Bloomberg Honored Letter, but Not Spirit, of Campaign Finance Law, Board Finds

15 january 2013

On the eve of the 2009 mayoral election, Michael R. Bloomberg wrote two checks, totaling $1.2 million, to the state’s Independence Party. Even though the city’s campaign finance board had declared that personal contributions to political committees would soon have to be disclosed, the Bloomberg campaign opted not to report those payments, which only became public months later, when the campaign was over.

On Thursday, after two investigations and a related court case, the city’s Campaign Finance Board, in a 3-to-1 vote, determined that the mayor’s campaign had not violated the city’s campaign finance law, because the disclosure requirement had not yet gone into effect when the payment was made. It rebuked the campaign, however, declaring, “The campaign’s actions contravened the spirit of disclosure” underlying the campaign finance act and board rules.

A top Bloomberg aide said the mayor had been vindicated by the ruling.

“We are pleased that the board dismissed the complaint, and in doing so recognized that the campaign committed no violation,” said Howard Wolfson, a deputy mayor who was the chief spokesman of Mr. Bloomberg’s campaign.

But government watchdogs were not as impressed.

“The appearance here is poor,” said Gene Russianoff, a staff attorney at the Straphangers Campaign. “Voters were left in the dark on more than a million dollars spent in the 2009 mayoral campaign.”

Mr. Bloomberg, a political independent, spent more than $109 million on his 2009 campaign to beat back a challenge by the Democratic nominee, William C. Thompson Jr., a former city comptroller. Mr. Thompson spent a little more than $9 million on his campaign, according to the state Board of Elections.

The $1.2 million payment that Mr. Bloomberg made to the Independence Party was in addition to his direct campaign spending.

The Independence Party used much of the Bloomberg money to hire John F. Haggerty Jr., a Queens political operative who had a personal bond with the mayor, to perform ballot security work, an occasionally controversial practice in which volunteers, lawyers and inspectors are stationed at polling sites to discourage voter fraud. After the campaign, Mr. Haggerty was charged by Cyrus R. Vance Jr., the Manhattan district attorney, with stealing most of the money to finance the purchase of his childhood home, rather than to set up the Election Day ballot-security operation. In Oct. 2011, Mr. Haggerty was convicted of second-degree grand larceny and second-degree money laundering.

An investigation by the board of Mr. Bloomberg’s spending in 2009 was made in response to a complaint by Mr. Thompson. It was dismissed, because the board determined that it had not yet clearly mandated the disclosure of political contributions made with personal funds — a requirement it then established.

After the Independence Party disclosed the payment, it was discussed at the Haggerty trial and another complaint was filed — by Jerry Kann, a longtime minor-party candidate — and the board decided to investigate again.

In its ruling Thursday, the board said that the record of the Haggerty trial “makes clear that the campaign moved deliberately to avoid pre-election public disclosure,” but that the campaign had not violated the law because the board had chosen not to make disclosure of such spending mandatory until January of 2010.

The one member of the board who voted against closing the case on Thursday was Richard J. Davis, a former federal prosecutor, who argued that a penalty should be assessed because of what he viewed was the “improper coordination” between Mr. Bloomberg’s campaign and the Independence Party.

Mr. Bloomberg’s payment to the Independence Party was directed to the party’s so-called housekeeping account, intended for office expenses. Contributions to such accounts are not limited.

The Campaign Finance Board said it was “troubled by Bloomberg’s apparent freedom under New York State election law to make and conceal such payments in the first place” and “deprive the New York City electorate of the benefits of disclosure.”

“Housekeeping arrangements are, at best, hostile to the principles of fair play and transparency,” the board wrote. “At worst, housekeeping committees may provide legal cover for corruption or engender the appearance of corruption.”

The board, in its statement, said it “once again calls upon the New York State Legislature to close New York’s housekeeping loopholes.” But Laurence D. Laufer, the election lawyer and former general counsel to the board who filed the 2009 complaint on behalf of Mr. Thompson, said that the board merely “passes the buck” to Albany.