Mayor Bill de Blasio is personally soliciting donations for his political action committee – reaping money from sources that include individuals seeking favorable treatment from his administration, an investigation by THE CITY found.
The revelations about de Blasio’s Fairness PAC – which he’s using, in part, to pay for travels exploring a presidential bid – followed the city Department of Investigation’s finding he broke city ethics rules in a previous fundraising campaign.
Mike Casca, a Fairness PAC spokesperson, confirmed the mayor is personally seeking donations for the group. Each donor’s name is run through the city’s database of entities doing business with City Hall, said Casca, adding the PAC won’t accept a check from anybody on the list.
But the so-called Doing Business database, which includes only top executives involved in certain transactions, is hardly complete.
A basic search of other databases – including the list of lobbyists – revealed multiple examples of donors who were pressing de Blasio’s team on active projects while writing checks to his PAC, THE CITY found.
Meanwhile, the mayor is working the phones.
His public schedule for August through December shows a total of 125 hours dedicated to fundraising phone calls. His “Call Time” included 38.5 hours in August, 25 hours in September and 38 hours in October. It’s unclear how much of this time was dedicated to Fairness PAC fundraising.
Casca said the “mayor voluntarily set out a strict standard” in declining donations from entities in the Doing Business database, and criticized the examples uncovered by THE CITY as overly broad.
But Betsy Gotbaum, executive director of the government reform group Citizens Union, said the mayor and his Fairness PAC need to be more vigilant in assessing potential donors.
“They should be extremely careful not to ask anybody – or to double-check to make sure people are not – doing business or trying to get business with the city,” said Gotbaum, a former city public advocate. “[The mayor] should not be asking them.”
Transparency Issues on Conflicts Guidance
A DOI report filed in October concluded de Blasio had violated city conflict-of-interest rules by personally soliciting donations for his now-defunct non-profit Campaign for One New York from entities with business pending before the executive branch.
DOI found the mayor had twice been warned not to do that – and detailed his pursuit of checks from several developers who, at the time, were pursuing favorable treatment from City Hall.
With Campaign for One New York, the mayor released a letter he got from the city Conflicts of Interest Board spelling out the rules for his fundraising.
With Fairness PAC, the group’s lawyers sought unspecified “advice” from COIB, but Casca declined to provide details.
Casca said only that the PAC’s lawyers did not ask about fundraising because they believed that was covered by the state Joint Commission on Public Ethics and the Federal Election Commission. They “did seek other advice,” which he wouldn’t describe, and dubbed COIB’s guidance to the Fairness PAC as “privileged communications.”
THE CITY reported last week that Campaign for One New York is the subject of an ongoing Joint Commission on Public Ethics probe.
Questions on Vetting Process
A key finding of DOI’s report on de Blasio’s Campaign for One New York fundraising was the group’s failure to adequately check potential donors to see whether they had business with City Hall. In the first three months, during which de Blasio raised $1.37 million, DOI found there was no vetting process.
The vetting procedures for Fairness PAC, which raised $470,000 through the end of 2018, appear far from comprehensive.
THE CITY easily found multiple Fairness PAC donors who – at the same time they were writing checks for the mayor – had lobbyists on retainer pressing City Hall for agency approvals related to their projects, including zoning changes and tax breaks.
In our view, when someone donates to a campaign, to the legal limits of that campaign, the politician is beholden.
Politicians, lobbyists and the kingmakers of New York know how the system works. A person can legally donate to the Democratic Committee, to de Blasio’s campaign bids as mayor and now as a potential Presidential candidate, to the not-for-profits associated with the Mayor and to other small organization associated with the mayor. None of those donations is illegal. To the best of our knowledge, even if all roads lead back to de Blasio, even if each penny somehow washes through de Blasio’s hands like sands in an hourglass, the donations are still quite legal, but are they really?
If when grossed-up the donations are all legal, in our view when taken as a whole, the gross-up of the aggregated proceeds of those donations may amount to a form of legal bribery. It should be stopped. We assert further that the aggregated proceeds of the donations could amount to a form of money laundering and conspiracy and while it may be legal (or not) we are most certainly not sure it is ethical.
