Despite increasing prosecutorial scrutiny on the influence of real estate interests on government policy, Mayor de Blasio continues to actively toy with real estate interests in his inner circle
Law enforcement interest in financial transactions at NYCHA
By LOUIS FLORES
When the New York State Office of the Attorney General was probing allegations that campaign consulting firm The Advance Group had been illegally coördinating its independent expenditure work in the 2013 municipal elections with official campaign committees during the same election cycle, state prosecutors were looking to determine how, or if, The Advance Group ensured separation of staff between independent expenditure work and official campaign committee work.
Such a separation, referred to as a firewall, would ensure that information from one team would not be shared with another team. Typically, firewalls in staff are put into place to address conflicts of interest, and such firewalls, sometimes augmented by technological restrictions, are often used by law firms and investment banks to avoid leaking valuable information, like inside information or information protected by attorney-client privilege.
During its probe, the State Attorney General’s Office found no such firewall in effect at The Advance Group, and the absence of such played a critical role in informing the investigations into the activities of The Advance Group.
One former The Advance Group staffer “referred to firewalls as 'non-existent'" and said that The Advance Group President Scott Levenson "'gets business, and then throws it at someone,' with little regard for whether this might facilitate unlawful coordination," according to the signed disposition in the State Attorney General’s Office’s investigation of campaign violations by The Advance Group. Because of the nature of the relationships between The Advance Group and each of its independent expenditure clients and its official campaign committee clients, the New York City Campaign Finance Board fined The Advance Group $15,000, and the State Attorney General’s Office fined The Advance Group $10,800 to close its investigation without an admission of liability by The Advance Group.
The issue of a firewall may also come into play as the New York City Conflicts of Interest Board and the Campaign Finance Board investigate the activities of the Campaign for One New York, City Hall’s nonprofit lobbying arm.
A complaint lodged with the two municipal agencies by the government watchdog group Common Cause/NY questioned whether Mayor Bill de Blasio (D-New York City) may have disclosed confidential government information to “consultants hired by the Campaign for One New York who are also employed by companies that have business dealings with the City of New York, in particular, individuals and companies with real estate interests actively engaged in projects that require approval or funding from the City of New York.” The complained was signed by Susan Lerner, executive director for Common Cause/NY. Ms. Lerner was not available for comment for this report.
That the same consultants are serving in more than one capacity shows that there may be absolutely no regard for firewalls by the Campaign for One New York.
For this report, Dan Levitan, a vice president of the unregistered lobbying firm, BerlinRosen, did not respond to a request for comment. Mr. Levitan serves as a spokesperson for the Campaign for One New York. As has been widely reported, BerlinRosen administers media relations for the Campaign for One New York. During the 2013 municipal elections, BerlinRosen was also employed as a campaign consulting firm for Mayor de Blasio’s campaign committee, and Mr. Levitan served as the campaign committee’s spokesperson. Baring any law enforcement action, they are likely to be rehired by the mayor’s committee to reëlect for the 2017 election cycle.
As the Conflicts of Interest Board and the Campaign Finance Board investigate the legal questions posed by the Common Cause/NY complaint, other law enforcement agencies may be called to join the probe. Whereas the Campaign Finance Board, as an independent agency with unique powers and authorities granted to it under the city’s Campaign Finance Act can issue subpoenas and documents requests and take testimony, the Conflicts of Interest Board, on the other hand, must turn to the New York City Department of Investigation for fact-finding support. In turn, the Department of Investigation routinely partners with outside law enforcement agencies, such as the New York Police Department, the Federal Bureau of Investigation, the State Attorney General’s Office, and Federal prosecutors from the U.S. Attorney’s Office for each of New York’s eastern and southern districts.
But the groundwork for the other law enforcement agencies joining the Campaign for One New York probe may already exist.
Three days before the journalist J. David Goodman filed a report for The New York Times, noting that Common Cause/NY had filed its complaint, Progress Queens reported that there was law enforcement interest in the activities of the Campaign for One New York.
What is not known is if either the Conflicts of Interest Board or the Campaign Finance Board will retain sole jurisdiction over the Campaign for One New York probe. When the Campaign Finance Board handed down its $15,000 fine against The Advance Group, a campaign consulting firm that doubles as a lobbying firm with close ties to allies of Mayor de Blasio, that probe was conducted parallel to an investigation by the State Attorney General’s Office.
Under some Federal guidelines for the criminal investigation of significant government officials, prosecutions are given up by local law enforcement agencies to Federal law enforcement agencies. Because the Common Cause/NY complaint addresses questions as to whether Mayor de Blasio may have violated § 2604(b)(4) of the City Charter pertaining to rules about the use of confidential government information and § 2604(c)(4) of the City Charter pertaining to conflicts of interest, it’s not clear how municipal agencies can reasonably be expected to investigate the mayor. Members of the Conflicts of Interest Board are nominated by the mayor and affirmed by the New York City Council. The members of the Campaign Finance Board are jointly selected by the mayor and New York City Council Speaker Melissa Mark-Viverito (D-Spanish Harlem). The commissioner for the Department of Investigation, Mark Peters, is a close friend and former treasurer of Mayor de Blasio’s campaign committee. The only independence in a probe by the Conflicts of Interest Board or the Campaign Finance Board will come if an outside law enforcement agency not under direct control of the mayor joins in the investigation.
