Wednesday, April 29, 2009

The Silence of the Lions: What the Comptroller Candidates Don't Want You to Know

The Silence of the Lions
What the Comptroller Candidates Don't Want You to Know

The four candidates running for New York City Comptroller – Melinda Katz, John Liu, David Weprin and David Yassky – are hardly media shy. Liu thrust himself into the national spotlight last month by piling on a Texas lawmaker for anti-Asian comments. Yassky preferred the limelight, cozying up with Hollywood stars to push for an extension of the film tax credit. Weprin and Katz basked in the glow of the 1980s, trumpeting endorsements from David Dinkins and Geraldine Ferraro respectively.

Other than that little fiscal crisis thing tearing apart the City, all seems to be right with the world for this fearless foursome. Sure we have some problems, but it’s nothing that rolling up their sleeves and using their Blackberrys’ calculator function to crunch a couple billion bucks can’t fix. Yes, indeed, the Comptroller candidates are ready to get to work. That is, except for addressing the most serious challenge they are to face: dealing with the fallout of the disastrous pay-to-play pension scams that Attorney General Cuomo’s indictments have begun to uncover and changing the way the Comptroller office works beyond the cosmetic "elimination of the middleman", to purge this epidemic of corruption from our government now and forever.

Instead, for the Comptroller candidates, it’s as though the whole pension fund scandal threatening to bring down the former State Comptroller, Alan Hevesi, and current City Comptroller, Bill Thompson, didn’t even exist. Rather than pushing each other out of the way to get on NY1 like usual, the four Comptroller candidates have been eerily silent on Hank Morris, Steven Rattner and all of the other City big shots rolled up into the pay-to-play investigation.

Is that because the Comptroller candidates’ campaigns consultants and donors operate similar to Rattner, Morris, and the rest, to speak out again pay-for-play, while avoiding criticism of hypocrisy? Is it become some of the candidates and consultants are deeply interconnected with the indicted Morris? It’s not as if there is some precedent that would make it politically damaging for a candidate to attack pension fund abuse. After all, even Alan Hevesi and his longtime campaign consultant (now indicted) Hank Morris attacked Hevesi’s much weaker Republican opponent Christopher Callaghan in the 2006 State Comptroller’s race on these grounds. At the time, Hevesi and Morris sought to portray former Senator Alfonse D'Amato, who contributed heavily to Callaghan, as an unsavory lobbyist who converted slices of the state employees’ pension fund into investments.

It’s hard to write off the City Comptroller candidates’ silence as a sin of omission. It’s not like the candidates don’t know that the Comptroller manages the pension fund. Melinda Katz, who rose to political prominence in 1994 thanks to Alan Hevesi handing her off his Assembly seat, even has a plan to use City pension funds for backdoor bailouts of floundering companies.

Katz’s connections to Hevesi’s horde are far from ancient history. Her campaign spokesperson is none other than Marc Guma, Hank Morris’s former partner in the consulting company Morris, Carrick, and Guma. As partners, Morris and Guma contributed $52,972 to the New Mexico Democratic Party in February 2001. Not surprisingly, Steven Rattner’s Quadrangle Group later hired Morris as a third-party broker in New Mexico to secure a $20 million commitment to one of its private equity funds, allegedly kicking back millions to his bag man Morris according to the AG’s indictment.

Global Strategy Group, which is also part of Katz’s campaign, used to be publically aligned with Roberto Ramirez’s Mirram Group, until that firm got into lobbying problems. Nonetheless, they still share office space and seem to maintain a special arrangement. State Controller DiNapoli met personally with the head of a private equity concern, who was accompanied by Mirram’s boss Ramirez. In that case, the pension fund upped its $15 million investment in that company to $50 million.

Hank Sheinkopf, another campaign consultant like Hank Morris, is working for Comptroller candidate David Weprin. Sheinkopf recently abandoned Comptroller Thompson after years of working with the mayoral candidate to earn even bigger bucks from the Bloomberg campaign. Sheinkopf isn’t just a campaign consultant. He’s also a lobbyist for the Retirees Association of DC 37, AFSCME, and AFL-CIO and many other organziations around town. He also shares office space with another consultant, who now works on John Liu’s comptroller campaign.

