Thursday, May 1, 2008

Investigation of Council Said to Grow By Ray Rivera and William K. Rashbaum- New York Times

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The federal inquiry into how City Council members spend the discretionary money they control appears to be expanding, and city investigators have begun questioning workers at a variety of nonprofit organizations that received money, according to a person familiar with the investigation.

Several of the nonprofit groups whose activities are being reviewed by federal prosecutors and lawyers for the city’s Department of Investigation are those financed by Councilman Larry B. Seabrook, a veteran Bronx legislator.

In recent weeks, news reports have focused attention on several nonprofit groups to which Mr. Seabrook directed funds, including the Bronx African American Chamber of Commerce, which for years was located across the hall from Mr. Seabrook’s office on White Plains Road.

The group has since moved, but recently the Mayor’s Office of Contracts froze $912,244 in funds for the group while the investigation proceeds.

Mr. Seabrook could not be reached for comment. Representatives from the Bronx African American group and others that received funds from Mr. Seabrook could not be reached for comment Tuesday night, and it was unclear exactly which organizations investigators were concentrating on.

The inquiries are part of an investigation that has led to charges against two Council aides who were accused of embezzling at least $145,000 in city funds that Councilman Kendall Stewart directed to a nonprofit agency run by his chief of staff.

Mr. Stewart has not been charged and has denied any knowledge of any misappropriation of money.

The investigation has focused intense scrutiny on the way the Council handles money appropriated for use by local community groups that aid the city in the delivery of social services to young, old and poor residents.

In recent weeks, Council Speaker Christine C. Quinn has announced steps to tighten oversight of the money after it was disclosed that her office, and those of her predecessors, had set aside money for years in the name of fictional organizations to be distributed later outside the normal budgetary process to favored groups.

On Tuesday, the Council released hundreds of pages of forms asking members to disclose any potential conflicts of interest they saw in the groups to which they, or the Council as a whole, had hoped to channel funds in the last budget cycle.

About a dozen members disclosed that they or their staff members had some tie to groups receiving money, according to the documents, which were released as a result of a Freedom of Information request filed by The New York Times and other news agencies.

Councilwoman Diana Reyna of Brooklyn, for example, said she had directed money to the Los Sures Senior Citizens Center, which is run by her mother-in-law and received $39,500 in the current budget, at least part of that directly from Ms. Reyna’s discretionary funds. She also disclosed that she had directed funds to the Striking Viking Story Pirates, a group that provides after-school activities and of which her sister-in-law is a founding member.

Several council members said they were concerned that in disclosing their ties to established, reputable groups that had made good use of city money, they would be lumped in with members who have financed groups whose programs and monetary controls are being questioned.

Ms. Reyna said in an interview that she properly disclosed the relationships and that she gave the money because she believed in the groups. The senior center had regularly received Council money before she became a council member, and is only one of about a dozen in her district she helps, she said.

“If my mother-in-law was not the director of the senior center, I would still be helping it,” she said.

On his form, Councilman Erik Martin Dilan disclosed that his wife runs a nonprofit agency, the North Brooklyn Community Council, to which he has directed $187,500 in discretionary funds since 2005.

Mr. Dilan’s chief of staff, Woody Pascal, defended the allocation, saying Mr. Dilan announced in the Council chamber that he was directing funds to a group headed by his wife. “They’ve had great impact on the lives of the residents of Bushwick,” he said, noting that the group runs an after-school athletic league and provides legal services for immigrant families and busing for the elderly.

The city’s conflict-of-interest rules generally do not bar elected officials from sending money to groups to which they have direct or indirect relationships.

Councilwoman Maria del Carmen Arroyo did not list any potential conflicts in her disclosure, though The Daily News reported last week that she directed funds to a group, the South Bronx Community Corporation, that employed her sister and a nephew. Ms. Arroyo has said her relatives were no longer employed by the group at the time the funds were received. She did not return phone calls seeking comment on Tuesday.

Council members were required to file the disclosures for the first time as a result of new regulations put in place by Ms. Quinn in what she has described as an effort to bring more transparency to the budget process. Prior to that, members were only required to state the potential conflict on the record during open Council meetings, said Maria Alvarado, a spokeswoman for the Council.

In some cases, council members listed potential conflicts when their relationships with the organizations were distant. Inez E. Dickens, a Manhattan Democrat, listed the Greater Harlem Chamber of Commerce on her form because, as a businesswoman, she had once been a member, her office staff said.

Ms. Quinn disclosed that her partner, Kim Catullo, is an unpaid board member of a group to which Ms. Quinn directs funds, the Hetrick-Martin Institute, which provides services to lesbian and gay youth. The group, which received about $327,000 this year, had been regularly supported by Ms. Quinn’s two predecessors as speaker, she said.

Some Council leaders support a proposal barring a member from financing groups if the groups pay the member or a relative. Ms. Quinn declined to say whether she would support such a proposal. She said, though, that she believes there is a difference in whether a member’s relative is employed by the group or is a volunteer.

"We don’t want to do something that inadvertently deters people from volunteerism in New York, because it’s not easy to get people to volunteer for nonprofit organizations," she said.

Russ Buettner contributed reporting.