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Law Department Budget Hearing Focuses on De Blasio Administration Legal Defense


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Mayor de Blasio & aides in a courtyard (photo: Mayor's Office on flickr)


The investigations into Mayor Bill de Blasio’s administration have cost the city $10.5 million in outside legal defense spending so far, and might cost millions more, said Corporation Counsel Zachary Carter at a City Council preliminary budget hearing on Monday.

Carter, who heads the city’s Law Department, testified before the Council’s Committee on Governmental Operations that the state and federal investigations into the mayor and his aides necessitated the hiring of outside counsel. “The ongoing investigations are criminal in nature,” Carter told Council Member Ben Kallos, the committee chair, “and I know from my 40 years of experience in law enforcement that that is a…specialized area of practice that requires experience because of the delicacy of the judgments to be made.”

Carter noted that the investigations involve an area of practice “particularly sensitive to conflicts of interest” and dozens of witnesses, some of whom insisted on independent counsel, thus the hiring of at least 11 outside law firms for the legal defense.

He also estimated additional costs for the next fiscal year, which begins July 1, but insisted they would not be substantial. “I don’t believe that it will be a large magnitude of expenditures,” he said, predicting that the investigations are winding down. Late last month, the mayor sat down with federal prosecutors for a four-hour interview, which many saw as a sign that the U.S. Attorney’s office was nearly done with its probe. The mayor also met with the Manhattan District Attorney’s office weeks prior to that. The mayor’s own legal fees are not being paid by taxpayers; he plans to set up a legal defense fund to pay the bills he has accrued.  

Carter could not provide an exact dollar amount for the expected costs as the investigations wrap up, but he said that there may be “an additional seven-figure expenditure” for the department.

Although the cost to the city to defend the mayor and his aides has been a source of significant criticism, it is a relatively small part of the Law Department’s proposed preliminary budget of $206.3 million for fiscal year 2018, which is down from $211.5 million in last year’s adopted budget. (In the November budget modification, the department’s outlay was revised to $220.3 million for the current fiscal year (2017).)

Council Member Kallos noted at the hearing that the city’s budget for judgements and claims resulting from lawsuits for fiscal year 2018 is $720 million, and projected to increase to $740 million by fiscal year 2021. It’s an issue Kallos has raised for years, pushing the administration to reduce the amount of money it budgets for lawsuits by instead rectifying problems that are sources of constant claims against the city.

City Comptroller Scott Stringer has taken aim at the issue in two annual reports, the most recent released Feb. 10, that include a data-driven approach to reducing preventable lawsuits. For instance, Stringer’s report noted the five costliest personal injury claim categories that accounted for 78 percent of all personal injury settlements and judgments in fiscal year 2016: civil rights claims ($158.0 million), medical malpractice claims ($101.1 million), police action claims ($100.6 million), motor vehicle claims ($89.7 million), and sidewalk claims ($31.8 million).

In response to Kallos’ concerns, Carter noted that the department has a risk management unit that specifically advises the city on recurring themes in the types of claims made against employees and agencies. The department does not, however, create reports on that unit’s work with different agencies to mitigate risks.

“We’ve got his $720 million plan to pay out,” Kallos said. “How much can you and your unit reduce from our plan to payout from before?”

“I don’t believe that we can give a firm estimate on reduction,” Carter responded. “I think that it is fair to say that any time we provide feedback to agencies, in connection with these conditions, that it reduces the likelihood these conditions will recur, but I’m not in a position to quantify that with certainty.”

Carter also noted that “a handful” of large settlements from lawsuits spanning years can “distort” the judgements and claims budget, which has remained otherwise relatively level. For instance, per Stringer’s report, in fiscal year 2016 four settlements from old cases against the NYPD totalled $76.7 million or 27 percent of the $279.7 million payouts by the NYPD. The City paid out $629.5 million in total for claim settlements and judgments that year.

In 2016, Carter said, there were 32,640 claims filed against the city.