For this report, Progress Queens made numerous attempts at obtaining a description of the process by which a municipal probe would be handed up to Federal law enforcement authorities. Requests were made to the press offices of each of the U.S. Department of Justice, the New York Field Office of the FBI, and the FBI’s Washington headquarters. Each office declined to provide a description of the give-up process.
The real estate factor
It’s material that on the question of inside government information, the Common Cause/NY complaint qualified that the consultants serving dual roles served clients “with real estate interests actively engaged in projects that require approval or funding from the City of New York.” In a report about the Common Cause/NY complaint filed by the journalist Eric Durkin for The New York Daily News, it was noted that real estate developers are big donors to the Campaign for One New York. And that makes sense, given that real estate developer-members of the powerful real estate lobbying group, the Real Estate Board of New York, or REBNY, made over ten per cent. of campaign contributions made to state-level campaign committees in the 2014 election cycle, according to a report filed by Bill Maloney for POLITICO New York. In New York, real estate developers exert a great sway over politics via their campaign contributions, so much so that one prominent measure of the power of the state legislative leaders, Assembly Speaker Carl Heastie (D-The Bronx) and State Senate President John Flanagan (R-Long Island), is the sum of campaign contributions that each attract from real estate interests. Whoever between the two receives the most real estate campaign contributions is seen as being more commanding than the other.
Yet, against the backdrop of the prominent role of real estate developers, a backlash has been developing.
At a speech delivered at New York Law School on 23 January 2015, U.S. Attorney Preet Bharara spoke about the authority of public officials to exert control over the daily lives of citizens. Speaking of state legislators, for example, U.S. Attorney Bharara said, in part, “They decide what constitutes a crime and how it should be punished. They decide about how much we pay for rent and housing and taxes,” before alluding to the influence that real estate interests can have in shaping public policies that were noted in the government’s Federal corruption case against former Assembly Speaker Sheldon Silver (D-Lower East Side), who was subsequently convicted late last year by a jury on all counts of Federal criminal corruption charges.
Despite a second, spectacular prosecution against former State Senate President Dean Skelos (R-Rockville Centre) and his son, which similarly involved real estate interests and likewise ended with a jury’s conviction on all counts of Federal criminal corruption charges, Mayor de Blasio continues to actively toy with real estate interests so close to the inside of his political circle. Even in the face of reports that Federal prosecutors had sought court-approved warrants to conduct wiretaps to obtain evidence for corruption prosecution cases, Mayor de Balsio appears unmoved about possible legal repercussions.
In spite of information obtained by Progress Queens showing that there is law enforcement interest in possible fraud committed at the New York City Housing Authority, or NYCHA, the mayor appears to be doubling-down on his closeness to real estate.
The law enforcement interest in NYCHA is likely related to the $8 million scaffolding contract now in dispute, but the probe may not be limited to that contract and may extend to other capital expenditures or other financial transactions, according to sources, including those overseen by former NYCHA capital projects vice president Raymond Ribeiro, who was suspended in 2015 pending the outcome of a Department of Investigation probe. Given the Department of Investigation’s policy of not commenting about on-going investigations, an official with the Department of Investigation would not comment for this report about information secondary to its reported probe of NYCHA that would not compromise the conduct of its investigation, like when its probe was expected to be concluded.
Questions also remain unanswered after Progress Queens reported about a controversial 2014 sale by NYCHA of a portfolio of project-based, Section 8 apartment buildings to a consortium of politically-connected real estate developers with close ties to the de Blasio administration. That sale was transacted with no public input and was not subjected to requirements under the City Charter. Moreover, a cash-strapped NYCHA was reported to have made capital improvements to some of the buildings prior to the sale, contradicting assertions that NYCHA was too cash-poor to retain ownership of the dilapidated Section 8 buildings.
Juxtaposing Gov. Cuomo with Mayor de Blasio
That Mayor de Blasio still clings so closely to a real estate-centric platform going into the 2017 election cycle also ignores the transformation of Gov. Andrew Cuomo (D-New York) from formerly allowing real estate and big business interests to drive his own political platform to presently being a union-backed champion of progressive causes, like supporting a $15 minimum wage and proposing paid family leave for New York workers. Gov. Cuomo’s political reversal took place coïncidentally after he outsourced the renewal process of the controversial 421-a tax abatement program from the state legislature to a working group comprised of REBNY and a trade union. That unconventional renewal process, which eventually failed, allowed Gov. Cuomo to sufficiently wash his hands of real estate interests to receive an all-clear from the U.S. Attorney’s Office that had been probing the premature closure of the Moreland Commission. Before its demise, the corruption-fighting panel had issued subpoenas to real estate developers in an effort to determine whether campaign contributions had been being made in an effort to influence government officials. Some of the real estate developers, who had received subpoenas, had been campaign supporters of Gov. Cuomo.
