City and State - July 30, 2012 by City & State

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July 30, 2012

Vol. 1, No. 16

Malcolm Smith:

“ People

think that I’m a

crook

and a

thief

—and I’m absolutely not. Page 14

”

THE SURPRISING RETURN OF STEVE PIGEON PAGE 7 HANK GREENBERG’S THREAT TO THE MARTIN ACT PAGE 21

Manhattan Media 79 Madison Avenue, 16th Floor New York, NY 10016

Photo: Daniel S. Burnstein

UPFRONT

DON’T FEAR THE REPORTER Denouncing the TimesIn this issue, State Sen. Malcolm Smith gives an Union’s story in a particuexclusive interview to City & larly nasty 1,300-word letter State opening up for the first sent to the paper, Richard Cuomo’s time about his tumultuous Bamberger, director of communicayears in elected office. Of course, Smith is the tions, concluded, “it would not the first politician to be shameful for you to have a distant relationship compound your prior errors with the press. Many politi- by making use of your news cians consider members of pages to try to rehabilitate the media to be a nuisance, your own image by manufacturing doubt if not sworn about profesadversaries. sional work Take our done by career governor. When prosecutors Andrew Cuomo in the public was running interest.” for his current Whew. Tell us office, NY1 ran a what you really “Cuomo Clock” think, Richard. on their website The Timestracking the Morgan Pehme EDITOR Union is not the numbers of days Cuomo had declined to first news outlet to receive a livid letter such as this one appear on Inside City Hall. Since getting elected, from the Cuomo adminisCuomo’s relationship tration, nor will they likely with the media has only be the last. Apparently the governor grown icier. Though he has embraced some journal- does not agree with the late ists, like the New York Post’s British MP, Enoch Powell, Fred Dicker, he has become who mused, “For a politiincreasingly hostile toward cian to complain about the most of the other members press is like a ship’s captain complaining about the sea.” of the Albany press corps. Governor, I realize that These days it seems any story daring to criticize the we can’t always write what governor or probe his admin- you want, and yet I wonder istration prompts some form why you can’t come to of invective from Cuomo’s love the press? After all, so spokespeople. Most recently many of your initiatives it has been reporter James have been the byproduct of Odato and the excellent hard-hitting news investigapolitical team at the Albany tions. Your sky-high approval Times-Union, who have ratings are at least in part been the subject of Cuomo’s owing to media accounts ire for having the audacity of your legislative victories. to examine Cuomo’s public And your rumored presidenrecords as Attorney General tial aspirations are propelled pertaining to the “Trooper- by the rumors we print. Another Englishman, gate” investigation and then Northcliffe, once alerting their readers when Lord the documents they exam- declared, “News is what ined were subsequently someone, somewhere is removed from the state trying to suppress. The rest archives by members of the is advertising.” Don’t hate us, governor. governor’s staff in response We’re just doing our job. to the paper’s inquiry.

JULY 30, 2012 | www.cityandstateny.com

AROUND NEW YORK The best items from The Notebook, City & State’s political blog City & State’s political blog, The Notebook, is your key source for political and campaign developments in New York. Stay on top of the news with items like these at www.cityandstateny.com/thenotebook. 1. WESTCHESTER Among the items in Senate Independent Democratic Conference Leader Jeff Klein’s $176,649.50 in campaign spending over the past six months: 1–3) 3 separate expenditures on magicians: One $150 payment to Kenneth Krebs, representing the magician “Candini the Great” Two payments, for $200 and $150, to magician John Turdo 4) Several dinner dances, including one for $1,250 at the Benjamin Franklin Democratic Club and a $2,125 dance at the Chippewa Democratic Club 5) One bunny breakfast and build-a-bunnies from the Bear Factory /) /) (-,-) o(“) (“)o (One at Villa Barone Manor costing $3,688, and $872 on bunnies built by children at the bunny breakfast from the Bear Factory) 6) $100 on a card party at the Locust Point Yacht Club 7) $1,770 on St. Patrick’s Day cookies from the Golden Glow Cookie Company 8) $159.87 at American Balloon Time (memo line: “balloons”) 9) $146.98 on Hanukkah gelt from Moishy’s Bakery (buy in bulk and it seems you get approximately 270 bags with four pieces of gelt each for this price) 10) $1102.69 on holiday turkeys Eric Soufer, spokesman for the Independent Democratic Conference said the expenditures are for community events. “Senator Klein

enjoys supporting community programs, especially those focused on kids and seniors,” he said. “These donations are one small way that we’re able to contribute.”

2. ALBANY The Senate Republicans’ highest-paid consultant between July 2011 and February 2012 departed the Senate GOP campaign payroll around the same time City & State revealed her connections to the Jack Abramoff fundraising scandal. Susan Ralston’s firm, SBR Enterprises, had taken in 64 percent of the SRCC’s total spending (nearly $93,000) in the eight-month period, but hasn’t been paid a cent since the story came out, according to campaign-finance records. But Senate GOP spokesman Scott Reif has maintained that Republicans aren’t concerned about Ralston’s past history in Washington, D.C., and said that the timing of her departure from the SRCC payroll was merely coincidental. “Simply, I would say that she was brought in to do a job and she finished it,” Reif said. Back in February we reported that in 2006 Ralston was forced to resign from her position as a top aide to White House political director Karl Rove because of her ties to the Abramoff scandal. No full-time fundraiser appears to have replaced Ralston on the SRCC payroll.

3. KINGS PARK At the Ridgewood Bushwick Senior Citizen Council’s annual summer picnic on the north shore of Long Island, Brooklyn

1 3

Democratic State Sen. Martin Dilan fretted that the Independent Democratic Conference would hurt the Democrats’ chances of retaking the majority this fall. “I believe the presidential election will increase the number of Democratic voters, but challenges from the independent conference could hurt our chances,” said Dilan, flipping steaks at the event. Recently reports have surfaced that the IDC could step into a couple of primary races, including throwing support to Guillermo Linares in Manhattan and Manny Tavarez in the Bronx. The IDC is already lending financial support to Shawn Morse, who is taking on State Sen. Neil Breslin. Meanwhile, Dilan was more confident of his own reelection chances in a race against Jason Otaño— especially since he believes the Zalmanite faction of Brooklyn’s Satmar Hasidic community will come out strongly for him. “Parts of the community are in my district and I believe I will do as well as (my son) Erik [Dilan], who got over 6,000 votes,” the elder Dilan said. A Senate Democratic source notes that a spokesman for Linares ruled out the prospect of his conferencing with the IDC.

EDITORIAL Editor Morgan Pehme mpehme@cityandstate.com Managing Editor Jon Lentz jlentz@cityandstateny.com Reporters Chris Bragg cbragg@cityandstateny.com Laura Nahmias lnahmias@cityandstateny.com Aaron Short ashort@cityandstate.com Copy Editor Helen Eisenbach Photography Editor Andrew Schwartz Editorial Interns Mike Bocamazo, Wilder Fleming, Shoshana Lauter, Sam Levine ADVERTISING Associate Publishers Jim Katocin, Seth Miller Advertising Manager Marty Strongin Senior Account Executives Ceil Ainsworth, Monica Conde Director of Marketing Andrew A. Holt Executive Assistant of Sales Jennie Valenti PRODUCTION Art Director Christie Wright Production Manager Heather Mulcahey Ad Designer Quarn Corley MANHATTAN MEDIA President/CEO Tom Allon CFO/COO Joanne Harras Director of Interactive Marketing and Digital Strategy Vinny DiDonato

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AUGUST 9TH Hunter College, 68th Street Campus Room 714W Lecture Hall City & State will be hosting a workshop forum titled The Art of Advocacy. Joining us will be top consultants, advertising minds and politicos — such as Evan Stavisky, Marissa Shorenstein, Justin Krebs, Morgan Pehme and others — to offer insight into the world of issue advocacy advertising and communications.

Programming: Registration – 7:30 am – 8:00 am Networking Breakfast – 8:00 am – 9:00 am Discussion – 9:00 am – 10:30 am (followed by brief audience Q&A)

Follow the conversation at the forum using hashtag #ArtofAdvocacy

For more information regarding these and all other City & State events contact us at 646-442-1662 or jfreeman@cityandstateny.com. CITY&STATE

www.cityandstateny.com | July 16, 2012

UPFRONT The Kicker: A Choice Quote From City & State ’s First Read Email “It’s a clown story, bro.” —former Rep. Anthony Weiner, on speculation that he would run for mayor or public advocate in 2013, via The Wall Street Journal

The FootNote: A real press release, annotated Sent 2:07 p.m. on Wednesday, July 25 from Gov. Andrew Cuomo’s press office The governor was blasted earlier in the week by The New York Times’ Michael Powell, who wrote that past governors seized control of the PSC while Cuomo has cast himself “as a near powerless observer.” Con Edison said it welcomed the governor’s input. “We remain committed to the safety of our customers and employees and to bargaining in good faith until the contract issues are resolved,” a company spokesperson said. Con Ed has come under pressure from other elected officials, including Council Speaker Chris Quinn and City Comptroller John Liu. A number of Assembly members spoke out at a hearing on July 25, the day Cuomo sent this release. John Melia, a spokesman for the union representing the workers, earlier had told the Times that Cuomo “abdicated his responsibility.” Managers took over operations when the 8,000 employees were locked out. On July 17 Con Edison reported an electric peak for its service area of 12,429 megawatts, a record high for the year. Con Edison’s all-time high is 13,189 megawatts, a mark set on July 22, 2011.

GOVERNOR CUOMO SENDS LETTER TO PUBLIC SERVICE COMMISSION REGARDING LOCK OUT Governor Andrew M. Cuomo today sent a letter to Public Service Commission chairman Garry Brown, urging the Commission to bring together representatives from Con Edison and the utilities’ labor union to end the lock out. The letter is in response to a memorandum from the Public Service Commission (PSC) to the Governor’s office regarding the dispute between Con Ed and labor unions. Attached is the memorandum from PSC to the Governor’s office. The letter from the Governor is below: Dear Chairman Brown: I am in receipt of your memorandum outlining your view of the legal authority of the Public Service Commission to respond to work stoppages or lockouts involving regulated utilities. I understand that the Public Service Commission’s view is that its authority to intervene directly in what is primarily a labor dispute is prevented by federal labor law. I understand further from your memorandum that the Commission has not previously inserted itself into a labor dispute. The Commission’s position is that it can only respond when “a severe event compromising safety or disrupting the provision of reliable service” occurs. I respectfully suggest an alternative perspective. My administration has focused on fundamentally changing the way state government operates in order to position the government to proactively address problems facing New Yorkers and, when possible, prevent them happening in the first place. When we can take steps to avert disaster before it strikes, it is a dereliction of our public duty not to act. In the case of the current Con Ed lockout, it would be a failure to serve the public to respond only after a blackout or serious safety incident that occurs due to the labor dispute. I believe there is a real possibility of a safety or reliability issue if this situation continues. This is especially true as our region faces an ongoing heat wave which places significant stress on the power grid and requires all parties to devote the highest level of attention to the energy system. This lockout has gone on long enough. Elected state and city officials are rightfully concerned. I urge you to bring both parties together to strongly encourage an expeditious resolution, and to emphasize that both Con Ed and the union will be held accountable by the people of the state if their failure to settle the dispute contributes to service disruptions or impacts safety.

July 30, 2012 | www.cityandstateny.com

Con Edison reached an agreement with the union a day later, shortly after Cuomo intervened. Cuomo’s Committee to Save New York received $250,000 from Con Edison. The union gave Cuomo’s campaign $17,000. The Daily News called for a speedy resolution, writing that CEO Kevin Burke and his famous board members had no margin of error in risking electrical failure for the city. The New York Post defended Con Edison. Garry Brown, the PSC chair, wrote to Cuomo’s office that his commission “does not have legal authority to directly intervene to order an end to a work stoppage, and the attempt to exercise such authority would not withstand legal challenge.” This perspective is also an alternate one from Cuomo’s initial stance. Earlier his office noted that the governor appointed only one of the PSC’s five commissioners.

by the numbers

Quicker Recovery As in other states and the country as a whole, New York’s tax revenues dropped off during the recession. But compared with several other large states studied by the State Budget Crisis Task Force, New York suffered less and recovered more quickly, in part due to tax increases enacted early in the crisis. (Source: State Budget Crisis Task Force)

Percent change in inflation-adjusted state tax revenue Peak to 2011

-7.0% United States

-4.8% California

-8.2% Illinois

-15.0% New Jersey

-0.2% New York

-9.2% Texas

-12.6% Virginia

The lockout began when the contract for the utility’s largest union expired on July 1, over three weeks before the governor’s press release was issued.

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PERSONALITIES House. President Bush was more reserved than Clinton, who had more rambunctious St. Patrick’s Day parties, but he had Mayor Daley of Chicago and Tim Russert.” Massapequa Fire Department medallion and bell “The bell is from the Suffolk County Fire Department. They want to make sure it’s always here when they visit. The volunteer firefighters are a big part of Long Island.”

