Monday, October 14, 2013

Governor Andrew Cuomo Quashes Moreland Commission’s REBNY Subpoena and Other Follow-The-Money Subpoenas Hitting Too Close To Home

New York Governor Andrew Cuomo looked pretty good when, at the very beginning of July this past summer, he created a special 25 member panel Moreland Commission to investigate corruption and misconduct of public officials in our state capital of Albany and, in relation thereto, to recommend changes to the state’s election and campaign fund-raising laws.

He looked good, though sometimes what is most important for you to know about government is not what’s being done, but what is not being done: It has recently been reported that the governor is restraining the commission he created from issuing subpoenas to investigate exactly what the commission was created to investigate.  Cuomo’s administration has reportedly intervened to quash follow-the-money subpoenas that were hitting too close to home for Cuomo, including a subpoena that was to have been sent out to REBNY, the powerful Real Estate Board of New York, concerning highly lucrative tax cuts bestowed upon five  developers with the secretive passage of a highly suspect legislative provision.

The New York Times story about Cuomo’s creation of the Moreland Commission is here: Cuomo Creates Special Commission to Investigate Corrupt Elected Officials, by Thomas Kaplan, July 2, 2013.  The more recent story appearing there months later about Cuomo’s restraint of that commission is here: Cuomo’s Office Is Said to Rein In Ethics Board He Created, by Jesse McKinley and Thomas Kaplan, October 8, 2013

Cuomo needed to look good and to distinguish himself from the rest of Albany when he appointed the corruption investigation commission in July.  Everywhere you looked there was more Albany scandal and nobody knew what was coming next.  In April, announcing two different prosecutions of capital legislators the same week U.S. Attorney Preet Bharara said the investigation pointed to rampant corruption in New York’s capital and as reported by WNYC’s  Anna Sale he “specifically called out other lawmakers, without naming names, for standing silent while it went on” warning “that the Feds are watching.”  (See: WNYC News: Another Political Scandal Ensnares New York Politicians, Thursday, April 04, 2013, by Anna Sale.)

The two scandals of that week were the announcement of the federal case against State Senator Malcolm Smith and Councilman Dan Halloran and then the bringing of federal charges against Bronx Assemblyman Eric Stevenson alleged to have accepted cash bribes to help businessmen set up an adult day care center in the Bronx.  The second investigation of Stevenson involved a fellow Bronx Assemblyman Nelson Castro wearing a wire to serve as an informant in the case and, thereby, in a deal with the prosecutors, avoid other possible charges against himself.  Castro's cooperation with law enforcement officials began in 2009 after he was indicted by a Bronx grand jury for multiple felonies.  The case against Malcolm Smith and Dan Halloran in connection with which four others were arrested , including two Republican party officials and the mayor of Spring Valley, N.Y., involved Smith trying to bribe himself onto the Republican ballot for New York City Mayor and charges against the mayor of Spring Valley, N.Y., a village in Rockland County, and her deputy, accused of taking bribes to sell village land for a proposed community center.

As shocking as it was that Assemblyman Nelson Castro has served in the legislature for years while wearing a wire, one month after that revelation news was announced that another serving Albany legislator, Shirley Huntley, serving as state senator until November 2012 when she lost her bid for reelection, had been wearing a wire to record legislative comrades (seven others) at the same time.  She wore a wire in the summer of 2012 after being confronted with evidence of her own wrongdoing, “evidence of crimes that included embezzling $87,700 from her Queens nonprofit.”  (See- WNYC News: Another Legislator Served While Wearing a Wire, New Court Docs Show,  Friday, May 03, 2013, by Anna Sale)