In the wake of Albany corruption cases being increasingly tied to real estate interests, Mayor de Blasio was still lobbying for a compromise bill on the 421-a tax abatement program to be passed by the state legislature, even as Gov. Cuomo was probably setting up the renewal conditions for the 421-a program to be outsourced to oblivion. Even though the wealthy real estate developer Glenwood Management Corporation escaped prosecutorial consequence for its alleged role in the corruption cases faced by each of former Assemblymember Speaker Silver and former State Senate President Skelos, U.S. Attorney Bharara later and separately held the real estate developer responsible for discriminatory housing violations. A way was found to hold a real estate developer accountable.
Now, as Mayor de Blasio and City Council Speaker Mark-Viverito have reportedly forged a backroom agreement that paves the way for the municipal legislature to pass the text amendments of the mayor’s gentrification proposals, the mayor openly flouts prosecutorial risks stemming from his decisions as to which real estate projects receive approval or funding, giving the impression that he’s making giveaways to real estate interests, even in the face of questions about his reliance on donations from real estate interests. Government reform activists with loyalties to Mayor de Blasio privately explain that his actions stem from his belief that he is untouchable.
Forays into Federal politics are enough to undermine corruption investigations
Before U.S. Attorney Bharara issued the public statement, indicating that he would be ending, for now, his probe of the premature closure of the Moreland Commission without bringing any charges, a move seen to relieve Gov. Cuomo of prosecutorial liability for reported efforts to thwart the work of the Moreland Commission, Gov. Cuomo had been reportedly escalating his relationship with Vice President Joseph Biden in an effort, described by Fredrick Dicker in a column for The New York Post, to end the Federal probe into his office’s dealings with the Moreland Commission. Gov. Cuomo’s sudden bromance with Vice President Biden was seen by government reform activists as a calculated move to make U.S. Department of Justice officials think twice about probing a political ally of the White House, seemingly creating the kind of a conflict of interest for career Federal prosecutors that Federal guidelines were supposed to prevent.
To the extent that Mayor de Blasio believes that he’s untouchable, he may be borrowing a page from Gov. Cuomo’s playbook. After being humiliated by knocking on doors in rural Iowa for the presidential campaign of former First Lady Hillary Rodham Clinton, he’s now graduated to Clinton surrogate on the MSNBC cable news network. If it is true that a corrupt local or state politician can create political conflicts for prosecutors by strengthening their relationships with Federal politicians, then each of Gov. Cuomo’s and Mayor de Blasio’s forays into Federal politics can be said to have placed the U.S. Department of Justice in an awkward position of standing down from investigations in order to avoid creating a political risk to a Democratic White House administration during a heated presidential election year.
Allowing prosecutions to be gamed would backfire
Left unacknowledged by Federal law enforcement authorities is that, by allowing the political relationships of corruption investigation targets to trump the integrity of law enforcement investigations, the career prosecutors and investigators would face a demoralised and futile work culture. Should local law enforcement authorities give-up a problematic investigation of a significant government official to Federal law enforcement authorities, the Federal agents could theoretically work-up a case only to learn that politics would ultimately outplay the application of justice.
But it’s not just career law enforcement agents, who would feel dejected by seeing political influence undermine corruption investigations.
So would voters.
U.S. Attorney Bharara has said that the public loses faith in government whenever political or campaign corruption is allowed to reign. But he has overlooked how prosecutorial inaction has likewise contributed to this loss of faith. In years past, voters have rallied support around public officials promising material government reforms. Along the way, voters eventually turn on these reformist leaders when voters never witness the manifestation of the promised reforms.
The twin prosecutions and convictions of former Assembly Speaker Silver and former State Senate President Skelos were supposed to inspire an ethics reform movement in the state capital, but so far Gov. Cuomo and Albany lawmakers have resisted demands for legislation to address the spree of corruption scandals that have rightly shaken confidence in government. As if in acknowledgement that the reform movement is losing steam, U.S. Attorney Bharara’s office has rescheduled a court date so that the sentencing of both convicted legislative leaders are now set for the same date and hour, hoping to deliver a new punch on the psyche of media-obsessed Albany.
In the past, U.S. Attorney Bharara has said that sometimes the just act for his office to take is not to bring a prosecution. There have been times when his office and the courts have agreed to court-supervised settlements, deferred prosecution agreements, or the quiet extension of investigations to monitor for future activities of corruption. As Mayor de Blasio stands on the precipice of a massive giveaway to the real estate industry that not even Gov. Cuomo dared, voters are left to wait and see what other acts U.S. Attorney Bharara’s office can take.