Business Donors Get Around NYC Campaign Curbs

David Walentas in 2011 at the Empire Fulton Ferry Park in Brooklyn, which his real estate company developed. (Photo by Cooper Miller, Creative Commons license)

David Walentas in 2011 at Empire Fulton Ferry Park in Brooklyn, which his real estate company developed. (Photo by Cooper Miller, Creative Commons license)

This story was reported and written by students in the Urban Investigation class of CUNY Graduate School of Journalism: Ronald Chavez, Jeannie Choi, Emily Field, Julius Forhecz, Jessica Glazer, Matthew Perlman, Sophia Rosenbaum, Tobias Salinger, Latima Stephens, Nicholas Wells.

New York’s campaign rules are clear: If you’re doing business with the City of New York, you can’t donate more than $400 to a candidate for office. That’s been the law since 2007, part of a sweeping bid to reduce the influence of those with both deep pockets and a private stake in governmental decisions.

Aimed at ending the practice of “pay to play” politics, in which well-heeled donors seek an inside edge with candidates, it passed the City Council with strong support from the mayor and good-government groups. The law was the latest addition to a string of reforms that began with the approval of public campaign financing in 1988, producing a local campaign finance system considered among the nation’s toughest and most effective.

The law’s first full test came with last fall’s municipal elections since the limits on donors doing city business covered all four years of the fundraising period for those races.

And to a large extent, the system worked: Most campaigns and donors abided by the law. A database of those doing business with the city was kept current, so that both candidates and contributors could readily know who was on the list and who was not. The city’s Campaign Finance Board flagged most violations.

But the spigot of campaign cash is hard to shut down completely. “Money is like water,” says longtime campaign reform advocate and public interest attorney Gene Russianoff. “It flows where it can.”

And an investigation by students at CUNY Graduate School of Journalism of donations made in the 2013 race found that those whose business is heavily intertwined with city government still found multiple ways to roll around the legal obstacles, conveying large amounts of campaign cash to candidates they favored. And they did so with almost casual ease.

Despite New York City’s tough curbs, the review found, those doing business with the city, or seeking its assistance, still represent a reliable source of campaign funding. And they remain almost as generous as ever with those they seek to influence.

Limits on Donations, But Not on Fundraising

Take Brooklyn real estate moguls David and Jed Walentas. The father-and-son team actively compete for city development awards and pursue zoning variances for major projects. Earlier this year, the Walentases’ firm, Two Trees Management Co., negotiated a major deal with the administration of newly elected Mayor Bill de Blasio involving high-rise towers it seeks to build in place of the old Domino sugar plant on the north Brooklyn waterfront. It was de Blasio’s first negotiation as mayor with a developer in his bid to create 200,000 new units of affordable housing for the city. Both sides claimed victory: the city got 40 added low-rent units; Two Trees was allowed to add 20 additional stories to their buildings.

That’s exactly the kind of government business dealings the 2007 law sought to address, and both David and Jed Walentas are listed on the official “doing business” database compiled and maintained by the Mayor’s Office of Contract Services. As a result, both were limited to the $400 maximum in donations to candidates they support.

But nothing in the law prevents the Walentases from raising funds from friends, family and associates for favored candidates. Records show they did so with gusto, serving as intermediaries – bundlers, in campaign lingo – for $130,970 for five city office seekers. Contributions ranging from $250 to $4,950 – the maximum donation allowed any citizen under the city’s campaign finance laws – came from more than 70 individuals, many of them Two Trees subcontractors and tenants.

The contribution limits also only apply to principals of firms engaged in city business; spouses are free to give up to the maximum. Records show Jane Walentas, David’s wife and Jed’s mother, did just that, donating $4,950 to the de Blasio campaign shortly after he won the September primary. It was just the most recent of 15 donations she made to candidates during the 2013 campaign cycle, for a total of $32,575.

In Spite of Restrictions, Money Rolled In

The Walentas family was hardly alone in finding ways to funnel financial support to city office seekers, in spite of the restrictions.

