City’s Campaign Finance Board using words “fraud,” “improper payments” in investigation
According to Andrea Lynn, deputy press secretary for the Campaign Finance Board, at a recent CFB hearing, a list of alleged financial misdeeds involving the Lopez campaign was read aloud as a lawyer representing the councilwoman listened.
According to Lynn, the allegations involved $45,000 in “impermissible post-election expenditures to individuals” and “apparent fraud and misrepresentation” related to them; “an impermissible $1,300 post-election expenditure to the AHONA Housing Development Fund Corporation” and “apparent fraud and misrepresentation” related to that; “apparent fraud and misrepresentation in connection with services purportedly provided by campaign workers for the general election;” failure to maintain and provide copies of the campaign’s cancelled checks; “apparent fraud and misrepresentation” related to a subpoena served on Lower East Side People’s Federal Credit Union, the campaign’s bank; and a $500 contribution accepted from “an unregistered political committee.”
Lynn would not provide further details—saying the audit of Lopez’s finances is ongoing—except to add that the unregistered political committee was the Committee to Re-elect Nydia Velazquez. All political committees must register with the CFB, which oversees the city’s public campaign finance system, before making contributions to any candidate participating in that system.. Velazquez, a Democratic congresswoman who represents part of the Lower East Side and Brooklyn, is a close ally of Lopez, who represents the Second Council District, which stretches from the Lower East Side to Murray Hill.
Any public funds left unspent after an election are supposed to be returned to the CFB. The board has jurisdiction to assess civil penalties for violations of the campaign finance laws, but doesn’t prosecute criminal matter.
“As of now, these are civil penalties,” Lynn said. “This is all the board considers when assessing penalties.” As to whether there were allegations of criminality, Lynn said, “that would be for a district attorney to consider.”
Lopez and her 2001 campaign treasurer, Anne Johnson, both declined to comment on the matter, referring questions to attorney Jerry Goldfeder, recently retained to represent the 2001 Lopez campaign committee. Goldfeder said the CFB is off base in its allegations.
“All payments were made properly,” he said. “All records were submitted to the Campaign Finance Board. Anyone who worked for the campaign was paid on a timely basis.”
Specifically, Goldfeder said, no one was paid after the election.
“They were paid on November 6,” he said, noting that some payments were mailed and some hand delivered. “The board appears to be confused, because not everybody cashes a check immediately. And so, they infer that we paid them for work after the [election]. These people worked on Election Day and they were paid on Election Day.”
Goldfeder said he has the list of Lopez campaign workers, not been made public by the CFB, and that the overwhelming majority of them were paid less than $100.
As for the disputed $1,300 payment to AHONA, Goldfeder said this was rent for a ground-floor space in the East 11th Street building in which Lopez also has a co-op apartment. The space was used for two months as one of Lopez’s several campaign headquarters, he said.
Regarding the bank subpoena, the attorney said the CFB claims Lopez told them she never received it. Yet, he said, it was the bank that was subpoenaed and which provided the records to the board.
“What’s the difference?” he asked. Credit unions don’t send checks, so its records must be consulted instead, he noted.
On the subject of the $500 contribution from the Committee to Re-elect Nydia Velazquez, Goldfeder said, “The $500 was returned—it was a mistake and it was returned.”
Goldfeder said the use of the word “fraud” by C.F.B. is simply a “bootstrap” term the board uses when it doesn’t accept a candidate’s defense regarding expenditures made.
“They don’t believe you, and then they say that you’re lying,” he said.
Lopez received $143,682 in public funds for her 2001 Council re-election campaign. In August 2005, Lopez paid $185,877 to the CFB, an amount representing the total public funds received plus any potential penalties to satisfy any potential liability the 2001 campaign still has. The CFB termed the payment “a protection to the taxpayer.” About 10 friends and political allies—including Michael Rosen of East Village Community Coalition, housing activist Frances Goldin, and former Community Board 3 chairwoman Lisa Kaplan—put up the majority of that payment, with Lopez paying the rest.
The August payment was critical in winning CFB approval of the $453,745 payment Lopez’s primary campaign for Manhattan borough president was due. Lopez received the 2005 campaign funds, but was bested in the primary by West Side Assemblyman Scott Stringer.
If the Lopez campaign is cleared of any financial wrongdoing, she’ll get the August payment back. If not, the board could keep as much as the entire payment. As collateral for the $165,872 Lopez’s friends loaned her, she put up her interest in her Sullivan County country house and East Village co-op apartment.
Lynn said that Lopez’s 2001 committee is scheduled to submit written responses to the CFB charges this week, and that the Board will address the issues at a hearing on November 16.
Asked on Tuesday if she plans to run for the Assembly seat from which Steve Sanders recently announced he will resign at the end of this year, Lopez said right now she’s focusing on helping get Republican Mayor Michael Bloomberg re-elected.