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DA scrutinizing Buffalo Senate race as part of statewide corruption probe

Erie County prosecutors are asking questions about campaign donations to a Buffalo-based State Senate race in 2014 as part of a burgeoning statewide investigation that extends to the mayor of New York City.

Acting Erie County District Attorney Michael J. Flaherty Jr. said he will not discuss details, but acknowledged his office is involved. Sources familiar with Flaherty’s effort say it revolves around the 60th District race between Republican Mark J. Grisanti and Democrat Marc C. Panepinto, which Panepinto won.

“I can’t comment on specific investigations, but the chief of my Public Integrity Unit has been in contact with the Board of Elections concerning a number of different allegations, and they are being reviewed,” Flaherty said.

Flaherty added that Assistant District Attorney Paul Bonanno has discussed the situation with the State Board of Elections, law enforcement agencies, the Manhattan District Attorney’s Office, and is “actively reviewing allegations as related to Erie County.”

It is expected Bonanno’s investigation will center on whether any illegal coordination occurred between contributing committees and individual campaigns. Suggestions of such activity surfaced during the 2014 campaign, according to Erie County Republican Elections Commissioner Ralph M. Mohr.

“There were complaints that there was coordination between the teachers union and the Panepinto campaign,” Mohr said, “in the general campaign and specifically with signs.

“But there was never any formal complaint,” he added.

It is also expected that transactions The Buffalo News reported last July between the Erie County Democratic Committee and a political action committee linked to a state teachers union will be involved in the probe.

The News reported that a significant donation to the Erie County Democratic Committee for Panepinto’s campaign – involving some of the same unions and consultants now under scrutiny – was never recorded. Campaign finance reports showed the United Federation of Teachers Committee on Political Education sent $100,000 on Oct. 28, 2014, to Erie County Democrats. Two months later, the local Democrats sent $50,000 to the Red Horse Strategies political consulting firm in Brooklyn, which was working for the Panepinto campaign.

Erie County Democratic Chairman Jeremy J. Zellner said at the time that the committee never received money from UFT/COPE, a teachers union political committee. In fact, he said he never reported the income and never cashed a check because he never received one.

A UFT spokesman also said at the time that the union cut a check for Erie County Democrats on Oct. 28, 2014, as part of its efforts to aid Senate Democrats, but never sent it after establishing other priorities.

Campaign finance records show the New York State United Teachers union spent more than $1 million on the 2014 race to defeat Grisanti.

At this point, Flaherty’s Friday statement constitutes all that is publicly known about a local investigation that could figure in an ongoing State Board of Elections review of 2014 efforts to establish a Democratic majority in the State Senate.

But one source familiar with the situation said it is expected Flaherty will subpoena bank records of those under scrutiny, similar to what already occurred in New York City.

Federal and state prosecutors in Manhattan are probing Senate fundraising linked to New York City Mayor Bill de Blasio, according to several media reports. The New York Daily News reported that internal Board of Elections documents recommend a criminal probe of de Blasio’s 2014 efforts to aid Senate Democrats.

It quoted Risa S. Sugarman, the Board of Elections’ chief enforcement counsel, as determining “reasonable cause exists” to warrant prosecution for circumventing legal donation limits in various upstate Senate races during 2014.

“The violations discovered by this investigation can only be described as willful and flagrant,” the Daily News quoted the Sugarman memo as saying.

Manhattan District Attorney Cyrus R. Vance Jr. has confirmed that he initiated an investigation into Sugarman’s concerns, and it is also known that Manhattan U.S. Attorney Preet Bharara is reviewing the situation.

The mayor has insisted in recent weeks that the efforts of his political operation were all legal.

The Daily News has reported on several occasions that state investigators are honing in on requests from de Blasio operatives for substantial donations from wealthy individuals and unions to the Democratic committees in Putnam and Ulster counties. The committees, which could legally accept the higher amounts than those allowed for individual campaigns, then allegedly transferred those funds to Democratic Senate candidates.

It is now to be determined whether they illegally coordinated with the individual campaigns.

Erie County’s two elections commissioners – Mohr and Democrat Leonard R. Lenihan – said Friday they have not been questioned by Flaherty’s investigators or anyone else. Zellner also said he has not been contacted as part of any investigation, despite questions raised by the inconsistencies in 2014 campaign finance reports linked to the Panepinto race.

His organization rejected Flaherty in favor of John J. Flynn in making an endorsement for this year’s district attorney race.

“If this is about the Erie County Democratic Committee and our transactions, there is absolutely nothing there and this is preposterous,” Zellner said. “If it’s about the senator’s campaign, I’m certainly not in any position to defend him.”

The Daily News quoted the Sugarman memo as indicating that concerns over campaign finance had surfaced in Erie and Monroe counties, but that the Board of Elections recommended no action because nobody complained.

The Daily News also reported Thursday that Monroe County GOP Chairman Bill Reilich has asked for a probe into the 2014 race that saw Republican Richard Funke unseat Democratic incumbent Ted O’Brien.

“It’s definitely money laundering,” Reilich said of the Democrats’ efforts in that race. “They are trying to circumvent campaign limits.”

Flaherty served for seven years as top assistant to former District Attorney Frank A. Sedita III, who was often criticized for failing to aggressively prosecute election law violations. But even before Sedita left the district attorney’s post on Dec. 31 to assume a State Supreme Court seat, Flaherty said he would adopt a more proactive approach to enforcing election laws and prosecuting public corruption.

He established a Public Integrity Unit when he became interim district attorney, and said he would work hard to prosecute such crimes.

“There is certainly a void in public perception that the District Attorney’s Office has not stood in the forefront of investigating and prosecuting these crimes,” Flaherty said in November. “The difference will be that we will have an actual unit whose mission will be to investigate and prosecute these cases. It will be no longer ad hoc.”