Whistleblower claims state Employment Security Commissioner manipulated system

CONCORD – Employment Security Commissioner Tara Reardon had her daughter hired for a part-time summer job and ordered a subordinate to lay her off so she could collect unemployment benefits according to a whistleblower complaint The Telegraph has obtained.

Executive Councilor David Wheeler, R-Milford, said Attorney General Michael Delaney informed him Tuesday that Reardon has agreed to resign her job at the end of next month.

The state Executive Council has been discussing this for the past few months in nonpublic session and it plans to meet again Wednesday to talk about it.

“This is a matter the governor will be discussing with councilors and the attorney general at tomorrow’s meeting,” Press Secretary Colin Manning said late Tuesday.

Wheeler believes the punishment should be more severe and that Reardon should be suspended without pay immediately.

“I don’t believe this whole matter should be kept quiet. This was a serious breach of ethics if not an outright breaking of state law,” Wheeler said. “This has caused a lot of turmoil and unrest in that agency and sweeping it under the rug doesn’t help one bit.”

The complaint further alleges a daughter of Deputy Commissioner Darrell Gates worked in a part-time role for two years before Gates instructed that she be let go to qualify for the same benefits.

At least one Employment Security employee testified before a grand jury the attorney general’s office had convened in Merrimack County.

“I am not in a position to comment on the matter,” Attorney General Michael Delaney said in a statement.

Reardon and Gates did not respond to requests for comment.

Reardon earns $99,200 a year and holds a five-year term that runs until April 1, 2014.

In the complaint, two co-workers charged Reardon with violating the state’s anti-nepotism law and executive branch ethics rules.

Reardon ordered the agency’s personnel chief to lay off Reardon’s daughter, Whitney Flanders, from a part-time summer internship so Flanders could qualify for unemployment benefits, the complaint alleges.

After leaving the job in August 2011, Whitney Flanders collected $1,010 in unemployment benefits over eight weeks according to the whistleblower complaint.

”I was directed to hire Tara’s daughter and to keep it in complete secrecy,” Human Resources Director Lisa Riccio told The Telegraph during an interview.

Riccio said Reardon asked it be kept quiet so her daughter would not be a target for abuse or questions about favorable treatment.

“She posed it to me like a mother,” said Riccio, who is a single mother. “She was convinced that she wanted it to be kept a secret; she didn’t want her to be disadvantaged at all.

“Then after she left, Whitney called it her fun employment.”

According to state payroll records, Whitney Flanders was paid $2,050 in wages during 2011.

Kelsey Gates earned $9,809 last year and $6,886 in salary during 2010.

Part-time employees are entitled to collect unemployment.

At issue is whether Reardon and Gates violated the anti-nepotism law by directing subordinates to process both daughters as layoffs when the original personnel plan was Kelsey Gates would be fired and Whitney Flanders would quit at the end of her summer internship.

Riccio alleged in August 2011 that Reardon, after hearing of a personnel dispute in the Manchester district office, told her to fire Kelsey Gates to avoid “any further impropriety” in the agency.

According to Riccio, Darrell Gates then told agency officials his daughter would not be terminated.

“Darrell says to me she is not going to go away quietly, she would only go away kicking and screaming,” Riccio said. “So Darrell asks, ‘Why can’t we lay her off like we did all other members of the unit so she can get benefits?’ ”

Kelsey Gates got paid $166 for two weeks of unemployment, according to the complaint.

Reardon immediately moved to get her daughter out of her part-time job, the complaint continues.

“On the same day, Commissioner Reardon instructed her daughter, who had previously notified the department of her intent to resign from her position in the near future, to pack up her belongings and leave that day,” says the complaint.

Riccio said Tara Reardon changed her mind and ordered she be processed as a layoff.

“Her mother first told her get her stuff and leave. That’s a quit,” Riccio said. “They manipulated the system to get their daughter paid. It’s just as simple as that.”

The complaint further states, “However, at Deputy Gates’ suggestion, rather than having Ms. Riccro process Ms. Flanders’ separation as a resignation, Commissioner Reardon instructed her to issue a lay-off notice to Ms. Flanders,” the complaint states. “In this way, Ms. Flanders would not be disqualified from eligibility for unemployment compensation as she would have been.”

Riccio said these actions were hypocritical in an agency that prosecutes anyone who tries illegally to collect jobless benefits.

The moves also came as the agency prepared to face its first sizable layoff in the department in many years. A decline in the number of people filing claims for jobless benefits led to laying off 53 full-time and 19 part-time workers at Employment Security last December.

Concord lawyer Martin Gross played a major role in writing the Executive Branch Ethics Code the Legislature adopted in 2006 at the urging of Gov. Lynch.

This anti-nepotism provision was added three years later and expressly allows relatives to work in state agencies.

It prohibits any executive branch official from “directly” taking part in hiring, firing, setting the pay or supervising a spouse, child, parent, sibling or close relation by marriage.

“The focus on the word directly here really narrows the bite of the statute,” said Gross, a longtime member of the Legislative Ethics Committee.

“Basically I have to think the statute means what it says and it wasn’t intended to ensnare somebody if his or her department happened to hire a relative. Now if you actively participated and played a role in what happened with that employee that could be viewed as a violation.”

A violation of the ethics code amounts to a criminal misdemeanor and could result in other disciplinary action taken against the executive branch official.

In April, Delaney’s office brought the matter of Reardon’s actions to a grand jury sitting in Merrimack County.

No indictments have come forward and grand jury proceedings remain secret until there’s some resolution.

Riccio confirmed she testified on April 20 but did not comment on what she said citing a gag order on the proceedings.

These allegations should come to the surface, Riccio said, even though she fears it could damage her own career in state government.

“People in the department are really appalled about this and want there to be some closure,” Ricco said.

In July 2009, Gov. Lynch nominated and the Executive Council confirmed Reardon, 56, to become commissioner.

Reardon was replacing Richard Brothers, a former Republican state legislator and one-time aide to former Republican Gov. Craig Benson.

A few months earlier, Brothers had quit his job to defend himself against 10 criminal misdemeanor charges that Brothers billed the state mileage $4,000 for trips he hadn’t taken.

In May 2010, a jury in Concord District Court acquitted Brothers on all charges.

Lynch praised Reardon for managing NH Works, a new program the governor promoted that offers incentives for companies to bring on laid-off workers and train them at the workplace.

Reardon also got through the Legislature a comprehensive reform of the way all state companies are taxed to pay for unemployment benefits. This included for some companies the first tax increase in several years.

Major business groups such as the Greater Nashua Chamber of Commerce and Business & Industry Association supported the unemployment tax reform.

An attorney, Reardon served for 14 years in the state House of Representatives before taking the job. At the time she left, Reardon was chairing the House Commerce Committee that considers all business-related legislation.

Her husband, James Bouley, is mayor of Concord and a veteran lobbyist at the Statehouse.

Kevin Landrigan can reached at 321-7040 or klandrigan@nashuatelegraph.com. Also, follow Landrigan on Twitter (@Klandrigan).