D.A. Interviewing Hevesi Supporters About Fund-Raising

Investigators for Manhattan District Attorney Robert Morgenthau have interviewed two business executives about fund-raising they did in 1998 and 1999 for City Comptroller Alan Hevesi’s Mayoral campaign, The Observer has learned.

The investigators have also spoken to several other people who have either donated money or organized an event for the Comptroller, according to sources familiar with the inquiry.

The investigators are trying to determine whether donations to Mr. Hevesi’s campaign were improperly “bundled,” or collected from individuals without their knowledge or consent–a misdemeanor under state election law.

Mr. Morgenthau’s office began its inquiry after staff members from the city Campaign Finance Board, or C.F.B., asked his investigators to scrutinize fund-raising conducted on behalf of Mr. Hevesi and two other Mayoral candidates, City Council Speaker Peter Vallone and Bronx Borough President Fernando Ferrer, sources said. The inquiry into fund-raising for Mr. Hevesi, however, is much further along, and investigators have interviewed far more people in connection with that case. According to a source familiar with the situation, Mr. Hevesi’s fund-raising statements contain far more possible discrepancies than those of his rivals.

Mr. Hevesi likely has little knowledge of the fund-raising activities that have attracted the attention of investigators, the sources noted. Outside fund-raisers often work with little or no input from campaigns. It is also unclear whether some of the discrepancies were simply the result of sloppy bookkeeping.

Still, a full-fledged inquiry into the financing of Mr. Hevesi’s campaign could complicate his efforts to present himself as the most fiscally responsible Mayoral candidate. It could also draw Mr. Morgenthau, a Democrat who has scrupulously avoided involvement in local politics, into the Mayoral race as he prepares, at age 81, to run for his eighth term this year.

As part of the inquiry, investigators have questioned Richard Perry, the president of Perry Corporation, a private investment-management firm, about $17,500 he raised for Mr. Hevesi in 1998, according to sources familiar with the situation. Mr. Perry is a powerful figure on Wall Street; according to Ticker, a monthly magazine for Wall Street insiders, he earned $34 million in 1998, winning him the No. 42 spot on the magazine’s list of Wall Street’s 100 highest earners. Mr. Perry didn’t return several calls from The Observer .

Another executive who raised money for Mr. Hevesi, Vijay Dandapani, the chief operating officer of Apple Core Hotels, which owns five hotels in the city, told The Observer that two investigators visited him “about four weeks ago” and asked about a fund-raiser he held for Mr. Hevesi in 1999. Mr. Dandapani has bundled more than $25,000 for Mr. Hevesi since 1999, according to campaign-finance records.

Mr. Dandapani emphatically denied wrongdoing, and said that he had arranged for the fund-raiser to be held in one of his hotels, but had played only a minor role in the collection of money.

The C.F.B.–which monitors the fund-raising practices of local candidates who participate in the city’s voluntary system of public campaign finance–also asked the D.A.’s office to examine the fund-raising done for a number of candidates in smaller local races. (The four major Democratic candidates for Mayor are participating in the program, as are most candidates for City Council.) But according to sources familiar with the inquiry, the D.A.’s office has determined that all but a handful of those referrals don’t rise to the level of possible criminal activity.

“Comptroller Hevesi has absolutely no knowledge of any questionable contributions,” said Josh Isay, a Hevesi campaign spokesman. “No one from the District Attorney’s office or the Campaign Finance Board has contacted us about this matter. If any of these contributions are improper, we will return them immediately.”

A spokesman for Mr. Vallone, Mattis Goldman, said, “We are committed to following the letter and spirit of the city’s campaign-finance laws. If we are ever informed of any irregularity or wrongdoing, we will immediately return the money in question.” Spokesmen for Mr. Ferrer, Mr. Morgenthau’s office and the Campaign Finance Board declined to comment.

According to sources, the C.F.B. alerted Mr. Morgenthau’s office because staff members saw signs of a possible pattern of improper bundling on Mr. Hevesi’s financial-disclosure forms. Bundling–the term is political-speak for the efforts of individual fund-raisers, who collect a series of contributions from other donors–is entirely legal. It is a violation of election law, however, for a bundler to contribute money in the names of other individuals without their knowledge or consent. State law requires that contributions bear the name of the actual contributor.

Even if investigators determined that improper bundling has occurred, it does not mean that the actions took place with the campaign’s knowledge or approval.

According to sources, Mr. Perry was questioned about a series of seven $2,500 money orders–totaling $17,500–that he collected for Mr. Hevesi in 1998. Each of the money orders bore the name of a different senior executive at Mr. Perry’s company, Perry Corporation

According to sources, C.F.B. staff members alerted the D.A.’s office to the money orders because they had all been purchased on the same date–May 14, 1998. The money orders were in numerical order–a red flag, because it suggests that the money orders may have been purchased in bulk by one person.

Investigators from the D.A.’s office questioned Mr. Perry recently to discuss the money orders, the sources said. Mr. Perry denied any wrongdoing in the interview with investigators, according to sources familiar with the discussions. The sources said that Mr. Perry told investigators that Mr. Hevesi had visited him and the other executives in 1998 to discuss the Mayoral race, and that they had been so impressed with Mr. Hevesi’s performance that they wanted to contribute immediately to his campaign.

Mr. Perry told investigators that he bought the money orders by withdrawing money from an account that distributed the partnership’s profits, sources said. Each executive then reimbursed $2,500 to the account, although it’s unclear exactly how.

Hotel Fund-Raiser

The circumstances surrounding the fund-raiser held by Mr. Dandapani, the hotel impresario, are far less clear.

As in the case of Mr. Perry, sources said, C.F.B. staff pointed Mr. Morgenthau’s investigators in the direction of a series of money orders collected at Mr. Dandapani’s 1999 fund-raiser–each of which was for $250 and had been purchased on the same day, July 16, 1999.

According to Mr. Dandapani, investigators asked him about the fund-raising event. “They asked me, ‘One, did you collect the checks?” Mr. Dandapani said in an interview with The Observer. “We said no, we had people who collected [them], including the Hevesi campaign, [their] fund-raiser. I had an organizer, some guy who does hotel-related events” who also collected money.

In the interview, Mr. Dandapani said his main function was to invite friends and provide a space in his hotel. He said he had only a minor role in the collection of money at the event–and absolutely no role in the collection of the money orders in question.

“I had no knowledge of the money orders at all,” Mr. Dandapani said. According to Mr. Dandapani, investigators have also questioned one of his colleague’s wives, who donated one of the $250 money orders. They have also interviewed M.K. Srinivasan, the organizer of the event. Mr. Srinivasan is the president of Masala Communications Inc., a company that organizes events and runs a Web site for the South Asian community.

Adding to the confusion, the contact addresses of four of the people who contributed the money orders in question were apparently misidentified in campaign filings which the Hevesi campaign forwarded to the C.F.B. The filings say the contributors are connected to Masala Communications. But according to Mr. Srinivasan, the company’s president, none of the four donors–Reveka Boudouvas, Lazaros Agopianis, Nick Gavalas and Panagiotis Kalabokis–has ever been associated in any way with the company.