BUFFALO, NY - Some Erie County legislators are raising concerns about how a law firm was hired to handle a case against two mortgage giants. Last month, the county filed a lawsuit against Fannie Mae and Freddie Mac, both owned by the federal government, for allegedly not paying local excise taxes.
Now, lawmakers who were skeptical of the deal say it's not transparent.
The concern among a group of lawmakers has to do with Cantor, Lukasik, Dolce and Panepinto. It was hired with no bidding process and according to the county, a bidding process was not needed. From a letter circulated among lawmakers, legislators Ed Rath, Joseph Lorigo and Lynne Dixon are still uncomfortable with the hire.
"I just think it's the right thing to do, it's not a requirement, you're absolutely correct on that, but I think it's the right thing to do, especially when you're talking about potentially millions of dollars," said Dixon, an independent.
The county says that it could get more than $2 million in tax income, if it's successful in the suit. The county is battling with Fannie Mae and Freddie Mac over whether the corporations should have to pay excise taxes on thousands of mortgages in Erie County. Officials locally say the payments need to be made because the two corporations are publicly traded. Fannie and Freddie say the payments shouldn't be made because they're owned by the government and should be exempt.
"I feel confident that they'll do a good job for us and that this is not a political favor," said Erie County executive Mark Poloncarz.
It turns out that the law firm has been a financial contributor to Poloncarz from 2009 to 2012. According to disclosure reports, filed by the county executive, Marc Panepinto, a partner at the law firm has given $1,700 in total. And in 2011, a wage payment of $432 was made from Poloncarz to the Panepinto residence.
2 On Your Side's Jeff Preval questioned Poloncarz about the contributions.
"I would not be surprised to see some of those same Republicans who are criticizing me, accepting money from law firms that are doing work on behalf of Erie County, but they're not critical of those law firms, because donating to them, this is a political attack, that's all it is. Attorneys have the right to donate to whomever they choose, " said Poloncarz.
"If those financial contributions were made and they were still the best firm, to handle this then so be it, but I do think we at least need to have that discussion," said Dixon.
Opponents are also skeptical of the firm's qualifications. Its website says it defends mostly against wrongful death, labor and accident-related cases. It doesn't say anything about housing or mortgage law.
Legislators want the county executive to come before lawmakers to explain this no-bid contract.
Polancarz tells 2 On Your Side that the firm signed a contingency agreement, which means, the county doesn't pay anything to the firm if the lawsuit is unsuccessful. However if they're successful, the firm would make hundreds of thousands of dollars.