John Liu’s consultant, mega lobbyist Bill Lynch, is very familiar with financial investors, having represented sub-prime lender Delta Mortgages. According to John Zinner, who worked for the Foreclosure Prevention Project, said “Delta Funding, in the '90s in particular, sort of epitomized predatory lending.” Until it went bankrupt, Delta was the 9th largest sub-prime lender.

As for David Yassky, his campaign consultant Josh Isay, like Katz’s Guma, also used to work for Hank Morris, yet further sad proof that rather than carelessly overlooking the growing pay-to-play scandal in the City and State Comptroller offices, the current flock of Comptroller candidates is deliberately ignoring it in the hope that their silence will help contain it from spreading. Now why would they want to keep the Play to Pay system going?

On almost all of the Comptroller candidates’ websites are proposals as to how they would invest the City pension fund, conceived of to make voters feel they can trust these candidates as the City’s accountant. But apparently, this year’s candidates’ grand plans for managing the life savings of the City’s hard-working union members don’t take into account that as soon as Thompson and Hevesi signed off on the type of private investments the candidates suggest, millions of taxpayer dollars went missing in payouts and fees to modern day “Robber Barons” and political insiders with close connections to the Comptrollers’ offices.

The fact that none of the City Comptroller candidates have thought it necessary or even politically expedient to promise top to bottom reforms, the growing pension fund scandal is almost as appalling as the fact that no one in the media has asked them to do so. Nor have any of the political clubs thought it a worthwhile question for their innumerable candidate forums to ask how the Comptroller hopefuls plan on purging the pervasive corruption that has deeply marred the Comptroller’s office, and which threatens to lead to even more indictments, including one for Thompson, the Democrat’s presumptive nominee for Mayor. Maybe the Working Families Party decided getting to the bottom of where the candidates stand on this scandal was no big deal when they hastily handed off their endorsement to John Liu.

True News thinks it is important to protect New Yorkers’ pensions. That’s why True News is today offering all four candidates a public forum to give the taxpayers the answers we must have in order to evaluate who is really the right person to entrust with our money.

So, David Yassky, David Weprin, John Liu, and Melinda Katz, let’s start with some basics:

1) Do you think that it is a criminal conflict of interest that Josh Wolf-Powers and Adam Blumenthal left their jobs as Bill Thompson’s top deputies in the Comptroller’s office managing the City’s pension fund to set up the private company Blue Wolf Capital Management, which then secured $70 million in investment for Blue Wolf from the Comptroller’s office? And should Bill Thompson resign as Comptroller for taking almost $10,000 in donations for his mayoral campaign from Blumenthal and Blue Wolf Capital?

2) What is the connection between the growing pension fund scandal in Bill Richardson’s administration in New Mexico that the state’s AG is trying hard to keep a lid on and Andrew Cuomo’s bold investigation into New York’s pension fund scandal? Are you troubled that Deborah Gallegos, the Chief Investment Officer for the City Comptroller in 2005 – the year Wolf-Powers urged Steven Rattner to hire the now-indicted Hank Morris as his placement agent – had come to Thompson’s office directly from New Mexico, where she worked in Richardson’s administration as deputy state investment officer for the New Mexico State Investment Council and was deeply involved in the private investment of billions of dollars of taxpayer money under similar (and suspicious) circumstances to the investigation into New York City’s Comptroller’s office. Are you aware that Richardson, who is being investigated for pay-to-play with New Mexico’s pension funds, also received money from Hank Morris and Steven Rattner?

3) Have you met with Andrew Cuomo to learn more about the pension fund scandal and what you could do to end corruption in the Comptroller’s office? Other than the smoke screen concession of eliminating placement agents enacted by Bill Thompson and State Comptroller Thomas DiNapoli, what would you do to really reform the Comptroller’s Office?

We’ll start with these questions. We encourage the candidates to submit their responses in writing to as soon as possible.

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