Mark Peters recuses himself from investigations that may determine potential liability for he and Mayor de Blasio

By LOUIS FLORES

Late on Friday, New York City Department of Investigation Commissioner Mark Peters, the former treasurer of the campaign committee for Mayor Bill de Blasio (D-New York City), announced his decision to recuse himself from investigations into some of Mayor de Blasio’s campaign donors.

The recusal will remove Commissioner Peters from the reported probes moving forward by the Department of Investigation into questions about Mayor de Blasio’s campaign committee and a controversial administration decision to lift deed restrictions on a former AIDS nursing home.

Commissioner Peters’ announcement represented a stark reversal from his refusal to recuse himself in a statement his office issued to The New York Daily News on Wednesday, as noted in a news report. In the past, the Department of Investigation had been attacked for reportedly going soft on the de Blasio administration.

The surprise announcement followed commentaries published today by the Editorial Boards of each of The New York Times and The New York Daily News, in which it was noted that Commissioner Peters had promised to recuse himself if the Department of Investigation were to ever have to investigate Mayor de Blasio’s campaign committee.

Prior to his appointment to head the Department of Investigation, Commissioner Peters had previously served as treasurer of New Yorkers for de Blasio, Mayor de Blasio’s official campaign committee for the 2013 election cycle. That position also placed Commissioner Peters in a role where he had to approve the acceptance of campaign contributions made by a lobbyist involved, to varying degrees, in the nursing home transaction.

As treasurer of Mayor de Blasio’s campaign committee, Commissioner Peters was the campaign committee officer responsible for “accurately reporting transactions,” “properly maintaining [the] campaign’s documentation,” and “submitting disclosure statements” to the municipal and state campaign finance regulatory authorities, according to the Campaign Finance Handbook published by the New York City Campaign Finance Board, the municipal campaign finance regulatory authority. Even though in practise some campaign committees sometimes designate individuals other than the candidate or the treasurer to electronically submit campaign committee records, Campaign Finance Board rules hold that only the candidate or treasurer are responsible for checking verification and confirmation sections when electronically submitting campaign information, according to the Campaign Finance Handbook.

The Campaign Finance Board gives campaign committees an opportunity to correct inaccurate information, either after inaccurate information has been discovered by the campaign committee, or in response to Campaign Finance Board audits. Municipal campaign finance rules give campaign committees an incentive to comply with reporting rules, because campaign committees which participate in the municipal campaign finance regulatory authority's matching-dollar system receive generous taxpayer subsidies for small campaign donations.

Operationally, Commissioner Peters would have also had to review the acceptance of large campaign contributions bundled by individuals known as intermediaries, as noted in The New York Daily News editorial. Because he was a campaign committee officer, Commissioner Peters may have been involved in the planning of other campaign committee activities, such as fundraisers.

Whilst Commissioner Peters was treasurer, Mayor de Blasio’s campaign committee was the beneficiary of a large 2013 fundraiser hosted at the Waldorf-Astoria by a committee of his supporters, which featured notable municipal lobbyists, such as James Capalino, who has been identified as one of the figures involved in the controversial flipping of a former AIDS nursing home in the Lower East Side. That transaction is the subject of four agency investigations, including the one by the Department of Investigation, that will now reportedly move forward without Commissioner Peters’ involvement.

Because Commissioner Peters is a friend and loyal political supporter of Mayor de Blasio and because the campaign finance questions and nursing home transaction purport to potentially render possible political damage to the de Blasio administration, Commissioner Peters’ relationship with Mayor de Blasio had created the appearance of a conflict of interest. Furthermore, had Commissioner Peters remained involved in investigations pertaining to Mayor de Blasio's campaign committee, Commissioner Peters may have been in a position to rule about his own potential culpability for wrong-doing, if any. As reported by Progress Queens, investigators have yet to announce any disposition of a reported investigation by the Federal Bureau of Investigation into questions about possible coördiantion between Mayor de Blasio's campaign committee and the animal rights group, NY-CLASS.

