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Friday, August 28, 2009

City Council Slush Fund: Federal Felony Possibilities

The New York City Council slush fund controversy has not made any recent headlines, but one can be fairly certain plenty of investigating is going on behind the scenes (and of course no one has a vested interest in publicizing any of this until the perp walk).    Some observers are getting agitated that there hasn't been a perp walk yet.   Below is my educated theory as to why.

A quick recap:  The controversy emerged with the discovery of the practice of allocating funds to a nonprofit group/entity which didn't really exist, in order to preserve the ability to reallocate such funds to a different, actually existing nonprofit entity later on.  

Put into plain English: this is fraud.  Doing something in order to obtain the money or goods of another, by false pretenses, generally falls under the definition of fraud. Wire fraud, mail fraud, honest services fraud, whatever. Somewhere, there is a federal felony where all the elements of said felony are satisfied by something or someone in connection with this slush fund mess. Even if the ultimate ends are benign, the undeniable implication is that candor, at the beginning, that nonprofit A was the intended destination of the funds would have resulted in the funds being denied to nonprofit A, therefore nonprofit B (for bogus) was "created" in order to procure (aka "steal") the funds for preservation and safekeeping for ultimate destination nonprofit A.   Here's another word for the above:  deception.   There is a crime of "theft by deception" in many states.

The timeline of these activities will also have legal implications.  There are allegations that this slush fund activity dates back to the days when Peter Vallone was the City Council  Speaker.   We're talking going back to the turn of the century.   This brings up an issue regarding the statute of limitations.   Usually, federal criminal allegations can only cover acts within the last five years (there are exceptions based upon the type of felony); however, a "conspiracy" felony charge means that, in other words and for the most part, the five year period starts running on the most recent date of an act in furtherance of the conspiracy.   Now, if the conspiracy lasted all these years until its discovery in 2008... well, then the government has plenty of time to sort out the truth.

Finally, there's the question of who was involved.   Perhaps this is the biggest reason for the apparent lack of activity.   The net here could be very wide, and any careful investigation (in any context) amasses evidence and develops (and either adopts or rebuts) theories before proceeding.   Hence, silence does not mean there's nothing going on.

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