City Hall Broke Rules Funneling Money to Groups
By MICHAEL BARBARO and RAY RIVERA • New York Times
For years, aides to Mayor Michael R. Bloomberg routed hundreds of thousands of dollars in city money to at least two politically connected nonprofit groups in violation of government contracting rules, according to records and interviews.
The mayor’s office, from 2002 to 2006, gave $1.1 million to Agudath Israel of America Community Services and more than $400,000 to Ohel Children’s Home and Family Services, using a little-known pot of discretionary money that it controls.
By law, the mayor’s office can give the money only if it has been requested by a City Council member or borough president, but in these two instances, records and interviews show, the money was given by the Bloomberg administration, then later attributed to a council member without his knowledge.
Agudath Israel and Ohel provide services including career counseling and mental health care and are powerful institutions in the city’s Orthodox Jewish communities — political forces long courted by the mayor.
And the organizations have substantial ties to the Bloomberg administration: Mr. Bloomberg, since becoming mayor, has personally donated $200,000 to Agudath Israel, and a former top aide to the mayor is a lobbyist for Ohel.
In documents, the Bloomberg administration contends that since 2002, it distributed money annually to the two groups at the request of Councilman Simcha Felder, a Bloomberg ally. But Mr. Felder, a Brooklyn Democrat, says he never sought the money.
“I did not ask for it,” Mr. Felder said in an interview.
A spokesman for the mayor said the administration disagreed with Mr. Felder’s account. He said City Hall had conducted a formal audit of all money distributed through the mayor’s fund and determined that all grants had been done at the request of an elected official.
“We have no reason to think that the funding analysis contains any errors,” the spokesman, Marc LaVorgna, said. “And we disagree with the councilman’s recollection.”
But the mayor’s office said it had no documentation showing that Mr. Felder had made the requests. In fact, the mayor’s office could not provide documents for much of the money it had distributed and said it relied on interviews with its own staff to conduct its audit.
When asked whether Agudath Israel had requested the money from Mr. Felder, David Zwiebel, an executive vice president of the group, said that the group had sought the money directly from the mayor’s office.
“It was news to us that the mayor’s money was being funneled through the City Council,” Mr. Zwiebel said.
Much has been revealed over the last year about a discretionary fund operated by the Council to finance hundreds of nonprofit groups, some of which were fictitious companies or organizations that employed the relatives of lawmakers. A wide-ranging criminal inquiry into that fund, conducted by federal and city investigators, led to the indictment of two Council aides and the resignation of a Council member, Miguel Martinez, who pleaded guilty last month to misusing public money.
But much less is known about the mayor’s fund, the existence of which was kept from many in city government until it was revealed by the Bloomberg administration last year in the wake of the Council fund embarrassment.
Like the Council fund, the mayor’s fund allowed lawmakers to finance nonprofit groups and small projects in their districts without going through a formal competitive bidding process. Records show that from 2002 to 2008, when the fund was shut down, the Bloomberg administration gave nearly $30 million from the fund to more than 500 groups on behalf of more than two dozen council members, most close political allies of the mayor’s.
Many Council members who received money said they got it after convincing the mayor’s staff of legitimate needs in their districts. But money also went to members who sided with the mayor on major initiatives like the overhaul of the city’s garbage system in 2006 and his failed plans to build a stadium on the West Side for the New York Jets. Groups championed by Mr. Felder received the most: nearly $6 million over six years.
City law bars the mayor from sending money from the fund to groups of his choosing. In two memorandums issued last year, City Hall acknowledged that the distribution process lacked transparency, leaving the impression that the mayor was directly financing nonprofit groups.
“Unlike the City Council and borough presidents, the mayor’s office cannot designate contractors to receive funds through the discretionary funding process,” wrote Edward Skyler, a deputy mayor.
Yet that appears to be what the Bloomberg administration did in the case of Agudath and Ohel. Mr. Felder said it was not until the 2007 fiscal year that he even learned that money was being given to the groups in his name. That year, he said, the mayor’s director of intergovernmental affairs, Haeda Mihaltses, asked him whether she could attach his name to the allocations.
“We can’t do it without you,” he recalled her saying.
Mr. LaVorgna said that Ms. Mihaltses remembered only that Mr. Felder requested the money for the groups.
Mr. Felder said he agreed to let his named be used, but at a price: he wanted the mayor’s office to distribute an additional $700,000 to his favorite nonprofit groups the next year.
The following year, Mr. Felder got nearly all of the extra $700,000 he asked for. Mr. Felder said the extra money allowed him to finance deserving groups. By 2008, the mayor’s office had given Agudath Israel and Ohel nearly $3 million in Mr. Felder’s name.
Mr. Felder declined to characterize his feelings about the mayor’s office’s use of his name.
“I don’t know what to tell you. I have nothing to say,” Mr. Felder said. “I am trying to be as honest as I can without ruining my relationships with people who will be annoyed with what they read.”
Agudath Israel said it never asked Mr. Felder for the money, going instead straight to the mayor’s office and the commissioner of the community assistance unit at the time, Jonathan Greenspun, who served as Mr. Bloomberg’s liaison to the Jewish community.
“We always worked with the mayor’s office,” Mr. Zwiebel said.
Agudath Israel and Ohel, like all nonprofit organizations, cannot make political endorsements. But it is clear that both were admirers of Mr. Bloomberg’s. The mayor was a guest speaker at Agudath Israel’s annual dinner this year. He also chose a board member of Agudath Israel’s parent organization, the real estate developer George Klein, to serve on his transition team after his election in 2001.
Mr. Klein said he did not “recall playing any role” in securing money from the mayor’s office for Agudath Israel.
Ohel had its own ally within the Bloomberg administration: Mr. Greenspun. In 2007, after he left the mayor’s office, he became Ohel’s lobbyist, records show.
Councilman Felder said that in his conversations with the Bloomberg administration after 2007, aides “indicated it was Greenspun” who had requested the money from the fund.
Mr. Greenspun said that while he was a commissioner, both Agudath Israel and Ohel sought his help to obtain money from the fund. But at the time, he believed the money had been requested by a council member, he said.
After he left City Hall, however, Mr. Greenspun said he never lobbied his old colleagues to give either group money from the fund.
A spokesman for Ohel, Derek Saker, wrote in an e-mail message: “Ohel has been fortunate to receive critical government funding to assist the city’s most vulnerable populations.”
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