2010-10-08 / Top Stories

Smith Business, Charity Under Investigation, Share Office

Though he helped found the organization and sent it $57,000 in member items, State Senate President Malcolm Smith, who represents all of Rockaway in the Senate, has maintained that he has no knowledge of the day-to-day operations of the New Direction Local Development Corp., the non-profit that federal authorities are now probing for potential abuses, according to a recent report on the City Hall website. New Direction was located in the office portion of a one-story building in southeast Queen that shares space with a laundromat and gym. Also located in the building’s office space, however, according to the report, is the Great Abstract Company, LLC, a mortgage title company that Smith served as vice president of for more than four years, according to his personal income disclosures with the Legislative Ethics Commission.

Founded in August 2004, Great Abstract was also located at 219-10 South Conduit Avenue, in Springfield Gardens, incorporation and property records show. The for-profit and nonprofit also shared at least one common employee: Joan Flowers, a board member for New Direction, who has reportedly been subpoenaed in the federal probe, and who was in charge of the organization’s books for at least several years, according to the group’s tax returns. Flowers, meanwhile, earned at least $1,000 working for Great Abstract in 2008, according to her 2009 financial disclosure with the Legislative Ethics Commission. Flowers also drew up both the 2000 incorporation documents for New Direction and the 2004 incorporation papers for Great Abstract. Previous media scrutiny into New Direction has focused on four of Smith’s former aides (including Flowers) — who were also officials at New Direction — and the potential misuse of funds steered to the group by Smith and others. The group’s tax returns offer little information accounting for how New Direction spent hundreds of thousands of dollars in funding drawn from government grants and private donations, including at least $31,000 that was supposed to go to Hurricane Katrina victims. The group’s treasurer has said he could not account for how the funds were spent. “Obviously, the overlap does raise questions, and it’s up to Senator Smith to make crystal clear what the deal was between the business and everything else,” Horner said. A Smith spokeswoman declined to comment and did not return a request for Great Abstracts’ tax records. Levy declined to release any documentation showing the number of hours Flowers had spent working for the non-profit and the for-profit companies or payroll records. He said that the non-profit’s records had been taken by federal investigators, while the mortgage title company was not part of the inquiry. The number of employees at Great Abstract remains unclear. Levy said that it definitely had employees beyond Smith and Flowers — though not many — but he could not provide information on their names or how many there were. Still, he said that no one involved with New Direction besides Smith and Flowers had also worked for Great Abstract.

A July 2006 property transaction involving Great Abstract bears the signature of a woman named Lenora Knight. Flowers served as the notary public for the deal. Flowers and her husband have owned, or currently own, several other businesses registered at the 219-10 South Conduit Avenue address including a law firm, a fitness center, a physical therapy clinic and a political consulting firm, which has received nearly $250,000 from Smith, Rep. Greg Meeks — who also helped found New Direction — and then-State Senator David Paterson between 2000 and 2009. (Flowers was also Paterson’s campaign treasurer in 2007, when Great Abstract made its only political donation, for $3,500, to Paterson’s account. At the time, Great Abstract listed an address in Nassau County.) Levy said that New Direction was located in a physically separate location within the building from Great Abstract, though he could not say where exactly the mortgage title company had been located. Great Abstract may have been run out of Flowers’ law office, he said.

Though the one-story property Flowers and her husband own at 219-10 South Conduit is fairly large, the vast majority of the floor space is taken up by the gym at one end and a physical therapy clinic (Flowers Physical Therapy) at the other. A sign still advertises Flowers’ law office, though it was unclear from outside the building where that is located. There are no visible remains of the now-defunct New Direction or Great Abstract. Levy said that all the business dealings between New Direction and the for-profits had been kept separate. He argued that the 21,000-square-foot space at the building offers ample room for all the different businesses to co-exist separately.

“There’s also a gym, there’s a dry cleaner,” Levy said. “None of them got any non-profit funds. [Great Abstract] had absolutely nothing to do with New Direction. It did not give any money to the title company.”

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