Kallos also made another push for performance budgeting, or tying the allocations for key initiatives and programs to quantifiable results.

[Related: Renewed Push for 'Performance Budgeting' Through Mayor's Management Report]

Carter was supportive of the idea. “I agree with you that we should use performance measures and we’re certainly willing to provide statistical information that actually presents an accurate picture of the progress being made to reduce judgements and claims,” he said.

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Supreme Court Ruling May Help De Blasio Avoid Charges


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Mayor de Blasio swears-in judges (photo: Ed Reed/Mayor's Office)


In June 2016, the United States Supreme Court overturned the corruption conviction of former Virginia Governor Robert McDonnell, ruling that his help to a constituent who gave him thousands of dollars in gifts did not break the law. The ruling, which examined the meaning of an “official act,” set a new precedent for corruption prosecutions and effectively increased the burden of proof for investigators.

As New York City Mayor Bill de Blasio faces a federal investigation into his administration over whether government action was promised to or taken on behalf of donors to the mayor’s causes, the McDonnell case may provide help in vindicating de Blasio and his aides. De Blasio has insisted that he and his team have behaved legally and will be exonerated -- the mayor recently agreed to be interviewed by federal agents.

De Blasio’s office has also said that the mayor himself is not the focus of the investigation. However, he could become a target depending on the evidence prosecutors have collected or if his answers at the interview were inconsistent with statements from others in the orbit of the investigation. At the same time, the McDonnell ruling could help prevent prosecutors from bringing charges against de Blasio.

In Virginia, McDonnell and his wife were convicted in 2015 on bribery charges for accepting loans and gifts equalling $175,000 from businessman Jonnie Williams when McDonnell was in office. Federal prosecutors argued that, in exchange for the gifts, McDonnell used his office to arrange meetings and host events to promote Williams’ business.

On appeal, the Supreme Court unanimously vacated McDonnell’s conviction and ruled that for an exercise of governmental power in a “question, matter, cause, suit, proceeding or controversy” to be considered an “official act,” a public official “must make a decision or take an action on that question or matter, or agree to do so. Setting up a meeting, talking to another official, or organizing an event—without more—does not fit that definition.”

This is effectively what Mayor de Blasio has argued recently, as he has admitted bringing items to the attention of his agency leaders that were of concern to donors. His deputies, the mayor said, always know to make their decisions based on the merits. No evidence has surfaced publicly showing de Blasio ordering a government act on behalf of a donor because of the donor’s monetary contribution to a de Blasio cause.

The McDonnell decision undoubtedly narrowed the interpretation of bribery law, as it pertains to the types of actions that a public official can legally perform. “That decision has changed the way prosecutors charge these cases,” said Jennifer Rodgers, a former federal prosecutor and now executive director at Columbia Law School’s Center for the Advancement of Public Integrity. “It impacts all cases. Prosecutors will definitely consider that when making charging decisions.”

Other experts see a minor change in how prosecutors will approach relevant cases under the McDonnell ruling. "It prevents prosecutors from bringing only the weakest of public corruption cases, those where the prosecution lacks even circumstantial evidence that a corrupt payoff was for something more than a chance to meet with the public official," write Arlo Devlin-Brown, a former prosecutor with the Manhattan U.S. Attorney’s office and Erin Monju, a former clerk there, in a recent New York Law Journal piece.

The Manhattan U.S. Attorney’s office seems to be winding down its investigation into whether there was quid-pro-quo involved in donations to de Blasio’s 2013 electoral campaign and now-defunct nonprofit, the Campaign for One New York. While de Blasio’s electoral campaign received a good deal of bundled money from people with city business, the Campaign for One New York received millions from such from entities, like labor unions and real estate developers. Individuals with city business are limited to $400 contributions to electoral campaigns (only recently were such restrictions created to limit groups like Campaign for One New York).