(photos: Andrew schwartz)

From the desk of...

Peter king

Peter King has served Nassau County since 1977, when he first was elected to the town council of Hempstead. He has represented the western portion of the county in Congress since 1993. The congressman is known for his support for Irish revolutionaries in Northern Ireland, his outspoken leadership during the September 11 attacks and his love of baseball. He has acquired souvenirs and mementos from constituents over his 35-year career, many of which he displays on his desk and in his office so voters can recognize their gifts. Brick from Notre Dame Stadium “I went to law school in Notre Dame. I am a football fanatic. In 1997 they expanded the stadium, and this is from the old part of the stadium. My daughter gave it to me.” Baseball “I’ve thrown out a first pitch 12 times. I’ve only almost bounced it once, in 2009. I decided from now on

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not to pitch but just to throw it. You have to go to the rubber; you go there [and] there’s not time to practice. This baseball is from a Cyclones game in 2007.” Photo of King with Yankees manager Joe Torre and Mayor Rudy Giuliani “President Bush threw out the first pitch at Yankee Stadium during the playoffs in 2001.

The country was at war; it was six weeks after Sept. 11. He was all set to throw, and security put a bulletproof vest on him. I was more nervous than he was. Jeter and the guys were giving him a hard time. I guess it’s a guy thing. He’s the president; he can’t be seen bouncing a ball.”

Photo of King and his wife with President Bush and First Lady Laura Bush “That was St. Patrick’s Day 2008 at the White

Bust of President Ronald Reagan “I got that as an award from the Nassau County Republican Party. They have an awards dinner every year. He’s the most prominent Republican president of our time.” Cross “That’s from Ground Zero. One of the Port Authority cops gave me that. When the building came down, a piece of steel came down in the perfect shape of a cross, and the cops started making crosses. Catholics started having religious services at the site.” TV microphones “Somebody left his microphone holder here one time. Then other TV reporters asked why I didn’t have their microphone holders, and they started giving them to me.”

Yeltsin doll/Giuliani bobblehead doll “I got that in Russia. Somebody started giving them to me. Then others saw them, and then they bought me other ones.” 9/11 still shot from Channel 12 “That was taken the second the tower came down. They were evacuating the Capitol at 10:10 a.m., and I was getting everyone out of the office, and there’s one guy on the line who said, ‘Channel 12 wants to talk with you.’ The towers were still standing. I’m talking to the reporter, I give routine answers to the questions, and I heard in the background, ‘Oh my God, no!’ As I was speaking, the towers started to come down.” Pakistani silver bowl “I met President Musharraf on a trip to Pakistan. Pakistan is the scariest place I’ve been to, and I’ve been to Iraq, Afghanistan and Northern Ireland during the Troubles. You feel very vulnerable. It’s a free country and people can go everywhere, but that means the bad guys are going everywhere too.” Irish Peace Agreement “That was in 1998. I was very involved in the Irish Peace Agreement. It’s signed by every signatory.”

www.cityandstateny.com | July 30, 2012

E V E N TS State Comptroller Thomas DiNapoli discusses the economy and his office at C&S’s latest Newsmakers Breakfast

Comptrolling New York

By Sam Levine New York State Comptroller Thomas DiNapoli offered an optimistic take on the state’s fiscal health, countered challenges to his office’s oversight power and emphasized the importance of maintaining the public’s trust in a discussion with City & State last week. DiNapoli sat down with City & State Editor Morgan Pehme for an interview in midtown Manhattan at a July 19 Newsmakers Breakfast Series event, cohosted by the accounting and financial-professionals member organization ACCA USA. At the event DiNapoli defended the importance of his office’s oversight powers in the wake of Gov. Andrew Cuomo’s usurpation earlier this year of the comptroller’s authority to preaudit some state contracts. DiNapoli said that the changes to the review process “made no sense” because they rendered it more readily subject to abuse, as there would be fewer eyes vetting the contracts in question. He also disputed the idea that preauditing only adds to government bureaucracy. “I think that the argument that the comptroller’s review slows down the process is really not based on the track record of the office,” DiNapoli said, noting that in many cases the review of contracts takes two weeks, and sometimes a matter of days. DiNapoli added that the comptroller’s staff frequently works with state agencies to resolve potential “It’s a stark reminder areas of concern in of how fragile a contract instead of blocking it completely. notions of trust and Without preauditing perception are, and authority, he said, his how important it is to office can only identify a problem after the fact. safeguard them.” The comptroller also weighed in on a new report co-written by former Lt. Gov. Richard Ravitch and former Chairman of the Federal Reserve Paul Volcker, saying he agreed with those findings projecting significant financial problems for states that did not adjust their spending. It’s no surprise that states continue to struggle with the uncertain status of their federal funding and the ballooning costs of funding healthcare and other benefits, he said. But he also noted that New York has fared the best of the six states studied in the report. “The Ravitch report pointed out that we’re going to start to see a leveling off of the pension hit that we’ve had over past few years, and [it] pointed out that New York is in the best shape,” DiNapoli said. “We were the only one of the states studied that had a fully funded state pension plan.” Reflecting on the fact that his immediate predecessor, Alan Hevesi, is now in prison for abusing his position, DiNapoli stressed the need to earn the public’s trust. “It is a bit sobering, the notion—especially when you’re in a public office, you reflect on the fact that the person who was there before you is sitting in a jail cell,” DiNapoli said. “It’s a stark reminder of how fragile notions of trust and perception are, and how important it is to safeguard them.” 6

July 30, 2012 | www.cityandstateny.com

Clockwise from top: NY1 News’ Zack Fink with Comptroller Thomas DiNapoli; NYS Assembly’s Deanna Bitetti; Councilman Mark Weprin; former Congresswoman/Comptroller Elizabeth Holtzman with DiNapoli; ACCA USA CEO Warner Johnson. Center: Ernest Logan, president, Council of School Supervisors & Administrators (Photo: Andrew Schwartz)

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POLITICS

Return Of Steve Pigeon The

A key figure in the 2010 Senate coup is back—and he’s helping a party-switching Democratic candidate in a must-win Senate race

By Chris Bragg

s there an odder alliance in New York politics these days than the one between Steve Pigeon and the New York Senate Democrats? Pigeon, a controversial and influential Democratic operative in Western New York, helped orchestrate the 2010 Senate “coup” that put the legislative body in gridlock for a month—an act of party disloyalty that contributed mightily to the Senate Democrats losing their first majority in four decades. Yet after being bounced from his highly paid position in the Senate Democratic conference following the 2010 election, Pigeon has returned to the conference’s fold—in perhaps this year’s most important state Senate race. The signs of Pigeon’s new alliance with Senate Democrats can be found on the recent campaign-finance report of Buffalo Democratic State Senate candidate Chuck Swanick, who, like Pigeon’s former boss Pedro Espada, has not always been a staunch party loyalist. Swanick faces attorney Michael Amodeo in a Democratic primary, and the winner will take on Republican State Sen. Mark Grisanti, a freshman who could be the Senate Republicans’ most vulnerable member. Swanick’s mid-July campaign-finance report shows that six biweekly fundraising lunches have already been held for Swanick at the Buffalo law firm Underberg & Kessler, where Pigeon works. His donations include a $6,250 contribution from Landen Associates, a consulting firm run by Pigeon, and $3,000 from Democratic Action for Western New York, a group run by Pigeon protégé Jack O’Donnell. Meanwhile, it is just as clear that the Democratic Senate Campaign Committee is also backing Swanick—as evidenced by a $6,500 donation to Swanick from Queens State Sen. Mike Gianaris, the chairman of the DSCC. In an interview Pigeon acknowledged that he was a major player in Swanick’s campaign, but insisted there was nothing unusual about his being aligned with the interests of the Senate Democrats. “I believe that if you look closer—if you look at my history of working on Senate races—it really should be no surprise that we’re working together on this,” Pigeon said. Pigeon, along with other influential Western New York players like O’Donnell and Buffalo Deputy Mayor Steve Casey, has indeed been involved with numerous candidates backed by the Senate Democrats. But those races were all before the summer of 2010, when Pigeon convinced ex-Sens. Espada and Hiram Monserrate to tempo-

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rarily flee the Senate Democratic conference to vote for a Senate Republican majority—landing a highly paid job working for Espada in the process. Pigeon said he was merely carrying out the wishes of his boss at the time, former Buffalo Sabres owner/billionaire Tom Golisano. Golisano’s Responsible New York PAC spent $5 million helping Senate Democrats take the majority—only for then– Democratic Senate Majority Leader Malcolm Smith to agree to a budget that dramatically raised taxes and spending against Golisano’s wishes. But Pigeon said that one very high-profile incident should not mar a long history of working with Senate Democratic-backed candidates. He also made the point that Golisano’s gripe was primarily with Smith—and not, for instance, with Gianaris, the new DSCC chairman. “The aberration was the fallout between Smith and Golisano,” Pigeon said. But there is another parallel with the coup: Swanick, like Espada, does not have a stellar record as a party loyalist. Near the end of a 26-year-term as an Erie County legislator, he switched his affiliation to Republican to preserve his status as chairman

of the body, thwarting a coup attempt against his leadership. Swanick, who did not return requests for comment, later said the decision was a mistake. All these considerations should raise red flags for the Senate Democrats, according to one Democratic political consultant not involved in the Senate race. “If I were John Sampson or Mike Gianaris, I would be

“If I were John Sampson or Mike Gianaris, I would be concerned about it.” concerned about it,” said the consultant, who did not wish to be named for fear of upsetting relations with Senate Democrats. “There aren’t the same ethical or legal issues as Espada, but Swanick has shown the same ability to cut deals with the other side, and the Steve Pigeon connection should also be a concern. On the other hand, there’s also very little that the Senate Democrats can do to

(Above) Steve Pigeon walks down a hallway in the Capitol in Albany, Wed., June 10, 2009. (Photo: AP/Mike Groll)

influence the process,” the Democratic consultant added. A spokesman for the Senate Democrats declined to comment, but a knowledgeable source said Swanick has strongly committed to sit with the Democratic conference, and that his close allies in Buffalo politics had vouched for his character. There were also pragmatic considerations for the Senate Democrats: Swanick still polls with high name recognition, while Amodeo is a political newcomer. Most important, Swanick has also already landed the Conservative Party line for the general election against Grisanti. Amodeo, meanwhile, unsurprisingly has the backing of the Erie County Democratic Party, which for years has feuded with its former chairman, Pigeon, and the faction of the party controlled by Buffalo Mayor Byron Brown. In an interview Amodeo said voters should look closely at the track records of Swanick and Pigeon, signaling he will make the unusual alliances a campaign issue. “He has a history of political dealmaking, and I don’t know why, given that history, he wouldn’t do the same thing in Albany,” Amodeo said of Swanick. “And he has people like Steve Pigeon on his team—who have a history of cutting deals with Republicans.”

www.cityandstateny.com | July 30, 2012

P O L I CY

The Holes In The

Salary Ceiling How New York’s nonprofit salary cap could have the opposite of its intended effect

By Laura Nahmias It has been a year since Gov. Andrew Cuomo set out to reform nonprofit executive compensation, but nonprofit groups say the most lasting achievement of the administration’s reforms may be industrywide confusion. In mid-May 13 state agencies issued regulations giving guidance on how a $199,000 executive salary cap would work. The cap covers executives at nonprofits that receive at least 30 percent of their funding from the state, and more than $500,000 annually in state funds. But many nonprofit groups found the guidelines, meant to cover thousands of organizations statewide, so vague they left more questions than answers. In a report written days after the new regulations were issued, nonprofit specialty attorney Michael Cooney called the new rules “complicated” and “difficult to apply.” The plan “bears little relationship to the decade-old structure under federal tax law for tax-exempt organizations in assuring the reasonableness of compensation,” he wrote. Many nonprofit providers said it was unclear why a change in the law was necessary in the first place. The proposed salary cap was issued in an executive order one day after it was announced in the state budget and two days before a planned Senate hearing on nonprofit compensation. The cap itself was the product of a task force Cuomo announced in August 2011, ostensibly in response to a series of articles about excessive compensation at Young Adult Institute Network (YAI), an almost entirely government-subsidized developmentaldisabilities organization whose executives each earned in excess of one million dollars a year. The task force was headed by Department of Financial Services Superintendent Ben Lawsky and rounded out with other Cuomo administration officials including Ellen Biben, the former state inspector general, Secretary of State Cesar Perales and James Cox, the state Medicaid inspector general. A week after the group’s formation, the administration announced the addition of two legislative members, State Sen. Carl Marcellino and Assemblyman Steve Englebright. The task force immediately sent out questionnaires to about 1,000 nonprofit organizations seeking their salary information, a step that both alarmed and confused the nonprofits, whose salary information is already publicly available in federal tax returns. In testimony during a Feb. 6 Senate hearing, advocates for several nonprofit organizations called the handling of the compensation question “troubling” and asked to review the task force’s analysis of the salary data. But if the task force produced any analysis or report 8

