2011-03-04 / Top Stories

Public Funds Used To Halt AEG Probe

By Howard Schwach

Aqueduct Racino in artist’s rendering Aqueduct Racino in artist’s rendering According to published reports, Senate Democrats, including Malcolm Smith, spent tens-of-thousands of dollars in taxpayer funds to quash subpoenas issued by the state Inspector General’s office seeking information about the Democratic Conference’s role in the Aqueduct Entertainment Group (AEG) scandal, according to Senate expense records recently obtained under a freedom of information law request filed by the Gothamist Website.

Those records show that on April 1, 2010 Senate Democrats cut a check for $29,300 to the Manhattan criminal defense firm Thompson, Wigdor & Gilly LLP — a payment Senate Democratic spokesperson Austin Shafran confirmed was used for a lawsuit to block the Inspector General’s subpoena requests, though the State Supreme Court ultimately rejected the suit.

All of this came less than a month after the Paterson administration, under a cloud of scandal, shut down the AEG contract.

Shafran insisted the funds were used for official Senate business, and not to shield individual members from potential legal fallout.

In October, the Inspector General’s office released a scathing report that found several high-ranking Democratic senators, including now- Minority Leader John Sampson, Malcolm Smith and Eric Adams, among others, had acted improperly in initially helping AEG win a multi-billion dollar Racino bid.

Notably, $118,000 in subsequent payments to Thompson, Wigdor & Gilly were made by the Democratic Senate Campaign Committee in June for individual legal services for Senate members. Shafran said the shifting nature of the case led Senate Democrats to pay the firm at first out of government funds and later out of campaign funds.

The April payment of $29,300 was appropriate, said Shafran, arguing that the case was a matter of principle. The Senate needed to assert itself as a separate, co-equal branch of government that was not subject to the IG’s subpoenas for Senate records and witness testimony, Shafran said. He insisted that efforts to block the AEGrelated subpoenas had nothing to do with individual members’ potential roles in the scandal.

“Our legal challenge was based on the fact that the Senate is an independent body and on the idea of separation of powers,” Shafran said.

Shafran said in-house counsel was not qualified to handle the case, since Senate lawyers primarily work on legislative issues. The Senate Democrats made a similar argument about inhouse counsel being unable to handle legal work in a Daily News article published Monday about why the conference spent $376,000 on attorneys who advised the conference in expelling former State Sen. Hiram Monserrate.

Shafran noted that on March 24, Sampson publicly stated that the Senate Democrats would turn over all requested documents regardless of how the legal case played out — a move that would be made, Sampson said, in the name of transparency.

At the time, though, questions were raised about whether the Senate Democrats really would comply with the IG’s request voluntarily, even as they were unwilling to turn over the documents under legal duress. And the scathing Inspector General’s report released in October painted a less than flattering picture of the Senate Democrats. Shelley Mayer, the majority counsel, had initially informed the IG’s office that the Senate would fully cooperate, but quickly withdrew the offer, the report states. On March 9, the IG subpoenaed Sampson, ex- Majority Leader Pedro Espada, Jr., and the Senate. Fourteen days later, Sampson, Espada and the Senate moved to quash the IG subpoenas. The Senate Democrats also attempted to prevent the public from knowing of its lawsuit against the IG, the report alleges.

State Sen. Diane Savino, a former member of the Democratic Conference who in January joined the four-person breakaway Independent Democratic Conference, said that rank-and-file members were never told of the government spending in relation to AEG, nor did they know about the campaign spending on legal defense until DSCC campaign filings became available this year.

“As far as I was aware, Shelley Mayer was acting as the attorney,” Savino said.

Regardless, Savino said the payments reflected a general lack of foresight that spurred her to split off from the conference in the first place. She noted that Sampson, Smith and Adams all had plenty of campaign cash that they could have tapped into instead.

“It would have been much more appropriate,” she said.

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