As treasurer of Mayor de Blasio's campaign committee, Commissioner Peters faces potential legal exposure

The New York City Department of Investigation is the municipal agency charged with probing allegations of corruption by city officials. Source :  New York City Department of Investigation/YouTube (Screen Shot)/Public Domain

The New York City Department of Investigation is the municipal agency charged with probing allegations of corruption by city officials. Source :  New York City Department of Investigation/YouTube (Screen Shot)/Public Domain

The appearance of a conflict of interest became more disconcerting to some, because the focus on Commissioner Peters’ reported friendship with and loyalty to Mayor de Blasio overlooked potential legal issues facing Commissioner Peters, himself. As the campaign treasurer, Commissioner Peters would have also have had oversight in respect of the host committee of that 2013 fundraiser, which would have presumably included approving the lobbyist Mr. Capalino as a member of that host committee. Although donations to campaign committees of candidates seeking municipal office are strictly regulated by the Campaign Finance Board, advocates for clean elections have expressed criticism about the involvement of lobbyists as contribution bundlers or other campaign-related roles.

The timing of the 2013 fundraiser at the Waldorf-Astoria was also problematic for Commissioner Peters, because it took place after Mayor de Blasio won the Democratic Party primary. As the editorial in The New York Daily News suggested, Mayor de Blasio's campaign fundraising activities should be investigated commencing with the Democratic Party primary win.

According to information obtained from New Yorkers for de Blasio and published in a report, “Who’s Helping de Blasio Bring Big Bucks,” by WNYC, Commissioner Peters also hosted another fundraising event on 12 September 2013, right after Mayor de Blasio reportedly won the Democratic Party’s mayoral primary election.

Additionally, Commissioner Peters and his wife were vice-chairs of a host committee for a significant December 2010 fundraiser, held also at the Waldorf-Astoria, that telegraphed Mayor de Blasio’s intention to run for higher office, back when Mayor de Blasio was serving at the Public Advocate for the City of New York.

Typically, for campaign contributors to be appointed to positions on a host committee, individuals have to pledge to contribute a set dollar amount. Because Commissioner and Mrs. Peters were vice-chairs, that meant that they donated an intermediate amount of money to New Yorkers for de Blasio for that fundraising event. According to online records of the municipal campaign finance regulatory authority, Commissioner Peters had made a donation of $1,000 in May of that year. In the three years following that fundraiser, online records showed that Commissioner and Mrs. Peters contributed a further $7,425 to New Yorkers for de Blasio, although the amounts online records attributed to Commissioner Peters totaled $5,950, which exceeded the $4,950 maximum amount an individual could contribute to a mayoral campaign in one election cycle.

Mayor de Blasio’s campaign committee had pledged to publish information about bundlers and host committees on a page of its Web site titled, “Transparency,” but that information was not kept updated during the 2013 election cycle, according to the WNYC report, and, what is more, that Web page no longer exists.

Other irregularities noted about New Yorkers for de Blasio included a report published by The New York Daily News, which revealed that the campaign committee was raising contributions from big money donors that exceeded campaign finance limits by allocating excess amounts to old campaign debts and for costs associated with his inauguration and transition.

It is not yet publicly known the full degree to which Commissioner Peters may have participated in the planning of fundraising activities that may be under scrutiny by Federal investigators. A request made by Progress Queens to the press office of the Department of Investigation, asking for Commissioner Peters to describe the degree of his participation in the planning of fundraising activities and for a description of such, was not answered.

It also not known what supervision or oversight Commissioner Peters exerted over Ross Offinger, a campaign committee fundraiser given the designation of finance director. Mr. Offinger has been identified in press reports as being a focus of the reported Federal corruption investigation into Mayor de Blasio’s fundraising activities.

At a minimum, the potential exists that Commissioner Peters, in addition to Mayor de Blasio, may be treated as witnesses by the other law enforcement agencies reportedly conducting their own investigations into the activities of Mayor de Blasio’s campaign committee, and each of Commissioner Peters and Mayor de Blasio also face the potential of being held legally liable for any violations of municipal campaign finance laws committed by the campaign committee, if the campaign committee does not have funds to pay any related fines, according to municipal campaign finance rules. In the past, the Campaign Finance Board has exerted discretion about holding or absolving campaign treasurers responsible for fines assessed against a campaign committee, notably in its determination affecting the campaign committee of former New York City Councilmember Kendall Stewart. In that case, the candidate, former Councilmember Stewart, was held jointly liable for fines, in addition to the campaign committee.

