Flowers Smell, Money Doesn't

New York City Councilman Corey Johnson, who represents Chelsea, the West Village and Hell’s Kitchen, threw himself an elegant inauguration costing upwards of $30,000, including $1,500 on flowers. Rather than sourcing this business to one of his district’s many high-end florists, or to the city’s flower district on 28^th Street, Johnson hired his chief of staff’s mother, who owns a flower shop 150 miles away in Norwich, Conn., to provide the floral arrangements for his swearing-in celebration. The councilman also spent $14,000 on food with a caterer based in New Jersey. Johnson’s chief of staff, Jeffrey LeFrancois, did not respond to questions as to why his mother’s business was chosen to supply the Johnson inaugural with its table arrangements.

According to the city’s Campaign Finance Board’s rules, Transition and Inauguration (TIE) funds are not matched by public funding, so elected officials are free to distribute the money they raise for those purposes largely at their own discretion. As such, TIE funds are a gray area of political financing, not just because they are mostly spent on parties, but also because they do not receive a lot of scrutiny. A candidate taking money from a dubious donor will be criticized by his opponent, but the winner of the election no longer faces campaign opposition, and is freer to accept TIE money from questionable sources.

For example, Johnson was adamant throughout his campaign that he was independent of real estate and development interests, and insisted that his professional life in the hospitality industry was so incidental as to be practically an afterthought. Indeed Johnson took only a small amount of money from the real estate industry in his race for Council. As soon as he was elected, however, he accepted $5,000 in TIE money from the Meilman brothers, who own a large stretch of prime retail property on 14th Street just east of the High Line. Johnson also received $15,000 from the developers and managers of the Dream Hotel in the famed Maritime Building on Ninth Avenue, including the owners of Tao Nightclub.

One of these developers, Punjabi hotelier Sant Chatwal, purchased a decommissioned church on 44^th Street and converted it into a luxury hotel called the Chatwal. He neglected to inform the Department of Finance that the building was no longer a house of worship, and thus no longer exempt from property taxes. By the time the city caught up with this omission, the hotel had avoided payment of $2 million.

Johnson also accepted $2,500 from Judith Rubin. Rubin is the wife of Robert Rubin, Clinton’s secretary of the Treasury. Secretary Rubin oversaw the dismantling of regulatory oversight of the financial industry, and urged caution regarding the regulation of credit derivatives. He then became chairman of Citigroup, which had to be bailed out by the U.S. government following the 2008 collapse of the financial industry. Between 1999 and 2009 Rubin received more than $125 million in compensation from Citigroup.

Is there a contradiction inherent in a supposed “progressive” who aggressively touts his family’s labor background partying on the dime of a person who perhaps typifies the “1 percent”?  Or is it the case that in a one-party town, being a “Democrat” covers the widest range of sins?

Another progressive whose TIE fundraising appears to be incongruous with his politics is Councilman Carlos Menchaca, who, like Johnson, was selected as a freshman by his borough colleagues to be a co-leader of their respective delegations. Menchaca ran as a reformist insurgent against Sara Gonzalez, whom he vilified as a tool of “Manhattan millionaire developers” for receiving support from Jobs for New York, the Real Estate Board’s independent expenditure arm. But soon after taking office, Menchaca accepted $1,500 in TIE funding from Taxpayers for an Affordable New York, which is essentially run and funded by the same major property owners who spearheaded Jobs for New York.

Menchaca also took $1,500 from John Ciafone, a Queens lawyer and property owner who was listed on Public Advocate Bill de Blasio’s Worst Slumlord watchlist in 2011. De Blasio returned two large contributions from Ciafone when it was revealed that he was a donor, but Menchaca is apparently untroubled by or unaware of whom he is accepting from.

John Ciafone’s wife is Gina Argento, the CEO of Broadway Stages, a large television and film production studio and sound stage company in Brooklyn and Queens. Argento and her brother Anthony Argento are prolific contributors to political campaigns, and each gave $1,500 to Menchaca’s TIE committee.

Last year the Argentos applied to have a subsidiary company, Luna Lighting, receive a license to operate as a trade waste business, which would allow the company to cart demolition and construction debris from worksites. As the Argentos have ownership interest in many industrial sites that they would like to repurpose for other commercial uses (for example, the Knockdown Center in Maspeth), owning their own demolition hauling company would provide vertical integration to their business. The city’s Business Integrity Commission issued a harsh denial of the Argentos’ application, citing a history of illegal carting by Luna Lighting, and also misrepresentation by Anthony Argento of his arrest record.

Furthermore, Anthony Argento was shown to have over $1 million in federal tax liens against him, as well as his business. As of April 2013 Argento owed the Internal Revenue Service more than $600,000. This information was all published by the city and is a matter of public record. One imagines that Menchaca or his staff must have done some cursory analysis of who was giving him money. Or perhaps the Argentos have papered the city with enough contributions that their questionable business practices do not raise the eyebrows of even the most progressive elected officials.

Debi Rose of Staten Island, one of the Council’s seven deputy leaders, threw herself a $7,000 inaugural party, even though she has already served a full term. It is typical for freshman Council members to have a lavish inauguration, though it is not unheard of for veterans to do so as well: Rose’s fellow progressive Councilwoman Margaret Chin had a five-figure celebratory dinner to commemorate her election to a second term.

Rose raised a relatively small amount of TIE money, but she got it from some strange sources. Almost half of her TIE contributions come from four men who appear to work together in a real estate company called Shore to Shore Realty Partners. The business address is listed with the Secretary of State as 15 Page Avenue on Staten Island, which is the location of a 7-Eleven convenience store. No one at the store has any knowledge of Shore to Shore.

In 2011 the CEO of Shore to Shore, Andrew Gonchar, who gave Rose $2,000, was recently barred for life from the securities industry by the Securities Exchange Commission, which noted in its decision that Gonchar actively sought to “gouge” his bond-trading retail customers.

Whether accepting these donations was hypocritical, unwise or justifiable is for the Council members and their constitutents to judge. What is certain, however, is that elected officials exercise far more due diligence vetting whom they take campaign dollars from than from whom they receive Transition and Inauguration funds. The bar is much lower for TIE funds because the election is over, the next campaign is more than three years off and none of the money is eligible for public matching funding anyway, so who really cares? Still, for those paying attention, TIE contributions are an amusing coda to campaign finance season, when elected officials can embrace their unseemly supporters and freely take what they had to deny themselves during the Lenten pre-election period. Which begs the question: Are the progressives who now constitute the Council leadership any different from the typical big city machine politician with a wide smile and an open palm?

 Seth Barron (@NYCCouncilWatch on Twitter) runs City Council Watch, an investigative website focusing on local New York City politics.