As a political matter, De Blasio’s loyalties, and those of each of the organizations from which he obtains financial assistance, must naturally rest with the person who has a shekel here, a dollar there, even if each was given legally. And, we don’t see how it is not a conflict of interest when there is a person within the entire structure that sits on multiple boards or within the rank and file of multiple organizations with which de Blasio works and from which he gains his political clout (and perhaps his legal or campaign advice). A contract here, a faulty appraisal there, the closing of an entire hospital center for luxury redevelopment, leaving people on the streets, all legal – “ish?”
We posit that if the people involved in the multiple organizations are also those chosen to make kings out of Judicial hopefuls, to destroy careers when necessary, to allocate money to political hopefuls and the list goes on, there can be nothing but a conflict of interest.
Someone should be paying attention lest New York, more specifically Brooklyn, sink into the abyss of corrupt G-dfather like politics.
New York City Mayor Bill de Blasio is no stranger to fundraising scandals, even if the allegations never fully stick. Just last week, The City reported on a previously undisclosed investigation by the city Department of Investigation into potential conflict of interest violations in relation to de Blasio’s fundraising. Earlier this month, the mayor received scrutiny for receiving donations from the lawyer at the heart of a controversial real estate deal between the city and shady landlords.
Here are the other times de Blasio’s fundraising tactics have gotten him into hot water:
Federal campaign finance investigation
In 2013, de Blasio set up a nonprofit called the Campaign for One New York to support his agenda. The now-defunct organization came under federal investigation for possible campaign finance violations in 2016. Federal prosecutors from the Southern District of New York subpoenaed thousands of emails and documents from the mayor, his aides, donors to both his 2013 mayoral campaign and the Campaign for One New York to see if donors received favorable treatment from the de Blasio administration. The investigation led to the indictment of two de Blasio donors who became cooperating witnesses – restaurateur Harendra Singh, who admitted to attempting to bribe the mayor through straw donations made to his actual campaign account, and real estate developer Jona Rechnitz, who pled guilty to conspiracy charges and later testified about his close relationship to de Blasio and other benefits as a result of his donations and fundraising. At the investigation’s conclusion in 2017, federal prosecutors did not press charges against de Blasio, but did say that he acted on behalf of donors who sought favors.
Rivington House lobbying
De Blasio and his administration received extensive scrutiny from both New York City Comptroller Scott Stringer and the city Department of Investigation for how the city handled the sale of Rivington House, a former nonprofit health care facility, which is now being developed for residential purposes. A for-profit nursing home company, Allure Group, bought the property in 2015 and paid the city $16 million to lift a deed restriction that required the property to remain a nonprofit health care facility, with the expectation that the company would instead build a for-profit nursing home. Instead, Allure sold the property to Slate in 2016, which plans to convert the building to residential use and build condos. The city admitted that it had been “misled” by Allure. Prominent lobbyist and frequent de Blasio donor James Capalino represented both the original owner and Slate. Capalino steered $40,000 to de Blasio 2017 reelection campaign and cut a check for $10,000 to Campaign for One New York after pressuring the city to change the deed.
Around the same time, de Blasio also made headlines for a questionable fundraiser hosted by Suffolk Construction in Boston, a company that is currently looking to expand its business in New York City and recently hired de Blasio’s former public housing commissioner Shola Olatoye. De Blasio did not publicize the fundraiser and did not disclose the host when asked by reporters – but everything was still above board, he later argued, even if the lack of transparency made it seem like de Blasio was “violating the spirit” of his own promise not to accept campaign cash from donors with business before the city, as WNYC’s Brian Lehrer saidwhile interviewing the mayor.