The New York Times story reporting Cuomo’s establishment of the Moreland Commission (“two weeks after the Legislature concluded its annual session without approving any new measures to address the recent corruption scandals”) included all sorts of assurances about its reach, including this quote from the governor at the news conference held in Albany:  
The people of this state should sleep better tonight knowing that there is a mechanism in place to make sure their government is not only competent, but is also meeting the highest ethical and legal standards.
The article noted that, while the Moreland Act under which the commission was created itself only allowed scrutiny of Mr. Cuomo’s executive branch, Cuomo was working with State Attorney General Eric Schneiderman deputizing and empowering members of the panel as deputy attorneys general, so that according to Mr. Schneiderman:
There’s no substantial legal argument against them looking into every aspect of the state government. . . Their jurisdiction is as broad as we can grant using the full authority of my office and of the governor’s office.
According to the Times, William J. Fitzpatrick, the Onondaga County district attorney, one of three appointed leaders of the panel, “suggested the panel would not shy away from scrutinizing the governor’s fund-raising,” saying:
He’s not looking for rubber stamps . . .He’s looking for an independent commission, and we’ll do what Deep Throat told Bob Woodward to do: follow the money.
That was significant in that U.S. Attorney Preet Bharara has been communicating to the media that “a show-me-the-money culture seems to pervade every level of New York government,” and, as the Times made clear, “Mr. Cuomo is a prolific fund-raiser, with more than $22 million in his campaign account as of January.”  The flow of money to public officials in Albany is important in two respects: Campaign contributions flowing to those running for office, and because Albany legislators who officially work part-time take in significant other income.  The New York Times editorializing in September about the work in store for the Moreland Commission noted that 115 of the state’s 212 legislators earn income on the side that can be secret.  (See: Editorial- New York Legislators’ Secret Income, by The Editorial Board, September 23, 2013.)

The Daily News also had its own follow-the-money ideas about what should be investigated.  Not many days before Cuomo created the new commission the Daily News had reported with outrage that five luxury developments in Manhattan were singled out for “tax breaks — which could cost the city tens of millions of dollars in property taxes” flowing from “language quietly inserted into a bill that sailed through the state Legislature.”   The exemption from local real estate taxes was not part of any broadly administered or thought out local program or the subject of an economic benefit analysis.  On the contrary, the secretly slipped in exemption overrode what local officials analyzed would e best for the city in terms of collecting taxes, but in the Daily News article Steven Spinola, president of the Real Estate Board of New York, said the tax breaks were deserved, and:
Whenever anybody doesn’t like something, they make an argument that some quid pro quo was made. I totally reject the suggestion.
(See: NY lawmakers mandate massive tax breaks for millionaires’ Manhattan apartments
Language quietly inserted into a bill that sailed through the state Legislature singled out five NYC developments to make them eligible for tax breaks that could cost the city tens of millions of dollars in property taxes, the Daily News has learned. Developers of four of the projects, their relatives and affiliated companies gave $1.5 million to various state campaign committees from 2008 to 2012. by Daniel Beekman, Monday, June 17, 2013.   See also: NYC politicians blast ‘galling’ Albany tax deal for luxury apartment towers- Officials seethed a day after the Daily News reported that five upscale developments were given property tax breaks by state lawmakers. 'Extending tax breaks to super-luxury apartment buildings in Manhattan is wrongheaded and shows grossly misplaced priorities,' City Controller John Liu said. By Erin Durkin AND Daniel Beekman Tuesday, June 18, 2013.)

Days later the Daily News editorialized that the “tens of millions of dollars” tax breaks “Mr. and Mrs. Taxpayer” were subsidizing were a “monument to fleecing,” pointing out that the “Bloomberg administration concluded years ago that the abatements [the developers seized with secret legislation] were far too generous and demanded too little affordable housing.”   (See: Opinion- A towering insult-  Why should taxpayers subsidize luxury condos for billionaires? New York Daily News, June 24, 2013.)
In August, the Daily News followed up with another editorial calling for the Moreland Commission empowered by Cuomo and the Attorney General to get to the bottom of what had happened when the millions of dollars of tax breaks were granted.   (See: Opinion- From out of the murk- Cuomo’s Moreland Act panel has to unravel the mystery of the luxury tax breaks, New York Daily News, Wednesday, August 21, 2013.)