While there are a number of instances where de Blasio donors received favorable city action, the investigation is focused on about half a dozen donors, according to The New York Times.

As the 2017 mayoral race heats up, the investigation has been hanging over de Blasio, his aides, his declared and potential challengers, and the entire city for almost a year. In a twist, U.S. Attorney Preet Bharara, head of the investigating office, was on Saturday fired from his post by President Donald Trump. The investigation, which may be in its final stages, will continue without Bharara, as his leading public corruption lawyers have been on the case throughout.

(There is also an ongoing investigation, led by the Manhattan District Attorney’s office, looking into de Blasio and his associates funnelling funds to Democratic candidates for state Senate in 2014. The McDonnell case appears to have no bearing in this instance, though the mayor also insists that he and his political team did nothing illegal.)

During a Feb. 27 appearance on NY1’s Road to City Hall, de Blasio’s first interview after a four-hour meeting with federal prosecutors the prior Friday, the mayor sought to dispel the notion that he had personally intervened to direct government action in favor of a particular donor. The donor in question, Moishe Indig, a rabbi in the Satmar Hasidic community, was a fundraiser for the mayor, and the Department of Buildings had reportedly lifted a partial vacate order on two school buildings owned by him after the mayor intervened. (The news was first reported by Kings County Politics.)

De Blasio told host Errol Louis that he only knew Indig as a community leader and played no part in any DOB decision. “I don't intervene and tell agencies how to do their business,” de Blasio said. “Agencies come to their own conclusion when they look at a community concern like the concern of a house of worship, they’re going to ultimately come to their own decision, and that’s as it should be.”

In a point that directly relates to the McDonnell decision, de Blasio argued that it wasn’t improper for him to bring an issue to an agency’s attention. “[W]hen I was City Council member, Public Advocate, and, again, as Mayor, I believe it is perfectly appropriate to put an issue on an agency's plate,” he said later in the interview. “The agency has to make the decision that they see as right.”

It’s not uncommon for the mayor to pay attention to individual constituent concerns. On his weekly appearances on WNYC’s The Brian Lehrer Show, de Blasio takes questions from callers and often promises to help them with issues they raise. He does the same at local town halls that he has hosted across the city, asking his team to follow up with a person to see if they can provide assistance. The question remains, though, whether donors receive special treatment because they are donors.

In the McDonnell decision, the Supreme Court recognized that elected officials respond to constituents in many instances. Chief Justice John Roberts, delivering the unanimous opinion, wrote, “[C]onscientious public officials arrange meetings for constituents, contact other officials on their behalf, and include them in events all the time. The basic compact underlying representative government assumes that public officials will hear from their constituents and act appropriately on their concerns—whether it is the union official worried about a plant closing or the homeowners who wonder why it took five days to restore power to their neighborhood after a storm.”

Although it’s unclear what evidence federal prosecutors may have collected so far, they will need to prove that public officials in the de Blasio administration did more than just highlight an issue for an agency to follow through on. They’re also likely taking that into consideration. The McDonnell decision came down the month after the convictions of both Sheldon Silver and Dean Skelos, former New York state legislative leaders, who were successfully prosecuted on corruption charges by the same office currently probing de Blasio. Neither has had to report to prison yet, and both are appealing their cases based on the McDonnell decision.

In New York Law Journal, Devlin-Brown and Monju argue that the McDonnell decision had “limited significance” for corruption prosecutions. “In the prototypical public corruption case—where the prosecution can make a straight-faced claim that governmental action, and not just access, was the intended aim of the bribe—McDonnell defenses will have little impact on judges and still less on juries,” they wrote, “who may fail to rally around the official who argues he was selling ‘only’ access to an elected office.”

[Related: The Risks of De Blasio’s Interview with Federal Prosecutors]

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.

Investigations Commissioner Lays Out Budget Needs For Agency


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DOI Commissioner Mark Peters (photo: @DOInews)


At a City Council preliminary budget hearing on Thursday, Department of Investigation Commissioner Mark Peters laid out new funding and staffing needs for his agency, which is facing a $5 million proposed reduction in its fiscal year 2018 allocation by Mayor Bill de Blasio.

