NY TIMES BOMBSHELL INVESTIGATION: Final proof of Cuomo corruption revealed in blistering expose

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ORIGINALLY PUBLISHED: THE NY TIMES

Cuomo’s Office Hobbled State Ethics Inquiries

By SUSANNE CRAIG, WILLIAM K. RASHBAUM and THOMAS KAPLAN

With Albany rocked by a seemingly endless barrage of scandals and arrests, Gov. Andrew M. Cuomo set up a high-powered commission last summer to root out corruption in state politics. It was barely two months old when its investigators, hunting for violations of campaign-finance laws, issued a subpoena to a media-buying firm that had placed millions of dollars’ worth of advertisements for the New York State Democratic Party.

The investigators did not realize that the firm, Buying Time, also counted Mr. Cuomo among its clients, having bought the airtime for his campaign when he ran for governor in 2010.

Word that the subpoena had been served quickly reached Mr. Cuomo’s most senior aide, Lawrence S. Schwartz. He called one of the commission’s three co-chairs, William J. Fitzpatrick, the district attorney in Syracuse.

“This is wrong,” Mr. Schwartz said, according to Mr. Fitzpatrick, whose account was corroborated by three other people told about the call at the time. He said the firm worked for the governor, and issued a simple directive:

“Pull it back.”

The subpoena was swiftly withdrawn. The panel’s chief investigator explained why in an email to the two other co-chairs later that afternoon.

“They apparently produced ads for the governor,” she wrote.

The pulled-back subpoena was the most flagrant example of how the commission, established with great ceremony by Mr. Cuomo in July 2013, was hobbled almost from the outset by demands from the governor’s office.

While the governor now maintains he had every right to monitor and direct the work of a commission he had created, many commissioners and investigators saw the demands as politically motivated interference that hamstrung an undertaking that the governor had publicly vowed would be independent.

The commission developed a list of promising targets, including a lawmaker suspected of using campaign funds to support a girlfriend in another state and pay tanning-salon bills. The panel also highlighted activities that it saw as politically odious but perfectly legal, like exploiting a loophole to bundle enormous campaign contributions.

But a three-month examination by The New York Times found that the governor’s office deeply compromised the panel’s work, objecting whenever the commission focused on groups with ties to Mr. Cuomo or on issues that might reflect poorly on him.

Ultimately, Mr. Cuomo abruptly disbanded the commission halfway through what he had indicated would be an 18-month life. And now, as the Democratic governor seeks a second term in November, federal prosecutors are investigating the roles of Mr. Cuomo and his aides in the panel’s shutdown and are pursuing its unfinished business.

Before its demise, Mr. Cuomo’s aides repeatedly pressured the commission, many of whose members and staff thought they had been given a once-in-a-career chance at cleaning up Albany. As a result, the panel’s brief existence — and the writing and editing of its sole creation, a report of its preliminary findings — was marred by infighting, arguments and accusations. Things got so bad that investigators believed a Cuomo appointee was monitoring their communications without their knowledge. Resignations further crippled the commission. In the end, the governor got the Legislature to agree to a package of ethics reforms far less ambitious than those the commission had recommended — a result Mr. Cuomo hailed as proof of the panel’s success.

While some reports of tension between the governor’s office and the commission surfaced in the news media at the time, the examination by The Times provides the first full accounting of how extensively the governor’s aides involved themselves in the commission’s work and the level of disruption that this caused.

The examination included a review of hundreds of emails, subpoenas and internal documents and interviews with more than three dozen commission members, employees, legislative staff members and other officials. Few of those interviewed agreed to be quoted by name for fear of antagonizing the governor or his aides.

Mr. Cuomo said early on that the commission would be “totally independent” and free to pursue wrongdoing anywhere in state government, including in his own office. “Anything they want to look at, they can look at — me, the lieutenant governor, the attorney general, the comptroller, any senator, any assemblyman,” he said last August.

In a 13-page statement responding to The Times’s questions, Mr. Cuomo’s office defended its handling of the commission. It said the commission was created by and reported to the governor, and therefore he could not be accused of interfering

While he allowed the commission the independence to investigate whatever it wanted, the governor’s office said, it would have been a conflict for a panel he created to investigate his own administration.

“A commission appointed by and staffed by the executive cannot investigate the executive,” the statement said. “It is a pure conflict of interest and would not pass the laugh test.”

Yet, The Times found that the governor’s office interfered with the commission when it was looking into groups that were politically close to him. In fact, the commission never tried to investigate his administration.

Beyond that, Mr. Cuomo’s office said, the commission needed the governor’s guiding hand because it was, simply, a mess: Its staff was plagued by “relationship issues” and was “mired in discord.” The commissioners, whom he earlier called some of New York’s sharpest governmental and legal minds, “did not understand the budget or legislative process or how state government worked,” the statement said. Their subpoenas often had “no logic or basis,” and those that touched on the governor’s supporters were more for show than for legitimate investigative purposes, the statement said.

