Statement of Neil V. Getnick About the Implementation of Local Law 50, Which Regulates Activities at the Fulton Fish Market

I am Neil Getnick, managing partner of the New York City law firm Getnick & Getnick LLP. We practice in the areas of commercial counselling and litigation, with a particular focus on civil prosecution, the use of civil remedies to combat commercial fraud and related criminal conduct.

Since 1991, I have chaired the New York State Bar Association Commercial and Federal Litigation Section Civil Prosecution Committee. Since 1994, I have served as the President of the International Association of Independent Private Sector Inspectors General. I am speaking to you today in an individual, not representative, capacity.

Eighteen months ago, I testified before the City Council in support of Mayor Giuliani’s legislation to regulate and reform the Fulton Fish Market. I argued that the regulatory and administrative framework proposed in the legislation responded effectively to the need to reform the market’s corrupted business environment and acknowledged that these problems would not be addressed merely by short-term solutions for individual corrupt acts. The plan promised an enduring structural solution to entrenched corruption, complementing existing criminal and civil prosecutions targeting bad actors and the profits of their activities. The plan’s administrative management structure would prevent corrupt business activity by prequalifying firms seeking to do business at the market and by monitoring their ongoing activity to guard against the reappearance of the same problems.

The passage of time since this corruption control strategy was implemented in the market has seen the methodical erosion of organized crime influence and the rebirth of honest and competitive business practices. Through vigorous enforcement by the City of the legislation’s licensing and registration procedures, corrupt wholesale dealers and companies providing security and parking spaces for retailers and restaurateurs have been evicted; the Market’s garbage hauling costs have been halved by replacing an indicted carting company that previously serviced the market with the national waste-hauler Browning Ferris Industries; and an exclusive license has been granted to a prequalified unloading company following the ouster of six companies found by the City to have exercised control over the movement of seafood at the market through a system of mob-dominated extortion and kickbacks.

The legislation and its implementation have withstood challenges in the courts both at the federal and state level. A federal court in July this year refused to entertain a constitutional challenge to the legislation, Judge Thomas P. Griesa noting that “the action was entirely without merit.” The Judge held that “[i]t would be detrimental in the extreme for the federal court to meddle into the efforts of the City to carry out a coherent policy of law enforcement in the Fulton Fish Market.” It is “clear beyond question,” he said, that the findings of the City Council in enacting the legislation “were justified with regard to the need for combating crime in the Fulton Fish Market.” (The Committee to Save the Fulton Fish Market Inc., v. City of New York, 1996 U.S. Dist. LEXIS 9297, at *6-7 (S.D.N.Y. July 3, 1996))

In State Supreme Court, also in July this year, Justice Phyllis B. Gangel-Jacob refused to overturn a decision by the Department of Business services to deny a license to load fish to Joseph Macario, whom the City alleged in affidavits was an associate of the Genovese crime family. In Farrington Fish Receiving Zone Inc. v. Washington, N.Y.L.J., Aug. 1, 1996, at 23-4 (N.Y. Sup. Ct. July 30, 1996), Justice Gangel-Jacob declined to substitute her judgement for that of the Commissioner and continued: “In any event, the record reveals that Macario’s loyalty lies not with the City’s efforts to remedy conditions at the Fulton Fish Market but rather with the `Old Guard’s’ domination of the market.”

The challenge now faced by the City is to establish a means of ensuring that the achievements of the past several months are preserved for the future without the need for continuing government scrutiny. A means of achieving this objective within the present system is the Independent Private Sector Inspector General, a highly developed monitoring mechanism.

The Independent Private Sector Inspector General (“IPSIG”) is a state-of-the-art monitoring mechanism that was developed by a working group of public and private sector attorneys, investigators and accountants in New York. An IPSIG is an independent, private sector firm with legal, auditing, investigative, and loss prevention skills, hired and paid for by an company to ensure compliance with relevant laws and regulations and to deter, prevent, uncover, and report unethical and illegal conduct by, within and against the organization. An IPSIG in this context would report its findings to the City independently of the monitored company.

The IPSIG approach is increasingly favored by City agencies faced with pervasive and entrenched corruption. The Inspector General of the City’s School Construction Authority has an established monitoring program under which particular firms wishing to do business with the Authority may be required to hire an IPSIG or like entity. A similar approach was taken in the legislation passed earlier this year aimed at reforming the City’s commercial carting industry. In November this year, the administration of Dade County, Florida, created a pool of IPSIGs to help restore public confidence in a local government confronted with a huge budget deficit and plagued by allegations of fraud, corruption and mismanagement.

An IPSIG monitoring program at the market would complement the licensing, registration and prequalification system by providing targeted oversight for particular entities to ensure the maintenance of honest business practices on a continuing basis.

The implementation of the Fulton Fish Market legislation has advanced the Mayor’s pro-business agenda for New York City. The City’s effort should be applauded as another milestone in its ongoing campaign to improve the bottom line for the City’s business and consumers by restoring and maintaining honest business practices in industries long infiltrated by organized crime and corruption.