July 30, 2012 | www.cityandstateny.com

subject to the rules, on an agency-by-agency basis. “It on what they found, there is no public record of it. A depends on the agency, so we don’t know how many FOIL request for records from the task force’s meetings organizations are actually going to fall within this,” she yielded a response that no such records existed. “This administration performed extensive outreach to said. A Steven Hall & Partners report estimated the new non-profits and other affected organizations even before guidelines will mostly hit smaller nonprofit organizathese draft regulations were released,” Rich Azzopardi, tions, which are more likely to rely on state funding than a Cuomo spokesman, said in a statement. “We found bigger organizations that receive substantial money widespread support from a community just as interested from private donors. That means that large institutions as we were in preventing a few bad actors from gaming with big CEO packages are often not even subject to the the system and casting a shadow on the vital work these guidelines. organizations perform.” For instance, New York-Presbyterian Hospital CEO Nonprofit groups insisted the scandal at YAI Network Herbert Pardes receives $4.4 million in salary every year, was a statistical outlier. According to an analysis of New but because the hospital receives state grants that, while York nonprofit executive compensation published in sizable, make up a fraction of its $3.5 billion in overall July this year by the executive compensation consulting revenue, the hospital isn’t subject to the cap. Organizafirm Steven Hall & Partnersl, the median compensation tions subject to the revenue provisions can pay their for organizations with revenues between $10 million CEOs more than the $199,000 amount if they use and $58 million a year is $284,698, with revenue from other funding sources. median salaries for CEOs in environmental, And the regulations also vest an extraordihealth and human-services industries much which nary amount of power in the heads of each lower. nonprofit CEOs are of the covered state agencies, who can “Aside from the notable exceptions covered? issue a waiver on the salary cap if a that have been the subject of recent group can submit a sturdy rationale publicity and attention, we are not Andrew Rudnick for their compensation practices, a aware that there is widespread abuse President and CEO, Buffalo loophole that some see as potentially Niagara Partnership of the public trust by our agencies,” Jeff Salary: $308,254 ripe for exploitation. Wise, president and CEO of the New Covered by cap: No Several nonprofit industry officials, York State Rehabilitation Association, who asked to remain anonymous, citing which represents developmentalLinda Brady, M.D. their relationships with the Cuomo disabilities service providers, wrote President and CEO, administration, said that their organizaKingsbrook Jewish Medical in a letter to the Senate Investigations Center tions were hiring consultants to help Committee. “We believe the abuses that Salary: $4,252,877 them craft expert letters defending their have been reported—which are very Covered by cap: Yes already-existing compensation packfew—are, in fact, extraordinary excepages. tions, newsworthy for their rarity.” William Rapfogel According to New York Council of What is clear is that nonprofit groups President and CEO, Metropolitan New York Nonprofits CEO Doug Sauer, this is the across the state are now scrambling to Coordinating Council on exact opposite of the rules’ original figure out what they can do to meet the Jewish Poverty intent. state’s new requirements, which go into Salary: $343,000 “The proposed system provides effect on Jan. 1, 2013. If states miss the Covered by cap: Yes exceptions and waivers which we reporting requirements, their grants believe will result in exceptions for Herbert Pardes funding and contracts may be shut off. President and CEO, New those organizations whose compenThe level of potential administrative York-Presbyterian Hospital sation levels are most likely to shock burden on the state and on nonprofit Salary: $4,356,039 the conscience,” Sauer said in his groups is unclear, because no one Covered by cap: No testimony before the Senate. “This knows how many people will actually be Christiana Fisher, system…will generate an environaffected by the cap. Angela Battaglia ment where those organizations who “It may be 100 people, or it may be Executive Director and Assistant Executive Director, can afford elaborate accounting and 1,000. It’s just not really known,” said Ridgewood Bushwick Senior compliance divisions will be able to Christina Young, a managing director at Citizens Council, Inc. sidestep the original intent of this Salaries: $366,626 and Steven Hall. “I’m not sure if anybody will $253,043 executive order.” have the answer.” Covered by cap: Yes “In my opinion,” he added, “those Young, who found the guidelines with the deepest pockets and most “genuinely unclear,” said she didn’t influence will achieve their goal.” know which organizations would be

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# W I N N E R SA N D LO S E R S

winners & Losers

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If you’ve been at the beach all summer, you missed Charlie Rangel’s victory, the latest campaign finance filings and the governor’s artful technique for making his correspondence invisible—though it’s debatable whether that makes him a winner or a loser. So for your reading pleasure, we recap all our winners and losers over the past two weeks. Go to cityandstateny.com each week to vote.

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Week of July 16, 2012

YOUR CHOICE

Winners Rangel 46% Skelos 18% Menin 17% Bloomberg 7% Spitzer 9% Dean Skelos: Huge campaign-cash advantage Julie Menin: Maxes out on fundraising Michael Bloomberg: Activist philanthropy, control of 9/11 site

MOST IMPROVED Eliot Spitzer: Okay, so the former governor may never have another political career, and he hasn’t been a success as a national pundit, but we are interested to watch his stint as a NY1 Wise Guy. For his opening show Spitzer offered advice to Gov. Andrew Cuomo, which is just about the most brazen thing we can think of. With so few people willing to talk about Cuomo, Spitzer could serve an important function in criticizing the state’s executive, on the record and in the open.

Charlie Rangel: Charles Rangel: The octogenarian congressman can finally exhale after his primary challenger, State Sen. Adriano Espaillat, conceded for a second time amid ballot irregularities. It is unclear whether Rangel will consider running again in 2014, and Adam Clayton Powell IV is already calling dibs on the seat, but the veteran lawmaker will certainly relish his commute to the Beltway for another two years.

Losers

MOST IMPROVED

Winners Weiner 32% Klein 37% de Blasio 12% Grimm 7% Maffei 10% Bill de Blasio: Outraises mayoral rivals Michael Grimm: Cleared of ethics issues in Congress Dan Maffei: More cash than the incumbent

YOUR CHOICE Jeff Klein: There’s nothing new under the sun, but then State Sen. Jeff Klein, a Democrat (albeit part of the breakaway Independent Democratic Conference) got the Republican ballot line. The IDC raised enough money to insulate them from electoral defeat, and Klein’s own fundraising is so prodigious that he could spend thousands of his campaign dollars on balloons, magicians, chocolate gelt and stuffed bunnies. We’re betting he’s one happy senator.

Losers Richman 33%

Cox 18% Burke 31%

Lenihan 2%

Levine 19%

Quinn 33% Lee 6%

Astorino 8% Walcott 21% Mark Levine: Out of State Senate race Ed Cox: At odds with Romney Rob Astorino: Burning his bridges?

YOUR CHOICE Kevin Burke: No summer vacation for Con Ed’s chairman, who entered another week of lockout over a union contract dispute, even though the workers would help the city in the event of a heat-induced power outage. Con Ed is also among the elusive donors to the Committee to Save New York, which plugs Cuomo’s budget. Every company has its own interests, but to the public it looks like Burke’s interests are directly opposed to his workers and most of the rest of New Yorkers.

July 30, 2012 | www.cityandstateny.com

Long 23%

F GRADE Dennis Walcott: The schools chancellor heard it from all sides this week. Newspaper editorial boards criticized his lenient penalties toward Stuyvesant High School cheaters, and the Bloomberg administration retreated from his plan to close 24 troubled schools. At least he’s gotten outdoors to promote the city’s free-lunch program at Orchard Beach. Soak up those rays!

Len Lenihan: Pushed out by governor Myungsuk Lee: Lascivious newspapers ads Wendy Long: Overspending fiscal conservative

YOUR CHOICE (TIE) Christine Quinn: The speaker has a tough job, but she took it from all sides over her noncommittal position on paid sick leave. Union and low-wage workers, immigrant groups and even feminist icon Gloria Steinem pressured her to support it. And then tennis icon Martina Navratilova urged Quinn to speak out against horse-drawn carriages. We bet the speaker can’t wait to get out of City Hall and catch a few U.S. Open matches.

Anthony Weiner: The former congressman went from recluse to mayoral/public advocate candidate in a matter of weeks, helped along by a sunny pictorial in People magazine and buoyed by the unassailably sympathetic position of his wife, Huma. With Huma being defended by both John Boehner and John McCain from spurious charges leveled at her by Michele Bachmann, you have a candidacy that all of a sudden seems more fact than fiction.

YOUR CHOICE (TIE) Steve Richman: Over and over, the general counsel for the New York City Board of Elections said the BoE could not change its flawed, dubious votecounting procedure because of pesky state law. That’s despite the fact that nearly every other county in the state took a different legal interpretation. This week the state Board of Elections itself said the flawed procedure could be changed, and the board voted to do so. What took so long?

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PERSPECTIVES SUSAN DEL PERCIO

NEW YORK REPUBLICANS WELL-PLACED TO MAKE GAINS IN CONGRESS

ven as the size of New York’s Congressional delegation shrinks from 29 to 27, there is an opportunity for the number of Republican representatives to grow. Currently there are eight Republican members of the House from New York, though owing to redistricting, Rep. Bob Turner’s seat has been eliminated. Of the remaining seven Peter King, Michael Grimm, Chris Gibson, Richard Hanna and Tom Reed are all in strong positions to win reelection. This leaves only Reps. Nan Hayworth and Ann Marie Buerkle with the challenge of fending off their Democratic opponents in order for Republicans to keep their conference intact. The rematch between Buerkle and former oneterm Congressman Dan Maffei has already been touted as one of the hottest races to watch in the country. Hayworth’s showdown with Sean Patrick Maloney, a former aide to President Clinton, also promises to be a top-tier race. One aspect of these contests is how the Affordable Care Act will affect their outcome. Buerkle rode in on the anti-“Obamacare” wave in 2010. She has continued to speak out against it, and voted to repeal the law as part of the Republican Party’s “repeal and replace” strategy. Hayworth also voted against the act but now finds herself in the position of having to defend the vote, instead of wielding it as an asset like Buerkle is. But will “Obamacare” be the issue that helps Republicans pick up even more seats in New York? Nope. The issue that will elect more New York Republicans to the House of Representatives is the economy. And, boy, are Republicans ready for that fight. On Long Island there is a rematch between Rep. Tim Bishop and businessman Randy Altschuler for NY-1. Altschuler lost by only 593 votes after going through a rough-and-tumble primary. This year he easily defeated his

JERRY KREMER

INDEPENDENTS TIP THE SCALES ON LONG ISLAND

nce upon a time the Republican Party ruled Nassau and Suffolk counties with an iron fist. Their power was so strong that their nomination in local races was tantamount to election. National political figures like Dwight Eisenhower and Richard Nixon made obligatory stops in both counties to seek the favor of the party’s leaders. Long Island was a decidedly “red” bastion before people even used the term. In those high-flying years, newly enrolled voters instinctively chose the Republican Party, as doing so was almost a guarantee that requests for a new stop sign or getting a street plowed after a snowstorm would be honored. Long Island even served as the de facto base for the statewide Republican Party. Perry Duryea, a powerful Suffolk Republican, ascended to the speakership of the Assembly for three terms that lasted until 1974. Al D’Amato steered the statewide party for years, successfully anointed a relatively unknown State Sen. George Pataki, then fought tooth and nail to make him governor. Ralph Marino, a Nassau Republican, served as Senate majority leader until 1994, when Joe Bruno took over. Yet the passage of time has dramatically changed the landscape. Shifting enrollment dynamics in recent years have upended longtime assumptions about Long Island politics, and Democrats have made deep inroads into Republican territory. The numbers speak for themselves. In 2002 Republicans had a significant registration advantage, with 367,476 registered voters in Suffolk County compared with 249,939 Democrats, but over the last decade that margin has narrowed considerably. In 2012 Republicans exceed Democrats by a mere 315,454 to 311,244 enrollees. Nassau County’s figures are even more dramatic. Ten years ago Republicans had 333,776 registered party members to Democrats’ 299,650. Today

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primary opponent with 87 percent of the vote. Upstate in NY-21 another rematch is heating up, between Rep. Bill Owens and former Deutsche Bank managing director Matt Doheny. In 2010 Doheny ran on the Republican and Independence lines and lost by 1,995 votes in a three-way race. This year he will also have the benefit of the Conservative line, held in the prior race by Doug Hoffman. Hoffman’s absence is not insignificant. In 2010 he received over 10,000 votes on the Conservative line, more than enough to tip the election to Doheny. In NY-25 Monroe County Executive Maggie Brooks is challenging Democratic Rep. Louise Slaughter. Not only is the newly drawn district believed to more favorable to Republicans, but Brooks’ popularity is off the charts and her fundraising has kept pace, meaning she poses a real threat to the 82-year-old incumbent. Out in Western New York, freshman Democrat Kathy Hochul scored an upset victory for her conservative-leaning seat in a special election last May, but her redrawn district has become even redder. In the new NY-27 she will face former Erie County Executive Chris Collins. Collins was elected county executive in 2007 even though Democrats outnumber Republicans in the area 2–1. Collins did lose his reelection bid in 2011, but it is believed he will mount a vigorous self-financed challenge that will greatly test Hochul’s resilience. There is no doubt these close races will be fiercely fought with combined spending between the parties soaring into the tens of

millions, but one factor of great interest in these battles that has been largely overlooked to date is what role, if any, Gov. Andrew Cuomo will play. After two successful years working across party lines and slowly cleaning up Albany’s horrible, dysfunctional image, why would Cuomo plunge precipitously into the swamp of Washington, D.C.? Cuomo currently enjoys an approval rating above 70 percent and has raised tons of money from both Republicans and Democrats. There is little reason to sully himself wading into House races with Congress’ 17 percent approval rating. Even if he has designs on national office, as is almost universally thought, it is a safe bet that abstaining from expending his political capital in these races will not have dramatic negative ramifications for his personal aspirations in 2016 and beyond. Of course, he may endorse in a few critical races, but it is highly unlikely he will make himself a central figure in all of them. It is clear President Obama will win New York handily in November, even without the record 2008 turnout, and Senator Gillibrand will likely coast to reelection. Still, if Republicans can excite their base, increasing their number in New York’s congressional delegation is not just plausible, it’s attainable.

