Isolated Scheme or Commonplace Corruption?
Yesterday, <a href="http://www.nytimes.com/interactive/2013/09/25/nyregion/25rapfogel-felon…; target="”_blank”">a
felony complaint</a> was issued against William Rapfogel, the CEO
of the Metropolitan Council on Jewish Poverty, a large nonprofit
social service agency that received millions of dollars in grants
and contracts from New York City, New York state, and the federal
government. One of the charges is that the nonprofit made large
campaign contributions to city and state candidates through its
insurance company (and the company's officers and employees), using
money from overcharges on insurance policies (part of this
money also went, as kickbacks, to Rapfogel and others).
<br>
<br>
In New York State, nonprofits are not permitted to make campaign
contributions. Nor is it legal for an individual or corporation to
make campaign contributions through someone else (known as a "straw
donor").<br>
<br>
<a href="http://www.nytimes.com/2013/09/25/nyregion/charitys-fired-chief-is-char…; target="”_blank”">An
article in today's New York <i>Times</i></a> notes that "None of the
politicians have been accused of any impropriety." But are they
guilty of any impropriety? Think how this scheme must work. The
nonprofit is seeking to either influence officials to give it
contracts and grants, or to meet officials' demands for
contributions (pay to play). Either way, there is no point in making
the contributions if the officials do not know where they are
coming from.<br>
<br>
The charge is that the checks were given to Rapfogel by the
insurance company, and then passed on to the campaigns. Thus, Rapfogel
acted as the bundler of his nonprofit's own contributions. Therefore,
the campaigns, and presumably the candidates, knew the origin of the
contributions. And they knew that they were being given
contributions by a nonprofit that could not legally make such
contributions, and that a straw donor was being illegally employed.<br>
<br>
While Rapfogel was the one indicted, and was the center of this
scheme (although it appears to have existed before he was hired by
the Council), it is the officials whose campaigns bought into the
scheme who are most at fault. If they had refused the contributions
and reported them to the authorities, as was their duty, this scheme would have been
over decades ago. In other words, they were complicit in the scheme.<br>
<br>
But this is not the most serious implication of what occurred here.
If this were the only such scheme, the only instance of nonprofits
trying to get around the prohibition on making contributions and the
only use of straw donors, is it likely that officials would have
gone along with it? In fact, is it likely that the conspirators would
have had any reason to expect them to go along with it?<br>
<br>
Or is this scheme just one instance of a kind of institutional
corruption that is considered — by elected officials, nonprofits, and others — commonplace in New York state? And
perhaps elsewhere? This is something that should be investigated by <a href="http://publiccorruption.moreland.ny.gov/" target="”_blank”">the Moreland Commission to Investigate Public Corruption</a>, a special commission recently created by the governor to investigate misconduct among legislators.<br>
<br>
Robert Wechsler<br>
Director of Research-Retired, City Ethics<br>
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