The proposed preliminary budget for the Department of Investigation (DOI), the watchdog body that monitors and probes public corruption and other wrongdoing at 45 city agencies, is $41.7 million, down from $46.7 million in last year’s adopted budget. (That number does not include another $13 million in federal forfeiture funds that is available for the agency to spend through fiscal year 2018. Peters also noted that these funds are not affected by federal budget fluctuations.)

Testifying at the hearing, held by the Council’s oversight and investigations committee, Peters stressed the need for adequate funding as the agency’s work has grown in key areas, including monitoring construction safety, NYPD surveillance practices, the Administration of Children’s Services, and the Department of Corrections. The agency has over 700 personnel, Peters said in his opening statement, working towards a “comprehensive strategy of systemic investigations, high impact arrests, preventative controls and operational reforms, in a manner designed to ensure we leverage our resources effectively.”

Although Peters didn’t provide an exact budget ask, he said after the hearing, “There’s work we’re doing both around the Department of Corrections and ACS where we believe that we could make very good use of some additional staff so we’re talking with OMB [the Office of Management and Budget] about it.”

Peters also spoke of the need for additional staff to cover a massive backlog in background checks for city employees, an issue raised by Council Member Vincent Gentile, chair of the committee, during the hearing. The city currently has a backlog of 4,000 needed background checks, and Peters projected that number would grow by another 1,600 over the next fiscal year.

Gentile expressed a range of concerns about the DOI’s responsibilities and how DOI measures success. Pointing to the Preliminary Mayor’s Management Report, which gauges performance indicators for all city agencies, Gentile wondered why the report did not include data for individual Inspectors General at different city agencies. Peters, who had earlier in his testimony warned against a heavy dependence on statistics, instead emphasized the agency’s focus on citywide systemic change. Reporting on 45 city agencies, he said, would be “cumbersome” and “not necessarily helpful” to gauge effectiveness as DOI works to root out waste, fraud, and abuse.

At Gentile’s insistence, Peters also explained his reticence in relying on the length of an investigation as a performance metric. Quicker investigations, he said, could be less effective. “The biggest cases where we have the most impact are the ones where we don’t jump too quickly,” he said.

He added, “I think the best metric, that’s hard to put a number about is, ‘Is there a greater sense in these city agencies that there’s a cop on the beat watching and are we seeing significant institutional change?’”

Peters did provide numbers to illustrate the agency’s work, however. In the 2016 calendar year, DOI made 694 arrests, a 22% increase over 2015, stemming from more than 1,800 investigations. The agency also referred over 800 cases for criminal prosecution, a 14% increase.

The hearing also touched on agency financial savings, a particularly pertinent subject this year round with major risks in the city budget, including potential federal funding cuts, proposed state funding cuts, and slowing city economic growth. DOI identified a one percent reduction in its Other Than Personal Spending (OTPS) costs, amounting to about $22,000. “Have you considered other areas that might yield some cost savings,” Gentile asked.

Peters said the agency had little room for creating savings through efficiencies. “The real savings come from things like doing the monitoring of monies spent,” he said, referring to DOI’s role as a watchdog of others and citing the $40 million saved by the agency’s arrest of four people involved in defrauding the “Build It Back” Superstorm Sandy relief program.

Gentile, in closing out the hearing, said he anticipates an executive budget hearing for the agency, unlike last year when DOI saw a substantial 43 percent increase in its budget. The executive budget will follow on the heels of the Council’s official response to the mayor’s preliminary budget, after weeks of hearings like the one held Thursday. The next fiscal year starts July 1.

[Related: Under the Hood at Agencies, Investigation Department Increases Policy Focus]

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by Samar Khurshid, senior reporter, Gotham Gazette
     

Read more by this writer.



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