– Douglas Durst, chairman of one of the city’s largest real estate firms and a partner in the new One World Trade Center, is covered by the law’s doing-business limits, as is Jordan Barowitz, a top firm executive handling government relations. But campaign data shows Barowitz collected $64,750 in donations for three candidates during the 2013 campaign. Among the checks he collected were a half-dozen for the $4,950 maximum, all from members of the Durst family. (In a separate campaign effort, Durst and other real estate tycoons plowed millions of dollars into a political action committee to influence the City Council races. See “In 2013, NY PACs Rushed to Fund Campaigns” to be published May 13.)

– Top officials of Glenwood Management, another major city real estate firm that owns and manages 7,000 apartments, many in high-rise luxury towers in Manhattan, are also covered by the law’s restrictions. But records show that one of those listed, Glenwood executive Charles Dorego, raised $167,500 for city campaigns in the 2013 election, most of it for Scott Stringer, the former Manhattan borough president who was elected city comptroller in November.

– Developer Gary Barnett has become one of the city’s most active builders, erecting sleek new mega-towers that often require public approvals. His Extell Development Co. retains multiple lobbyists to press its cause before the city council and the mayor’s office. Right up until the new law went into effect in January 2008, Barnett was a generous donor to city campaigns. But thanks to his lobbying and other city business, he was one of those included under the new limits. Barnett promptly complied, downshifting to the new $400 maximum. But records show Barnett’s wife, Ayala, donated $48,000 to candidates in her own name.

– Also listed as conducting city business for Extell was Lela Goren, who handles acquisitions and development for the firm. But under the loophole that allows her to solicit donations from others, records show Goren served as a top fundraiser for mayoral candidate Christine Quinn, bundling $55,000 for the former council speaker, much of it raised in 2010 while the council was deciding a rezoning issue for one of Extell’s projects.

– One of the biggest pending projects seeking city approvals while the mayoral race was underway was the proposed commercial development of a large swath of city-owned land in Willets Point in Queens. Its developers included the Wilpon family, owner of the Mets, who play at nearby Citi Field, and Related Companies, one of the most successful developers of city-assisted projects during the administration of former Mayor Michael Bloomberg. The developers stuck to the rules, making modest donations to candidates within the doing business limits. But Related’s top lobbyist, Jay Kriegel, was an active fundraiser for mayoral candidates Quinn, Thompson and de Blasio, as well as for Scott Stringer’s successful race to become city comptroller. All together, Kriegel bundled more than $110,000 for the candidates during the course of the campaign.

– The taxi industry has long been a major source of campaign donations. In years past, yellow taxis carrying messengers and campaign aides lined up outside political headquarters on election days, with fleet owners footing the bill for the cost of the rides. They have a lot at stake: the city tightly regulates their industry and sets rates for fares. Yet most taxi owners and medallion brokers are not included in the law’s contribution limits. Their lobbyists, however, are covered. Top taxi industry advocate Michael Woloz is on the list and records show he played by the rules, contributing the maximum $400 to candidates for a total of $4,000. But in some of the most scrutinized fundraising of the 2013 campaign, Woloz also rounded up $235,000 in taxi-related donations for de Blasio. The donations followed de Blasio’s opposition to changes in taxi policies instituted by the outgoing administration of Mayor Michael Bloomberg, including a decision to allow 18,000 newly licensed cabs to accept street hails in the outer boroughs and Upper Manhattan.

– Woloz also raised $33,850 from many of the same sources for Manhattan City Councilman Daniel Garodnick who at the time was viewed as a strong contender to become the next speaker of the council which also plays a major role in determining taxi policies. Three other industry leaders – taxi magnates Evgeny Freidman and David Pollack and trade association president Jean Barrett – bundled an additional $150,000 for de Blasio and Garodnick.

– The biggest bundler of contributions in the mayoral campaign last year was Sally Susman, executive vice president of corporate affairs at Pfizer Inc., the New York-based pharmaceutical giant. Pfizer has such extensive business dealings with the city that it has spent $700,000 since 2009 lobbying municipal officials. Nine of its top executives are listed as “doing business” with the city, and thus subject to the $400 contribution limit. Susman, however, is not among them. Records show Susman maxed out as an individual contributor to Quinn’s mayoral campaign and was also a whirlwind of fundraising for her, bundling more than $278,000 in campaign donations.

Susman did not respond to inquiries about her fundraising, nor did the Walentas, Durst, Glenwood or Willets Point development executives. Michael Woloz, however, said he had supported de Blasio because he sees him as “a fair-minded politician. There is no expectation whatsoever,” he said, “other than to see a continuation of that fair-minded service. Period.”

