An open DSS audit was nixed, and a grand jury is investigating

 Dave Altimari and Andrew Brown

A federal grand jury that began investigating state school construction grants has more recently focused on a day in May 2020 when Konstantinos Diamantis personally helped deliver a $600,000 check to the state Department of Social Services’ audit division from a Bristol doctor who admitted to overbilling Medicaid. 

According to records subpoenaed by the grand jury and obtained by The Connecticut Mirror through a Freedom of Information Act request to DSS, the agency agreed to cancel an “open audit” of the provider after Diamantis, who at the time was deputy secretary of the Office of Policy and Management, helped deliver the check. 

The doctor — Helen Zervas, of Family Eye Care — is the fiancée of former state Rep. Christopher Ziogas, a Bristol lawmaker who is related to Diamantis and who accompanied him on the May 12, 2020 trip to DSS headquarters. 

Zervas had acknowledged, through a letter to DSS from her attorney, that her practice was paid for procedures it never performed.

It’s not clear if cancellation of the audit could have violated DSS policy. While Medicaid providers — whether they are doctors, dentists or optometrists — can self-disclose overpayments that they received through the government insurance program, DSS policy states: “Matters related to an on-going audit/investigation of the provider are not generally eligible for resolution under the self-disclosure protocol.”

The grand jury has recently shown interest in activities at DSS. Officials at DSS received three subpoenas since June seeking the emails and phone records of at least five people who work for the agency, according to documents obtained by the CT Mirror. The subpoenas also requested key card scan records of anyone who entered the agency’s offices at 55 Farmington Ave. in Hartford from January through May of 2020.

A fourth subpoena was sent to the Office of Legislative Management in October 2023 seeking all of Ziogas’ emails over that same period.

Ziogas and Diamantis have known each other for some time. Ziogas, who left the legislature in January 2023 after not seeking a fourth term, is a lawyer — whose license is currently suspended — who represented Diamantis’ daughter, Anastasia, when she was interviewed by attorney Stanley Twardy in late 2021 or early 2022 about how she got a job at then-Chief State’s Attorney Richard Colangelo’s office. Twardy had been hired by Gov. Ned Lamont to conduct an independent investigation into how Anastasia Diamantis got the job in Colangelo’s office after concerns were raised about Colangelo’s motives for hiring her. 

Colangelo resigned after Twardy’s report showed that he hired Diamantis’ daughter at the same time he was lobbying the Office of Police and Management, where Diamantis was the deputy secretary, to get raises for some prosecutors, including himself. 

Ziogas acknowledged in an interview at his Bristol home last week that Zervas is his fiancée and that he is aware of the federal investigation. 

“They can look at whatever they want. I’ve got nothing to hide,” Ziogas said.

Diamantis said he did not intervene in the audit or the settlement of Zervas’ Medicaid payment. 

“Over a period of months, the parties independently negotiated a settlement to resolve audit findings” conducted by the provider, Diamantis said in a statement to the CT Mirror.

“On behalf of a friend, I, during the height of the pandemic when state agencies were ghost towns, arranged for the delivery of the settlement check, which represented a large sum of money owed to the State,” Diamantis added. “There was concern that if the check was mailed it could be lost or languished due to the pandemic and reduced staff.” 

The state had limited mail delivery during the early months of the pandemic because the governor ordered non-essential personnel to work from home.

U.S. Attorney spokesman Thomas Carson would not comment Thursday on the subpoenas or the status of the grand jury investigation. DSS spokesman Jalmar DeDios said because “there is an ongoing investigation DSS will defer to the Office of the Governor.” Lamont’s spokeswoman Julia Bergman said last week that his office would have no comment.

A $599,810 negotiation

Records obtained by CT Mirror show that the grand jury specifically requested the emails of two DSS employees for May 12, 2020, the same day that Diamantis and Ziogas delivered the check.

The check and all of the emails turned over to the grand jury have been partially redacted at the request of the U.S. Attorney’s office because it is an ongoing investigation. Shipman and Goodwin, a Hartford-based law firm, was hired by the governor’s general counsel, Natalie Braswell, to oversee the state’s response to any federal subpoenas.

But officials at DSS, at the CT Mirror’s request, turned over an unredacted copy of the check.

Multiple sources have confirmed that the emails discuss a payment to the DSS Office of Quality Assurance Unit, which conducts audits of all medical providers that receive Medicaid payments from DSS. The unit was overseen at that time by John McCormick, who retired in 2022 after more than 24 years as a state employee.

Family Eye Care had been notified on January 6, 2020 that DSS was going to audit its Medicaid billing records from Sept. 23, 2017 through Sept. 22, 2019, according to a letter from attorney Jody Erdfarb, who was representing Family Eye Care.

