De Blasio’s Lawyer Denies Cover-Up Allegations Over Lower East Side Property Deal

The Law Department claims the Department of Investigations falsely alleged that the city sought to conceal a potentially damaging memo.

Mayor Bill de Blasio.
Mayor Bill de Blasio.

Mayor Bill de Blasio’s Law Department lashed out at the Department of Investigations for alleging—incorrectly, it claims—that the city’s lawyer’s inappropriately withheld a potentially incriminating memo relating to the controversial loosening of development constraints on a former Lower East Side AIDS hospice.

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DOI’s claims that the mayor’s taxpayer-funded lawyers refused to surrender a number of crucial documents it had requested until threatened with a lawsuit set front pages afire this morning. The Daily News reported that one of the items the administration finally turned over yesterday was a 2014 memo describing other potential uses for the Rivington House property, including private sale for luxury development—which was the complex’s ultimate fate—leading to allegations of a cover-up.

The administration has long asserted none of its senior officials realized that could or would happen when the city was lifting the deed restrictions on the property, which had only permitted it to operate as a nonprofit healthcare center. But the memo in question had in fact been shared with Deputy Mayor Anthony Shorris at the time.

But Zachary Carter, the city corporation counsel, maintained today that the Law Department had in fact sent that internal notice to DOI back in April.

“Its existence was flagged to the attention of DOI on April 11, 2016, which explicitly described the document as a ‘draft memorandum regarding possible uses of Rivington House property,'” the Law Department wrote in a statement to the media. “It was produced to the DOI immediately upon a request made on April 12, 2016.”

In fact, the Law Depatment pointed out that the memo in question was included in the appendix of documents in DOI’s damning report on the transaction. The city received $16 million in exchange for lifting the deed restrictions.

The report revealed that consultant James Capalino—a donor and bundler to the mayor’s campaign and a lobbyist for VillageCare, the original owner of Rivington House—was in regular contact with DCAS about getting the deed restriction lifted.

The Law Department insisted it had granted DOI “unprecedented access” to its files and cooperated fully with the probe. The mayor complained the continued coverage of the scandal was “over-heated and off-the-mark” at an event today in Philadelphia, where he is participating in the Democratic National Convention.

Neither de Blasio nor his corporation counsel explained how these developments and the content of the memo corroborates the administration’s originial version of events.

DOI insisted to the Observer that the Law Department had only produced the memorandum in question in redacted form, and that the investigatory agency had obtained its full text from “alternate sources.” The department’s commissioner, Mark Peters, served as de Blasio’s campaign treasurer in 2013. He has recused himself from his agency’s investigation into the Rivington deal, but not from the tug-of-war with his corporation counsel.

Updated to include response from DOI, and to reflect that the city corporation counsel is named Zachary Carter, not Zachary Taylor.

De Blasio’s Lawyer Denies Cover-Up Allegations Over Lower East Side Property Deal