Part of a Bigger Pattern

Despite those examples, city campaign finance board officials noted that the current system has greatly reined in the insiders.

“The city’s campaign finance program exists to reduce apparent or actual corruption,” said Matt Sollars, a spokesman for the board. “Data from two citywide election cycles clearly show the success of the city’s strict, low limits on contributions from people doing business with the city.” The limits, he added, “have dramatically reduced the flow of large campaign contributions from those who would have a vested interest in candidates’ actions in office.”

Still, board officials acknowledge that those with a financial stake in government nonetheless find ways to make their influence felt. And they remain effective fundraisers.

The investigation by CUNY Journalism students found that overall, at least one-quarter of the biggest bundlers in the 2013 campaign – those who raised more than $1,000 for candidates – had some form of business dealings with the city. Some, like Susman, weren’t listed on the official register of those doing city business. But checks of lobbying and corporate records disclosed their involvement.

For instance, Broadway Stages, the Brooklyn TV and movie production facility, spent $70,000 over the past two years lobbying the City Council on budget and legislation issues. Yet Broadway Stages president Gina Argento doesn’t show up on the “doing business” list and records show she donated $47,000 to candidates in the 2013 election. Argento was also an active bundler, raising $98,000 for de Blasio from friends and business associates.

Similarly, former U.S. Sen. Alfonse D’Amato is the founder and managing director of Park Strategies, one of the city’s leading lobbying firms. But D’Amato, who raised $69,800 for the mayoral campaign of former City Comptroller William Thompson Jr., also isn’t included on the “doing business” list.

Likewise, Louis Coletti, longtime president of the city’s pro-union Building Trades Employers’ Association was also absent from the list, even though he regularly lobbies City Hall and the council on behalf of his members. Records show Coletti raised $17,700 for mayoral candidates last year.

The investigation also found that those with city business dealings were more effective at raising campaign cash than other fundraisers. While representing just one out of four bundlers, those with city business interests accounted for almost 40 percent of the $10.1 million raised by all intermediaries, records show.

Part of the problem is defining what it means to do business with the city.

“The core of the issue is what do we mean by doing business with the city?” said Charles Brecher of the NYU Wagner Graduate School of Public Service who has researched the issue. “That can be construed as very broad.” Taken to its extreme, said Brecher, “You could say that everyone who pays taxes is doing business with the city.”

Fundraising Loopholes

Even the list of those serving as campaign bundlers has its own loopholes. One of the best ways to get to know a candidate is at small, intimate gatherings. But under campaign finance rules, those who hold fundraising events for candidates at their homes don’t have to be listed publicly as intermediaries, so long as individual donations don’t exceed $500.

De Blasio’s mayoral campaign served as a clear example of how such small cocktail party-style events allow those dependent on city favors to cruise beneath the radar.

Early in the race, de Blasio’s campaign began voluntarily listing dozens of new names of smaller fundraisers. The campaign did so, it stated, as part of the candidate’s “commitment to transparency.” But the practice began soon after media stories questioned whether de Blasio, and other mayoral candidates, were disclosing all of their bundlers. After those stories, de Blasio’s campaign added more intermediary names to its campaign filings, and began posting the longer list on its website.

The voluntary disclosure list was kept current until shortly before de Blasio won the mayoral primary when his fundraising began soaring. By that time it included more than 600 names, including scores of those doing city business who were not otherwise listed as campaign bundlers. For example, Sid Davidoff, one of the city’s biggest lobbyists with more than 30 clients seeking City Hall aid, was included on de Blasio’s voluntary campaign list, even though he wasn’t listed as an intermediary.

But there’s no doubt that he’s close to the mayor: In April, de Blasio officiated at his first wedding at City Hall, that of Davidoff and his new bride.

The review’s findings did not surprise veteran observers of city campaign giving, including those who have pushed hardest to win limits on money in elections.

“You can slow it down, you can divert it somehow, but without question, bundling is a way to get around [the limits],” said Franz Leichter, a former state senator from Manhattan whose documentation of then huge direct donations made by real estate titans in the 1980s helped spur the city’s push to pass campaign finance limits.

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