That municipal rules exist that could potentially hold Commissioner Peters accountable for wrong-doing committed by Mayor de Blasio's campaign committee could also impact whether Commissioner Peters could face further culpability for any wrong-doing found by other investigators, if any are found.

Prior to his recusal, Commissioner Peters’ unilateral resistance to recuse himself also violated jurisprudence. Under guidelines applicable to Federal prosecutors, for example, which would not have any direct legal bearing on Commissioner Peters, but which, nonetheless, could be used as a guidepost, prosecutors, who become aware of an issue that may cause a conflict of interest as a result of a relationship with a party to an investigation, must consult with a central office to make a determination if a recusal is required, according to § 3-2.170 of the United States Attorneys’ Manual.

Commissioner Peters’ prior unilateral refusal to recuse himself was in contravention to the spirit of the guidelines followed by Federal prosecutors, because he never indicated if he consulted an outside legal authority for guidance before issuing his refusal to recuse himself.

Criticism that Commissioner Peters was going soft on the de Blasio administration

One year ago, Commissioner Peters asserted that the way he conducted the Department of Investigation was not designed to go easy on Mayor de Blasio, even though critics charged that his focus on effecting policy changes at the expense of making arrests of city employees accused of wrong-doing bordered on a dereliction of duty. At that time then, Commissioner Peters said in a report published by POLITICO New York that significant statistical drops in the number of arrests stemming from Department of Investigation probes was not a “not a real good benchmark” of his performance, adding that, “It’s not open season on stealing from anybody.”

However, Commissioner Peters’ assessment turned out to be inaccurate, given that it has been revealed that the New York City Department of Citywide Administrative Services approved in 2015 the lifting of deed restrictions on a former AIDS nursing home in exchange for a payment of $16 million, the use of which remains unaccounted, opening the door for speculative real estate developers to purchase the property and initiate plans for its luxury condominium conversion. That transaction has robbed the Lower East Side community of 219 beds in a nursing home setting, and residents of the Lower East Side and their elected officials are demanding the de Blasio administration compensate the community for the loss of strategic, public, nonprofit assets.

The lifting of the deed restrictions to the nursing home, formerly known as Rivington House, involved the lobbyist, Mr. Capalino, a campaign committee supporter and campaign host committee member. Mr. Capalino was paid to lobby the Department of Citywide Administrative Services to lift the deed restrictions, but he failed in his instruction. The property was sold by Mr. Capalino’s client to another owner, which eventually succeeded in lifting the deed restrictions. Before that owner obtained a clean deed to the property, Mr. Capalino was retained as a lobbyist to an affiliate of a real estate developer which was a member of a joint venture to which that owner subsequently sold the former nursing home, raising the spectre that Mr. Capalino’s clients were possibly receiving special treatment by city officials.

Reported aspects of the wide-ranging, Federal corruption investigation into the de Blasio administration include whether the Mayor's Office has provided preferential treatment to campaign contributors and how Mayor de Blasio's various campaign committees have raised money from the real estate industry.

Since becoming an early establishment supporter of Mayor de Blasio, Mr. Capalino has seen his lobbying business skyrocket to the top of the municipal lobbying league table as the city’s highest-grossing lobbying firm.

The Rivington House transaction followed by one year a controversial decision by New York City Housing Authority officials and the de Blasio administration to transact in secret and without any public input the sale of a portfolio of project-based, Section 8 apartment buildings, garden areas, and parking lots to a consortium of politically-connected real estate developers with close ties to the de Blasio administration. Since news of that transaction was made public, the Department of Investigation has remained mum about the potential of any conflicts of interest in that transaction. Mayor de Blasio selected former officers from or individuals otherwise affiliated with some of the real estate developers in that consortium to join his administration in positions affecting housing issues.

An investigation by Progress Queens revealed that some of the buildings sold by NYCHA may have received significant improvements prior to their sale, contradicting claims made by NYCHA CEO Shola Olatoye that the cash-strapped agency was unable to maintain the buildings any longer.