The Secret Campaign of Mayor Mike

It’s unclear how much he actually did on Election Day, Nov. 4, 2009. In the DA’s recounting of the scheme, Mr. Haggerty spent only about $32,000 of the total $1.1 million on expenses for the operation.

So where did the rest of the mayor’s money go? As it happens, Mr. Haggerty’s father had recently died, and Mr. Haggerty’s family needed to resolve the ownership of that historic house in Forest Hills Gardens. Mr. Haggerty used about $600,000 of the Bloomberg money to buy out his brother Bart’s share. (Like his brother, Bart worked for the Bloomberg campaign; unlike
John, he earned a salary.)

Interestingly, the DA’s office decided to treat the case as a simple theft, with the mayor cast as victim. “This case is about theft and greed, but it is also about transparency and the integrity of the electoral process,” announced Mr. Vance.

Left unexamined in the DA’s case were several puzzling issues: Why was Mr. Haggerty, who did political work for a living, an unpaid “volunteer” when Bloomberg was spending a record $109 million on his campaign and doling out huge bonuses? Why did the billionaire mayor channel money to Mr. Haggerty from his personal accounts through the Independence Party, rather than paying it straight through his campaign committee, Bloomberg for Mayor 2009 Inc.? And why the Goldman Sachs-like complexity?

Mr. Bloomberg’s representatives insist no laws were broken, since he “contributed” the $1.2 million as an individual rather than as a political candidate, and therefore didn’t need to use his campaign committee. “It is perfectly legal for the mayor to make a personal contribution to the Independence Party,” said Mr. Bloomberg’s chief campaign finance lawyer, Kenneth A. Gross. “We’ve done everything in compliance with applicable state and city law.” Mr Gross also said he believes a temporary loophole in city law made Mr. Bloomberg’s actions legal.

When asked about funneling money through the party to Mr. Haggerty, he disputed the term. “When you say ‘funneling,’” he said, “it sounds pejorative. There is nothing pejorative about what the mayor did.”

Deputy Mayor Howard Wolfson, a spokesman for the campaign,
maintained that if the Independence Party gave Mr. Bloomberg’s funds to Mr. Haggerty, then “that was a decision that the party made.” So, he said, “that is a question for them.” Mr. Wolfson added that “ballot security is a traditional function of parties.”

However, sources familiar with the Independence Party said that it had no intention of “ballot security” or “poll watching” until the Bloomberg camp requested that it pass along the mayor’s money to Mr. Haggerty. That is, it seems the entire operation was conceived of, paid for and planned by the mayor’s campaign, not by the Independence Party.

Another argument central to Mr. Bloomberg’s defense is that anything the Independence Party did was not solely for the mayor’s campaign but also for other candidates. Jerome Koenig, former chief of staff of the New York State Assembly Election Law Committee, dismisses that. “Even if you accept the argument on face value,” he said, “which is ridiculous, part of it was done for Bloomberg. Even if it was done for other candidates, part of it was done for Bloomberg, so it still should have been disclosed.”

 

TO FULLY UNDERSTAND the Bloomberg arrangement is to pick at some old threads from the mayor’s 2005 election. Then, the mayor was running as a Republican, rather than an “independent,” and spent $78 million to beat out Democratic challenger Fernando Ferrer. It turns out, Mr. Bloomberg funded another ballot security operation-helmed by Mr. Haggerty-in that race as well. In that case, Mr. Bloomberg made two $400,000 donations to the New York State Republican Party’s “Housekeeping Account.” (Those parallel the two $600,000 donations he would make in 2009 to the Independence Party.) In turn, the Republican Party paid $200,000 in “poll watcher” fees to an apparently unincorporated company called Campaign Resources. Located at 205 Montague Street, in downtown Brooklyn, it used the address of the law office of the late Robert Allan Muir, Mr. Haggerty’s attorney and friend.

When asked about Campaign Resources, Mr. Bloomberg’s lawyer, Mr. Gross, said that if it was connected with Muir, then it was a John Haggerty operation. In other words, for two consecutive mayoral campaigns, Mr. Haggerty, the officially unpaid Bloomberg “volunteer,” was in fact paid very well through unincorporated firms, with funds that had originated in Mayor Bloomberg’s private accounts.

