Skip navigation
× You have 2 more free articles available this month. Subscribe today.

New York Prison Official Nets $500,000 in Fraudulent Scheme; Audit Finds 17 Years of Unchecked Corruption

A joint audit/investigation by the New York State Comptroller and Inspector General uncovered a 17-year fraudulent scheme by the former director of the New York Department of Correctional Services (NYDOCS) Food Production Center. Between 1992 and August 2008 the Center’s director bilked the state out of $497,452.61, though he and his supervisors tried to justify the fraud by claiming he deserved all he stole.

NYDOCS houses about 62,000 prisoners at 69 prisons and one drug treatment center. Before 1992, each facility employed its own cooking staff, did its own food purchasing and prepared prisoner meals on-site. A 1992 audit by the State Comptroller put an end to that, however, upon identifying significant food preparation waste.

NYDOCS responded by establishing a Food Production Center at the Oneida Correctional Facility in Rome, New York and designing a cook/chill program to “streamline the manufacturing and service of meals to the inmate population.” This program “allows the ... Center to prepare massive quantities of food and quickly chill it to near freezing before it is shipped to facilities throughout the State.”

The Food Center “is a state-of-the-art facility designed to provide food and drink on a daily basis to all inmates.” It also contracts to supply approximately 1,900 meals a day to local jails in 19 counties and to the New York Psychiatric Center.

The Food Center is staffed by approximately 140 prisoners and 80 employees, and has an annual budget of over $55 million. From 1992 until his retirement in August 2008, the Center was run by Director Howard Dean, who was described by his supervisors “as the ‘czar’ of the cook/chill program and an expert in the food service field.” They considered Dean’s supervision to be “critical” to the Center’s success.

Apparently Dean also felt he was indispensable, and thus could do anything he wanted. According to the audit report released on April 9, 2010, Dean’s official work schedule was 7 a.m. to 3 p.m. with a half-hour lunch break, Monday through Thursday. “However, Mr. Dean submitted false time sheets ... for 17 years certifying he worked Fridays, when in fact he never reported to work on Friday,” investigators found.

“Mr. Dean freely admitted he did not work on Fridays for the entire 17 years he was in charge of the Food Center,” according to the audit. “Mr. Dean claimed he worked longer hours Monday through Thursday,” but investigators found that his story lacked credibility, largely because records revealed he did not work extended hours on those days nor could he provide “a specific or legitimate reason why he needed to be at the Food Center after his official work day ended at 3 p.m.”

Dean’s supervisors alleged they had no clue that he never worked on Fridays, which investigators found to “strain credibility.” The investigators “estimated Mr. Dean realized an unwarranted benefit of approximately $247,830” by submitting fraudulent time sheets.

Dean engaged in several other fraudulent practices, too. Although he worked at the Food Center he resided 88 miles away in Locke, New York. In 1992, Dean’s supervisor, Deputy Commissioner Susan Butler, designated Albany as his official work station even though it was 109 miles from the Food Center and 187 miles from his residence. “This designation of an illusory official work station, and its perpetuation by future supervisors allowed Mr. Dean to remain in fictitious travel status and accrue associated benefits during the ensuing 17 years,” investigators found.

“Mr. Dean stated he was allowed to engage in this long-standing fraud in order to receive travel per diems in lieu of a pay raise,” according to the audit report. “Contrary to his claim of foregoing pay raises,” however, “Mr. Dean’s salary history shows he received at least two pay grade increases during his 17 years at the Food Center while still collecting unjustifiable travel benefits.”

Dean’s annual salary when he retired was $112,743, yet his supervisor, Chief Fiscal Officer Russell DiBello, said “he believed Mr. Dean was underpaid given the level of responsibility entrusted to him at the Food Center, and he knew Mr. Dean was frustrated by his compensation.” Further, “Mr. DiBello candidly admitted he allowed Mr. Dean the continued benefit of being in perpetual travel status and justified this fraud by stating ‘I knew the responsibilities of his job were such, his pay was such, that he had a heart attack at that time, and it was a stressful job he had ... so I had no problem with him staying in a motel 3-4 nights a week.’” Investigators “determined this scheme rewarded Mr. Dean [with] $66,079 in per diem payments and cost the State $137,353 in hotel expenses. The total value of the fraud was $203,432 over a 16-year period.”

In November 2007, Dean’s travel benefits were finally terminated by his supervisor at the time, Deputy Commissioner Gayle Haponik. However, Haponik then set him up in state-provided housing where he remained until his retirement in August 2008. Investigators found that “no reasonable justification for Mr. Dean’s use of staff housing was provided.”
Dean paid only $87 a month for state housing, while the median rent for apartments in the area was $461 per month. “Mr. Dean was given an improper benefit which saved him $374 monthly or $2,992 for the more than eight months he stayed in staff housing,” according to the audit report.

Further, records revealed that between September 25, 2005 and November 12, 2007, “Dean also falsified travel vouchers and provided illegitimate hotel invoices to support claims he stayed at the Quality Inn in Rome, New York on 75 nights he did not.”
Investigators determined that “as a result, the State incurred 75 extra hotel room charges at $60 per night and Mr. Dean was paid a travel per diem of $31-39 for each of the 75 days.” The hotel owner “said he spent time with Mr. Dean ... and considered him a good customer.” He “charged the extra nights to Mr. Dean’s State credit card according to Mr. Dean’s instructions ... [and] he ... ‘checked in’ Mr. Dean on nights he was not actually at the hotel, using the State credit card number on file at the hotel.”

