Audit blasts Suffolk land buys

Real Estate Weekly, March 19, 2003 by Steve Viuker

Suffolk County Comptroller Joseph Sawicki last week issued a long-awaited audit of the county real estate program that found what Sawicki called a "classic case of abuse" under former director Allan Grecco.

According to Newsday, Sawicki said he turned over the audit, which was begun in February 2002, to Suffolk County District Attorney Thomas Spota because Grecco had "by passed and ignored safeguards and controls to the point where it opened up the whole acquisition process to abuse."

The auditors examined 59 county purchases of land made over the past five years totaling $129 million. They found that county officials frequently paid more than the appraised value for land and had no formal controls to prevent conflicts of interest. And in many instances, the report said, officials were pressured to buy land quickly, which the audit said could lead to errors.

The auditors noted that serious problems began occurring after Jan. 1, 1999, when Grecco, who is the former law partner of County Executive Robert Gaffney, was named real estate division director. Grecco is under investigation by the U.S. attorney, state attorney general and county district attorney. He resigned in December 2001.

In five deals that totaled $20.6 million, county officials set a purchase price based on a seller's appraisal, rather than a lower independent appraisal. In one of those deals, the $9 million purchase of land in Springs from Andrew Sabin, a political contributor to Gaffney, there was no independent appraisal.

Even though officials are limited by law to paying fair market value, Grecco negotiated or approved prices that exceeded appraised values in 22 deals. In addition, in 12 deals costing a total of $25.5 million, the county bought only a portion of the property that was actually appraised. Many files after 1999 had no notes detailing negotiations, making it impossible to determine who conducted the negotiations or whether anyone witnessed them.

Suffolk Planning Director Thomas Isles, who oversees the real estate division, said in a formal response that county officials had been buying land in a rapidly escalating market and that they were competing with builders who wanted to develop land. He said the real estate division "is in the difficult position of balancing the timely processing of acquisitions with quality control."