Council Staffers Indicted, Quinn is Without Info
April 16th, 2008
Two council staffers, one the former chief of staff to Councilmember Kendall Stewart, were indicted on federal charges today for allegedly steering public money into their own pockets through an educational nonprofit organization, the Donna Reid Memorial Education Fund.
The former chief of staff, Asquith Reid, and Jocyinth Anderson, a council staffer, could face decades in prison if found guilty of the federal charges, which include money laundering and mail fraud. The indictment was released this afternoon by Michael J. Garcia, the United States attorney in Manhattan, and Rose Gill Hearn, commissioner of the city’s Department of Investigation. Garcia said today the investigation was ongoing.
The release followed a tumultuous week at City Hall, where City Council Speaker Christine Quinn has been entrenched in a budget scandal (See related story here). That scandal broke less than two weeks ago, when the Post revealed the council had allocated discretionary funding to fictitious organizations. The funding eventually went to legitimate groups midway through the budget cycle.
According to the indictment, the Donna Reid Fund was a nonprofit organization that provided educational assistance to public school children.
Since April 2005, the Reid Fund received $356,000 from the council’s discretionary funding, some of which was used for “legitimate purposes,” according to the indictment. At least $145,000, however, was used personally by Reid, Johnson and other unnamed individuals. Reid allegedly sent $31,000 of that funding to family members in Jamaica, the indictment reads.
More than $20,000, according to the indictment, was also spent on campaign literature and on costs associated with political events for Stewart.
The funding landed in the hands of Reid and Johnson through multiple avenues, including from Stewart’s discretionary funding and from funding initially allocated to fictitious organizations — what city officials have called “holding codes” or accounts meant to park funding, which would be allocated to legitimate groups later following the budget’s approval.
Before the City Council’s stated meeting today, Stewart said he knew Reid had set up the nonprofit in memory of his deceased daughter. Stewart said he had been questioned by federal investigators, and he admitted to giving funding over several years to his chief of staff’s nonprofit group.
When questioned today, Quinn said she had no new information and could not answer any additional questions regarding the indictment nor the council’s allocation of its discretionary funding to the Donna Reid Fund or to fictional organizations.
“I think you all know that we’ve cooperated fully with the U.S. attorneys and the department of investigation in all of their requests for information and on the investigation that they are conducting. I have full confidence in their ability to conduct this inquiry,” said Quinn. “But I have no information and no insights about the press conference being held by the U.S. Attorney’s Office. Obviously news of these criminal charges are sad news for the city and sad news for this institution. But we will have to await further information and results in the legal process before we have any more comment in the matter.”
Like any nonprofit that receives some of council’s discretionary funding (see a more detailed description of the process here), the Reid Fund approached city agency’s to receive funding for their contracted services. First, though, the fund was denied by the city’s Department for the Aging, because the fund had the same address as Stewart’s chief of staff.
The funding was then approved by the city’s Department for Youth and Community Development. Already, officials are calling into question the department’s failure to see the conflict of interst in the nonprofit’s application.
Comptroller William Thompson released the following statement:
“It is extremely troubling and disheartening when city employees forget they have a duty to serve the public, and not themselves.”
“I also am dismayed that, according to today’s indictment, a city agency had adverse information concerning a vendor and yet did not take steps to alert other city agencies.”
“Nearly two decades ago, the City developed a system to report and share information on vendors. The Department for the Aging should have reported its concerns in that system, but apparently failed to do so, allowing these alleged thefts of money to occur.”
As we noted in our story this week here, multiple agencies, departments and officials have their hands in the council’s discretionary funding process at some point, including Thompson, who is charged with auditing every city agency and registering every city contract.By Courtney Gross on April 16, 2008, 4:47 pm
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