Democrats top Republicans 354,039 to 327,670. With enrollment figures so close, both parties’ future success will depend on how effective they are in general elections at wooing independent voters—a bloc that is growing in power. Nassau County residents who chose not to enroll in a political party have grown from 182,674 in 2002 to 202,013. Suffolk County independents rose to 245,732 from 219,938 in 2002. Independents have clearly had the greatest impact in Suffolk County, where despite the Republicans’ enrollment edge, Democrats hold most of the countywide offices and are dominant in the two biggest towns: Brookhaven and Huntington. On the flip side, Nassau County continues to be a Republican stronghold, even with the Democrats’ slight lead in registered voters. The GOP controls the towns of Hempstead and Oyster Bay, while Democrats can claim superiority in North Hempstead. The Democrats, with the help of independent voters, have succeeded in Suffolk County primarily due to the fact that Suffolk has 10 towns and an aggressive leader in Richard Schaffer, who also serves as Babylon town supervisor. The combination of Democratic voters paired with independents has made Suffolk County ripe territory for more party gains. As a result, the Republican’s longtime stranglehold on Long Island’s nine State Senate seats may be in jeopardy. Republican Sen. Owen Johnson, who has served since the early 1970s, recently announced that he will retire, leaving Suffolk County Legislator Ricardo Montano, the

declared Democratic candidate for his seat, in a good position to steal a victory from the GOP in November, especially if he receives party support and the funds to run a competitive race. The ability of the Democratic Party to win over independent voters in Suffolk County will be tested in the race for Johnson’s seat. The district has large pockets of Democrats—but make no mistake, it’ll be the independents that decide that race. Over in Nassau County, Democrats continue to covet a takeover of Hempstead, but with the lack of a charismatic candidate and a heavy concentration of Republicans in that town, there is no immediate prospect of a coalition of Democrats and independents upsetting the status quo. Politics being unpredictable, something short of a miracle could occur that would cause this picture to change, but for now Republican dominance in Nassau is still likely assured. In any event, the rise in the number of independent voters has changed the political landscape of the bi-county area for the foreseeable future. While the Democratic Party has been the main beneficiary of the new enrollment dynamic to date, independents are an unpredictable bunch, which neither party can claim for certain. But for Long Island Democrats, so far the informal marriage with independents has been a happy one.

Susan Del Percio is a New York-based Republican strategist and founder of Susan Del Percio Strategies, a full-service strategic communications firm.

Frequent political commentator Jerry Kremer, filling in for the traveling Richard Brodsky, served in the New York State Legislature 23 years. www.cityandstateny.com | JULY 30, 2012

POLITICS

In the money A look at celebrity backers, the goofiest campaign expenses and the top New York donors to federal candidates

Silly spending A selection of some of the quirkiest campaignspending items

$1,923.25 Golf balls

Golfballs.com

Friends of Kathleen Rice, Nassau County D.A.

$390

Cigars for golf outing Village Tobacconist

Steve Bellone 2015

$1,200 Defibrillator

Throgs Neck Little League

State Sen. Jeffrey Klein (New Yorkers for Klein)

$611.61 Steak sauce

Rob Salamida Co.

State Sen. Tom Libous (Friends of Senator Libous Committee)

$1,903.12 Carnations

Spirit Flower Shop

Nassau County Democratic Committee

$13.00

An “inadvertent expense” Bake City Bagels

Councilman Domenic Recchia (Recchia for New York)

$863.55

Eagle Scout coins TJM Promotions

Friends of Sen. Jack Martins

NEw YOrk’s Top Federal-Campaign Contributors

George & Olga Tsunis Cold Spring Harbor

Total contributions: $243,144 To Democrats: 89% To Republicans: 10% George J. Tsunis is the CEO and managing director of Chartwell Hotels. He served as a senior staff member on George Pataki’s 1994 gubernatorial campaign and also worked as an attorney for the New York City Council. In 2010 Tsunis told The New York Times that he tended to favor candidates with an interest in protecting the Greek Orthodox Church in Turkey.

Robert & Diana Mercer East Setauket

Total contributions: $236,900 To Republicans: 97% Robert L. Mercer is the co-CEO of Renaissance Technologies, a hedge-fund management firm. Mercer donated $1 million to the proRomney Super PAC Restore Our Future in the months leading up to the Iowa caucuses.

Harry & Barbara Kamen New York City

Total contributions: $235,200 To Democrats: 97% To Republicans: 3% Harry P. Kamen is the former CEO, chairman of the board, and president of Metropolitan Life Insurance Company. He serves as a trustee of Smith College, an overseer of the School of Arts and Sciences at the University of Pennsyl-

July 30, 2012 | www.cityandstateny.com

vania, and sits on the board of advisors of the Mailman School of Public Health at Columbia University. Barbara Kamen retired as New York City assistant corporation counsel in 1996.

Bernard & Irene Schwartz New York City

Total contributions: $224,000 To Democrats: 100% Bernard L. Schwartz is the chairman and CEO of the private investment firm BLS Investments, LLC. From 1972 to 2006 he served as chairman and CEO of Loral Space & Communications, a manufacturer of aerospacedefense systems. Schwartz has supported numerous Democratic and nonpartisan political organizations and think tanks, including the Center for Strategic and International Studies, Grassroots Democrats and the Fair Elections Legal Network.

Paul Isaac Larchmont

co–chief investment officer and an equity partner at Elliott Management Corporation, the management affiliate of the hedge funds Elliott Associates, L.P. and Elliott International Limited. He is a director of Prime Natural Resources, Inc. and Grant Geophysical, Inc.

John & Margo Catsimatidis New York City

Total contributions: $213,100 To Democrats: 13% To Republicans: 87% Floated as a potential Republican candidate for New York City mayor, billionaire John A. Catsimatidis is the owner and CEO of the Red Apple group and the Gristedes supermarket chain. In March Forbes estimated the NYU dropout’s net worth to be $2 billion. Margo Catsimatidis is involved with the Alzheimer’s, Parkinson’s and Tolstoy foundations.

Vincent & Anne Mai Port Washington

Total contributions: $210,900 To Democrats: 100%

Total contributions: $219,200 To Democrats: 2% To Republicans: 98% Paul J. Isaac is the Chief Investment Office of the hedge fund Cadogan Management, LLC.

Jonathan & Tea Pollock New York City

Total contributions: $213,200 To Republicans: 100%

Vincent Mai is the chairman and CEO of the private equity firm AEA investors. From 1976 to 1989 he was on the executive committee of Lehman Brothers and helped direct its investmentbanking division. Mai also served on the board of directors of Fannie Mae and the Carnegie Corporation of New York. He is currently the chairman of the Africa Advisory Board of the Council on Foreign Relations.

Jeffrey & Paula Gural New York City

Total contributions: $208,400 To Democrats: 98% Jeffrey R. Gural is the chairman of Newmark, Grubb, Knight, Frank, a real estate management firm that controls 150 buildings in New York City. Gural, whose family owns approximately a 20% stake in the Flatiron Building, also breeds racehorses in upstate New York. He serves on the board of directors of several organizations, including the Real Estate Board of New York and UJAFederation.

James & Marilyn Simons New York City

Total contributions: $208,200 To Democrats: 91% In 1982 James H. Simons founded the hedge-fund management firm Renaissance Technologies. Simons retired as the firm’s CEO in 2010, and last year Forbes estimated his net worth at $10.6 billion. He has donated over $200 million to SUNY Stony Brook, where he served as chair of the mathematics department before entering finance. He was also a fierce supporter of Gov. David Paterson’s failed plan to allow SUNY and CUNY schools to charge their own tuition without legislative approval.

(Source: Center for Responsive Politics, based on data released by FEC on 6/21/12.

Jonathan D. Pollock is the

Figures include family members.)

CITY&STATE

POLITICS Kenneth Cole Job: Fashion designer

$TAR BUCK$: New York candidates take cash from big stars

Recipient: David Weprin Amount: $500 Date: 2011

George Soros Job: Investor and philanthropist

Recipient: Eric Schneiderman Amount: $30,000 Date: 2010

Recipient:

One of the mayoral front-runners has a large campaign war chest thanks in part to some friends in high places.

The governor will have plenty of big-name backers if he does decide, as expected, to make a bid for the White House in 2016.

Christine Quinn

Andrew Cuomo

Trumped

Donald Trump Harvey Weinstein

Ivanka Trump

Job: Film producer/co-chair, the Weinstein Company

Amount: $7,500 Date: 2010–11

Amount: $4,950 Date: 2011

Barbra Streisand

The publicity-seeking billionaire has deep pockets and is not afraid to spread the cash around to candidates on either end of the political spectrum.

Job: Actor/director

Mario Batali

Amount: $3,000 Date: 2008–09

Job: Chef

Amount: $500 Date: 2009

Recipient: Ruben Díaz Jr. Amount: $320 Date: 2012

Kenneth Cole Job: Fashion designer

Anna Wintour

Recipient: Andrew Cuomo (his brother-in-law) Amount: $25,812.27 Date: 2010

Job: Editor, Vogue magazine

Amount: $1,000 Date: 2011

Recipient: James Vacca Amount: $250 Date: 2012

Candidates for attorney general: Recipient: Eric Schneiderman Amount: $12,500 Date: 2010

Oscar de la Renta 2 for the price of 1

Job: Clothing designer

Recipient: Guillermo Linares Amount: $3,800 Date: 2010

Scarlett Johansson Job: Actor

Steve Buscemi

Recipient: Scott Stringer Amount: $4,950 Date: 2011

Hunter Johansson

Job: Actor

Recipient: Bill de Blasio Amount: $1,000 Date: 2011 $uperhero

(Scarlett’s twin brother)

Mark Ruffalo

Job: Assemblyman Richard

Job: Actor

Gottfried’s constituent liaison

Recipient: Town of Delaware Democratic Committee Amount: $1,000 Date: 2011

Recipient: Scott Stringer Amount: $195 Date: 2011

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Recipient: Kathleen Rice Amount: $30,000 Date: 2010

Weiner supporters

Marv Albert Job: Sportscaster

Recipient: Dan Donovan Amount: $5,000 Date: 2010

Recipient: Anthony Weiner Amount: $1,000 Date: 2007

Barbra Streisand Anna Wintour Job: Editor, Vogue magazine

Recipient: Steve Bellone Amount: $2,500 Date: 2011

Job: Actor/director

Recipient: Anthony Weiner Amount: $1,000 Date: 2008

Woody Allen Job: Filmmaker

Recipient: Julie Menin Amount: $175 Date: 2012 www.cityandstateny.com | JULY 30, 2012

F E AT U R E

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www.cityandstateny.com | July 30, 2012

F E AT U R E Reading the small library of articles detailing Smith’s alleged abuses, schemes and outright crimes, one gets the impression he has been under investigation or in some sort of legal or ethical quandary nonstop since January of 2009, when he reached the pinnacle of his career by becoming the first Democratic Senate majority leader in over 40 years and the highest-ranking African-American legislator in state history. While Smith avowed that he has been the subject of far less scrutiny from the legal authorities than the media has suggested, he realizes the cumulative affect reports about him have had on his reputation. “People think that I’m a crook and a thief—and I’m absolutely not,” he said. As for the rumors about a run for mayor, Smith was coy about his ultimate intentions, but eager to leave the door open to a run when I asked him about it. “I’m flattered that some people have had conversations with me about it, and I’ve had conversations with consultants who have worked for both Bloomberg and Giuliani, and Democratic consultants as well, but for me right now, I have to worry about my Senate seat,” he said. Until now Smith has stayed remarkably silent Pigeon discounted on the controversies he Smith’s recollection has been linked to in recent years: the AEG of the events Aqueduct bid; a Hurricane as revisionist Katrina charity accused history, calling of exploiting the tragedy’s victims; and the disastrous him a “famed coup that stripped him of exaggerator, his position and made the fabricator and Senate under his leadership a symbol of dysfunchustler.” tional government. When I asked Smith why he wanted to speak now on so many topics he had been reticent to discuss in the past, he responded, “It’s not even a matter of reticence,” he said. “It’s just that as an elected official, the one thing that allows you to continue what you’re doing is your reputation, your integrity, and what people see as your ability to serve. And so while I have continued to serve and continued to do things, I don’t know what the future holds, and so because of that I think it is important that as much of the public as possible knows the good, the bad, the misunderstood.”

