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Wall Street Journal

 

Where the Statehouse Often Leads to the Big House

September 01, 2012

By Steven Malanga

Using shady nonprofits as a stepping stone to elected office grew out of the 1960s ’Great Society’ antipoverty programs.

The dog days of August don’t usually offer much local political news, but New Yorkers this year are getting a heavy dose of official scandal—even for the corrupt Empire State.

State investigators last week hauled away in handcuffs state Sen. Shirley Huntley after charging her with trying to cover up the theft of taxpayer money at a nonprofit she created, Parent Workshop Inc. Outside the courthouse where she proclaimed her innocence, Ms. Huntley strangely declared to reporters that it was "a great day."

Days later, a state ethics panel ruled that powerful Brooklyn Assemblyman and Kings County Democratic Party Chair Vito Lopez had sexually harassed legislative staffers. (He has denied it.) That followed reports earlier in the month that Assemblywoman Naomi Rivera was under investigation for allegedly installing her boyfriend as the head of a local nonprofit (the Bronx Council for Economic Development) and using the group’s funds for personal and political purposes. Ms. Rivera has denied the allegations, which were first made by her former boyfriend after she broke up with him.

How corrupt is the Empire State? Plenty. A study this year by the University of Illinois Institute for Government and Public Affairs found that New York leads the country in public corruption, with 2,522 of its officials having been convicted of misdeeds since 1976.

One cause of persistent scandal is the unusual role that taxpayer-funded nonprofits play in New York’s political life. Politically ambitious people use these neighborhood groups as a stepping stone to elected office, and then they place their friends, families and allies in key positions thanks to loose rules governing funding. No surprise that scandal follows.

Consider investigators’ accusations that Ms. Huntley enriched herself through a phony nonprofit that was meant to support workshops for parents of New York City school kids but never performed any work for the money. Those alleged circumstances echo investigators’ 2007 discovery that New York’s City Council was appropriating millions of dollars every year to fictitious social-service groups and then channeling the money into a giant slush fund for real and politically connected nonprofits.

One nonprofit that received these funds was called Libre and controlled by former City Councilman Hiram Monserrate. According to a 2010 federal indictment, Libre used city funds to pay employees on Monserrate’s 2006 campaign for the state Senate. Yet that wasn’t what got Monserrate expelled from the state Senate in 2010; for that, he had to be convicted of third-degree assault for attacking his girlfriend. Two years later, this May, he pled guilty to the charges relating to Libre.

Former City Councilman Larry Seabrook was even more ambitious. He directed nearly $1 million of city money to groups that prosecutors described as sham organizations employing his allies and relatives. It was Seabrook’s "own corrupted City Council-funded friends and family plan," said U.S. Attorney Preet Bharara. A jury convicted Seabrook on nine counts of fraud in July.

These shady nonprofits date to federal "Great Society" antipoverty programs in the 1960s. The architects of those efforts sent billions of federal dollars into neighborhood programs to alleviate poverty, funneling the money to local groups that Washington bureaucrats assumed had the local knowledge necessary to uplift communities.

New York, with its sprawling urban problems in the 1960s and 1970s, received big chunks of this money and spawned more than its share of new nonprofit providers. Those who ran the groups became influential and used their growing power to ensure that the groups’ funding continued to grow.

The nonprofit organizations became new political clubhouses. In 1977, as a candidate for New York City mayor, Ed Koch described one of these social-service politicos, City Councilman Ramon Velez, as a "poverty pimp" for building a nonprofit empire on taxpayers’ antipoverty dollars.

The story of former social worker Vito Lopez illustrates the emergence of these new power brokers. Mr. Lopez founded the Ridgewood Bushwick Senior Citizens Council in 1973 to provide social services to residents of Queens and Brooklyn. With the agency as his political base, he won election to the state Assembly in 1984.

Ridgewood Bushwick grew into a nonprofit empire thanks to hefty government contracts. Today it receives some $70 million in city contracts and employs 1,700 people in 22 locations, according to press reports. The group’s political muscle means a plentiful supply of campaign volunteers and votes for Mr. Lopez and his allies.

But the Lopez empire has also been wrapped in controversy. In 2010, New York City’s Department of Investigation discovered that Ridgewood Bushwick’s executive director, Christiana Fisher (who also happened to be Mr. Lopez’s campaign treasurer), paid herself $782,000 the previous year. The group’s head of housing services, Angela Battaglia, collected $343,000 in annual pay. Amid local outrage, the state froze $25 million in contracts with Ridgewood Bushwick, and New York City ruled that the group had to fire its director and replace its board or risk losing city money, too.

Mr. Lopez is now watching his political power evaporate thanks to the sexual harassment charges and a report that Assembly Speaker Sheldon Silver authorized a $103,000 payment—with taxpayer money—to hush up previous allegations of misconduct against Mr. Lopez (who denies having engaged in any misconduct).

New York Gov. Andrew Cuomo has promised an investigation of the money used to settle claims against Mr. Lopez. Attorney General Eric Schneiderman, meanwhile, has pledged to ensure that the state’s "sham nonprofits are put out of business."

Don’t count on widespread reform. The state’s legislature is so heavily gerrymandered that, once elected, officials can act without fear of losing their seats. They regularly ignore calls for reforms, such as banning lawmakers from sending money to groups staffed by their relatives or political aides.

Only when New York legislators cross the line into actual corruption do they risk their political careers. But that’s a temptation that many of them have found hard to resist.

Original Source: http://online.wsj.com/article/SB10000872396390444914904577623090898883170.html?KEYWORDS=malanga

 

 
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