Gotham Gazette

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City Pays $2.6 Million De Blasio Legal Fees; Campaign-Related Debts Unclear

de Blasio city hall blue room

Mayor de Blasio (photo: Ed Reed/Mayor's Office)

At a public hearing Thursday morning in downtown Manhattan, an official from the city’s Law Department plainly read the fifteenth item on the docket: a proposed contract for legal services that would cost the city $2,627,500. No individuals testified and the hearing was over in less than five minutes, allowing the city to move forward with its intent to award the contract.

That contract is just the latest development in the long-running saga of Mayor Bill de Blasio’s ethical and fundraising scandals, which invited federal and state investigations of the mayor and his aides but resulted in no criminal charges. The $2.6 million city contract award was to the law firm of Kramer, Levin, Naftalis and Frankel for services provided to the mayor in an investigation by the Manhattan United States Attorney’s office into to what extent the mayor and his administration gave favorable treatment to his campaign donors.

By March 2017, the city had already spent about $10.5 million on 11 outside law firms for work related to the two investigations.

Although the separate investigations by the U.S. Attorney and the Manhattan District Attorney’s office, which was looking at de Blasio’s involvement in 2014 state Senate races, closed in March 2017, the cloud of scandal around the mayor’s administration never entirely cleared.

Then-Acting U.S. Attorney Joon Kim noted in 2017 that though the mayor would not face charges, he had nonetheless sought donations from donors and then “made or directed inquiries to relevant City agencies on behalf of those donors.” Recently, in a separate case in Long Island, one of those donors pleaded guilty to attempting to bribe the mayor, raising a new round of questions -- which de Blasio has repeatedly refused to answer -- on how far the mayor and his administration went to help out close allies and campaign funders.

De Blasio has repeatedly argued that he and his associates acted legally and ethically, and has said that thorough investigations with no charges proved that to be the case. However, there are major leaps in his logic that have been undercut by many critics, including Kim.

As his legal bills mounted and though he always maintained his innocence, de Blasio had pledged that taxpayers would not foot the cost of his representation. While the City would pay for any outside counsel needed to represent other governmental employees, the mayor said he would not saddle taxpayers with his own costs. De Blasio eventually reversed course, leading to the contract approved on Thursday morning. But, there is also the matter of de Blasio’s legal bill for representation in the District Attorney’s investigation of his efforts to elect Democrats to the state Senate and possibly violations of state campaign finance law.

The administration has been less than forthcoming on what legal bills remain unresolved, nearly a year after the investigations concluded. The contract approved on Thursday wasn’t available for review except for a summary of the “scope of services” provided. Nicholas Paolucci, a Law Department spokesperson, said in an email that the contract had yet to be finalized. “The hearing was scheduled before final contract was established,” he wrote. “We are in the process of finalizing.”

Paolucci did provide the “scope of services” summary from the contract, which runs from April 11, 2016 through June 30, 2018, referencing the U.S. Attorney’s investigation. “Contractor’s services will include provision of all legal and related services necessary for satisfactory disposition of the Matter and incidental and related matters,” it reads.

“You will have to foil for contract when it's complete,” Paolucci added, referencing a Freedom of Information Law (FOIL) request.

“The purpose of today’s hearing was to give members of the public an opportunity to speak on the record concerning the proposed contract. The hearing is required by law. Next steps: the city can now proceed to completing the City procurement process, executing the contract, and submitting the contract to the Comptroller for registration,” Paolucci said in a subsequent email. Though asked, he did not provide any estimates on the mayor’s legal bills.

“We anticipate completing the remaining procurement steps promptly and the Comptroller has 30 days to register once the contract is submitted,” Paolucci wrote in a follow-up email.

Mayoral spokesperson Eric Phillips declined to comment when asked about the total legal bills faced by the mayor and the administration in the investigations, and the outstanding amount from the D.A. investigation and how the mayor plans to pay it. Dan Levitan, a spokesperson for the mayor’s reelection campaign and for the mayor’s political nonprofit at the center of the federal investigation, the Campaign for One New York, directed Gotham Gazette to Phillips. Levitan’s firm, BerlinRosen, was also among the players involved in the 2014 efforts to flip the state Senate to Democrats.

During a March 2017 City Council hearing, just days before the simultaneous U.S. Attorney and District Attorney announcements that no charges would be filed in either investigation, Corporation Counsel Zachary Carter, the city’s top lawyer, testified that the Law Department had spent about $10.5 million already on outside law firms for the legal defense of the mayor and his aides in both investigations. (Earlier news reports had revealed that the city had entered into contracts with outside law firms worth about $11.6 million for those purposes).

When insisting for months that he would not allow taxpayers to bear the burden of his legal costs, de Blasio had indicated he would explore setting up a legal defense fund to raise the money. “That’s money that will have to be raised. So that’s the reality, because I guess you didn’t know, I’m not a billionaire like my predecessor,” de Blasio said in February 2017.

But, after The Conflicts of Interest Board, an independent watchdog and advisory agency, issued guidance that effectively limited donations to such a fund to just $50 from any individual or entity, the mayor found himself having to avail of public money for as much of his legal defense as applied to his government work.

In a post from June on the online publishing site Medium, de Blasio wrote that roughly $2 million would come from the city’s coffers, corresponding with the contract that was approved Thursday. For the rest of the fees, related to “some non-governmental work” that was the subject of the District Attorney investigation, the mayor said he would have to raise about $300,000 from private donors through a legal defense fund.

“Employers have a legal and moral responsibility to cover the costs of representation when employees are doing their jobs, like we were,” the mayor said in the post. “It’s true in the private sector and it’s true in government.”

When asked in June 2017 what his level of frustration was given that he had been cleared of criminal wrongdoing in the investigations but still had the legal bills to pay, de Blasio said, “I’m beyond frustration. I don’t register that emotion anymore. Look, it is what it is. I said what I believe – that was had done things the right way. This is the world we’re living in. It’s something we have to find a way to deal with.”

by Samar Khurshid, senior reporter, Gotham Gazette

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