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FBI interviews 2 local Democrats in Preet Bharara’s probe of campaign funds

FBI agents interviewed Monday two members of the Erie County Democratic Committee as part of Manhattan U.S. Attorney Preet Bharara’s probe of campaign funds spent in the 2014 elections for State Senate, according to a source familiar with the situation.

The source also said agents are probing the circumstances behind funds raised from several Western New York candidates for State Supreme Court in 2014, and use of that money in the Independence Party primary for candidates to that year’s judicial nominating convention.

The source, who asked not to be identified and who would not name the Democrats under scrutiny, emphasized neither is considered a target but they are considered “witnesses.” Both are also cooperating, the source said.

Erie County Democratic Chairman Jeremy J. Zellner did not return calls seeking comment. He has not returned calls from The Buffalo News all week, and also did not attend a rare meeting of the New York State Democratic Committee held in Buffalo on Monday.

The News reported in May that the office of acting Erie County District Attorney Michael J. Flaherty Jr. was asking questions about campaign donations to a Buffalo-based State Senate race in 2014 as part of a statewide investigation that extends to New York Mayor Bill de Blasio.

At the time, Flaherty said he would not discuss details, but acknowledged the involvement of his office. Sources familiar with Flaherty’s effort say it revolves around the 60th District race in 2014 won by Democrat Marc C. Panepinto.

Again on Wednesday, Flaherty would not provide any more detail in response to questions.

“Obviously, it would be inappropriate for me to comment on an investigation being conducted by the FBI,” he said.

The source also said the latest questions posed by the FBI stem from “tentacles” of the joint state-federal probe that resulted in the June 30 indictment of former Erie County Democratic Chairman G. Steven Pigeon on nine counts of bribery and extortion. Bribery charges were also lodged against former State Supreme Court Justice John A. Michalek, who resigned after more than 20 years on the bench.

The News reported in March of 2015 that Erie County’s Democratic and Republican chairmen asked most of the 2014 Supreme Court aspirants to pony up $4,000 each for campaign literature aimed at the Independence Party primary. The effort was billed as an attempt to gain support of the minor party for the November general election, but questions have remained about how the money was spent on the Democratic side.

Other sources say there have been no FBI questions about Republican activity during the 2014 judicial election.

The FBI agents here Monday were asking the two local Democrats about their solicitation of the $4,000 each from aspirants to the bench in the 2014 judicial campaign, according to the source with knowledge of the investigation. Some of those judicial candidates had no chance of receiving Zellner’s nod. The questions about the $4,000 contributions are a tangential matter of interest, the source added.

Campaign finance reports filed with the state Board of Elections indicate at least five judicial hopefuls contributed each contributed $4,000 for Zellner’s efforts to influence the Independence Party, well before he settled on a cross-endorsement for eventual nominees Dennis E. Ward and E. Jeannette Ogden.

Each was asked to send the money to the Balduzzi Group of suburban Rochester, a printing contractor for Erie County Democrats. Another source familiar with the situation said questions are now being raised about how those funds were spent.

Democrats who contributed the $4,000 to Balduzzi were Ogden, Daniel J. Furlong, Debra L. Givens, Jonathan P. Gorman and Susan Eagan. John J. DelMonte, who received a Democratic nomination but not a cross-endorsement, separately spent $120,000 with Balduzzi in an unsuccessful effort for television advertising that the firm also produces.

Sources also indicate that at least several of the 2014 judicial aspirtants have not been interviewed by federal agents.

Bharara probe

Meanwhile, Bharara and Manhattan District Attorney Cyrus R. Vance Jr. are probing Senate fund raising in 2014 linked to 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.

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

The Daily News also reported on several occasions that state investigators were 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.

Local probe

Locally, Flaherty noted in May that Assistant District Attorney Paul Bonanno had discussed the situation with the State Board of Elections, law enforcement agencies, the Manhattan District Attorney’s Office, and was “actively reviewing allegations as related to Erie County.”

It was expected Bonanno’s investigation would 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 then, “in the general campaign and specifically with signs.

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

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.

Teachers union money

It was also expected that transactions The News reported in July 2015 between the Erie County Democratic Committee and a political action committee linked to a state teachers union would 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.

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.


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