted to sell CEDC’s property to Ginsberg Foods. In our interview, Mr. Sherwood acknowledged he did not act as a board member who had a potential conflict of interest. He stated that in retrospect he should have recused himself from the vote.”
Crawford, whose firm has performed extensive engineering and permitting work for Ginsberg’s, was “present at 18 of the 23 board and Executive Committee meetings at which the Ginsberg Foods project was discussed.” Moreover, the ABO found “found instances in meeting minutes where Mr. Crawford did participate in discussions and voted on issues related to the project.” In addition, the State observes that “the Ginsberg Foods loan terms are more favorable than the majority of the other loans,” but finds that CEDC’s loose loan guidelines allow that practice.
In addition, the State investigation found that Crawford participated in email discussions about Ginsberg’s, including communications with the company about facilitating “tax increment financing (TIF) for infrastructure costs of the project.” Emails also showed that Crawford argued for and facilitated a meeting “at the offices of Ginsberg Foods with representatives from a public relations firm (Behan Communications),” which was hired by him and CEDC Executive Director Ken Flood without Board approval.
As the beneficiary of a separate $400,000 loan from CEDC, followed by an eyebrow-raising $1 deal with CEDC to acquire 28 acres of land on Route 9H, Ginsberg himself was present at an un-announced Executive Committee meeting “where the project was discussed prior to his resignation,” according to the State report.
Better, in turn, was paid $22,375 in 2014 “to negotiate the [Columbia County] IDA’s financial assistance package with Ginsberg Foods… Mr. Better was present at four of the nine board meetings during 2014 when the project was discussed.” The State notes that Crawford was the one who proposed Better as “the project manager for the Ginsberg Foods project.”
The report concludes:
“We find the payments to Mr. Better by the CCIDA to be a questionable use of CCIDA funds. There is no indication why the services could not be provided by the CCIDA, either by the executive director or either of the two existing legal counsels contracted by the CCIDA. There is no written contract between the CCIDA and Mr. Better, or any records to indicate what services were to be rendered or the fees to be charged. Further, a review of the invoices to the CCIDA show he was paid for calls and meetings with individuals that do not appear to be related to CCIDA’s financial assistance package. For example, there are charges for phone calls to Crawford & Associates including to David Crawford … not related to the CCIDA’s financial assistance.”
Looking at the bigger picture, the ABO’s interviews with CEDC Executive Committee members revealed a lack of awareness and concerns about conflict of interest, with “most indicat[ing] that it is not uncommon for one or more board members to have potential conflicts of interest regarding particular projects or loans,” and that they “do not think it is necessary to always disclose potential conflicts. None of the Executive Committee members were aware of the requirement in the CEDC Code of Ethics for a written statement disclosing a member’s financial interest in a project.”
Overall, “it is troubling that this lack of disclosure is considered routine with other projects and loans. This lack of disclosure and transparency inhibits the public’s trust and confidence concerning board actions,” the ABO concludes.
Ironically, the denial of the project by the Ghent Planning Board may have saved CEDC from further criticism, as the State says that “no harm has yet arisen from the board’s failure to follow its own policies since the Ginsberg Foods expansion project was not approved by the Ghent Planning Board.”
So if Ginsberg’s lawsuit against the Planning Board is successful, that would appear to put CEDC back in hot water.
Meanwhile, the State also takes CEDC to task for a lack of openness, transparency and record-keeping.
Citing Section 102(2) of Public Officers Law , the ABO found instances where CEDC failed to meet requirements for “public bodies to provide advance public notice of meetings, allow for public access to meetings, and formally document and record meeting minutes.” This includes committees and subcommittees, such as CEDC’s Loan Committee and Executive Committee, whose proceedings “CEDC does not provide public notice of… or allow public access to these meetings.”
Moreover, CEDC “does not maintain meeting minutes for its Loan Committee [and] did not maintain meeting minutes for all of its Executive Committee meetings in 2014.”
In relation to the Ginsberg $1 land sale, the State concluded that a July 29, 2014 executive session to did “not appear to be appropriate.”
The ABO investigation was prompted by a complaint filed by citizens group GhenCANN, led by resident Patti Matheney, which has been been watchdogging the Ginsberg’s project. The full report and complaint can be downloaded here.