At the center of the battle between independent-minded commissioners and Mr. Cuomo and his aides were two hard-charging lawyers: E. Danya Perry, a former federal prosecutor who was the panel’s chief of investigations; and Regina M. Calcaterra, a former securities lawyer who, as the commission’s executive director, routinely conveyed the wishes of the governor’s office.

Working closely with Ms. Calcaterra was Mr. Schwartz, the secretary to the governor, a job far more powerful than the title suggests.

Yet never far from the action was Mr. Cuomo himself, making the most of the levers of power at his disposal and operating behind closed doors in ways that sometimes appeared at odds with his public statements.

Over two days of meetings with the commission’s co-chairs last September, Mr. Cuomo personally suggested a way to squeeze members of the Legislature into enacting ethics-reform measures: by issuing subpoenas to the law firms where many legislators earn sizable incomes for part-time work.

(Months later, however, Mr. Cuomo made it sound as if he bore no responsibility for those subpoenas: In a private meeting, according to one of the participants, he ascribed the subpoenas to “cowboys” on the commission.)

In another pressure-packed session, Mr. Schwartz specifically told the commission’s co-chairs that the governor himself was off limits.

As if to demonstrate the competing views of interference, Mr. Fitzpatrick now says he agreed with the decision to pull back the subpoena to the governor’s media-buying firm, though others on the commission were outraged.

Many of them, including some of New York’s most senior prosecutors, had believed they would have free rein to pursue investigations wherever they led and would be independent of the executive branch. What became of the commission left many of them disillusioned.

“The thing that bothered me the most is we were created with all this fanfare and the governor was going to clean up Albany,” said Barbara Bartoletti, legislative director for the League of Women Voters of New York State and a special adviser to the commission. “And it became purely a vehicle for the governor to get legislation. Another notch for his re-election campaign. That was it.”

New York State government had always seen its share of scandal, but it had become nearly synonymous with corruption when Mr. Cuomo was elected in 2010, promising to restore integrity to Albany. But by early last year, the parade of handcuffed officials had not subsided. In little more than a month, three state legislators were arrested on federal charges; one of them was accused of trying to bribe his way onto the New York City mayoral ballot, and another had sold legislation for cash.

On July 2, 2013, Mr. Cuomo took a seat at a long table in the stately Red Room adjoining his private office on the second floor of the Capitol building. With him were Attorney General Eric T. Schneiderman and district attorneys from across the state.

Mr. Cuomo said the rash of scandals had shaken the public’s confidence, and he announced he was creating a formidable new commission, investing it with subpoena power and giving it until the end of 2014 to crack down on public corruption as never before.

It was called a Moreland Commission, after a 1907 law that governors had long used to create panels to investigate wrongdoing and recommend legislative improvements.

“The people of this state should sleep better tonight,” Mr. Cuomo said.

Three people would lead the panel, formally named the Commission to Investigate Public Corruption. The governor selected two: the affable and blunt-spoken Mr. Fitzpatrick, the longtime district attorney in Onondaga County and a Republican; and Kathleen M. Rice, the Nassau County district attorney and a Democrat.

Mr. Schneiderman, a Democrat, recommended nine of the 25 members, including the third leader: Milton L. Williams Jr., a former state and federal prosecutor and partner at the Manhattan law firm of Vladeck, Waldman, Elias & Engelhard. A unanimous vote of the commission’s three leaders would be required to issue a subpoena.

“I believe, with the credibility of this commission, you can go a long way towards restoring that public trust,” Mr. Cuomo said.

The members included prosecutors, professors and lawyers, some with close ties to Mr. Cuomo. Yet Mr. Fitzpatrick, seated to Mr. Cuomo’s left, said the commission could proceed freely, even if the governor’s own fund-raising came under scrutiny.

“He’s not looking for rubber stamps,” Mr. Fitzpatrick said. “He’s looking for an independent commission, and we’ll do what Deep Throat told Bob Woodward to do: Follow the money.”

Two weeks later, the newly formed commission was being advertised in a 30-second television spot paid for by Mr. Cuomo’s re-election campaign.

“Trust is everything to me,” the governor said, looking into the camera. He said, “So I am appointing a new independent commission, led by top law enforcement officials from all across this great state, to investigate and prosecute wrongdoing.”

“The politicians in Albany won’t like it,” he said. “But I work for the people.”

Being hired by the commission, one young investigator said, “had all the makings of a dream job.”

