By Matt Youngfrau
WHITE PLAINS — November 15, 2002 – Wednesday morning, the executive director of the Liberty Housing Authority, Brian Panich, pled guilty to embezzlement and misuse of funds (under 18 USC 666), a felony, in Federal Court in White Plains. The plea ended months of investigation by the Village of Liberty and the federal Department of Housing and Urban Development (HUD) into Panich’s illegal use of federal funds.
“I committed a crime. I have to suffer the consequences,” Panich remarked when interviewed by the Democrat yesterday. “I do not blame anyone else.”
The incidents in question date back several years. At the September 4, 1997 meeting of the Housing Authority, the board discussed giving Panich a personal loan (no amount was stated in the minutes) at 10 percent interest. Panich contacted the accountants to determine if the loan, culled from HUD funds, was proper.
In the minutes of that meeting, Panich told the board that the housing authority’s auditors, Cooper, Niemann, and Co., LLP of Mongaup Valley, indicated a loan would not be a problem as long as the board approved. The board did approve a loan in the amount of $7,000.
Over the course of 1998, two additional loans of $4,000 and $3,000 each were also approved for Panich on the same terms: 10 percent interest, and both needed to be paid back by the end of the fiscal year. At the same time, Panich was getting advances on his salary.
Earlier this year, the Village of Liberty Board began to suspect some wrongdoing. Village of Liberty Mayor Edward Pankonin ordered the law firm of Gerstman, Kelson, and Coffill to investigate the matter. They did so in conjunction with HUD.
“I was sent a copy of the annual report, and I was shocked by the numbers,” Pankonin stated. “I wanted more information, and I was told it was none of my business. That was when [attorney] Randy [Coffill] got involved.”
FOIL requests were made, and information was gathered. As the investigation continued, significant changes were made to the Housing Authority Board. All but one member was removed by the village board. The new Housing Authority Board includes Pankonin as a member, since the village board now requires a member of their board serve on the housing board. The auditors were also changed, and an attorney was assigned to the board.
“This is not something we are happy about – we did what had to be done,” commented Pankonin. “The board had a lack of definition and direction. It was a problem that was not addressed over the years. The program has now been stabilized.”
Panich recently submitted his letter of resignation, effective December 31. He stated he did so because “he felt uncomfortable,” although he paid back $21,201.08 on May 16. He had owed $22,697, but the difference had already been garnished from his wages.
Only the interest, estimated at $4,000-$5,000, is still owed. Panich anticipates that will be paid back by the end of the year (he’s already paid about $3,600).
“If I could do it again, I would have spoken to an attorney, not the auditors,” Panich said. “It is my own stupidity. I am deeply remorseful, ashamed, and humiliated. I am guilty, so I will pay the price.”
However, when contacted by the Democrat, Anna Niemann, a partner in Cooper & Niemann, said Panich “absolutely never contacted us prior to taking any loan out.”
“I’m sure we would not have advised him of anything illegal,” she said yesterday.
Indeed, when the annual fiscal year 2001 audit was completed earlier this year, Niemann wrote to the housing board advising them of the loans and “strongly” recommending a review of such transactions.
It should be noted that the accounting firm has not been charged in any way in this matter.
Panich’s sentencing is scheduled for February 7. He is facing up to ten years in prison, a fine up to $250,000, restitution up to double the amount he embezzled, a $100 court fee, and the possibility of the loss of his professional licenses and livelihood.
Panich continues to operate his insurance business in Liberty.