SCANDAL SHEETS A quick Web search brings up a long list of lacerating headlines accusing Malcolm Smith of numerous instances of wrongdoing, incompetence and corruption. The following are a dozen of the more damning headlines that dogged Smith throughout his two years as majority leader and president pro tem of the State Senate (2009– 2010) and continue to hound him to this day.

Subpoena Seeks Senator’s Records on Funds He Directed to Community Groups New York Times 2/11/2010

Federal probe shows Senate President Malcolm Smith rippled off elderly couple for $60,000 New York Daily News 5/2/2010

ALL THAT GLITTERS

fter not seeing Malcolm Smith up close for almost a decade, the first thing I noticed about him is how ashen he has become. His graying hair and fading skin blurred drearily into a loose-fitting suit tailored for a different man. Once the master of the Senate—one-third of Albany’s all-powerful “three men in a room”—Smith, 55, now barely filled the leather chair across the table from me in a generic midtown conference room. He was not always this way. Ten years ago he beamed with the confidence of a management guru, while looking the part of a Wall Street financier. With his million-dollar smile, easy affability, and taste for suspenders and pinstripes, Smith had an undeniable flash about him, as if he were already certain of his stardom, even though at the time he was still largely unknown beyond his majority AfricanAmerican district. The following years would ratify his self-assurance. Smith shot up the Senate ranks so quickly that by the time Minority Leader David Paterson resigned his seat to join Eliot Spitzer’s ticket as lieutenant governor, just shy of seven years after Smith was elected, the senator outmaneuvered opponents like then Sens. Eric Schneiderman, Martin Dilan and Neil Breslin to become the head of his conference. Two years later, with the Democrats taking over the Senate, Smith became majority leader. What happened next is widely known, though the reason it occurred will perhaps forever remain in dispute. Less than six months into his term, Smith was deposed as

July 30, 2012 | www.cityandstateny.com

Future Charges for Smith? Aqueduct investigator: Bidding was Rigged Rockaway Wave 10/29/2010

Feds Investigating Link Between State Senator Malcolm Smith And Charity Group Huffington Post 4/17/10 Sen. Malcolm Smith’s Second life: self-serving crook New York Eye 5/27/10

majority leader after the so-called Four Amigos, in particular Democratic Sens. Pedro Espada Jr. and Hiram Monserrate, threw their support behind the Republicans, thus giving the GOP back the majority and making Dean Skelos the Senate leader. Over the following weeks Monserrate and Espada defected back and forth between the parties, and ultimately the Democrats regained the Senate after agreeing to the amigos’ demands, one of which was that Espada be given Smith’s title of majority leader. Although Smith retained the title of Senate president until the end of the term, when Republicans regained control and reinstalled Skelos, the “coup,” as it came to be known, in essence ended Smith’s leadership, marginalizing him in the body he once controlled. Three years later it still seems difficult for Smith to reflect upon the bewildering change of fortune that was his undoing. Though he expressed pride in some legislative accomplishments during his short time in the majority, his estimation of his performance as leader was “average,” and his overall feeling about the experience “bittersweet,” with perhaps a greater emphasis upon “bitter” than “sweet.” Some participants in those extraordinary events judge Smith a casualty of circumstance. State Sen. Diane Savino, who was part of the group that brokered the deal elevating him to majority leader, recalled that the troubles that ended up sinking Smith began even before he had assumed his post. “The day after election day Malcolm got shaken down by four members, who turned out to be the undoing of the Senate,” said Savino, alluding to the Amigos. “[They] basically sent a message to anyone else that if you want something, all you have to do is upend the apple cart and the leader will be forced to capitulate to you, regardless of whether it’s good for the larger group.” Political consultant Steve Pigeon, who had helped engineer the Democratic takeover and had been dispatched by Smith after Election Day to help woo Espada’s support for Smith’s leadership, disputed Savino’s analysis that Smith could not have avoided the outcome that ultimately befell him. “I believe he brought it upon himself,” said Pigeon. “It was a very fragile coalition that you really needed to be a master inside-dealing personality to keep

together... The power went to his head too quickly, and that’s why he blew it in three months and he ended up making it impossible for [the Democrats] to be reelected that cycle.” Smith contended it was his choice to cede power to the Amigos, and that he did so to serve his conference. “When we got to the majority, it wasn’t about Malcolm,” said Smith in a gravelly voice that betrayed a certain weariness. “For me the greater good was making sure that 32 members who had not been in the majority for almost 40 years had the opportunity to be in the majority, which also meant they had the opportunity to serve their constituencies, which had been shortchanged for so many years. So I had to weigh that versus saying, ‘You know what? Screw you all…I’m not giving nothing to those two guys or three guys who want to do anything.’ ” In hindsight Smith has plenty of regrets. He should not have antagonized Republicans by announcing his intention to redistrict them into “oblivion”—which he describes now as an unfortunate “tongue-incheek moment.” He should have stood up to the Amigos and refused to negotiate. He should have been more mindful of his members. He should have counseled his caucus to be more patient. And he should have had the courage to say to his members— at least once—that they shouldn’t take the traitors back. Pigeon discounted Smith’s recollection of the events as revisionist history, calling him “a famed exaggerator, fabricator and hustler.” When I asked Smith how he thought his successor, John Sampson, had done as leader of the conference, a smile slipped over his lips. “I think he has a very tough job. The same job that I had [that was] very tough… Probably he’s finding out how great a job I was doing for six months versus what he’s done over the last 18.” THE AEG AFFAIR

hough Smith rocketed to the leadership of the Senate, his journey to becoming an elected official was far more arduous. The first three times he ran for office—one time each for City Council, Assembly and Senate—he was defeated. Indeed, it wasn’t until State Sen. Alton Waldon Jr. vacated his seat in 1999 to accept a judgeship on the State Court of Claims that Smith’s moment finally came.

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F E AT U R E As the clear consensus candidate to replace Waldon, Smith ran on the Democratic, Republican and Conservative lines, amassing 90 percent of the vote in the special election against his two opponents. Waldon is perhaps best remembered for having won the 1986 special election by squeaking past Smith’s mentor and minister, Rev. Floyd Flake—only to lose the seat to Flake in a rematch in the Democratic primary a mere six weeks later. Flake would serve until 1997, when he quit to devote himself to the Greater Allen A.M.E. Cathedral, a 23,000-member Queens megachurch with a $34 million annual budget that he leads to this day as senior pastor, along with his wife. Like Smith, Flake’s time in office was blemished by rumor, allegations and worse. In 1990 Flake, who did not respond to requests to be interviewed for this article, was indicted with his wife and charged with fraud, embezzlement and tax violations for allegedly looting $140,000 from his congregation and federal housing funds. A month into his trial, the charges against Flake were tossed, and black leaders pointed to the case as part of a pattern of the government persecuting black politicians. For Smith, Flake’s ordeal taught him that “as long as you know you’re doing the right thing, good always conquers evil.” Since 1986 Smith had been district manager of Flake’s congressional office and an attendee of his church. Smith described Flake’s prosecution as “political retribution” against Flake for challenging Waldon and the county organization; he said he never doubted Flake’s innocence. “I knew his character,” Smith said. “I trusted him.” Flake remains a seminal figure in Smith’s life. A February 2010 article in The Wave described Smith and Flake’s relationship as so close that the two “reportedly speak…several times a day by telephone.” While Smith downplayed the frequency of his contact with Flake, confining it primarily to church and Sundays, he did not dispute the closeness of their friendship. Indeed he publicly acknowledged it, in effect, when he recused himself from the bidding process to build the Aqueduct racino, a contract worth hundreds of millions of dollars, in the backyard of Smith’s district in Queens. At issue for Smith was that one of the bidders for the contract was the Aqueduct Entertainment Group (AEG), of which Flake was a minority owner with a reported 0.6 percent stake in the company, valued at $625,000. Another party with a 0.6 percent share in AEG was the Darman Group, a real estate For Smith, Flake’s development company ordeal taught him headed by attorney Darryl Greene. that “as long as “We haven’t been in you know you’re business together for 12 doing the right years,” Smith said when asked to characterize his thing, good always relationship with Greene. conquers evil.” “He’s somebody I know. He’s a friend.” Shortly after Gov. David Paterson selected AEG as the winning bidder in early 2010, Greene relinquished his interests in AEG after it was discovered that he had pleaded guilty to stealing $500,000 from various government and public entities. Greene, who had avoided jail time but gotten three years probation and community service for his theft, was forced out. Greene’s stepping aside from AEG—followed by Flake a few weeks later amid accusations of various conflicts of interest between himself and officials—was not enough to stem the uproar over AEG, which lost the license. In the aftermath state Inspector General Joseph Fisch issued a report that was expressly critical of Smith. In Fisch’s report Smith was interviewed by the IG, not just as a former business partner of Greene’s but also as cofounder of the Darman Group, the same real estate and consulting company through which Greene was a partner in AEG. Though the report repeats what Smith told me—that he hadn’t been in business with Greene since getting elected to the Senate and that he had wholly

CITY&STATE

SCANDAL SHEETS (cont.) Malcolm’s secret 500G land deals New York Post 4/4/2010

Malcolm Smith eyeing cushy Aqueduct afterlife? New York magazine 9/4/2009

Merrick Academy students suffer as State Senate President Malcolm Smith profits from charter school New York Daily News 3/28/2010

Smith a Porky Pig: Brings home bacon as #1 earmarker New York Post 3/23/2010

Malcolm: I’m clueless on $$ New York Post 2/24/2010

Smith ripped for saying ye$ to yuppies New York Post 4/5/2010

Sen. Malcolm Smith’s door: Home-building firm failed now buyers are crying foul New York Daily News 6/10/2010

Queens pols stiffed Katrina victims New York Post 2/7/2010

Albany leader Malcolm Smith tapped kitty for loan to pol wife’s flight New York Daily News 1/23/2009

divested himself from Darman over a decade before—the IG still concluded, “Smith’s actions belie any recusal on his part.” Smith did not dispute some involvement, but claimed it was a purely bureaucratic one. His role, he said, “actually wasn’t much of a role at all.” His only direct involvement, he said, was because as the Senate president he was the designated second signer on the actual contract. Brushing aside a passage of the IG report that found that “documentary evidence reveal[s] that Smith was very much involved in advocating for AEG, including advocacy to the [g]overnor,” Smith maintained that all of his discussions about the AEG bid pertained to the Senate Democrats’ chief counsel, Shelley Mayer, going over due diligence. “As a lawyer her obligation is to say, ‘Before I have you sign this document, you need to see what was going to be in it,’ ” Smith said. “But if your question is, ‘Did I take that document and then call up everybody I know and hand it out?’—absolutely not.” Asked about the IG’s finding that Paterson had “ ‘got the impression’ that Smith had a preference for AEG,” and, upon being pressed, “acknowledged… yes, he spoke to me about AEG,” Smith admitted to discussing AEG with Paterson, but said he had not expressed a preference for a bidder, and had spoken favorably of all of the contenders, stating that “they were all equally just as good.” In general, Smith insisted he kept an appropriate distance from any parties involved in the bidding process. About Flake, he said, “We consciously stayed away from each other at that time—that’s not impossible. If you’re smart enough to know, you don’t get yourself into any trouble, which was what I said to myself: ‘You do what you have to do. You have public responsibility.’ ” The senator granted that his relationship with Greene and Flake raised red flags. “That’s why I volunteered to recuse myself!” he exclaimed. “The minute I heard that [Flake and Greene were involved in AEG] I was like, ‘You know what? I need to keep my arm’s length from this thing.’… If you go to that report, everybody they spoke to says, ‘Senator Smith never told us what to do or suggested that we do anything,’ because I totally kept myself out of it.”

