FINDING TWO DHCR HAS BEEN KNOWINGLY PROVIDING FALSE INFORMATION TO THE LEGISLATURE AND THE PUBLIC ABOUT THE STATUS OF ITS CASE BACKLOG. Background As was noted earlier, DHCR inherited a 104,000-case backlog from its predecessor agencies when it assumed responsibility for the rent stabilization and rent control systems on April 1, 1984. Many of these cases were relatively easy to resolve, and within one year the agency reported that it had reduced the inherited backlog to 35,000 cases. Complaints persisted, however, about how DHCR was operating, the speed with which DHCR was reducing the backlog, and the new backlog which DHCR was accumulating in cases filed subsequent to the State takeover. The concerns prompted the Legislature, at the request of the Senate minority, to provide DHCR with a special $2 million additional appropriation in the 1985-1986 budget to "reduce the rent regulation backlog and aid in the efficient management of the system." The appropriation was contingent upon DHCR submitting a plan to the Legislature for how the agency intended to use the $2 million appropriation to expedite the processing of the case backlog. Such a plan was submitted by the division shortly after the adoption of the budget and projected that by the end of 1986 the backlog would be eliminated, with the exception of some "administratively unresolvable cases." DHCR received the $2 million and went to work. In a February 1986 report to the Legislature, DHCR stated that the backlog had been cut in half and that only 17,000 cases remained. The report also revised DHCR's self imposed timetable for eliminating its inherited workload and promised that with the exception of 3,000 "administratively unresolvable cases," the backlog would be eliminated by September 30th, 1986. Complaints Continue and the Division Responds Despite the rosy picture being painted by DHCR about its success in resolving its case backlog, complaints persisted from legislators, tenants and landlords about the agency's performance. In response, the Division presented the Administration, the Legislature and the public with statistics which seemingly demonstrated that DHCR was doing an efficient job. Data on the speed with which DHCR was reducing its inherited case backlog were given particular prominence in reports to the Legislature and the public about how the rent regulatory system was working. The reports contradicted the increasingly common public perception that DHCR was not doing its job properly. To charges that telephones were not answered, cases were taking years to process, files and records were being lost and the agency was in a state of disarray, the Division responded in its reports with numbers -- thousands of new cases processed, hundreds of thousands of apartments registered and the inherited backlog almost gone. DHCR, by its February 1986 report to the Legislature, was revising its own processing projections upwards and claiming that the rent regulation system's administration was at peak efficiency. As Commissioner Eimicke summarized the situation: "Overall the performance of DHCR has been outstanding." Unfortunately, things at DHCR's processing units were not going anywhere near as well as the projections which had been made by the division's managers. In the trenches, DHCR was finding it impossible to efficiently process the tens of thousands of cases it had to resolve in order to keep the promises DHCR officials were making. In particular, DHCR was finding it impossible to meet the projection it considered to be the cornerstone of all its claims of administrative efficiency, the September 30th, 1986 deadline it had imposed on itself for eliminating the inherited case backlog. To bridge the gap between projections and reality, DHCR apparently embarked on two improper courses of action. First, as documented in this section, the agency began providing false information to the Legislature and the public about how many cases it had left to process. Secondly, as detailed in the following finding, DHCR began to ignore the law and its own due process procedures in order to speed up the processing of the backlog cases which actually remained. Fudging the Numbers DHCR reported to the Legislature in the fall of 1986 that the backlog had been reduced to 1,232 cases. In an appearance before the joint legislative fiscal committees on February 9th, 1987, Commissioner Eimicke testified: "In terms of rent regulation, I'm proud to say that we've resolved the entire backlog that we inherited from the CAB. There are only 1,000 rather complicated legal cases remaining from that backlog." At the Assembly's public hearings on March 6th, 1987 Commissioner Eimicke testified under oath that: "When we last reported to you in the Legislature in February of 1986 on the status of the backlog, we had 17,357 cases then still pending. At the end of this month last completed, February 28th, '87, there were less than 1,000 cases remaining from the initial backlog." The following week, however, DHCR employees and officials responsible for processing the backlog, testifying under oath, presented dramatically different information. Rent examiner Elliot Vizansky testified that he processed about two backlog cases a day, that there were about 35 people in his office doing such work and that they had been processing such cases since October of 1986, when Commissioner Eimicke had stated the backlog had been eliminated. A quick calculation showed that if Vizansky's testimony was accurate, thousands of backlog cases