Home Banking & Finance Mount Vernon charges against developers dismissed by federal judge

Mount Vernon charges against developers dismissed by federal judge

A federal judge has dismissed charges brought by Mount Vernon Mayor Richard Thomas against two political rivals and two developers, but allowed the lawsuit to continue against four adversaries.

Claims that former Mayor Ernest D. Davis, former Comptroller Maureen Walker, Manhattan developer Peter Fine and Elmsford developer John Saraceno “systematically looted” the city were dropped.

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Developer Peter Fine atop La Porte Apartments in Mount Vernon. Photo by Bill Heltzel

Claims against former Urban Renewal Agency Director Jaime Martinez, Councilmen Marcus Griffith and Andrew Wallace, and former Police Commissioner Robert Kelly were allowed to continue.

The city’s lawsuit stems from the use of federal funds for low-income housing. After Thomas defeated Davis and became mayor in 2016, he says he learned of a $6 million discrepancy in the use of the federal funds. Internal audits had found that the urban renewal agency had made loans to developers at “unconscionably low interest rates,” the lawsuit states, and that loans were not repaid.

The city cited $3.13 million in loans for Fine’s 159-unit LaPorte Apartments project on Gramatan Avenue and $1 million to Saraceno’s housing project at 60 W. First St.

In February 2016, two months after taking office, Thomas fired Martinez.

Martinez tried to remove a city computer from his office the following day, the lawsuit alleges, and police stopped him and locked the office. That night, a watchman saw Wallace and Griffith in Martinez’s office placing paperwork into bags. They allegedly took the bags to the parking lot behind City Hall, where Martinez was waiting, then left together.

Police filed a report that was revised several times. Kelly, according to the lawsuit, ordered an officer to destroy all but one of the reports.

Thomas fired Kelly.

The city sued the developers and city officials, past and present, for unauthorized access to a computer with intent to defraud. The lawsuit also charges negligence, conversion, breach of contract and unjust enrichment under state law.

The defendants argued that the charges should be dismissed on several technical grounds. U.S. District Judge Vincent L. Briccetti disagreed, ruling on March 26 that the city had established enough, at this stage, for the case to continue.

But Briccetti agreed that the city had not plausibly established a federal computer fraud claim against Kelly.

He also agreed that federal court does not have jurisdiction over state law claims of negligence, conversion, breach of contract and unjust enrichment, because the facts argued in the complaint are too loosely connected to the federal computer fraud claim. He made one exception: the negligence claim against Kelly could continue.

Charges against developers Fine, Saraceno and their companies, former mayor Davis and former comptroller Walker were dismissed.

Computer fraud claims against Griffith, Martinez and Wallace, and the negligence claim against Kelly survived.

Briccetti ordered the remaining defendants to file answers to the city’s accusations.

Kelly quickly complied.

He claims Thomas had an ulterior motive for firing him and suing, because he had refused the mayor’s demand to reinstate Thomas’ brother as a city firefighter, after the brother was convicted of illegally selling handguns.

The timing of the lawsuit, shortly after Thomas was accused of stealing campaign funds and misusing inaugural funds, Kelly argues, was “a perfect red herring to obfuscate attention from Thomas’ arrest.

The court should dismiss the negligence claim because it is “no more than a thinly veiled effort to utilize the power of government,” Kelly argues, “to extract revenge upon a citizen.”


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