Smith declined to assign blame or speak specifically about any one individual’s involvement—or even to criticize the IG’s report. He instead attributed the problems to the way the bidding process had been set up. “You should never have government and casinos gambling at the same table,” he said. “It’s a bad combination.” His criticisms of the process are undoubtedly valid. The criteria by which the winner would be picked were left markedly vague when Joe Bruno, George Pataki and Sheldon Silver agreed upon a process that essentially allowed the majority leader, governor and speaker to choose whichever bidder they wanted with essentially no oversight—a process that invited a bonanza of lobbying dollars and campaign contributions aimed at getting the decision makers’ attentions. Before he was deposed as majority leader, Smith was poised to be one of the three men in the room who would have been in a position to divvy up the spoils sure to come from the gamed Aqueduct bidding process. Though Smith brought up his self-imposed recusal several times with me to deny charges of wrongdoing, the IG’s report asserted he never intended to recuse himself from the process when he was still majority leader. According to the report, on May 19, 2009, a Senate spokesperson had publicly confirmed Smith’s relationships with Greene and Flake, “but proclaimed that they had not and would not influence ‘any governmental decision’ made by Smith and that the connections did not pose a conflict… Therefore, prior to the coup while serving as the uncontested leader of the Senate, Smith publicly declared that, even considering the aforementioned apparent conflicts of interest, he could and would participate in the VLT [video lottery terminal] decision-making process.” Smith did acknowledge making mistakes. The most glaring was his decision to attend a “victory party” celebrating AEG’s selection, despite his stated neutrality in the process. The party, held at the home of senator-turnedlobbyist Carl Andrews, was also attended by Sen. Eric Adams, who was the chair of the Racing and Wagering committee, and then Majority Leader John Sampson, who was blasted by the IG’s report for leaking competitive-bid data to AEG through Andrews. Reflecting upon going to party, Smith expressed regret. “That was probably not the smartest thing to do.”

www.cityandstateny.com | July 30, 2012

F E AT U R E

SMALL WORLD

here is a recurring cast of characters who come up in articles about Malcolm Smith. These individuals, all of whom are or were influential in southeast Queens, tend to pop up in different capacities that intersect with Smith’s professional, political and private lives. Besides Flake and Greene, they include: Flake’s successor, U.S. Rep. Gregory Meeks; Smith’s attorney Joan Flowers; Flake’s congressional chief of staff, Rev. Edwin C. Reed; and Mortimer Lawrence, Smith’s chief of staff when he was minority leader. These individuals all seem to share some sort of connection to one another. For one thing, a number of them, like Meeks and Smith, currently are or have been parishioners of Reverend Flake’s or worshippers in his church. Mortimer Lawrence’s wife, Rev. Denise Lawrence, is an associate minister at Allen A.M.E., and Reverend Reed is the church’s former chief financial officer. In 2006 Joan Flowers, who has also attended A.M.E., filed a petition with the attorney general’s office on behalf of a for-profit real estate venture, controlled in part by Flake and Reed, which yielded its partners over $1 million in fees as part of a $14 million purchase of a housing project from—you guessed it—A.M.E. Cathedral of New York. In addition, Flowers has served as campaign treasurer for both Meeks and David Paterson when he was lieutenant governor, and though she has often been incorrectly identified as serving as Smith’s treasurer, too, she was, according to Smith, his “financial manager.” When Smith became majority leader, he made Lawrence special counsel to the Senate majority, at an annual salary of $176,748. Around the same time, Flowers became deputy secretary for appointments, meaning that it was her job to recommend whom Smith named to various boards. At other times during his years in the Senate, Flowers served as Smith’s personal lawyer and was his business partner in a title insurance company called Great Abstract, a company he received clearance from the Senate to be a part of. Connections like these abound. In another example, Flowers, Meeks, Greene and Smith were all on the board of the Merrick Academy charter school—but the real nexus for all of these associates appears to be the New Directions Local Development Corporation, a nonprofit created by Smith and Meeks. Meeks recalled that he and Smith had conceived of New Directions, founded in 2000, “The minute I as a vehicle to bring together heard that [Flake the talented professionals and Greene were in their community to work together on economic develinvolved in AEG] opment. I was like, ‘You “Malcolm and I agreed, know what? I so we went and we talked to some folks,” explained need to keep my Meeks. “They all agreed. They arm’s length from then went with the idea that this thing.’ ” was formulated by Malcolm and I, and they took the ball and ran. They agreed with the idea, and then they became New Directions.” When I asked Meeks the names of some of the professionals who had acted upon his idea and formed New Directions, he initially struggled to recall who they were. When I suggested Joan Flowers, Meeks said, “Joan Flowers could have been one,” before coming up with Mortimer Lawrence and “Edwin,” presumably Reverend Reed, as the “individuals that ran” New Directions. When I asked if Darryl Greene were perhaps among this group too, Meeks responded, “Absolutely.” According to the Times, New Directions’ website, which no longer exists, indicated that Reed was the organization’s treasurer, and its tax returns from 2003 through 2005 listed Lawrence as chairman of the board. From 2002 to 2008, when the organization filed its last tax return—it has since been disbanded—the nonprofit’s address was listed as the same Queens building as Flowers’ office. Flowers, who maintained that she was only the attorney for New Directions for a very short time at its inception, acknowledged

July 30, 2012 | www.cityandstateny.com

The cast of characters: The Friends

Rev. Floyd Flake

U.S. Rep. Gregory Meeks

The Conspirators

Pedro Espada Jr.

Hiram Monserrate

The Successor

John Sampson

having been a board member, but said that she had resigned soon after because she had become too busy. Flowers defended New Directions, saying, “It was a positive organization for the community.” Flowers backed up Smith and Meeks’ assertion that they were not involved in the organization other than at its founding, though beyond that, she claimed to have very little knowledge about New Directions. She said it was Lawrence, as chair of the board, who was better qualified to speak about the organization. Lawrence did not respond to multiple calls to his office requesting to interview him for this article. Smith said he knew that a board of directors had been in charge of New Directions, but “I can’t really tell you who was on the board, because all I know was when they formed it with those three names, and then they went and got their own board. So it was like Edwin Reed, Mortimer Lawrence, Joan Flowers. There were quite a few board members; I don’t remember them all.” The initial “three names” to which Smith was referring were Flowers, who drew up the organization’s incorporation papers, and two of the individuals listed in those documents as founding board members of New Directions: Darryl Greene’s wife, Cathy, and Smith’s own wife, Michele. Smith identified this information about his wife, which has been Smith with Senate Republican leader Dean Skelos and former Sen. Pedro Espada Jr. (Photo: AP/Mike Groll)

repeated in numerous articles, as emblematic of the press’s tendency to distort information to draw unfair inferences about him and those around him. “This is where the press…” Smith began to lament, before holding his tongue. “You have to have three names just to incorporate. Just to get the organization formed. And then once that happens, then the organization is formed, and then those three people disband. I think my wife was on the board all of the day or two it took to form the corporation legally, and then she was off. That was it. But they made it sound like she was operating on the board, she was there every day, she was part of it for years. I think you can count the hours.” It has been more than unfounded inferences, however, that has drawn media scrutiny to New Directions. In the first week of February 2010, amid an already tense time thanks to the AEG fiasco, federal prosecutors in Manhattan subpoenaed all of Smith’s records related to New Directions. While the intent or extent of the federal investigation is not clear and has never yielded a summary of its findings or resulted in any legal action against anyone involved, newspaper reports covering the issuing of the subpoenas delved into the interconnectedness of the players involved with New Directions and called attention to the fact that New Directions had requested $111,500 in member items from Smith’s office since 2000, receiving $56,000 in four disbursements—one in 2001 and three in 2006. Meeks had not directed any

CITY&STATE

F E AT U R E

congressional earmarks to the organization, but according to the congressman he was contacted by federal authorities, and turned over all his papers pertaining to New Directions. Both Smith and Meeks told me that they had not been questioned by any authorities since then, and they emphasized that they never had any involvement in New Directions whatsoever beyond being its creative spark. Echoing a sentiment expressed by Smith, Meeks insisted, “It was never intended for me to be a part of the internal structure as far as being a board member, of signing, or asking anyone to be a board member or anything of that nature. I haven’t been intricately involved in that regard. That never happened.” Added Meeks, “If I’m guilty of anything, I’m guilty of being a catalyst—of getting people who live in the community involved in the community.” As to the member items Smith allocated to New Directions—an organization with which he had so many apparent ties—Smith maintained that all of the member items were properly approved by the Legislature. Still, he admitted, “The perception looks bad. I don’t disagree with you. It looks bad, but there was nothing wrong, and nothing was illegal.” NO GOOD DEED…

n Meeks’ opinion, the whole New Directions situation is an example of the old sardonic observation “No good deed goes unpunished.” Take, for instance, New Yorkers Organized to Assistant Hurricane Families, or NOAH-F, another apparent focus of the federal investigators’ probe into New Directions. “Here I am trying to do a good thing, and it’s damaging my reputation,” howled Meeks. “That’s the damnedest thing I’ve ever seen in my life!... Here I am, I’ve been a prosecutor, an investigator, and all of a sudden it’s flipped on me! When I got the first call from the Post, I was shocked!” The Post story to which Meeks was referring was about NOAH-F, an organization put together by Smith, Meeks and several other area elected officials, ministers

CITY&STATE

and community leaders, to help the victims of Hurricane organize the community behind the effort and that he Katrina in the immediate aftermath of the tragedy in 2005. “was not involved in saying what money went where or According to Meeks, the money raised by NOAH-F anything of that nature,” declared he did not know what was administered by New Directions, which served as had happened to the money but was anxious to get to the the fiscal conduit for the organization. Meeks explained bottom of the matter. When I asked him who, then, was in charge of New that New Directions was selected because it had agreed to handle all of NOAH-F’s administrative affairs without Directions, Meeks erupted with enthusiasm, “Now you’re charging a fee, thus enabling 100 percent of the money asking the right questions, my friend! Now you’re being a good reporter! I’ve been waiting for somebody to ask the collected to go to Katrina victims. Although NOAH-F took in $31,000 in donations, the damn question!” Meeks continued to laugh riotously, almost to the point organization’s contact person in New Orleans, a former of comic exaggeration. “Now you’re Louisiana Democratic political asking the right question, because I director, told the Post “We never got a want to know as bad as anybody else!” dime.” Moreover, NOAH-F’s own filing “Here I am trying Becoming serious again, Meeks said it had distributed only $1,392 of to do a good said, “The guy who was in charge was the money raised. a guy by the name of Claude Stuart… Meeks explained that the money thing, and it’s You gotta ask the guys who were in hadn’t ever ended up going to New damaging my charge of New Directions, and he was Orleans because the organization’s reputation,” the guy who was in charge of New plans for distributing the money Directions!” changed when some of the hurricane howled Meeks. According to a 2010 New York victims began to be evacuated from “That’s the Times article, Stuart was the execuNew Orleans to hotels by JFK Airport damndest thing tive director of New Directions from in Meeks’ own congressional district. “sometime before May 2007, when At that point it was determined that it I’ve ever seen in he signed its tax return.” Meeks, who made more sense to concentrate their my life!” claimed he had nothing to do with the charity locally. decision, said the board had picked As for what happened to the almost $30,000 unaccounted for, that appears to remain a Stuart for the job. Like other figures involved in New Directions, Stuart mystery to this day. Reverend Reed, New Directions’ treasurer, did not has a checkered past. A former Queens prosecutor and respond to requests to interview him for this article, but JAG Corps officer, Stuart was fired as an assistant district back in 2010 he told the Post he couldn’t remember any attorney and subsequently suspended from practicing details about how donations to the charity were dispersed. law for three years for lying to a judge about not knowing Meeks, who reiterated to me that his role was only to the whereabouts of an individual who could have contradicted testimony of a key witness in a murder trial. Though when I asked Smith the name of New DirecSmith, surrounded by Democratic senators, tions’ executive director, he professed to not knowing speaking at a news conference at the Capitol in who it was, or even if the organization had had one (he Albany, Wednesday, Nov. 5, 2008. assumed it did), a Times report from February 2010 made (Photo: AP/Mike Groll) www.cityandstateny.com | July 30, 2012

F E AT U R E it clear that Smith knows Stuart. Shortly after being dismissed from his job in the Queens D.A.’s office, Stuart was placed on the payroll of the State Senate by none other than Smith. When I asked Smith about Stuart, he claimed to have not been “too familiar” with him, but that he had nonetheless taken it upon himself as a Christian to help Stuart out amid a rough patch in his life. When the Times sought more information about Stuart’s role in Smith’s office, the senator’s spokesperson at the time played down Stuart’s position, saying he had been hired as a part-time constituent liaison and had not spent long on the payroll before leaving to take another job, though the spokesperson “was unable to say what it was.” Stuart did not return calls to be interviewed for this piece, but he did speak to the Post after a flurry of articles came out connecting him to New Directions in February 2010. Describing him as “exasperated,” the Post quoted Stuart as exclaiming, “I was only an administrator! I didn’t control the money. I don’t know why the focus is on me.” Bringing the chain of denials and finger-pointing full circle, he continued, “You are looking in the wrong direction. There were other people in control. There was a treasurer and board members.” When I asked Smith why it is that it seems so many people with whom he has been associated have had trouble with the authorities, he grew pensive. “You know what it is? Part of it is I gotta separate my Christian beliefs from making business decisions. My Christian beliefs state you always give somebody a second chance…but that’s where I have to draw that line. From a business standpoint, you have to make business decisions…which requires me not to mix the two, which was a fault in the past…. I’ve got to do that moving forward.” LESSONS FOR THE FUTURE

he most glaring omission in almost all of the damning articles with lacerating headlines dicing Smith and his associates to pieces is any denial from Smith. On occasion he has commented—more often than not through a spokesperson—but largely he has remained silent through times that would have tempted even the strongest person to scream. Smith contended that in the past he had simply trusted that the truth would vindicate him. “My response to that was, the cream rises to the top,” he said. “People will find out. They’ll find out about the Katrina and the New Directions stuff, what happened to all that stuff.” To be fair, Smith has not fallen nearly as far or as hard as some of his former colleagues or associates. Smith has never been arrested, indicted or even censured. For all of the talk of investigations into his activities, he said the only instances when he has actually been contacted by authorities during his 12 years in the Senate were the IG report and New Directions subpoena previously discussed. Nonetheless, Smith told me he realized his failure to respond had been a mistake. “That’s a fault I clearly have learned not to do in the future,” he said. “Absolutely not to do. Somebody writes something, you gotta call ’em right back up or put a statement out or something. Can’t just let it sit.” Whether Smith can learn from his mistakes will be a key factor in determining how his future will unfold. All that Smith has gone through over the past years has not extinguished the fiery ambition that once propelled him to the pinnacle of state government. When he told the Daily News in April that he was contemplating a run for mayor of New York in 2013, the