The editorial observed:
Responding to the Daily News revelation that the law cut taxes on a W. 57th Street residential tower marketed to billionaires, Gov. Cuomo’s anti-corruption commission issued subpoenas to the builder, as well as to the real-estate interests behind the other four projects. News Albany Bureau Chief Ken Lovett got a jump on that inquiry with word that Assembly Speaker Sheldon Silver’s office was a pivotal player in the deal.
The Real Estate Board of New York, the industry lobbying group, has now provided additional information about a months-long series of events far from public view, in keeping with the Legislature’s practice of doing virtually everything in closed-door discussions.
The News notes that who slipped the provision into the bill isn’t known:
Then someone — no one has owned up — drafted language that inserted the properties into a massive bill that encompassed all the housing programs.
And noted that elected officials, including Assembly Speaker Sheldon Silver and Senate Republican Leader Dean Skelos, are not being “forthcoming.”  The caption to the picture for the editorial, a picture of Silver and Skelos is: “Silver or Skelos? Who put the high-rise tax break into the bill?”  Who could say?  REBNY could almost certainly say, which is something the editorial hints at.

The Daily News editorial concludes: “every participant must be brought to light by Cuomo’s Moreland Act commission.”

In its own editorial about the secret legislator income that it thinks the Moreland Commission should be investigating The New York Times informed us:
The Assembly speaker, Sheldon Silver, made up to $920,000 for his work with a law firm and his investments; the Senate Republican leader, Dean Skelos, earned as much as $263,000 in legal work, investments and deferred compensation.
(Editorial: New York Legislators’ Secret Income, by The Editorial Board, September 23, 2013.)

At just about the same time as the Daily News was calling for a deeper investigation of the granting of these multimillion dollar tax breaks to connected real estate developers, another story was breaking with respect to what activities were being investigated by the Moreland Commission that touched upon Speaker Silver’s relationships:  Political fund-raiser William E. Rapfogel, who ran the influential Metropolitan Council on Jewish Poverty, was abruptly fired from his position after an internal investigation concurrent with investigations of the commission pertaining to “financial irregularities and apparent misconduct” in the attempted steering of political donations “kickbacks” from insurance companies.  Mr. Rapfogel’s wife Judy “is the longtime chief of staff to the State Assembly speaker, Sheldon Silver.”  (See: Power Broker, Fired, Faces Inquiry on Political Donations, by David W. Chen and Kate Taylor, August 12, 2013.)

Norman Order has pointed our repeatedly in Atlantic Yards Report articles that the Rapfogel investigation could, in multiple possible ways, lead into connections with Forest City Ratner and its Atlantic Yards mega-project.  Among other things, Mr. Oder has noted that one of the sons of Mr. Rapfogel and his wife, Michael Rapfogel, is the “Forest City VP of External Affairs who's the developer's chief legislative liaison.”  (See: Tuesday, August 13, 2013, The surprise firing of power broker William Rapfogel: four Forest City Ratner angles, including Barclays Center charity event and campaign support for Tish James challenger, Monday, September 16, 2013, Times digs into investigation of the Met Council's Rapfogel; will it touch Silver and/or Forest City?, Wednesday, September 25, 2013, Met Council's Rapfogel said to have kept $1 million out of $5 million stolen; gave $100,000 to help a son buy home, and Wednesday, August 14, 2013, Why can't candidates return funds from developers receiving subpoenas, as Albanese suggests? Also, why campaign contributions suggest de Blasio will go light on Atlantic Yards .)

It would be nice if, as the Daily News urged “every participant” in the granting of the tax cuts could be brought to light.  To this end the commission had drafted a subpoena to go to REBNY, along with other subpoenas, all of which could have shed light on these matters and, unfortunately, the Cuomo administration reportedly intervened to quash them before they were ever issued.

