City Council investigated for slush fund

April 3, 2008 4:07:56 PM PDT
There is a dirty little secret with the budget. Millions of dollars are hidden in a slush fund, earmarked for organizations that don't exist. City Council speaker Christine Quinn insists she is the whistle blower, even though it is her office that's hidden the money.

Political reporter Dave Evans has the story.

Two finance officials have been dismissed in this matter. We've also confirmed that the city Department of Investigations and the U.S. Attorney's Office are investigating. Quinn says she is not the target, but that she tried to clean up the issue.

Quinn promises she alerted law enforcement when Council staff ignored her directive to stop a 20-year practice at City Hall of hiding millions in taxpayer money.

"I was obviously deeply troubled by this information," Quinn said. "I had no knowledge of it. I didn't know this was the practice. It is something I believe is completely inappropriate and shouldn't have gone on and no longer will go on.''

Quinn claims she especially didn't know that slush fund earmarked millions for non-existent, bogus organizations with official-sounding names, like Firewood Senior Center and Moving Up Building Bridges.

"Well, I mean, it is very disheartening to learn there's this pot of sweet honey out there for the speaker to dispense as the speaker wishes," said Dick Dadey, of the Citizens Union. "To sway votes, to influence relationships, to sweeten deals.''

Quinn, as leader of the City Council, is one of several top contenders for mayor next year.

She is tight with Mike Bloomberg, and this week, she delivered him a big Council victory on congestion pricing.

"I can just tell you, I've worked with her for six years, and she's an honest woman," Bloomberg said.

Then, one reporter asked whether Bloomberg knew about the Council slush fund, and that's when the mayor got a little peeved.

"I mean, if I knew there were fake organizations in there, do you really think I would have signed the budget," he said. "Thank you very much. One would hope you'd expect a little more from me, for goodness sake.''

Quinn is pledging complete cooperation with investigators. She admits concern about political fallout and voter disgust, given so much recent scandal, from Eliot Spitzer to Jim McGreevey

"Given what circumstances or events have occurred in the past few months, I worry about that," she said. "I worry about that every day.''

City Hall released information showing that this practice went on for several years, long before Quinn was even on the City Council.

Also, there was paperwork showing two different groups. The first is the bogus organizations where the money was actually hidden. The second is where the money actually went. About $4.7 million went to legitimate groups, like the 92nd Street Y and the Brooklyn Chamber of Commerce. Why the money was doled out for several years this way and whether or not it was illegal is now the subject of the investigation.