Once DSS received the check from Family Eye Care, the agency agreed to cancel the open audit.

Records show the check was to repay the state for “Medicaid services that were not performed.

It is unclear if DSS independently determined the value of the overpayments.

McCormick acknowledged he has been interviewed by federal authorities when questioned recently by a CT Mirror reporter at his home, but he declined further comment after calling his attorney, Steve Manning, a former federal prosecutor.

Manning declined to comment when asked if McCormick has appeared before the grand jury or been interviewed by FBI agents. 

The emails show that negotiations about the overbilling of Medicaid funds began on March 4, 2020, when Erdfarb emailed DSS about the state’s payment.

Erdfarb wrote that her office was still investigating the provider’s records but had determined that Family Eye Care was paid $599,810 for procedures it never performed. 

Erdfarb wrote that the “provider is prepared to repay this amount forthwith.”

The emails indicate that Erdfarb and the DSS employee finalized an agreement during a phone call on May 1. Three days later, Erdfarb emailed the DSS employee to say the provider would repay the money by May 15.

On May 5, the DSS employee emailed then-DSS Commissioner Deidre Gifford proposing the agency “accept a lump sum payment of $599,810. We will cancel the open audit and the provider will have a billing consultant review weekly billings for one year.”

There is no indication in the records obtained by the CT Mirror that Gifford responded to that email. Gifford declined to comment when asked whether she approved the cancellation of the audit.

On May 6, Erdfarb summarized the agreement in a letter to DSS and stated that Family Eye Care discovered the overpayment after receiving the Jan. 6 notice.

“In reviewing its records in preparation for the audit, [redacted] discovered that it was paid by the Medicaid program for services that were not performed,” Erdfarb wrote.

Erdfarb wrote that she attached a spreadsheet describing the medical billing codes and when they were billed.

In addition to repaying the $599,810, Family Eye Care hired a consultant, VantagePoint, “to assist the practice with billing, coding, and documentation,” Erdfarb wrote.

“We understand, based on our discussion, that the scheduled Department audit of [redacted] will be canceled,” Erdfarb wrote.

On May 12, starting at 10:42 a.m., a series of emails were exchanged among employees at OPM and DSS about Diamantis delivering the check. The names of the employees were redacted.

“Deputy Secretary Diamantis is actually headed that way now to hand deliver a sizable check from a constituent,” the first email from the OPM employee said.

The OPM employee asked for a phone number Diamantis could call when he arrived at DSS.

At 11:22 a.m. the same day, a DSS employee sent an email to four people, including Diamantis, that said “Deputy Secretary Konstantinos of OPM just brought over a check” that would be deposited two days later.

A trail of subpoenas

The grand jury started looking into Zervas and the audit in November 2022 with a subpoena to John Jakubowski, who replaced McCormick as director of the DSS Quality Assurance Unit, seeking all communications and calendar records of a DSS employee, whose name was redacted, for a five-month period at the beginning of 2020.

Prior to that, the grand jury subpoenas had focused on several municipal school building projects and the state Office of School Construction Grants & Review, which was overseen by Diamantis. 

The scope of the investigation broadened quickly. The grand jury issued subpoenas in October 2021 seeking records of several school projects involving D’Amato Construction, a Bristol contractor that received a no-bid school construction job in Tolland, and Construction Advocacy Professionals, a construction management firm that had hired Anastasia Diamantis after getting several school contracts. The subpoenas also sought all of Diamantis’ emails, as well as those of employees on the OSCG&R team.

The grand jury sent a second subpoena on the DSS audit issue in March 2023 seeking records of persons entering or exiting the building between March 1 and May 15, 2020. That subpoena also sought phone records and messages, including missed call notifications, from April 1 through May 31, 2020, of at least one DSS employee.

Diamantis’ name does not show up on the list as either having scanned into the building or signed the log in sheet on May 12, according to records reviewed by the CT Mirror.

Erdfarb did log into the building on March 5 to visit the floor where DSS’ Quality Assurance Unit is located, records show, one day after her initial email to the unit about the overpayment.

Erdfarb did not respond to requests for comment.

The grand jury search narrowed

The grand jury continued to narrow its search last June, specifically asking for communications between two employees on May 12, 2020, the day Diamantis dropped off the check.

The June subpoena also sought all the emails of a DSS employee from April 1 through May 31, all of Diamantis’ emails from Jan. 1 through May 3, and the emails of five DSS employees in that time period that mentioned “Kosta” or “Diamantis” or “Konstantinos.”

The subpoena seeking Ziogas’ emails and any attachments went to OLM on Oct. 3. It is unclear what documents state officials turned over to the grand jury from that subpoena.

The grand jury issued another subpoena in early October 2023 seeking “all available records of incoming and outgoing telephone calls to/from the office telephone numbers” for four state employees.