20 July 30, 2012 | www.cityandstateny.com

notion was quickly derided as ludicrous. Doug Muzzio, a professor at the Baruch College School of Public Affairs, quipped to the News, “If he’s not joking, it’s the most absurd thing I’ve heard today. If he’s joking, it’s still absurd.” Be that as it may, Smith was serious. A friend who didn’t wish to betray his confidence disclosed to me that as early as six months ago, Smith had floated the idea to him of running for mayor. Even the minutest threat of a Smith mayoral run immediately gave rise to a number of conspiracy theories, alleging the true, sinister animus behind his calculation. One theory I heard often enough that I thought it worth asking Smith to address was that Smith was being encouraged to run for mayor by emissaries of Christine Quinn in an effort to cut into Bill Thompson’s vote in the AfricanAmerican community. “I’ve heard that,” said Smith, amused. “I’ve heard that Republicans are asking me. I’ve heard all kinds of rumors. I guess I’m intrigued [by] the fact that one little blurb spread that quickly, but I can tell you one thing: If I chose to get into this race, I would get into this race because I think I could do a great job as mayor of this city. End. Period.” AFTERWORD

n July 19 the first new negative article written about Smith since our interview hit the stands. Played up for maximum effect by the Daily News with a picture of a grinning Smith beside faux postcards of his destinations, it slammed Smith for “drain[ing] more than $41,000 from his campaign war chest on airfare,

Former Gov. Paterson, right, and Smith, in Albany, Monday, March 30, 2009. (Photo: AP/Mike Groll)

rental cars and hotel stays in more than a dozen cities.” The article said that Smith “did not respond to requests to explain his expenses,” so I decided to call up the senator to ask him why. After all, the revelations sounded rather mild, especially given how many elected officials routinely take junkets to faraway lands on official business. Surely Smith had to have some sort of plausible explanation. Smith sounded thrilled when I brought the article up to him. He disputed that the News had made an adequate attempt to reach him before putting out the piece, but he was pleased to announce that he had gotten a response into motion as soon as he read the article. In fact, it was on its way into the paper as we spoke. The next morning Smith called up, excited. “Did you see the News?” A follow-up article titled “ ‘Air Smith’ on training missions” told Smith’s side of the story just as he had related it to me the day before: Most of the travel had been to promote and study high-speed rail, a concentration of Smith’s, who heads a working group on the subject formed by the National Conference of State Legislators. It was all much ado about nothing, Smith claimed— and the article seemed to affirm. For once it appeared that Smith had set the record straight. At the end of our first interview, Smith said he appreciated the chance to answer questions about his past. “It’s good for me,” he confessed. “It’s liberating for me. I have not had an opportunity, other than in my own bedroom, to have a private moment for myself to talk about some of the stuff you raised, like the feeling upset about it, the feeling betrayed, unfairly treated, all that kind of stuff. But at the same time, this is the business that I chose. So whether it’s unfair, untrue, whatever else, I’ve got to manage that. I accepted that, and I fault myself for not managing it right.”

CITY&STATE

S P OT L I G H T : b a n k i n g & f i n a n c i a l s e rv i c e s

Small

enough to

fail Smaller New York banks fearful of new regulations aimed at big banks

As of July 18, 221 of the DoddFrank rule-making requirement deadlines had passed, or 56 percent of the 398 rulemaking requirements.

By Wilder Fleming

Chance

With the second anniversary of the Dodd-Frank financial-reform law earlier this month, and some 70 percent of its regulations yet to be finalized, there is a lingering doubt among the 99 percent that big banks will ever be held responsible for their actions. But for the small-banking community and some financial experts, there is uncertainty of a different kind. “There are new regulatory hurdles on banks that don’t need it and can’t handle it,” Benjamin Lawsky, the superintendent of New York’s Department of Financial Services, said at a breakfast talk sponsored by The New York Observer earlier this month. Lawsky said he worries that compliance costs associated with the complex DoddFrank regulatory framework are hindering community banks in their ability to make small-business loans and will hasten the trend of consolidation into larger firms. He also raised concerns about the

Fr ee

Pa r k in g 22 July 30, 2012 | www.cityandstateny.com

provide a very vital service.” Federal Reserve’s June interpretation of According to testimony in February Basel III, the latest international agreement provided by Martin Gruenberg, acting on capital requirements for banks. The chairman of the FDIC, community banks Basel Accords, international standards put in the U.S. held 10 percent of all banking in place after the financial crisis of 2008–09, assets, yet they make 40 percent of all are designed to insure that banks are opersmall-business loans. ating with enough equity capital to weather Federal data from December 2011 shows significant losses. that the number of small-business loans The Fed’s proposal came as an unpleasant surprise for community bankers made by community banks has fallen to the lowest point in more than a decade, valiwho had hoped the regulations would only dating the concerns of Smith and superinapply to the big financial firms, in part because they had been exempted from such tendent Lawsky, who say that hiring outside lawyers and consultants to comply with capital and liquidity requirements under new federal regulations inhibits the small Dodd-Frank. banks’ ability to lend. Mike Smith, president and CEO of the “We should be regulating ‘too big to fail’ New York Bankers Association, said that banks, but that doesn’t mean we should compliance with Basel III doesn’t just be using a ‘too big to fail’ approach with involve a one-time overhaul; the process of continuously evaluating a bank’s capital is a smaller banks,” Lawsky said. Tom Schneider, president of Pathfinder full-time job. Bank in Oswego, says he’s concerned about “Community banks, whose size can the scope of the Dodd-Frank regulations range from 50–200 employees—but a lot of and how that translates into added costs. that is branch personnel, etc.—well, it’s a “The Fed is pushing down long-term much greater burden for them,” Smith said. interest rates, which squeezes your “On top of all the adjustments to the new margins, and the additional regulations are federal law, this comes out at a particularly really adding to the expense,” he said. difficult time for smaller institutions.” With assets of around $450 million, PathSome financial experts agree that the finder primarily makes loans for residential concerns are real. mortgages and small businesses. Schneider “The biggest problem is that the burden said the bank’s role is essential to the health and growing complexity of regulation will of the community. keep small banks from entering many “When you live in your market, it affects potential businesses,” said Charles Caloyour lending decisions,” Schneider said. miris of the Columbia Business School. “There are loans that are being made in “Ironically, although Dodd-Frank seems downtown Oswego that designed to punish large wouldn’t be made by the banks, it will enshrine the “Congress large banks if they ran top banks as dominant it through the quantiin many lines of busididn’t want that tative models, but we ness simply by virtue of same level of make them because we the costs of regulatory retribution to be know that it stimulates compliance and the entry economic vitality in the barriers they will impose.” exacted upon region, and therefore is A community bank is the community better for the bank in the commonly understood to banks.” long term, because we mean any financial instihave an interdependent tution with assets totaling relationship with the less than $1 billion, but communities that we operate in.” Smith says that in New York a community Yet both Smith and Schneider admit that bank would be better characterized as community bankers don’t object to everyhaving assets under $10 billion, a figure thing in Dodd-Frank. sometimes reflected in Dodd-Frank, which “Certainly there were carve-outs within does distinguish between large and small the Dodd-Frank act for institutions below banks in some respects. $10 billion,” Schneider said. “There were The traditional lending services of elements of it that were designed to punish small banks are vital to a vibrant regional larger financial institutions, and Congress economy, local bankers say. “Community didn’t want that same level of retribution to banks operate in parallel, in complement, to the larger institutions,” Smith says. “They be exacted upon the community banks.”

Community Chest

Chance Of the 221 passed deadlines, 136 (62 percent) have been missed and 85 (39 percent) have finalized rules.

Of the 398 rulemaking requirements, 123 (31 percent) have finalized rules, and rules have been proposed that would meet 134 (34 percent) more.

Rules have not yet been proposed to meet 141 (35 percent) rulemaking requirements. (Source: Davis Polk Dodd-Frank Progress Report)

CITY&STATE

www.cityandstateny.com | JULY 30, 2012

Educate & Influence NY’s Elected Officials with:

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Elevate awareness of your organization’s Organized Labor objectives and issues in this targeted legislative advertising venue. The Special Section Features Political Perspectives on Organized Labor With: • Assembly Labor Committee Chair, Peter Abbate • NYS Deputy Secretary for Civil Rights, Alphonso David • NYC Council Speaker, Christine Quinn • NY Senate Labor Committee Chair, Joseph Robach • City Council Civil Service & Labor Chair, James Sanders (Public Officials pending confirmation)

Organized Labor Scorecard: • Major Issues at Stake • A Rundown of the Key Players • Facts & Figures About Labor in NY

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Enhance & Supplement Your Lobbying & Messaging Efforts For advertising information, please contact Jim Katocin (212) 284-9714 or jkatocin@cityandstateny.com. 24 July 16, 2012 | www.cityandstateny.com

S P OT L I G H T : b a n k i n g & f i n a n c i a l s e rv i c e s ERIC SCHNEIDERMAN

ANNETTE ROBINSON

New York State Attorney General

Chair, Assembly Banks Committee

Q: What is your top priority on issues related to banking and financial services? ES: Public confidence was severely damaged not only by the financial crisis of 2008 but by the apparent lack of accountability in the aftermath of the crash. In light of the parade of new financial-sector scandals, a recent Gallup poll found that only 18 percent of Americans have a lot of confidence in U.S. banks, which is a new all-time low since they started asking the question in 1979. I’ve spent enough time in the private sector to know that our markets can only function well if participants have trust that our laws will be enforced, that contracts will be enforced, and that everyone is playing by the same set of rules. Everyday American investors will not return to the markets or have confidence in our banks if they think that Wall Street is a rigged casino. So my top priority is to change that perception by investigating what happened in the lead-up to the crash and holding wrongdoers accountable for their misconduct to ensure it never happens again. Q: Do New York banks need stronger financial regulations? ES: Yes, the need for more effective regulation is clear, and not only from events since 2008. Since modern financial markets developed in Europe in the 18th century they’ve crashed every 10 or 20 years, except between 1929 and 1987. That period of relative stability roughly corresponds to the period in which the securities regulations of the 1930s and 1940s remained in place. That period of sensible and effective regulation ended with the resurgence of a belief that markets are self-regulating, and now the same forces that drove decades of reckless deregulation, and left us vulnerable to the crash, are fighting tooth and nail against new regulations. The Dodd-Frank financial-reform bill was intended to rein in systemic risk in the financial system, but it faced fierce opposition in Congress. Some important provisions were lost, and we now see equally aggressive efforts to gut the law in the rule-writing process.

CITY&STATE

Q: What is your top priority on issues related to banking and financial services? AR: Protecting consumers of financial services from unscrupulous financial-service providers by enacting sound laws that regulate effectively without unnecessarily burdening our licensed financialservice providers. By striking the right balance between effective regulations and promoting consumer protection, we can weed out the bad actors and give responsible financial-service providers the opportunity to prosper, which will ultimately help consumers. Q: Would stricter banking regulations hurt the Cuomo administration’s effort to be “open for business”? AR: On the contrary, smart, effective regulation would only help to weed out the bad actors and create an environment in which responsible financial-service providers can prosper. The Cuomo administration is open for business, but let’s be clear that we’re talking about legitimate businesses, businesses that are compliant with our laws and regulations. I would say that the administration’s goal is to be open for business by not creating unnecessarily burdensome laws and regulations. Q: Was the banking industry adequately punished for its role in the banking crisis? AR: No, those responsible for causing the financial crisis were not adequately punished. That fact has not been lost on the American public, either. Occupy Wall Street, to wit. The often-suggested justification for not meting out tougher punishment has been that that, in and of itself, would have created even more uncertainty in the marketplace, at a time when the government was attempting to shore up confidence in the financial system and avoid general panic. I’m sure I don’t have all the facts to be able to answer that question with complete certainty, but it sure seems that if the average Joe on the street had committed the fraud and self-dealing committed by some of these financial institutions, he would undoubtedly been convicted of wrongdoing with the abundance of evidence that existed.

