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Steven Pigeon’s new tax lien raises total owed to federal government to $244,000

G. Steven Pigeon, who for years has hobnobbed with billionaires and trumpeted his own status among the elite of New York’s political donors, suddenly finds himself owing more than $244,000 to the federal government.

A new tax lien filed against him by the Internal Revenue Service for more than $126,000 may now undercut the Buffalo political operative’s contention that he was financially capable of contributing major sums to election campaigns – just as he faces mounting scrutiny from an investigation into his local fundraising activities.

The lien, originally filed in Manhattan on May 22 and with the Erie County Clerk’s Office on Tuesday, substantially adds to the $118,000 tax liability that Pigeon already was facing, which was reported by The Buffalo News on Wednesday. It arrives just days after investigators from the State Police, the FBI and the state Attorney General’s Office seized potential evidence from Pigeon’s waterfront condominium through search warrants issued in an escalating probe into the WNY Progressive Caucus and its ties to him.

Late Wednesday, Dennis C. Vacco – a former state attorney general and U.S. attorney who, along with attorney Paul J. Cambria Jr., represents Pigeon – confirmed the tax situation facing his client, though he acknowledged that he was learning for the first time about the latest lien.

He also said Pigeon negotiated a settlement plan with the IRS in March 2014 to satisfy the tax obligations, with the first payment made April 28, 2014.

“That plan is in place and being complied with on a monthly basis,” Vacco said. “He is now 13 or 14 payments into that plan.”

But the latest financial difficulties for the former Erie County Democratic chairman, who has close connections with many state and national Democratic stars, contribute to a host of new worries. Earlier this year, Pigeon emphasized he had not been contacted by any law enforcement officials about his involvement with the WNY Progressive Caucus, even as the FBI and the State Police Bureau of Criminal Investigation were questioning several local residents who contributed to the fund. That changed last Thursday when warrants were executed to search his home.

The state and federal probe revolves around the WNY Progressive Caucus, which raised about $267,000 for candidates challenging those endorsed by Democratic headquarters in the 2013 primary elections. Pigeon has long waged political warfare against his successors as local party chairman.

Pigeon, 54, has close ties to former President Bill Clinton, is considered a top political adviser and donor to Gov. Andrew M. Cuomo, and had planned to assume a role in the presidential campaign of former Secretary of State Hillary Rodham Clinton.

But as media attention intensified on Pigeon and the continuing investigation, so has political and financial pressure. The News reported in May that Pigeon mutually ended his 13-year “of counsel” employment in the Buffalo office of Rochester-based Underberg & Kessler, the law firm to which he said he brought the business of billionaire B. Thomas Golisano – founder of Paychex Inc. and former owner of the Buffalo Sabres.

As a result, Pigeon said two weeks ago that he was bolstering his new lobbying activities through a firm he and longtime associate Gary R. Parenti formed last year. Chief among his new lobbying clients was the Seneca Nation of Indians, which announced Tuesday it was canceling its $180,000 contract with the Pigeon firm – PAPI Consulting LLC.

In February, Pigeon invited The News to inspect tax returns from the last several years to reveal income ranging in the mid-six figures from his legal and lobbying efforts. But he did not include the tax liens in the review or the payment plan he had already negotiated with the IRS.

The tax lien revelations now prompt new questions about his ability to be major political donor as the continuing probe seeks the origins of much of the money given in 2013 to the WNY Progressive Caucus.

A week ago, the homes of Pigeon, former Buffalo First Deputy Mayor Steven M. Casey, and Christopher M. Grant, chief of staff to Rep. Chris Collins, R-Clarence, were searched with warrants signed by county and federal judges.