State campaign finance investigation
The state also investigated the Campaign for One New York, although it took a more narrow purview and focused specifically on de Blasio’s fundraising efforts on behalf of state Senate Democrats in 2014, which was only one part of the federal inquiry. State prosecutors, in conjunction with federal prosecutors, sought to determine if de Blasio attempted to circumvent campaign contribution limits by giving donations solicited by de Blasio to smaller county committees, which have no contribution limits. Rechnitz testified that both Ross Offinger, a former campaign fundraiser for de Blasio, and the mayor personally asked him to donate over $100,000 to bolster those efforts. Like in the federal investigation, Manhattan District Attorney Cyrus Vance Jr. did not press charges against the mayor in 2017, but did say that while there was not enough evidence to indict de Blasio, his actions “appeared contrary to the intent and spirit of the laws that impose candidate contribution limits.”
One of the appraisers hired by two shady landlords to value properties they would sell to the city for $173 million was fired from his firm amid allegations of embezzlement, misappropriation and fraud, court records and city appraisal documents show.
Joel Leitner, who formerly worked for BBG Inc. before his acrimonious departure from the appraisal firm, submitted a $200 million appraisal on the 17 properties in Jan. 2018, documents released late Monday afternoon by City Hall show.
Just months after Leitner finished his appraisal, BBG alleged on May 29 in state Supreme Court that Leitner’s behavior at the firm constituted “embezzlement, material misappropriation, fraud and dishonesty.” The allegations were made as part of a counterclaim the firm filed in response to Leitner suing over being fired by the firm.
Leitner and BBG were working for the Podolsky brothers, two shady landlords who just sold the buildings earlier this month to the city after years of charging taxpayers exorbitant fees to house homeless people in them.
Stuart Podolsky (left) and Jay Podolsky (right) from Park West Hotel are pictured Feb. 15, 1988. The Podolskys are the sons of notorious slumlord Zenek Podolsky. ((Clarence Davis)/New York Daily News)
Court filings do not indicate that Leitner’s work on the Podolsky appraisal had anything to do with the firm’s decision to fire him in April 2018.
During a Q and A with reporters Monday, city Social Services Commissioner Steve Banks suggested the firm is well-respected.
“They have experience working regularly on affordable housing,” he said.
Leitner’s appraisal handiwork went on full display late Monday afternoon when the city released documents connected to the controversial land deal that’s taken heat for its lack of transparency and potential conflicts of interest.
The release of almost 2,000 pages of redacted appraisal documents came a month after the Daily News requested the records be made public and weeks after Comptroller Scott Stringer slapped City Hall with a subpoena to obtain them.
HUCKLEBERRY FINN HE’S NOT: Mayor de Blasio may feel like he’s lighting out for the territory every time he spends a weekend on the presidential campaign trail, but his continuing to accept political contributions from those with ties to notorious developers bruises his image as a reformer and suggests he’s a machine pol in progressive garb. State Sen. John Liu, a 2013 mayoral rival, said Mr. de Blasio had sought abolition of an admissions test for specialized high schools because that was easier than improving education in black and Latino neighborhoods.
Call me a cynic, but lately every time I hear Mayor de Blasio launch into his spiel about how there’s plenty of money in this city/country/world but “it’s just in the wrong hands,” I can’t help but think of the Podolsky brothers.
That would be Stuart and Jay, the offspring of Zenek Podolsky. The father launched the family real-estate business with crude-but-chilling simplicity: during the mid-1980s he paid a gang to use intimidation and harassment tactics to clear out buildings under rent control and rent stabilization so he could jack up rents.
When then-Manhattan District Attorney Robert Morgenthau announced seven indictments of unscrupulous landlords in the fall of 1984, including Stuart and Jay along with their father, he stated, “The planned alternative for tenants who refused to move called for the conspirators to bully, burglarize and menace those tenants and to ransack, burglarize and flood their residences.”
Zenek Podolsky got off with a brief prison sentence, buying leniency by handing over three Upper West Side buildings to the Coalition for the Homeless and testifying against the former head of the Taxi and Limousine Commissioner, Jay Turoff, about a scheme involving the sale of electronic taxi meters.
Kids Refined Methods
Stuart and Jay Podolsky got off with virtually no jail time. Andrew Rice, who reported on the Podolsky brothers’ operations early this decade for New York Magazine, found that they stopped emptying buildings by moving drug addicts, prostitutes and strong-arm men into vacant apartments to make longtime tenants’ lives miserable in favor of operating buildings where half the units offered shelter for the homeless under city contracts.