actually remained at the time Eimicke had told the Legislature that the backlog had been eliminated. Vizansky also noted that he presently had 40 backlog cases to process and that additional cases were in storage. Rent examiner Elsie Carney, who had recently been transferred out of the backlog unit, corroborated Vizansky's testimony and stated that she had worked full time processing backlog cases subsequent to the time Eimicke had claimed the backlog had been eliminated. The Deputy Director of the Backlog Unit, Gene Kelly, testified that although he did not have precise figures, he estimated that there were 5,000 to 6,000 backlog cases remaining in March of 1987 and that there had been an additional one to two thousand pending in October of 1986. Backlog Unit Director Joseph Cordero testified that there were presently 7,500 cases remaining from the inherited backlog. He also stated that he had been keeping Deputy Commissioner Manuel Mirabal (the DHCR official in charge of administering the rent regulatory system) apprised of the status of the case backlog on a regular basis. Truth or Consequences? Following the sworn testimony of these DHCR officials and employees, Deputy Commissioner Mirabal admitted that the information which had been provided to the Legislature and the public about the case backlog had omitted approximately 10,000 cases. According to the March 22, 1987 edition of New York Newsday "(Commissioner) Eimicke said Mirabal never told him about the other cases." Thus, the official agency position apparently is that everyone at DHCR but Commissioner Eimicke knew how many cases were left to process. Written memorandum from Deputy Commissioner Mirabal to Commissioner Eimicke on the status of the case backlog, however, stated that there were backlog cases in addition to the ones which DHCR had been reporting to the Legislature. On September 4th, 1986, Mirabal wrote to Eimicke that: "[S]ome cases over the number counted in the statistical reports to the Legislature back in June of 1984, were added to the workload during the fall of 1984 and have been in the backlog file room since then." On October 7th, 1986, Mirabal wrote to Eimicke that, since the backlog which had been reported to the Legislature had been largely resolved, the backlog unit would "work on those cases that we have been carrying in the backlog workload but which were never included in the reports to the Legislature." Given the facts presented in sworn testimony and the documentation described above, one would have to construct a fantastic scenario to believe DHCR's assertion that Commissioner Eimicke never knew there were far more cases left to process than DHCR had reported to the Legislature. First, one would have to accept the proposition that Commissioner Eimicke does not read important memorandum from his direct subordinates. Even more improbable, one would have to believe that Deputy Commissioner Mirabal, who had no hesitation about telling Commissioner Eimicke the truth about the backlog in two written reports, lied to him about the same issue in every other communication he had with him. DHCR's official position would support the conclusion that Mirabal and other DHCR officials deliberately prepared false testimony for presentation by the Commissioner, sat with him at budget hearings while he delivered such false information, allowed him to swear, under oath, that information they knew was inaccurate was correct and never told him that the numbers he was giving out were wrong. Essentially, DHCR's position is that with the exception of the two memos noted above, there was a mass conspiracy of silence at DHCR -- everyone at the Division knew how many cases there were but collectively decided to keep the figures secret from Commissioner Eimicke. If this is true, Deputy Commissioner Mirabal and other DHCR officials are guilty of serious misconduct in the performance of their duties. But there may be a simpler explanation -- that Commissioner Eimicke knew the numbers were wrong all along and decided to present them anyway in order to meet his self-imposed deadline for resolving the case backlog. It would not be the first time that an agency headed by Commissioner Eimicke improperly overstated its statistics in order to disguise inefficiency. In a highly critical audit in 1982, the New York City Comptroller found that the Office of Property Management (OPM), headed by then Deputy Commissioner Eimicke, had improperly overstated the rent collection rates of HPD's "In Rem" program in order to present a misleading picture of the Department's efficiency in collecting rental payments. The City's In Rem program is responsible for managing buildings which the City has taken over because of owner failure to pay City property taxes. The rent collection rates in the program are important because they are used by the Mayor's office and other agencies to gauge program efficiency. The Comptroller's audit presented a number of examples of statistics reflecting "inappropriate adjustments and arbitrary calculations" to exaggerate the effectiveness of OPM's central management program. The audit concluded that the agency: "arbitrarily inflates its adjustments to the total amount of rent billed when the actual rate of collection falls too far below the projected goal." This is precisely the same type of deliberately inflated adjustment which might account for the false information provided by DHCR about the size of its outstanding case backlog and the speed with which it is being resolved.