Critic says Scarsdale Schools report on IRS tax scandal cover-up is 'a white wash'
Former Scarsdale Superintendent of Schools Thomas Hagerman, who resigned during the investigation of the cover-up of a $1.7-million IRS payroll-tax scandal, acknowledged he learned of the issue six months before he told the Board of Education.
That was among the revelations in a three-page “fact-finding report” by attorney Anthony J. Brock that was released by the school district this week.
The report on the cover-up concluded that the Board of Education was not informed of the IRS matter until March of this year. That was 15 months after the district’s treasurer learned of the payroll tax snafu, nine months after the district’s assistant superintendent for business and facilities said he was informed, and six months after Hagerman said he was told about it.
The report also revealed disputes among three top Scarsdale administrators about when they learned of the payroll tax snafu that continued through 2020 and 2021. Complicating matters was the practice of Scarsdale administrators to make these notifications verbally, so there was no record of the communications.
Those involved in the matter who were not named among those interviewed by Brock were attorneys from the Albany-based law firm, Bond Shoeneck & King. The firm represented Scarsdale in an appeal made in November 2021 of the fines and tax lien filed by the IRS. Brock also did not disclose if he interviewed current or former members of the Scarsdale Board of Education.
Two Scarsdale residents have criticized the report, saying Brock didn’t dig deep enough. Parent Mayra Kirkendall Rodriguez and homeowner Robert Berg said Brock should have taken sworn testimony from Hagerman and others.
“It’s a total whitewash – complete farce,” said Berg.
Said Kirkendall Rodriguez: “It was a very weak report. No sworn statements. It was a timeline, a lot of which a high-schooler herself already put together."
Board President Karen Ceske did not respond to an email message seeking comment. Attorneys for Bond Schoeneck & King did not return email and phone messages.
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The IRS issue has had deep reverberations in the Scarsdale school administration. Hagerman kept the issue secret from the Board of Education during the time he was seeking to win the job as head of school at the Latin School of Chicago. He was scheduled to start there today.
Scarsdale Treasurer Jeff Martin filed for retirement in January, effective October 2022, which he said followed a disagreement with Hagerman over the superintendent’s decision not to hire an assistant in the district’s business office. Assistant Superintendent for Business and Finance Stuart Mattey will retire next summer.
Hagerman announced in January 2022 that he was leaving at the end of the school year, but opted instead to depart in May as Brock, an Albany-based attorney, ramped up his probe.
Brock's report
Brock’s 31-item timeline detailed the progression of the IRS matter, which began in February 2020, with the Scarsdale Board of Education completely out of the loop for 15 months after Martin learned of the payroll tax filing errors in January 2021.
But who knew what when in the business office remains in dispute.
Martin said he reported the matter to Mattey, his supervisor, on Jan. 11, 2021, the same day he learned that the IRS had fined Scarsdale $174,799. Martin said he also told Mattey in April when the IRS said Scarsdale was fined an additional $539,370. Martin made the notification in conversation, so there is no record of it.
Mattey, however, said that he didn't learn of the IRS matter until July 2021.
Hagerman said wasn’t informed of IRS matter until Sept. 20, 2021.
According to the report’s timeline, that means that neither Mattey, Hagerman nor the Board of Education knew of the IRS matter in June 2021, when Hagerman was granted a one-year contract extension, raise, and $5,000 bonus, and Mattey was granted a 3.8% salary increase.
By late October, the district’s business office was rocked with news that the IRS had filed a $1.3-milllion federal tax lien against the Scarsdale school district for back payroll taxes.
The report states that Mattey “immediately notified Dr. Hagerman of the lien.”
That notification, however, was made verbally, so there is no record of it.
Scarsdale's tax lawyers
In November, the district engaged lawyers in the firm, Bond Schoeneck & King, to deal with the IRS, with attorneys Jessica Blanchette and Frank Mayer filing an appeal of the penalties and the tax lien on Nov. 19, 2021. The school board did not ratify the engagement of the law firm on the tax matter as the district relied on its annual contract with the firm on labor matters.
District reccords show that the firm billed Scarsdale for $50,864 for work conducted on the IRS matter from November through March.
Hagerman told the investigator he first learned of the tax lien after a hearing was held on the matter on March 16, 2022.
Martin, however, said the IRS matter was common knowledge in the district’s central office.
“Hagerman knew about the IRS issue right along, just as most people in our knew about the issue right along,” Martin wrote in response to the June 24 Tax Watch column. “It was not a secret.”
Follow Tax Watch columnist David McKay Wilson on Facebook or Twitter @davidmckay415. He has written about Hudson Valley public affiars since 1986. Read his columns in the lohud.com archive.
This article originally appeared on Rockland/Westchester Journal News: Scarsdale Schools IRS cover-up report draws criticism from residents