The Quality Inn owner “reported the extra room charges were then carried over to other dates to pay for Mr. Dean’s then-Assistant Food Center Director, Robert Schattinger, to stay at the hotel. ... Mr. Dean created this arrangement because Mr. Schattinger was not eligible to have the State pay for him to stay in a hotel in Rome.”

It was also learned that Schattinger, who was promoted to Director after Dean retired, stayed at the hotel on only 21 nights. It is unknown “who stayed in the room the State paid for during the remaining 54 nights.” Schattinger claimed, and Dean admitted, that Dean had told him the room was complimentary. “This scheme alone cost the State $7,393 in fraudulent travel expenses,” the investigators wrote. “It resulted in the Quality Inn receiving $4,500 for rooms charged to Mr. Dean’s State credit card for nights he was not actually lodged at the hotel and netted Mr. Dean $2,893 for travel per diems he was not entitled to receive.”

Investigators also discovered a “double dipping” scheme by Dean whereby he was compensated twice for the same expenses, costing the State an estimated $1,831. Finally, investigators found that “Mr. Dean received a further improper benefit through the use of a State-owned vehicle, which was approved by supervisors. This benefit was granted in direct violation of Correctional Services’ policies designed to prevent the abuse of State vehicle privileges.” Dean’s improper use of “a State vehicle and gas and tolls paid for by the State cost taxpayers an estimated $32,293 over the 17 years Mr. Dean received these improper benefits,” according to the audit.

Investigators concluded that “the improper activity discovered in this matter cost New York taxpayers approximately $500,000.” Yet Dean said he saw nothing wrong with that. “You are questioning my integrity and I never did anything dishonest that I knew of,” Dean claimed. “This does upset me very much. Correctional Services didn’t give me one red cent more than I honestly earned. In the back of my mind I never received anything I wasn’t entitled to.”

The investigators did not lay all the blame at Dean’s feet, stating, “this fraud was not merely the product of Dean’s intentional deception but was facilitated and allowed to occur through mismanagement, if not conscious acceptance of improprieties, by Mr. Dean’s immediate supervisors.” They found that his supervisors’ conduct “was not only unreasonable but abrogated their duty to the Department of Correctional Services and the public. Management failed to properly supervise the ... Center ... allowing Mr. Dean’s fraud to continue for nearly two decades. ... The managers’ attitude demonstrates a willful disregard for internal controls. As a result, they created an environment susceptible to fraud, waste and abuse.”

“The magnitude and duration of the deception that occurred highlights not only its systemic nature, but also the cultural environment within the Department which allowed it to occur,” the investigators wrote. “It is simply unacceptable and belied by the evidence to believe Mr. Dean merely deceived his supervisors. Mr. Dean’s fraud occurred for 17 years. For nearly two decades, Mr. Dean failed to work twenty percent of the work week for which he was paid. It strains credulity to believe for 17 years his supervisors were entirely ignorant of Mr. Dean’s arrangement. ... Mr. Dean, who took no steps to conceal his unusual and unauthorized work schedule, was permitted to operate in any manner he saw fit regardless of the rules applicable to other state employees.”

Given that “the evidence reveals that at least some of Mr. Dean’s supervisors, specifically Mr. DiBello, were aware of, and condoned, the fraud that was perpetrated,” investigators concluded that “They are also culpable as Mr. Dean in harming the taxpayers by violating their duties and not acting in the best interest of the State.”

“Mr. Dean owes the taxpayers of New York state the 20 percent of his paycheck which he never earned, but swindled, and his managers are no less accountable,” said Inspector General Joseph Fisch. “The uninterrupted fleecing of the state’s treasury for 17 years by Mr. Dean could not have occurred without the acquiescence, if not the complicity, of his supervisors.”

The report’s findings were referred to the Oneida County District Attorney’s office for possible criminal charges, including conspiracy, falsifying business records, defrauding the government, larceny and official misconduct. State Comptroller Thomas DiNapoli is also assessing how the audit findings may impact Dean’s $57,381 annual pension.

On August 31, 2010, the State Comptroller and Inspector General issued another joint report that found Dean had accepted free meals and donations of money and food in exchange for steering contracts to certain vendors. Over a 13-year period, Dean and other NYDOCS officials reportedly received free meals from two food vendors, Global Food Industries and Good Source, Inc., which had $2.5 million in contracts with the state prison system. In one case, Food Center staff provided one of the favored vendors but not other vendors with a secret ingredient needed to secure a contract to provide cheese sauce to the NYDOCS.

Global Food Industries and Good Source, Inc. allegedly provided free meals for Dean and his co-workers at a steakhouse. Dean also solicited and received free food and donations from vendors for the Food Center’s annual Christmas party and picnic. “The food was free to attendees because most of it was donated by vendors with whom the Food Production Center staff was doing business,” the audit found. The report concluded that Dean had abused his position to “garner every personal advantage he could obtain from the state.”

On September 10, 2010, Dean was charged with grand larceny for stealing $50,000 by submitting false expense vouchers and failing to work on Fridays despite being paid for working a five-day week. The statute of limitations precluded charging him with having bilked the state over the entire 17-year-period he was employed as director of the Food Center. Dean pleaded not guilty to the charges, and was released on his own recognizance.

Sources: The Enterprise;; “Seventeen Years of Fraud by the Former Director of the Department of Correctional Services’ Food Production Center,” New York State Comptroller and Inspector General report (2008-S-176); “Violations of Law, Conflicts of Interest and Other Improprieties at the Department of Correctional Services’ Food Production Center,” New York State Comptroller and Inspector General report (2009-S-6)

As a digital subscriber to Prison Legal News, you can access full text and downloads for this and other premium content.

Subscribe today

Already a subscriber? Login