2010-02-12 / Front Page

Feds Investigating Missing Katrina Funds

Records: Raised $31,000, Donated $1,392
By Howard Schwach
Federal prosecutors are probing a charity set up by three powerful Queens lawmakers that pledged to help the victims of Hurricane Katrina and then only spent a small fraction on helping victims who had migrated to New York City, officials say.

Law enforcement sources told The Wave that the U.S. Attorney is investigating the charity and its relief effort.

State records show that the charity, called New Yorkers Organized to Assist Hurricane Families (NOAH-F), was set up to assist victims who had fled New Orleans for New York City in the wake of the devastating hurricane.

NOAH-F was set up by State Senator Malcolm Smith and Congressman Gregory Meeks as part of their charity, New Direction Local Development Corporation.

That corporation was set up by Meeks, Smith and City Councilman James Sanders Jr. to fund community development in Rockaway and other sections of southeastern Queens.

Founded in 2001 by the initiatives of Meeks and Smith, state papers show that Smith’s wife, Michelle, was a founding board member.

Also on the initial board, papers show, was Cathy Green, the wife of Darryl Green, Smith’s former business partner.

Green was convicted in 1999 of stealing $500,000 from city agencies and private firms that hired him as a consultant on affirmative action hiring practices.

He was a partner, along with former Congressman Floyd Flake, in the Aqueduct Entertainment Group, which was just awarded a $300 million “Racino” deal at the aging racetrack in Ozone Park, until this week, when he dropped out of the group so as not to jeopardize its selection as the operator of the Racino.

Records show that between 2001 and 2006 Smith helped funnel at least $56,000 to the charity through state earmarks.

Records show that the non-profit’s biggest monetary donation was $250,000 from the International Airport Centers, the developer of a giant cargo facility on Rockaway Turnpike, near John F. Kennedy Airport.

Smith, Meeks and James Sanders Jr. are credited with negotiating the deal with the developer for money to be used for community development. That money reportedly went into the coffers of New Direction.

The published reports in the daily papers say that Smith directed that the airport money go to New Direction, but Meeks has long made the airport one of his major priorities, often traveling around the world in the name of airport development.

What, if any community development the money fostered is unclear.

State records show that the money was used for a senior appreciation week, a basketball and jump-rope tournament in Rosedale and a family day.

According to those records, New Direct ion spent $11,783 for meals and entertainment and $9,904 in Federal tax penalties.

In addition, records show, the non-profit took in more than $31,000 in Katrina donations through NOAH-F, but, according to tax records, spent only $1,392 on aiding families that had been displaced by the hurricane.

In 2004, New Direction took in $272,480, but spent only $100,000 on programs, including grants. The watchdog group said that the remaining money is “unaccounted for.”

In addition, the non-profit did not detail which groups or individuals got the grants.

Austin Shafran, Smith’s spokesperson, denied that the Senator had anything to do with the $250,000 or with the organization itself, beyond helping establish it.

“I’m not involved in the day-to-day operation,” Smith told the New York Post. “I don’t sign checks. I don’t manage the books. To say that I had something to do with the money not being spent is outrageous.”

On Wednesday, however, the New York Post reported that Candice Sandy, a NOAH-F board member who is the local spokesperson for Smith, said that Smith had appointed Claude Stuart, 48, to hand out the money.

According to the Post report, Stuart, who was a NOAH-F board member, had his New York State license as an attorney pulled because of “a string of improprieties, including withholding information when he was an assistant district attorney.”

The court finding in that case said, “[Stuart] fraudulently and contemptuously violated his constitutional duty by failing to [disclose information] and by lying to a court judge in open court about it.”

Stuart was also a former advisor to Governor David Paterson, reports say.

A spokesperson for Congressman Meek’s was not available for comment.

Investigations of non-profit charities are most often handled by the state’s attorney general. But a spokesperson for Attorney General Cuomo told the New York Post that Cuomo stepped aside because a federal probe was already underway.

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