Ownership wasn’t in their names; they used shell companies that listed their lawyer’s name and that of Alan Lapes, who managed the properties for them. The New York Times, following up on a couple of Daily News articles, reported earlier this month that the city began contracting with the Podolsky companies for buildings for its cluster-site program for the homeless in 2001—the final year of Mayor Rudy Giuliani’s administration. Over a five-year period beginning in July 2013, the Department of Homeless Services paid those companies $189 million for use of cluster-site apartments and single-room occupancy buildings.
Mr. Rice in late 2013—as Mayor Michael Bloomberg was wrapping up his third term in office—reported in New York magazine that the Podolsky brothers did little to correct their properties’ serious deficiencies, and took extra steps to cover their tracks by having their building managers use fake names when speaking to tenants or DHS employees.
That would have seemed to be of interest to Bill de Blasio, who at the time the article was published was getting ready to succeed Mr. Bloomberg and had pledged to reform what he called the city’s “disastrous and broken homelessness policy.”
His tenant-rights advocacy during his time as Public Advocate was burnished by the fact that his office annually published a list of the city’s worst landlords, adopting a tradition begun decades earlier by the late Jack Newfield as an investigative reporter for the Village Voice.
Yet once he took office, the city continued doing business with the Podolsky brothers. Mr. Rice had been told by DHS employees that the Bloomberg administration worked with them because it needed beds and couldn’t be that choosy about the suppliers. The need grew dramatically once Mr. Bloomberg ended a policy of allowing the homeless to jump to the head of the line for Federal Section 8 housing vouchers, which Patrick Markee of the Coalition for the Homeless told New York was “literally the biggest policy mistake of the Bloomberg administration” and a major factor in the explosion of families who were homeless.
Yet nothing really changed once Mr. de Blasio took office, other than his suddenly being the person forced to talk about the lack of progress in dealing with a “disastrous and broken homelessness policy.”
Meet the ‘New Sheriff’
And then on Jan. 10, during the same State of the City address in which he lamented that there was too much money in the hands of the wrong people, the Mayor signed an executive order establishing the Mayor’s Office to Protect Tenants.
“The city’s worst landlords will have a new sheriff to fear,” he declared. “When a landlord tries to push out a tenant by making their home unlivable, a team of inspectors and law-enforcement agents will be on the ground in time to stop it. We’ll use every tool we have: we’ll fine the landlords, we’ll penalize the landlords. But if the fines and penalties don’t cut it, we will seize their buildings and we will put them in the hands of a community nonprofit that will treat tenants with the kind of respect that they deserve.”
Ten days later, however, Michael Gartland reported in the Daily News that the city’s plan to convert 500 cluster-site apartments in Brooklyn and The Bronx into affordable housing hinged on acquiring 17 buildings “controlled by the notorious Podolsky family.”
It stated that the Wall Street Journal had recently reported the brothers were under investigation for possible tax evasion.
The story noted that the Mayor had returned a $4,950 political contribution from Alan Lapes—the property manager used by the Podolsky brothers—but kept more than $10,000 in contributions bundled through the late Robert Hess, who after serving as Mr. Bloomberg’s Homeless Services Commissioner had formed a non-profit, Housing Solutions USA, that was tied to the Podolsky’s.
In response to the story, the Mayor announced that the deal was being placed on “pause.”
Less than two months later, however, Mr. Gartland reported that the deal was nearing a conclusion. The biggest news was that the price-tag for the purchase of the 17 buildings, initially reported to be between $40 million and $60 million, had zoomed to $173 million, with the city financing the purchase and then having non-profit groups take over day-to-day management of the properties.
$143M Wasn’t Enough
Mr. Gartland quoted an anonymous city official who attributed the jump in sale price to the Law Department’s seeking an appraisal from Metropolitan Valuation Services of the value of the 17 buildings, which came in at $143.1 million.
That jump in valuation wasn’t enough for the Podolsky brothers: they demanded $200 million. Rather than bring in another appraiser, as they were entitled to do to give them added leverage, city officials decided to virtually split the difference between the appraisal and the brothers’ demands. The deal has since been completed.
