NYS Inspector General Tagliafierro Finds OMH Plant Superintendent Wasted $121k in Taxpayer Funds by Grossly Overpaying for Materials That Were Never Used

New York State Inspector General Letizia Tagliafierro today announced that her office’s investigation into the New York State Office of Mental Health (OMH)’s Greater Binghamton Health Center (GBHC) found that its plant superintendent wasted $121,000 in taxpayer funds by grossly overpaying for materials for a duct-cleaning project, taking steps to conceal the purchases, and then never using the products.

Inspector General Tagliafierro’s investigation found that Jeffrey Flansburg, 57, of Binghamton, used a State credit card to purchase materials from vendors – Florida-based Green Earth Supply and its subsidiaries (GES) - at exorbitantly inflated prices while disregarding New York State procurement requirements. To conceal the purchases, Flansburg had the vendor bill the credit card in installments so as not to exceed the card’s discretionary purchasing limit. He also made questionable entries in OMH’s project management system, claiming the completion of work on the project when, in fact, no work on the project was being conducted. In fact, the products he purchased sat in a garage on the edge of GBHC’s campus.

“Mr. Flansburg wasted $121,000 in taxpayer dollars on products that were neither used or needed,” said Inspector General Tagliafierro. “Beyond that, he grossly overpaid nearly $70,000 for the materials. These are serious, egregious abuses of the public’s trust, and OMH must make sure they never happen again.”

As plant superintendent at the Southern Tier mental health facility, Flansburg planned and supervised maintenance, repair, and construction activities. OMH provided Flansburg with a credit card for making purchases pursuant to New York State Finance Law, Office of General Services (OGS) guidelines and OMH’s own procurement policies. When making purchases, state agencies must first determine if a product or service is available from a “Preferred Source,” OGS centralized contract, or agency/multi-agency specific contract. If not, the agency may consider a discretionary purchase, generally under a $50,000 cap. Agencies doing so must document and justify the vendor selected, reasonableness of price, and ensure the purchase is from a responsible vendor. Purchases of more than $50,000 are subject to competitive bidding requirements as well as prior approval from the State Comptroller’s office.

In February 2018, Flansburg submitted a $150,000 funding request to OMH for a multi-building HVAC duct-cleaning project – estimating $100,000 for labor and $50,000 for materials. Before OMH approved the request and despite his own estimate, Flansburg spent $120,769.33 on materials from three Florida-based entities: Green Earth Supply Company; E.F.P., Incorporated; and Kleen Pro Corporation. All three companies have a common principal and are collectively known as Green Earth Supply (GES).

The investigation found that Flansburg grossly overpaid by at least $68,828.50 — more than 100 percent — for these materials. For example:

Flansburg bought 40 bags of Oil-Dri, an absorbent for liquid spills, at a cost of $718.75 per 50-pound bag. A reasonable retail price to pay for this product is $17.34 per bag. OMH ultimately paid $28,750 instead of $693.60, an overpayment of $28,056.40.

Flansburg bought 10 cases of Coil Cleanz, a liquid coil cleaner for HVAC condensers, at a cost of $1,500 per case. A reasonable retail price for similar products is $104.88 per case. OMH ultimately paid $15,000 instead of $1,048.80 — an overpayment of $13,951.20.

Based on other purchased items where accurate retail prices could be found, GES billed approximately $72,200 for products with an estimated retail value of $3,371.50.

To conceal the purchases, Flansburg engaged in several tactics. Although the materials arrived at GBHC in at least four shipments over the course of five months, payments were split over almost 11 months when billed to Flansburg’s credit card. When charges to Flansburg’s credit card neared the monthly limit, he directed subordinates to charge his OMH purchases to their State-issued credit cards instead. His entries in the OMH project management system concealed that work on the duct-cleaning project was not being completed and that materials ordered for the project were not being utilized.

Despite initially testifying to the Inspector General that he solicited three bids to comply with OMH procurement policies and that GES had provided the lowest bid, Flansburg later admitted that he purchased the materials from GES without soliciting any bids. Flansburg also admitted that while the materials were billed under the duct-cleaning project, some of the materials were intended for general use at GBHC. In fact, the materials were never used on the project. Instead, they were stored on pallets in a rarely used, unheated garage on the edge of GBHC’s campus.

Based on the Inspector General’s findings, OMH is taking disciplinary action against Flansburg. In addition, Inspector General Tagliafierro recommends that OMH:

Implement greater controls over its purchasing and project monitoring and train its employees on the same.

Scrutinize credit card purchases for improper purchases, inflated pricing, and improperly structured billing arrangements.

Regularly audit purchases made by holders of State-assigned credit cards. 

Remind staff of proper procurement procedures and appropriate vendor contact and ensure such guidance is given to all new employees upon receipt of a State credit card. 

Issue clear criteria regarding project management system update entries, defining what actions constitute partial, substantial, and project completion. 

Require that employees making entries in the project management system certify that their entries are truthful and accurate.

Review its issuance of State credit cards to employees and the spending limits on those cards. 

OMH has agreed to implement these recommendations. The Inspector General thanked OMH for referring the matter to her office and for cooperating with the investigation.

Flansburg is currently on administrative leave from OMH. The findings regarding Flansburg and GES have been provided to the Joint Commission on Public Ethics (JCOPE) for possible violations of New York State Public Officers Law and the Lobbying Act, as well as to OSC and OGS regarding GES and its owner, Lori Brennan, for their review.

The report, “Investigation of the New York State Office of Mental Health Greater Binghamton Health Center,” is available online.

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