Manhattan District Attorney Robert M. Morgenthau announced today the guilty pleas of JOHANNA (Jody) HALL, the former Special Deputy Superintendent of the New York Liquidation Bureau (“NYLB”), and her husband, JAMES HALL, for their roles in steering a contract to an architectural design firm that previously employed the husband. JOHANNA HALL also pleaded guilty to having the NYLB pay the salary and travel expenses of a NYLB employee who acted as a babysitter for her three children during a trip to Disney World.

JOHANNA HALL was the Special Deputy Superintendent of the NYLB from August 2005 until August 2006, when she was fired. The Special Deputy Superintendent is appointed by the New York State Superintendent of Insurance and acts as the court appointed receiver of impaired or insolvent insurance companies. In that capacity, the Special Deputy Superintendent seeks to maximize assets and resolve liabilities, return rehabilitated companies to the marketplace or distribute the proceeds of insolvent insurance companies to their creditors. 

The investigation revealed that in May 2006, while JOHANNA HALL was working for the NYLB, she and her husband, JAMES HALL, engaged in a scheme to defraud the NYLB. The Liquidation Bureau had conducted a competitive bidding process to find a vendor to perform space planning and design work. Shortly after sealed bids were received from four vendors participating in the competitive bidding process, JOHANNA HALL directed a Liquidation Bureau employee to have the Liquidation Bureau award the contract to an architectural firm known as MB Shapes and Forms, which had previously employed her husband. JAMES HALL had training in architectural design, but was not working at the time.

MB Shapes and Forms was not one of the four vendors that had participated in the competitive bidding process. Upon learning that another one of his former employers did not place a bid, JAMES HALL approached the principals of MB Shapes and Forms, after the bid opening, seeking to have MB Shapes and Forms submit a bid. Pursuant to this plan, JAMES HALL and MB Shapes and Forms entered into a written agreement in which JAMES HALL would receive 60 percent of the contract price after expenses, if they were awarded the contract.

MB Shapes and Forms subsequently submitted a proposal to the NYLB in an amount of $260,016. That proposal was dated prior to the bid opening, even though the proposal was sent to the NYLB after the bid opening. JAMES HALL was aware that the proposal had been back dated. JOHANNA HALL assisted in the scheme by directing a NYLB employee to disregard the four legitimate bids that had actually been received by the date they were due and instead awarded the space planning contract to MB Shapes and Forms. JOHANNA HALL directed that same NYLB employee to falsify NYLB records to make it appear as if MB Shapes and Forms had been one of the original bidders that participated in the competitive bidding process. As a result, MB Shapes and Forms was awarded the contract.

In July 2006, in accordance with the contract, the NYLB paid MB Shapes and Forms $27,139.14. Before MB Shapes and Forms paid JAMES HALL his share of the initial payment, JOHANNA HALL enlisted her adopted foster brother to help hide JAMES HALL’S relationship with MB Shapes and Forms.  As a result, MB Shapes and Forms issued JAMES HALL his share of the payment, which was $8,000, in the form of a check payable to JOHANNA HALL’S adopted foster brother. The adopted foster brother picked up the check from JOHANNA HALL, cashed it, and then gave $8,000 in cash to JAMES HALL.

In addition, in March 2006, when JOHANNA HALL was employed by the NYLB, she traveled to Orlando, Florida to attend the National Association of Insurance Commissioners (“NAIC”) conference. She directed the NYLB Legal Department to hire a personal friend as a messenger/paralegal at a salary of $75,000 per year. This friend had babysat the Halls’ children on numerous occasions prior to being hired by the NYLB.

Less than three weeks after the hiring, JOHANNA HALL traveled with JAMES HALL, their three young children, and this friend, who was now a NYLB employee, to a conference of the NAIC, which was held in a hotel in Disney World in Orlando, Florida. Her friend was not registered for the conference and performed little or no work on NYLB business during the trip. Instead, the friend spent her days with JAMES HALL and the children at the Disney World parks while JOHANNA HALL attended the conference and other business meetings. The cost to the NYLB for the friend to go on this trip, including her salary, lodging, airfare and other expenses amounted to $3,641.14.

JOHANNA HALL pleaded guilty to Grand Larceny in the Third Degree and Scheme to Defraud in the Second Degree. JAMES HALL pleaded guilty to Scheme to Defraud in the Second Degree in New York State Supreme Court, Part 52. Under the terms of the plea, JOHANNA HALL will pay $3,641.14 in restitution and $8,000 in forfeiture, and will be sentenced to five years probation.  JAMES HALL will be sentenced to three years probation and will be jointly liable with JOHANNA HALL for the $8,000 in forfeiture. 

Assistant District Attorney Daniel Cort, Deputy Bureau Chief of the Rackets Bureau, and Assistant District Attorneys Vanessa Richards and Cesar de Castro, prosecuted the case under the supervision of Rackets Bureau Chief Eric Seidel and Investigation Division Chief Patrick Dugan. Investigator Brendan Kenney assisted in the investigation under the supervision of Investigations Bureau Chief Joseph Pennisi.

Defendants’ Information:
JOHANNA HALL
DOB: 03/11/1965
229 Utter Avenue
Staten Island, NY
 
JAMES HALL
DOB: 07/28/1965
229 Utter Avenue
Staten Island, NY

 

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