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It's a bitter breakup as Caputo, Water Authority part ways

The Democratic takeover of the Erie County Water Authority has triggered a messy breakup with the public relations firm that toiled to protect the agency's image while in Republican hands.

The firm, Zeppelin Communications, is owned by Michael R. Caputo, a Republican political strategist who says the Water Authority's new regime is withholding his firm's latest check for no good reason.

The Water Authority recently told Caputo in a letter that his firm's monthly invoices over the last three years were vague. It's asking Caputo to go back and insert the details that justified a rate of $5,000 a month.

The Water Authority, for example, wants details about telephone calls, meetings and other duties that Caputo or his assistant included on bills. The letter hints that the Water Authority might take action against Zeppelin if Caputo doesn't comply.

The dispute illustrates how the Water Authority serves as a party asset, with certain contracts and jobs going to those in good stead with the political leadership. Saying goodbye to Caputo is one of a number of shifts expected as the Democrats place their chosen ones into key slots over the coming days and weeks.

Knowing Democrats would take control of the Water Authority in May of this year, Caputo on May 1 sent a letter saying he would end the contract May 31, three months before it would have expired. "It has been a pleasure to work with the highly qualified professionals at the Authority," he wrote. "It's an experience that we appreciate and will never forget."

Caputo's letter was dated two days before the Water Authority's new governing board – two Democrats and one Republican – voted on May 3 to dismiss Zeppelin Communications, giving it 30 days notice that the contract would end. The panel has not yet said what it will do to find a replacement.

Caputo's departure was widely predicted. He has spent his career squarely in the Republican camp and won the Water Authority contract when Republicans controlled the agency. His Republican connections were on display days ago, when he was questioned behind closed doors in Washington, D.C., by investigators working for special prosecutor Robert Mueller who are looking into Russian meddling in the 2016 presidential election. Caputo is close to key figures in Donald Trump's campaign and has worked as a political consultant in Russia.

Caputo questioned by Mueller's team on Russian election meddling

The Water Authority's new chairman is Jerome D. Schad, who leads the Democratic Party in the Town of Amherst. When Schad and the other water commissioners discussed Caputo's contract at a recent meeting, Schad said he once saw that the Water Authority's Twitter account had followers who appeared to be in Russia and Ukraine. Those Twitter followers have since been removed, Schad said.

Though both parties ended the relationship, the Water Authority sent Zeppelin Communications a letter saying only the authority had the right to terminate the contract and that it could see "any remedies available" because Zeppelin had breached its pact. The letter was signed by Terrence McCracken, who heads the Democratic Committee in Lancaster and was recently moved from one Water Authority post into the job of "secretary," one of Erie County's most coveted six-figure patronage positions.

With Caputo managing its image, the Republican-led Water Authority often kept a lid on information. When a water main broke in Amherst in July 2016, the firm waited hours before issuing a boil-water advisory around 6 a.m., after many of the 100,000 residents in the affected area were up brushing their teeth and drinking from the tap.

In April 2017, the Water Authority hired a law firm for up to $435 an hour for an "emergency." Zeppelin and the agency refused to say more. It was later learned the lawyer was hired in a response to critical publicity about the agency's water testing.

Further, Zeppelin and the Water Authority kept a spotlight off the decision to elevate the Republican-selected chairman, Earl L. Jann Jr., into the better-paying executive director's job, and to then grant him a contract that made him too expensive to fire once Democrats took over.

During Caputo's oversight of the Water Authority's public relations, the public agency updated its media relations policy to state that its purpose is to "protect the interests and reputation of the authority, its employees and the commissioners."

When incoming Water Authority Commissioner Mark S. Carney was interviewed by the County Legislature, he said he wanted to improve the agency's transparency. Schad, who was elevated to chairman this month, has expressed similar wishes. Their comments suggest they were dissatisfied with Caputo and Zeppelin Communications.

Caputo's assistant on the Water Authority account, Sean Dwyer, billed at $65 an hour, and Caputo billed at $125 an hour. Often they should have collected more than $5,000 a month, but they never sought more than the contract's cap, Caputo said.

He told The News in an email that he will not comply with the agency's request for more details about past invoices. The contract didn't require that, he said.

"I resigned as a gentleman and a professional," he said. "Now they are messing with me, and I just want what we are owed."

The News asked Schad what the commissioners might do if Caputo doesn't go along. Schad did not predict any specific course of action. But Caputo might find himself out $10,000 – the so-far withheld payment for April, and his would-be payment for May.

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