Charge $145G Stolen
Indictments Add To Council Fund Mess

By ARI PAUL

Two City Council employees were indicted April 16 on Federal charges of embezzling $145,000 in discretionary funding, with one of them allegedly sending $31,000 to relatives in Jamaica.

KENDALL STEWART: Key aide accused.

The charges followed the admission earlier this month that the Council had been appropriating millions of dollars to phony organizations that later were shifted to other neighborhood projects without mayoral scrutiny.

Aides to Stewart Charged

U.S. Attorney for the Southern District Michael J. Garcia announced the indictments of the Chief of Staff of Brooklyn Councilman Kendall Stewart and another aide.

The Chief of Staff, Asquith Reid, and Joycinth Anderson were charged with siphoning money granted to the Donna Reid Memorial Educational Fund since April 2005. Mr. Reid was also accused of sending some of the embezzled money to family members and friends in Jamaica. Both employees have been suspended and are expected to be fired.

Councilman Stewart designated the fund, which had the stated mission of aiding public school tutoring and Parent Teacher Associations, for discretionary funding in June 2004, but its application to the Department for the Aging was rejected two months later because the fund's address matched the home address of Mr. Reid, creating a conflict of interest. The program later secured funding through the Department of Youth and Community Development. DYCD apparently did not notice the program's address was identical to Mr. Reid's, and Department for the Aging officials never reported their findings to Vendex, the registry meant to guard against corrupt use of city funds.

Tribute and Disclaimer

SCANDAL WOES MULTIPLY: City Council Speaker Christine Quinn (left) is facing an internal backlash for proposing reforms in response to a discretionary funding scandal that many of her colleagues believed would usurp their prerogatives and give too much power to the Mayor's Office. Councilwoman Gale Brewer (center) said that the indictments of two aides to another Council Member increased the pressure on Ms. Quinn, and her old antagonist, Councilman Charles Barron, called on her to step down.

"Asquith Reid has been my friend for many years and he's performed his duties as my Chief of Staff with quiet professionalism," Mr. Stewart said in a statement. "From the onset of this investigation I made it very clear that it had absolutely nothing to do with my office or myself as Council Member for the 45th District in Brooklyn."

He continued, "While I believe in the presumption of innocent until proven guilty I must say that I'm deeply disappointed over the allegations leveled at Mr. Reid and the embarrassment that his actions - right or wrong - have caused me, my staff and office and the people of my district."

The two aides were charged with money-laundering and mail fraud conspiracy and could serve up to 40 years in prison if convicted on those counts. Mr. Reid was also charged with two counts of witness-tampering, and faces another 40 years in prison if convicted of those activities.

Discounts Wider Impact

One political expert said the arrests wouldn't necessarily add to the pressure on Council Speaker Christine Quinn as she deals with the manipulations of discretionary funds as a standard Council budget practice that predated her tenure.

"The question is, does it sort of add to the brouhaha over the discretionary funds, and I think it doesn't necessarily have to at all," said Douglas Muzzio, a Professor of political science at Baruch College. "These two folks are stealing money irrespective of how that money was generated."

Manhattan Councilwoman Gale Brewer, however, said that the indictments increased the political pressure the scandal has placed on the Speaker, a likely candidate for Mayor in 2009, and had in turn hurt the entire Council.

"I think she's holding up pretty well and answering people's questions as best she can," she said.

Ms. Brewer added that in the 30 years she has worked in and around the Council there has always been a secret fund for the Speaker, but that the scandal has prompted a discussion about creating more openness in the legislative body.

'More Transparency Now'

"Sometimes there's a silver lining, and in this case it's that there is going to be a more-transparent fund," she said.

But Brooklyn Councilman Charles Barron was less forgiving, accusing Ms. Quinn of undermining the other Council Members by not consulting with them before she announced reforms April 11, some of which she may scrap after numerous Council Members complained that they would give the Mayor's Office too much oversight.

Among the initiatives she proposed were hiring an Independent Compliance Officer to oversee spending, a Web site listing organizations applying for funding, and a Request-For-Proposal process for organizations seeking funding from the Speaker's Office.

"What a hypocrisy; that's a contradiction," Mr. Barron said. "And talk about transparency and come up with a proposal that you don't even discuss with the Council Members. And then we're under investigation - it's not complete. Nobody said that the way we're doing our business is wrong. You're in hot water, so you panic and shift it from you and put us on the defensive."

On April 18, Ms. Quinn appointed Preston Niblack as Financial Director for the Council. He had previously served as the Deputy Director of the Independent Budget Office for the last eight years.

Hopes for Compromise

Gene Russianoff of the New York Public Interest Group had endorsed the changes and said he was hopeful that the Speaker could reach some compromise with the rest of the Council regarding the reforms. He added that among the changes his group was particularly supportive of was creation of an Independent Compliance Officer.

"The Speaker is seeking input and ideas on the best way to implement the reforms she announced [the previous] Friday," said Council spokeswoman Maria Alvarado April 17. "We are at a point in the process where ideas need to be made more specific. As we do so, we are confident there is a way to meet both the goals that were laid out on Friday and the concerns that have been raised."

Mr. Muzzio said that it was unsurprising that Ms. Quinn was willing to rework her reforms in light of the criticism from Council Members.

"Oftentimes you react in certain situations to ameliorate a situation, and she may not have consulted to the extent she ought to have," he said.