The city could have sought to seize the properties under eminent domain, but Social Services Commissioner Steven Banks, who distinguished himself as a lawyer for the homeless before joining city government, noted that could produce a lengthy court fight that would tie up the properties at a time when DHS sorely needed the additional beds.
Then The Times reported April 4 that the lawyer for the landlords in the discussions on the deal was Frank Carone, who also serves as counsel to the Brooklyn Democratic Party. Willie Neuman’s story stated that Mr. Carone and his wife had each made the maximum individual donation of $4,950 to Mr. de Blasio’s re-election campaign two years ago, and that the attorney had donated the maximum $5,000 to the Mayor’s Federal political-action committee, Fairness PAC, and helped solicit additional donors for the fund, which has covered the Mayor’s expenses in recent months for his travels to early-primary states as he considers a run for President.
Both the Mayor and Mr. Carone denied having discussed the Podolsky brothers deal. Mr. Carone told The Times in a statement that “I am proud to say I regularly support people from Brooklyn. So it should be of no astonishment why I am supporting our Brooklyn Mayor as he explores a run for President.”
Future Considerations?
No doubt if asked, the two men would deny they have had any conversations about a possible future run for office by the Mayor’s wife, Chirlane.
Then Mr. Gartland reported April 10 that Human Resources Administration Chief Contracting Officer Vincent Pullo a year ago demanded that a homeless-service provider in The Bronx sign an affidavit swearing that the nonprofit had no connection to the Podolsky brothers. Mr. Rice reported in New York more than five years ago that Housing Solutions had taken over contracts belonging to the nonprofit, Aguila Inc., and its CEO, Jenny Rivera, told The News April 8 that she was providing services to homeless families at Podolsky brothers properties and that the city knew this.
She said she was forced to sign the notarized affidavit when the city jeopardized her ability to pay her workers by withholding a requested loan. She sent a letter to the Mayor late last month stating, “Under duress, I was coerced into signing this affidavit even though the city knows full well that Aguila manages multiple buildings owned by the Podolsky’s.”
She received an April 8 response from Homeless Services Administrator Joslyn Carter calling the affidavits “standard representations of the relationship between the entities.”
But Ms. Rivera showed Mr. Gartland correspondence she had last year with Mr. Pullo in which she sent him a signed lease for the Podolsky buildings and he responded with an e-mail requesting an affidavit asserting that Aguila “has no affiliation with” the Podolsky Family (any and all members)” or Mr. Lapes, their property manager.
It seemed clear that the de Blasio administration was moving forward on the deal and wanted to have a document indicating that it was not doing business with the Podolsky brothers. There have been no reports of them having made political contributions to the Mayor or his PAC, but they have long been known for making business transactions in the maiden names of their wives.
The level of desperation felt by the administration to secure properties that could be used for affordable housing could be seen in a New York Post report last Thursday that noted the Podolsky buildings had hundreds of unresolved Housing Code violations of the sort associated with the most troubled Housing Authority developments, from vermin to peeling lead paint to broken locks. Among just four of those buildings—three in The Bronx, one in Brooklyn—there were 188 open violations cited by the Department of Housing Preservation and Development, with 30 of those classified as “immediately hazardous.”
The ‘Not the First’ Excuse
It’s true that the city’s extensive dealings with the Podolsky brothers, despite what Mr. Morgenthau 35 years ago described as a kind of terror campaign against their tenants, dated back two Mayors.
But a key component of Mr. de Blasio’s rationale for his first mayoral run in 2013 was that he would be more sensitive to the needs of the less-fortunate in the city, and less-solicitous of the wealthy, than both Mr. Giuliani and Mr. Bloomberg.
That has been true for his most-prominent campaign issue, improper stop-and-frisks by police, although sharp scaling-back of abuses began during Mr. Bloomberg’s final two years in office even before a Federal Judge ruled that the NYPD had been conducting the program in a way that violated the U.S. Constitution.