The investigators set up shop in an office building in Lower Manhattan. In their cross hairs from the outset were the pots of money that had long spawned scandals in the Legislature: campaign donations and spending; the easy-to-abuse expense reimbursements known as per diem payments; and the outside income that some lawmakers earned in lucrative part-time jobs, often at law firms representing clients with business before the state.

A consulting firm, K2 Intelligence, was hired to search databases for donations linked to the passage of legislation or to the awarding of state contracts.

But as investigators asked questions, they found themselves inquiring about matters related to the governor’s supporters. And this led to confrontations between Ms. Perry, the commission’s chief investigator, and Ms. Calcaterra, its executive director.

While Ms. Perry was a senior prosecutor who had handled one of the nation’s largest immigration-fraud cases and a huge disability-fraud case, she was a newcomer to politics.

Ms. Calcaterra, by contrast, had spent years in and out of government and Democratic politics and ran for State Senate herself in 2010, before being disqualified because of a residency requirement. She had led Mr. Cuomo’s first Moreland panel, which dug into utility companies’ responses to Hurricane Sandy. (She had also written a memoir about her troubled childhood, which prompted a New York Post headline: “I Was Homeless — Now I’m Fabulous.”)

One of the first roadblocks Ms. Perry and her investigators encountered came when they sought to subpoena the Real Estate Board of New York, a powerful trade group whose members have been among Mr. Cuomo’s most generous supporters.

According to a subpoena that had been prepared, investigators wanted to examine the real estate board’s political donations, its materials related to a valuable tax break for new housing, and its communications with public officials, including phone calls with lawmakers.

Ms. Calcaterra repeatedly pressed Ms. Perry not to serve the subpoena, emails show. Yet the commission backed Ms. Perry, and on Aug. 19, she wrote to the co-chairs that she would be sharing a subpoena with them “shortly.”

Whereupon Mr. Cuomo’s office stepped in to shut it down.

Mr. Schwartz, the secretary to the governor, telephoned one of the commission’s three leaders in a fury, according to four people briefed on the call. There would be no subpoena to the real estate board, he said.

Ultimately, the commission merely sent the real estate board a letter asking it to provide information voluntarily, which it did.

In a statement, Mr. Schwartz, who is not a lawyer, did not address specific subpoenas but generally acknowledged giving the commission “advice on investigative or tactical decisions,” but only to improve its “effectiveness and fairness.” He added that he often said that investigative decisions were ultimately up to the co-chairs.

Around the same time, commission investigators also decided to subpoena a major retailer to see if its donations were linked to passage of a tax credit.

This, too, was met with resistance from Ms. Calcaterra.

The rationale? The tax credit had been included in Mr. Cuomo’s budget, she told Ms. Perry, so any questions raised about it could reflect poorly on him, according to several people apprised of the exchange.

On Aug. 28, Ms. Perry forwarded an email chain about the resistance to Ms. Rice, the panel’s co-chairwoman, who sent it along to the other two. “Danya can’t be prevented from doing the most basic and noncontroversial aspects of her job,” Ms. Rice wrote. “Thoughts??” (Ms. Rice, through a spokesman, declined to comment for this article.)

Mr. Fitzpatrick was exasperated. “The 2d Floor (Larry) needs to understand this is an INDEPENDENT commission and needs to be treated as such,” he wrote, referring to Mr. Schwartz and to the location of the governor’s office in the Capitol. He added that “everything we discuss does not need to be fed back to Floor 2.”

“I am not wasting 15 months of my quickly shortening life to write some silly report that Lewis and Clark couldn’t find in five years!” Mr. Fitzpatrick wrote.

Publicly, though, Mr. Fitzpatrick betrayed no sign of the turmoil in the commission and said a number of times that the governor’s office had not interfered — and his seemingly contradictory positions became a source of growing frustration to staff and commission members.

Investigators began to suspect that Ms. Calcaterra was monitoring their activities and reporting back to the governor’s office.

At times, commissioners and staff members said, she appeared to be updating Mr. Schwartz, practically in real time, with rapid-fire messages from her BlackBerry. The two also spoke frequently by phone.

A sense of paranoia spread through the office, where, one staff member said, the mood began to resemble that of a prison camp. Ms. Perry told investigators to assume that Ms. Calcaterra was indeed reading their emails. One investigator told colleagues he had become convinced that it was true after Ms. Calcaterra asked him about something he had mentioned only once, in a message he had emailed from his Moreland account to his personal account.

Investigators began keeping files on their laptops rather than on a shared drive, several staff members said, so that Ms. Calcaterra would not be able to gain access to them.

Independence and interference were, not surprisingly, on the agenda when the full commission met on Aug. 29 in a law firm’s Midtown Manhattan office.

Ms. Perry and Ms. Calcaterra were seated near one another. The two were barely on speaking terms.
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