Huffpost New York

Case Of Mayor's Money Puts NY Party In Costly Spot

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MICHAEL BLOOMBERG
AP

NEW YORK — New York state's Independence Party bills itself as blasting a straightforward new path through two-party politics, a route for free thinkers more interested in problem-solving than political intrigue. But now the state's third-largest party is increasingly embroiled in high-stakes intrigue of its own.

Prosecutors have accused the party in a lawsuit of helping a political consultant obscure his alleged theft of $1.1 million from Mayor Michael Bloomberg – money the billionaire mayor and marquee Independence Party candidate gave the party for poll-watching. The Independence Party hasn't been criminally charged; it says it did nothing wrong and didn't know anything about any scheme to divert the money. But a judge has frozen its bank accounts and said this week that its conduct "doesn't smell right."

It's a difficult moment even for a party that has weathered controversy before in its 16-year history. The party's lawyers have said the financial freeze could cause significant hardship, and political observers say the case could damage the party's image.

In the midst of it, party Chairman Frank MacKay is circumspect but upbeat.

"We very much look forward to getting our story out there" in future court sessions, he said this week. In the meantime, "we'll take all the punches, not whine about it – and when it's all said and done, we'll move on."

The Independence Party of New York State was born from the fervor for a new political direction that surrounded the 1992 presidential run of upstart billionaire H. Ross Perot. Conceived as a place for disaffected Democrats and Republicans to create a voice for the middle, New York's party now counts more than 425,000 voters. That's a fraction of Democrats' and Republicans' millions, but enough to make the Independence Party endorsement influential in various elections, including last year's race for governor.

It has found a generous donor and winning candidate in Bloomberg, a Democrat-turned-Republican-turned-independent with a personal fortune and an oft-stated interest in bipartisanship and alternatives to the two-party framework. He has run on the Republican and Independence party lines in all three of his campaigns.

In the final weeks of his 2009 city re-election bid, Bloomberg gave the Independence Party a $1.2 million personal donation to finance party-wide "ballot security," a term for poll-watching and other efforts to prevent election fraud. The mayor had done likewise with Republicans in prior runs. His team didn't pay for its own ballot-security operation as a campaign expense because parties traditionally have run such projects, Deputy Mayor Howard Wolfson said this week.

Republican campaign consultant John Haggerty became the Bloomberg campaign's point man on the 2009 effort, arranging the Independence Party donation and outlining a roughly $1.1 million budget for an office, poll watchers and other expenses, Manhattan prosecutors say.

The party ultimately paid Haggerty $750,000. But prosecutors say he did little election work with the cash, using it instead to buy himself a $1.7 million home, plane tickets and legal services. Haggerty, 42, has pleaded not guilty to grand larceny and other charges. His lawyers say he did his job and was paid for it.

Without making any criminal allegations against the Independence Party, prosecutors say in a lawsuit that it "knew or should have known about" Haggerty's ruse. They note that he was paid large sums on scant documentation, and they point to an e-mail from a party official to Haggerty about trying "to keep our stories straight" about the operation.

"They allowed close to a million dollars to be stolen without as much as a blink of an eye," Manhattan assistant district attorney Tara Christie Miner wrote last month in asking a judge to bar the party from spending what prosecutors deem ill-gotten money. About $200,000 of the mayor's money remains.

The judge, too, has made it clear he has questions about the party's stewardship of the money.

"Nothing here suggests anyone was watching the store. ... It doesn't smell right," state Supreme Court Justice Martin Shulman said this week as he declined to lift his three-week-old freeze on the party's finances. It has barred the organization from paying expenses, including a $42,000 catering bill from a fundraiser, party lawyers say.

The party says it's being unfairly tarred with the brush of a criminal case.

Indeed, "if there's a crime ... why wouldn't we be the victim?" MacKay asks, noting that Haggerty is accused of stealing money that had been donated to the party. Leaders didn't question the validity of the poll-watching effort because the party had directly paid some related car and other bills, and because they figured the project's success was reflected in their candidates' wins in the 2009 city elections, he said.

The Haggerty episode isn't the first time the Independence Party's internal business has erupted into public controversy.

The organization ended up openly at odds in the mid-2000s with one of its earliest and most aggressive leaders, Lenora Fulani, who had been accused of making anti-Semitic statements. Fulani, who in 1988 became the first woman and first black candidate to get on the presidential ballot in all 50 states, then said the party was trying to be "all white." An appeals court ultimately let the state party disband its county organizations in Brooklyn, Queens and the Bronx.

Its entanglement with the Haggerty case could also shape – and dent – the party's future, political experts say.

"Any time a party's finances and activities are called into legal question, it can only be bad news for the party," said Siena Research Institute pollster Steven Greenberg.

The case could become a cudgel for Independence Party candidates' opponents and a question mark in the public's perception of the party, said Douglas Muzzio, a Baruch College political science professor.

But MacKay, for his part, isn't worried. He's confident the party's standoff with the DA will ultimately be seen as "the smallest kid on the playground being pounded by a giant kid."

"When we tell our story, everyone will understand that," he said.

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Associated Press writer Michael Gormley contributed to this report from Albany, N.Y.