 

NOW MR. HAGGERTY faces criminal charges, but it is Mr. Bloomberg’s actions, according to lawyers with knowledge of the case, that may violate city and state campaign-finance-disclosure rules. Mr. Bloomberg’s official campaign committee, Bloomberg for Mayor 2009 Inc., was supposed to be the sole manner in which he funded his campaign. That way, voters could look at its filings and know how he spent his money-something he promised to do in a sworn document signed at the time.

So how could Mr. Bloomberg’s “donation” to the Independence Party for ballot security-the money that Mr. Haggerty allegedly stole-be exempt? According to the district attorney’s case against Mr. Haggerty, it seems to be definitively “related” to the campaign. Consider this phrase used in the prosecutor’s filings: “The Campaign needed ballot security and poll watching operations for Election Day.”

“This is clearly an attempt to evade the purpose of the law,” said John Moscow, a former white-collar prosecutor in Manhattan.

New York City has rules that are separate from, and more elaborate than, New York State’s. Political candidates “are required by law to make timely and complete disclosures of all their contributions and all their campaign expenditures,” emailed Eric Friedman, a spokesman for the city’s Campaign Finance Board, or CFB. Mr. Bloomberg never disclosed his $1.2 million contribution to the CFB.

Since the operation was a “ballot security” and “poll watching” effort, experts say New York City rules are specific: “[T]raining, compensating, or providing materials for poll watchers appointed by the party” are considered a contribution, meaning they must be disclosed.

“The only victim I see here is John Mr. Haggerty, who served the mayor faithfully for nine years and was traditionally paid this way, and now they are using him as a scapegoat,” said Thomas Ognibene, a street-smart Republican politician from Queens who tried to run against the mayor in 2005. (It was, ironically, Mr. Haggerty who destroyed Mr. Ognibene’s chances. Acting again as a “volunteer” for Mr. Bloomberg, Mr. Haggerty tenaciously used every legal technicality he could find to disqualify the signatures for Mr. Ognibene’s nominating petitions.)

Mr. Ognibene, who has since made peace with Mr. Haggerty, says he thinks the DA’s case is based on a flawed premise. “I believe the mayor was trying to get money to John for the services he rendered,” Mr. Ognibene told The Observer. “And that the mayor was aware that John had needs concerning buying his father’s estate, and this was the mayor’s way of funneling money to him.”

When The Observer asked Mr. Haggerty’s defense lawyer, Dennis Vacco, about this point, he responded, “Notice that I’m not answering it.”

 

“I WAS SHOCKED that Cy Vance [the new DA] gave the mayor such a free ride,” one veteran former prosecutor told The Observer. “It seems that Vance has decided he doesn’t have the stomach for it.”

Sources familiar with the investigation say the DA’s office did not believe there were actual criminal violations by Mayor Bloomberg’s campaign. Because of that, sources say, potential civil violations of campaign-finance law by Mr. Bloomberg were not even officially investigated.

When Mr. Haggerty’s trial moves forward, Mr. Vacco hints that secrets will emerge, and mayoral aides will be called to testify. “This case is anything but simple for the DA’s office,” he told The Observer.

Mr. Vacco says Mr. Haggerty didn’t steal any money, because he did run a ballot security operation-and he delivered for his customer. “Mr. Haggerty’s company was under contract with the Independence Party,” he said. His pointed hint is that Mr. Bloomberg couldn’t be portrayed as a victim in all this unless, ironically, he was steering the Independence Party money to Mr. Haggerty for his own campaign. After all, to make a legal contribution, Mr. Vacco emphasized, “you have to make very certain the contribution is not directed in any fashion.”

As for that house, Mr. Haggerty’s shaded, mansionlike residence in Forest Hills Gardens, where Bloomberg’s money ended up? The DA in New York is seeking to forfeit it and seize it from Mr. Haggerty as ill-gotten gains-so he can give the proceeds to Mayor Bloomberg.

editorial@observer.com

Aram Roston is a print and TV journalist and the winner of the 2010 Daniel Pearl Award for Outstanding International Investigative Reporting. Research support for this article was provided by the Investigative Fund at the Nation Institute.