In his February 2022 report, Twardy referred to Ziogas as a relative of the Diamantis family but did not specify how they are related.

Ziogas accompanied Anastasia Diamantis to an interview with Twardy during his investigation, even though his law license had been suspended for failure to pay the client security fund fee, according to Twardy’s report.

At a legislative hearing held in March 2022 regarding the school construction grant program with Department of Administrative Services officials, Ziogas defended Diamantis.

“I just wanted to remind the panel that nobody’s been found guilty of anything yet,” Ziogas said. “And we’re talking about reforms and making aspersions on people as to what might have gone wrong, when nothing’s been demonstrated as actually gone wrong.”

Brian Gioiele

SHELTON — Construction of the Constitution Boulevard West extension will continue in earnest come spring, with the first phase of development expected to be completed by the fall, according to city officials. 

Mike Kanios, the city’s public works director, said work on the site, which began about a year ago, has slowed of late mainly due to delays in receiving permitting from the Department of Transportation. 

“Once we get that permit, people will see work begin," Kanios said. "We will be connecting onto Bridgeport Avenue, and we will begin work on drainage, water, sanitary with utilities to follow. 

“I fully expect that once we hit spring, we will be in full construction mode,” Kanios added. 

The Constitution Boulevard West extension — long just a concept on paper — will allow development of the nearly 70 acres known as the Mas property, which has long been landlocked. The city has already agreed to sell portions to various companies, including Bigelow Tea. 

The city received $5 million from the state to complete Phase One of the project, which is already underway. That calls for the connection from Bridgeport Avenue, including the lowering of Cots Street by 8 to 10 feet to meet this roadway, to the Mas property. 

Phase Two is the roadway work through the Mas property. 

Kanios said the goal is to have Phase One done by the fall but added that some Phase Two work will likely be done during this time too. Kanios said he expects the entire project to be completed by spring of 2025. 

While stating that costs can fluctuate, Kanios said he believed the $5 million grant would more than cover phase one of the project. 

“This project received state funding because of its regional impact,” Kanios said. “This will not just be a benefit to the city.” 

Mayor Mark Lauretti began the push to develop the property about three years ago and he expects it to bring long-term financial benefits to the city. 

“The initial benefit is the sale of the land,” Lauretti has said. “We paid $600,000 (in 1996) for the land, and it is probably going to bring in $6 million." 

But the land's price is a minor part of the picture, Lauretti said, adding that the more important thing is the tax revenue development would bring in for the next 40 years. 

While the city purchased the Mas property from the FDIC in 1996, it was not until about three years ago that Lauretti presented a vision to the Planning and Zoning Commission for developing the site into a manufacturing hub for the region. 

For more than a year, Lauretti said the city was able to reach deals to sell off all the property. The buyer list is headed by Bigelow Tea, which agreed to purchase 25 acres of the property for an estimated $2.1 million for its future expansion.  

The price for the land ranges from $85,000 to $125,000 per acre to various groups for use in industrial and retail capacities.  

The initial two phases of road development are also a step toward connecting Shelton Avenue to Route 8, which is expected to relieve traffic downtown and in Huntington Center. 

Lauretti said the remaining portion of the extension is also on the agenda, with talks underway with the state to obtain an additional $3 million for that work. 

State Rep. Jason Perillo, who along with Lauretti, fellow state Rep. Ben McGorty and state Sen. Kevin Kelly, were instrumental in obtaining the $5 million state grant, said talks are underway to obtain state money to complete the road. 

“The road extension will bring jobs and tax revenue to the city and the state," Perillo said. "I expect that the governor’s office will want to see a financial commitment from the city, and I don’t think that’s unreasonable.” 

100,000-sq.-ft. industrial building proposed in Middletown

Hanna Snyder Gambini

AConnecticut-based development company is looking to build a nearly 100,000-square-foot industrial building in Middletown.

Gary Dayharsh, of Cromwell-based Delta Building Corp., has applied to the Middletown Inland Wetlands Agency and Planning and Zoning Commission with plans for a 99,000-square-foot industrial building with warehouse and office space, and room for potential expansion, on the vacant parcels at 0 Middle St. and Bell Street.

Property owner Ted Cwiertniewicz, president of Middle Street Middletown LLC, has authorized Delta to file the applications, according to city land use documents. LeConche Realty LLC and architects Krantzert Jones and Associates are also part of the development team.

The application will go for a public hearing in March.

According to its website, Delta has several development projects throughout Connecticut, including aviation hangars in Windsor Locks, Danbury and Groton; manufacturing buildings and distribution warehouses in Newington, Plainville, Windsor, Southington, Berlin, Cheshire and Middletown; along with numerous commercial, retail and recreational centers.