But the lead-paint contamination suffered by hundreds of children in Housing Authority apartments because of a four-year-plus stretch in which no inspections were conducted was treated by the Mayor as less a public-health concern than a political problem. He noted the Bloomberg administration didn’t do inspections in its final two years, and he kept HA Chair Shola Olatoye in her job even after it was revealed that she had lied to the U.S. Department of Housing and Urban Development in 2016 about inspections having been done. Even a subsequent lie before the City Council late in 2017 about the training given to the employees who eventually did the inspections did not prompt him to jettison her immediately; she hung on for two months after that misrepresentation came to light.
Six months later, she became vice president of business development for Suffolk Construction, a Boston-based contractor seeking to expand operations in New York.
It was an impressive landing for someone who had been tarnished both by the deteriorating conditions in some HA developments and her lies about efforts to correct them. Some of the mystery about her rebounding so well was dissipated when it was announced that a Boston fund-raiser for Mr. de Blasio’s PAC April 5 was being hosted by her boss, Suffolk CEO John Fish. Notwithstanding his claims that he’s a reformer, Mr. de Blasio has demonstrated more than a few times that the expressway to his good graces is paved with political contributions.
Unreal estate: Probe de Blasio’s purchase of 17 buildings from two slumlord brothers
Two slumlord brothers with a Friend-of-Bill lawyer who’s been scaring up checks for the mayor’s national political action committee just got a $173 million payday when the de Blasio administration decided to buy 17 of their buildings and convert them from lousy cluster-site apartments for the homeless to permanent affordable housing.
Then the city refused to turn over its appraisals for the properties, the first of which said the buildings were worth about $50 million, the second of which, by an independent contractor, put their value at $143 million.
It was recently reported that New York City landlords, Jay and Stuart Podolsky are raising millions to house homeless New Yorkers after selling over 20 buildings to the city for a total of $173.5 million — more than the appraised value.
By: Marcus Tentrite
Financial documents show that the Brooklyn born brothers raked in approximately $188.7 million through the leasing of various properties over the last five years.
After selling 21 buildings to the city above market value, they will retain seven buildings to house the homeless — taking in millions of dollars.
New York City officials told the New York Post last Thursday that the program will cease to exist by December of 2020.
“As we continue our shelter transformation plan, we are phasing out all of their remaining shelter locations by the end of next year,” Isaac McGinn, a spokesman for the City’s Department of Homeless Services, told The Post.
The brothers raked in massive profits by providing space to the city for the purpose of providing shelter to the city’s homeless population under two different programs — traditional shelters and “cluster” units.
The City’s purchase of the 20 plus apartment buildings in Brooklyn and the Bronx formalized the acquisition of the clusters that were owned by the Podolsky brothers and earned $48.6 million between July 2013 and June 2018.
The pair also leased eight buildings as additional shelters, where they made a larger profit — $140.1 million over the same five-year period of time.
Someone who is employed by the City of New York told The Post recently that they shut down one of the Podolsky standard shelters in December 2018, reducing the number of shelters owned by the pair to seven.
New York’s Department of Homeless Services never entered into an agreement directly with the brothers, but, rather signed contracts with nonprofit organizations which rented space in buildings owned by the pair and then billed City Hall for reimbursement.
The unusual payment relationship hid the amount of money which the brothers made in a relatively short period of time.
The city’s $173 million purchase of 21 buildings from the Podolsky brothers has attracted scrutiny because of the sellers’ past, their political connections and the price tag itself. A late Monday document dump is poking even more holes in the official version of events.
According to 2,000 pages of documents subpoenaed by City Comptroller Scott Stringer, City Hall overvalued the buildings by $26 million using faulty rent assumptions, the New York Post reported.
The city’s $173 million purchase of 21 buildings from the Podolsky brothers has attracted scrutiny because of the sellers’ past, their political connections and the price tag itself. A late Monday document dump is poking even more holes in the official version of events.
According to 2,000 pages of documents subpoenaed by City Comptroller Scott Stringer, City Hall overvalued the buildings by $26 million using faulty rent assumptions, the New York Post reported.
LOSTMESSIAH 