Last week Ken Lovett, Albany bureau chief for The Daily News, appeared on the Brian Lehrer show to talk about what Cuomo apparently doesn’t want the Moreland Commsion looking into: The Brian Lehrer Show- Anti-Corruption Commission Update, Thursday, October 10, 2013

Cuomo reportedly exercised influence to ensure that three commission subpoenas that were “set to go out” did not.  The subpoenas were to go to:
    1.    Ethics Commission and the Legislative Ethics Commission- (This subpoena employed the smart strategy of looking for prior complaints against legislators as pointers to what needs to be looked into). 
    2.    REBNY- Tax breaks for five developers- Same five developers gave a lot of money to Cuomo when he was signing the bill.
    3.    State Democratic party controlled by Cuomo.
Mr. Lovett explained that (as noted previously above) some of the very first subpoenas the commission has sent out were to the five developers who had received the lucrative tax breaks secretly snuck into the housing bill.  The REBNY subpoena would have followed up, but Mr Lovett explained that:   
We found out that those same five developers gave a lot of money to Governor Cuomo, particularly around the time the was signing the bill.  That raised questions.  REBNY was all part of that. REBNY was also very close to the Independence Party which was also getting subpoenaed for its relationship with the state senate Republicans.  So REBNY. . . There was a lot of interest from both those angles, and that subpena ended up not going out.
Mr. Lovett said that despite official denials and acknowledgment of frequent contact with the Governor’s Office and Attorney General’s Office, “sources close to the situation say . . .they were specifically told [by the Governor’s Office] not to send the subpoena to RBNY, not to send subpoenas to the Legislative Ethics Commission and the State Ethics Commission.”

It’s worth listening to Mr. Lovett’s interview with Lehrer which gets into many more details. It’s more informative and nuanced than his fairly short Daily News articles.  See below:  Cuomo's anti-corruption panel stops at investigating his own Democratic party- A subpoena that sought to seek information on the New York Democratic party’s spending from its ‘housekeeping’ account was never sent, sources tell the Daily News.  Thursday, October 3, 2013,  Gov. Cuomo leans on ‘independent’ corruption panel, Team Cuomo now has final say over some subpoenas and other actions, according to multiple sources.  Monday, September 30, 2013,  Cuomo doing damage-control over anti-corruption commission — gets no favors from GOP-  Cuomo may want to reignite talks with the Legislature on ethics reform, but Senate Republicans are letting him know, says an insider, ‘We may very well do it, but we’re not doing it on your time frame.' Monday, October 14, 2013.

In the Lehrer interview Mr. Lovett makes the point that the value of the commission’s work goes beyond investigating what is illegal, because as Mr. Lovett puts it: “Some of the worst stuff is considered legal right now.”

In an August 5, 2013 press release concerning the work of the commission Common Cause addressed itself to the money flow from the real estate industry that is, but shouldn’t be legal: "Moreland Monday" Analysis of REBNY Contributions Raises Serious Issues for Commission to Consider.

Before it concludes, the press release addresses itself to the technical LLC (Limited Liabiluity Corporation) loophole that allows real estate companies to give virtually unlimited money to political campaigns while concealing the money's source.  And it quotes Susan Lerner, Executive Director of Common Cause/NY, pointing out how vast a vast flow of real estate money to upstate legislators then governs what becomes law in New York City:
Our analysis shows a skillful and calculated manipulation of all of the weaknesses in New York State's campaign finance laws by New York City's real estate industry, which uses every trick in the book to insure that the investment they make in plentiful campaign contributions garners an extraordinarily large return at the expense of New York City's tenants and taxpayers. . .  Legislators from outside New York City are thus encouraged to pass laws which burden New York City residents and have no impact on their own constituents but serve to maximize the campaign contributions they receive. We urge the Moreland Commission to use the full scope of their investigatory powers to fully examine this situation and recommend policies to end this exploitation.
The press release starts out as follows:
A new "Moreland Monday" analysis released today by Common Cause/NY is raising serious questions about the potential influence of tens of millions of dollars in campaign contributions on public policy relating to real estate and development in New York City. Since 2005, REBNY (Real Estate Board of NY) and the 37 companies comprising its leadership have contributed $43.9 million to state and local candidates, committees, and PACs. REBNY's contributions have increased in recent election cycles, with $17.1 million given since 2011 alone.

The Fair Elections for New York campaign is calling on the newly created Moreland Commission to subpoena all relevant information related to contributions as part of their sweeping investigation of corruption in New York State.

