New York City Council Member Indicted for Misuse of Slush Fund, But He Was Enabled by Many Other Officials

It's been almost two years since the New York Times broke the story on the abuses of New York City council earmarks slush fund, which totaled about $50 million a year. This week, the council member featured in the Times article was expelled from the state senate for a violent act committed against his female companion, according to an article in yesterday's Times. And according to a Times article today, another council member was indicted by a federal grand jury for much the same sort of conduct. Not the violence, but the misuse of council earmarks to help himself and his family, which included charges of money laundering, extortion, and fraud.

But unlike the violent council member, this one was enabled by hundreds of elected and appointed city officials.

It's another textbook example of misuse of office. As always, nonprofits were used as front organizations (why don't politicians get creative and try pizza parlors, for a change?). According to the charges, the council member controlled the nonprofits, helped them win city contracts, and paid salaries to his brother, two sisters, other family members and, of course, his female companion.

The council member directed $1 million to the nonprofits, and never disclosed his relationship with them. He extorted money from a close associate relating to a city contract for boilers at the new Yankee Stadium. And there's even a $177 bagel (the receipt was fraudulently changed from $7) among the $200,000 in fraudulent billing of the city by the nonprofit groups.

But more important than the council member's misuse of office was everything that allowed him to do what he did. Putting all that money into the hands of elected officials was wrong to begin with. But it was done without transparency and without effective oversight ("Even after one of the nonprofit groups was flagged by city auditors for financial impropriety [the council member] 'found ways to dodge scrutiny and keep the money flowing.'").

Even when the council president tried to end the earmark program, it wouldn't die. But it's not clear whether the program was a zombie or instead every government official who sat there and let the program be created and continue. Everyone knew it could come to no good. Everyone knew that there should have been careful scrutiny of every dollar billed and of who was getting paid. If there were any integrity among the leaders of the city government, the ones most responsible, including the city council president, would have offered their resignations two years ago.

But enablers of unethical and criminal conduct are not guilty, so why should they feel guilty or act guilty? Hell, even the council member says that he didn't do anything wrong. The former council member, the one expelled from the state senate, says he's going to run in a special election. So why should anyone admit to having been an enabler, of showing that the fault for this sort of thing lies not just with officials ready to take advantage of such a horrible, tempting program, but also with those who voted for the program and who let it continue without making it transparent and accountable?

Here are links to my other blog posts on the earmark program, all from 2008:
Transparency vs. Fear
Council Earmarks Create a Serious Conflict of Interest Situation
The Conflicts of Slush Funds
Form of Government Ethics Issues

Robert Wechsler
Director of Research-Retired, City Ethics

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