DAVID FRANKEL New York City Finance Commissioner

Q: Why is the Bloomberg administration opposed to the Responsible Banking Act? DF: This legislation, by creating a new entity and empowering that entity with the responsibility not only to evaluate banks but also the needs of the city’s communities, is ill-conceived, overreaching and far too costly. Keep in mind this is not the type of regulation that would impact other areas of the banking industry that have been in the news recently. It is a completely separate type of regulation that is onerous for both the city and for the banks we deposit money with. Q: What role does New York City have in regulating banks? DF: Fundamentally the Banking Commission and the Department of Finance’s role regarding the city’s depository banks is to ensure that taxpayer money is deposited in banks that can best provide the safety and security of those deposits and the services the city needs. The legislation effectively anoints the Department of Finance a banking regulator. However, neither Finance nor any other city entity has the expertise, resources or legal authority to step into the much broader role contemplated by the legislation. This is not surprising, since bank regulation should be and currently is a matter of, primarily, national interest and, secondarily, state interest. Interposing yet another level of regulation at a municipal level threatens not only the overarching federal scheme but practically places the city at a competitive disadvantage to retain private banking functions and the tax revenues and jobs that come with them. Q: Aren’t there benefits for poor, underserved communities? DF: We recognize and fully support the need for all communities to be sufficiently serviced by banks. However, this is already a function of the federal and state governments. For example, the federal Community Reinvestment Act ratings system requires banks to report their activities at the community level for evaluation of whether the needs of communities are met. The Banking Commission considers the federal CRA ratings and related state ratings in reviewing a bank’s designation or redesignation application.

DOMENIC RECCHIA Chair, New York City Council Finance Committee

Q: Why did you support the Responsible Banking Act, which Mayor Michael Bloomberg deemed “ridiculous”? DR: This City Council, under the leadership of Speaker Christine Quinn and me as the finance chairman, were the ones who had a hearing on the Banking Commission. People never even knew that the Banking Commission existed in New York City. And these banks get millions of dollars in New York taxpayers’ money in deposits, and we want to know, “What are you doing in our communities, not only as far as donating, but how many loans have you given out to small businesses? How many loans have you given out to minority-owned businesses?” The banks say how many loans they modify and how many small-business loans they gave out, but they don’t say how many they do for the city. But now they do, after I brought it to their attention, when I came down on them. “What are you doing in BedfordStuyvesant? What are you doing in the South Bronx? What are you doing in Coney Island, Brooklyn?” Q: Bloomberg said it’s burdensome and should be left to state and federal regulators. DR: It’s not burdensome. Philadelphia does it, Cleveland does it, other big cities do it. If they can do it, New York City certainly can do it. They’ll argue a lot of this information is on file with the state and federal government, but it’s not specific for our communities. We want to know, locally, what they’re doing. That’s what this is going to do. Q: What impact are Wall Street tax revenues having on the city budget? DR: The tax revenues have not been coming in like we would like to see it. Wall Street is a big operation; we rely heavily on financial services to provide tax revenues. We’re trying to work with them and see how we can help them and keep jobs in New York City, and the banking industry throughout the world is going through such radical change every day. What’s happening in Spain, what’s happening in Greece, is affecting the New York City economy. We have to keep an eye on what’s going on out there.

www.cityandstateny.com | July 30, 2012

S P OT L I G H T : b a n k i n g & f i n a n c i a l s e rv i c e s Pa

7.9 percent foreclosure rate

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Community Chest

Income Tax Wall Street tax revenues: New York State and New York City government have each relied heavily on Wall Street for their tax revenues, and both suffered when bonuses for banking executives withered away in the wake of the financial crisis. Lately, however, the Bloomberg administration has highlighted the growing diversity of New York City’s economy, with growth in areas such as technology, film and tourism.

Middletown

Consumer protection: A key goal of Gov. Andrew Cuomo’s Department of Financial Services is to enhance consumer protections. Since he took the reins last year as the first superintendent of the department, Benjamin Lawsky has focused on assisting homeowners facing foreclosure, targeting no-fault insurance fraud and investigating insurance rates.

SCORECARD Benjamin Lawsky: The superintendent of the new Department of Financial Services drives state banking policy and also deals with some federal banking issues. Attorney General Eric Schneiderman plays a major role in investigating banks, and often does so on a national stage, as in during his critical role in the 50-state mortgage settlement. The banking committee chairs in the Legislature are State Sen. Joseph Griffo and Assemblywoman Annette Robinson.

Chance

Centre St.

New York City government: Finance Commissioner David Frankel is a member of the city’s Banking Commission, along with Mayor Michael Bloomberg and City Comptroller John Liu. The commission would play a role in the Responsible Banking Act, which Bloomberg vetoed, a veto the City Council overrode. Councilwoman Gale Brewer was the force behind another local banking bill, which capped the size of banks on the Upper West Side.

Chambers St. Broadway

Foreclosures: It’s been almost five years since the financial crisis hit, and many cities are now seeing their foreclosure rates stabilize, but in New York the improvement has been unsteady. And though the state as a whole has fewer foreclosures than most others, the process takes much longer to complete here, in recent cases averaging more than 1,000 days, which can be burdensome for banks and make it hard to maintain foreclosed properties.

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Pearl Street

New york

State government

Newburgh

State Street Eagle Street

Federal government: The House Financial Services Committee, which has jurisdiction over issues related to banking and securities and exchanges, has representation from eight New Yorkers, with Democratic Rep. Carolyn Maloney and Republican Rep. Peter King leading the state’s delegation. Sen. Charles Schumer, the state’s senior member in the U.S. Senate, also serves on the Senate Banking Committee. William Dudley is the president of the Federal Reserve Bank of New York.

Poughkeepsie

Community Chest

THE PLAYERS

Visiting

7.9 percent foreclosure rate

9.5 percent foreclosure rate, 25th highest in the nation

10.1 percent foreclosure rate, 23rd highest in the nation

Northern New Jersey

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Long IslanD

Go to Jail LIBOR: A federal investigation into LIBOR, the London Interbank Offered Rate, is hitting home in New York, where many big banks are headquartered and where Attorney General Eric Schneiderman has partnered with Connecticut to launch his own investigation into manipulation of the key rate during the financial crisis. No top banking executives have been convicted in the wake of the crisis yet, though some see the LIBOR case as a chance to finally hold banks accountable.

Chance

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Kingston, N.Y.

The banks Major banking institutions, whether they’re investment banks like Goldman Sachs or Morgan Stanley, or commercial banking behemoths like JPMorgan Chase and Citibank, are headquartered or have operations in New York City, which has long been the country’s financial center.

Just (Sources: Foreclosure-Response.org, RealtyTrac, NYC.gov, Department of Financial Services, FDIC)

26 July 30, 2012 | www.cityandstateny.com

CITY&STATE

B AC K & F O R T H

candid camera? C

onservative activist and Project Veritas founder James O’Keefe, 28, is one of the more controversial figures currently operating in the media landscape. His hidden-camera videos of ACORN, Planned Parenthood and NPR have served as a lightning rod, alternately drawing praise and scorn, and often sparking national debate. In his most current video O’Keefe and his team of “citizen journalists” turn their lens on New York politics, going undercover in an attempt to get union officials and a former assemblyman to help them obtain state and federal contracts to fund the company “Earth Supply and Renewal,” whose sole stated mission is to dig holes—then fill them back up again with dirt. City & State Editor Morgan Pehme asks O’Keefe the true intentions behind his work, whether he thinks Republicans are corrupt too and whom he is planning on filming next. The following is a (fairly?) edited transcript.

JO: In a way, yeah. They’re taking a damning statement and a non-damning statement and saying, “Well, this non-damning statement, ah-ha!” But that statement doesn’t mitigate or reduce the damningness of the statements made by the officials over here, and here, and here. CS: It did seem the union leaders questioned the credibility of the people who had come to see them on your behalf, and offered suggestions to legitimize the business being done. Would you say that there was some skepticism on their part? Do you see that at all? JO: Only from the gentleman on the right, the former assemblyman, Ron Tocci. We sensed mild skepticism from him. He was telling us to “create a purpose. Maybe if you do something else?” But the other two gentlemen, the Broome County legislator and the business manager for L.I.U.N.A., were very candid and very open and very willing to help us obtain funding. We did sense some hesitation, and I did include in the produced version Ron Tocci saying, “You need to find a purpose, a justification for what you do,” which I interpreted as, “Fine, just create some type of reason to have it go through.”

City & State: A spokesperson for Assembly Speaker Sheldon Silver said in response to your most recent video, “This is not reporting; this is not journalism. It doesn’t even rise to the level of a comic strip. This is the kind of stuff that gives honest reporters a bad name.” How do you describe what you do? Are you a journalist? A satirist? A provocateur? James O’Keefe: I think it’s a form of investigative reporting. It is certainly a form of reporting that has been around for decades through 60 Minutes, Dateline, Primetime Live. It is the citizen-journalism Internet version of that, but it is necessary because we go places and shine a light on issues that other news organizations are unwilling or unable to go.

CS: In the unedited version of the video there was a jump cut at a certain point, and then it seemed like the time code skipped forward eight or nine minutes. What happened to that missing video? JO: It might be [because] the camera we use only records 22 minutes at a time, so there’s three videos we had to put together. CS: Your critics despise you and your supporters lionize you. Are you trying to inspire such strong reactions? JO: No. I definitely do not intend to do that. It has sometimes been difficult to endure the hatred. No one likes being hated. But you make enemies when you expose certain things, when you expose certain subjects. I think it was Rush Limbaugh who…said at some point you begin to realize making enemies is a form of flattery, being hated is a form of flattery. But it’s not easy. It’s certainly not intentional.

CS: What was the specific intention of this most recent video? JO: The intention is to expose the nature—the true nature—of stimulus money. Bureaucrats do not have the incentive to direct stimulus money to good uses. Instead they have the incentive to direct that stimulus money to purposes that only appear to create jobs, such as digging holes and filling them back in again. Corrupt institutions such as the union portrayed in the video are only too happy to help those bureaucrats with that illusion. CS: Media Matters posted an analysis of your most recent video purporting to debunk To read what you had shown. They said that “the raw the full footage of O’Keefe’s supposed shock video transcript shows nothing more than three men kindly of this interview trying to explain to two youngsters that they and watch can’t run a business just by digging holes and O’Keefe’s newest filling them with dirt, and that the governvideo, which ment won’t pay them to do that, either. The targets New York only thing these men are guilty of, if anything, unions and elected is being too polite to the O’Keefe actors.” How officials, go to would you respond to that claim? cityandstateny.com. JO: I think if you watch the full footage, it’s completely untrue. There is a criticism about editing, but what you saw in the tape was a series of damning and candid revelations by the three individuals, and then Media Matters took one piece of tape that really had nothing to do with those damning revelations and said, “Ah-ha! This has been edited out.”



CS: Are you saying Media Matters is cherry picking, the way they’re accusing you of doing?

CITY&STATE

CS: What do you think is most misunderstood about you? JO: What my motives and intentions are. What my passions are. Where my heart lies. At the end of the day, this is…about morality, wrongdoing, virtue and unethical behavior. Exposing that, visualizing for people, to open up their eyes and get them to care about things they otherwise would not care about…revisit issues in a new way. It’s really not about some partisan agenda. I don’t have anyone telling me what to do. That’s the great advantage of having a nonprofit and a lot of small donors. I do what I think is right, and I go after issues I think are a priority, that no one else will go after. I think if people get to know me and work with me and find that out, they’ll be very surprised. And as we continue in the future, we’re going to expose and go after things that surprise people. Just give it some time. CS: Can you give us a preview of your next video? JO: Well, we do have more on this particular subject, Earth Supply and Renewal. And we’re going to be releasing more tapes in the coming weeks. The elections are coming up in three and a half months, so things we do are going to be very voter-integrity focused. Election finances, campaigns, ballots, things of that nature, because Photo by James it is the election. It is a huge issue. But after that, who knows? Kelleher

www.cityandstateny.com | July 30, 2012

D E D N I L B H

A F A NY$

D E E R BY G

NYSAFAH: YOU ARE LOSING SIGHT OF REALITY. In 2011, the HPD kept $9.8 million in unused funds that should have been returned to the NYC Treasury. In 2012, Wendell Walters, former HPD Assistant Commissioner pled guilty to stealing $600,000 in a kickback scheme involving dozens of contractors. Two other HPD employees and three developers have been indicted in a scheme to defraud taxpayers with gains totaling as much as $500,000.

DEMAND TRANSPARENCY, HOLD HPD & NYSAFAH DEVELOPERS TO THE SAME STANDARD AS ALL NYC AGENCIES.

THE MONEY IS THERE. Support Intro 730.

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