Common Cause/NY's analysis reveals that the State Senate is the top target of REBNY money and that the overwhelming majority flows to lawmakers who represent districts outside of New York City: Since 2011, REBNY and its leadership have given $3.2 million to candidates and committees in the State Senate. Over 73% of contributions to candidates went to districts outside of New York City. Similarly, over $2.4 million (75%) went to Senate Republicans. By comparison, Senate Democrats received $500,000 while the four-member Independent Democratic Conference received $308,000.
Noticing New York has always focused on development in New York City and its none-too-pleasant associated politics.  For so long as the world of New York development continues to be a baffling construct of complicated and arcane subsidies conjoined with discretionary public official approvals having significant financial ramifications, that world is going to be awash in the vast expenditures of political money it will attract.  It exacerbates problems tremendously that the flow of such money even when accompanied by fairly explicit quid-pro-quos is almost completely unregulated, uninvestigated and virtually legal.  Likely, it is a vicious cycle with the impossibility of regulating political money generating more complex obscurity in the world of real estate and vice versa.

In the end, it means is that, because organizations like REBNY are not looking out for the greater good, the city is diminished with each tax break, each subsidy, each zoning change, each variance that is improperly sold off to behind-the-scenes manipulators.  Why?  Because those are the things our public officials control and therefore have available to sell.  Unfortunately, the impoverishment of the public realm goes beyond even this: Our public officials are also officially entrusted with the assets that the public owns, and so in this world where money spent behind the scenes holds too much sway we see that our public officials are willing to sell off such public assets to the real estate industry as well: Our parks, our hospitals, our libraries, our NYCHA public housing playgrounds, our schools, our streets, avenues and sidewalks, our highways.  Nor does it even stop there: With eminent domain our public officials believe they are entitled to sell off the private property of citizens, and do.

Perhaps organizations like REBNY ought to perceive that a diminished city impoverishes us all, including, collectively, every property owner and developer within that city they represent.  Perhaps these organizations ought also to perceive that the cultural corruption of what is going on, whether or not it is exactly legal, similarly impoverishes us all.  They don’t apparently understand this..

Governor Cuomo didn’t invent the corruption in Albany.  There are those who might argue that he feels trapped by it, even as he knowledgeably uses and navigates through it it to get results.  His eye is discernibly on higher office.  In contrast to what is happening nationwide, he wants to hold up New York as an example of a state where Democrats and Republicans can work together.  Well, one example of such across-the-aisle cooperation is that it is expected that members of both parties, Democrat and Republican, would both be mightily riled if Cuomo more aggressively pursued reforms that would turn off the corrupting money spigot. . . .

. .   Nevertheless, it is disheartening to find our New York governor quashing the REBNY and other subpoenas, largely abandoning the purpose of the recently appointed Moreland Commission.  On the Brian Lehrer program there was talk of rumors that the commission might be shut down prematurely, its work largely undone, and that the governor would seek to kick the political can way down the road by proposing a constitutional amendment to be passed by the electorate.

At the same time we are reading about Governor Cuomo’s effective abandonment of the Moreland Commssion’s mission we are reading that on the other side of the river, in New Jersey, another governor with national political aspirations, Governor Christie, intervened to quash an unwanted investigation of supporters close to him:  The Quashing of a Case Against a Christie Ally, by Michael Powell, October 10, 2013.

New Jersey may be lucky- That story reported by the Times involved local corruption in one small town: “The 43-count grand jury indictment read like a primer in small-town abuse of power.”

According to the Times:
When the charges became public, the indicted undersheriff, Michael Russo, shrugged it off. Governor Christie, he assured an aide, would “have this whole thing thrown out,” according to The Hunterdon County Democrat. That sounded like bluster. Then the state killed the case.
New Jersey, courtesy of its intervening governor, gets uninvestigated small town abuses of power.  In New York we get a real estate industry that’s out of control.

What the Times asks with the quote (from a sidelined prospector) it selects to end of the Christie/New Jersey article is just as applicable to Governor Cuomo quashing the investigation of the real estate industry’s corrupting influence on politics in New York:
I think about what happened all the time; it wasn’t subtle, . . . . In the end, it’s easy to get rid of a prosecutor. But it raises that question: In New Jersey [substitute New York], who watches the watchman?

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