Suozzi Asks Ethics Commission to Investigate Spitzer's Family Trust Conflict of Interest
Suozzi Asks Ethics Commission to Investigate Spitzer's Family Trust Conflict of Interest
"He claimed jurisdiction over trustsuntil the law applied to him."Spitzer sits on board of trust he oversees as Attorney General in clear violation of law, but refuses to even acknowledge his ethical responsibilities
Democratic candidate for Governor Tom Suozzi today filed a formal request with the New York State Ethics Commission for a ruling on Attorney General Eliot Spitzer's conflict of interest for overseeing his own family's charitable trust.
"Does anyone expect the Attorney General to initiate an investigation of himself?" Suozzi asked. "If Eliot Spitzer doesn't believe there's a conflict of interest, then why does he refuse to ask the Ethics Commission for an opinion? Why is there a lower ethical standard for Attorney General Spitzer and his family charity?"
On Sunday, the Daily News reported that Spitzer's board position and responsibilities as Attorney General appear to be in direct conflict with each other. In response to this report, Suozzi brought to light an advisory opinion from the state ethics commission indicating that Spitzer was violating state ethics rules by overseeing his own family's charitable trust.
When confronted with this evidence, Spitzer spokesman Darren Dopp said Tuesday that the Ethics Commission's opinion did "not apply in this case" and denied that the Attorney General had oversight over charitable trusts.
The Suozzi campaign pointed out yesterday that Dopp's claim directly contradicts Spitzer's own testimony at a Congressional hearing in 2001, where the Attorney General claimed, "I am charged with overseeing foundations and charitable trusts, which are created in or hold assets in our state. It is my duty to help ensure that the interests of the public are protected when charitable funds are raised and spent. I consider it a privilege to perform this important function "
Dopp's claim on Spitzer's behalf also contradicts Opinion 79-66 issued by the Office of the Attorney General; New York State Ethics Commission Advisory Opinion 90-25; Article 8 of the New York State Consolidated Laws; Estates, Powers and Trust Law, and the Statement of Scope defining the regulatory role of the Attorney General's Charities Bureau put forth by Spitzer's own office.
Suozzi pointed to concerns raised in the same Daily News article by several independent experts about Spitzer's conflicting roles as Attorney General and trustee of his family trustsuch as that of New York Public Interest Research Group Legislative Director Blair Horner, who advised Spitzer to "either request an advisory opinion from the state Ethics Commission or withdraw from the board."
The Spitzer family trust has contributed tens of thousands of dollars to political groups that have endorsed Spitzer's candidacy, and the hedge fund managers the trust invests with have contributed hundreds of thousands of dollars to Spitzer's campaign.
According to Marcy Murninghan, a Boston-based consultant to foundations and a former ethics professor at Harvard Divinity School, Spitzer's sitting on the board "raises ethical questions - and suggests a level of self-dealing - when financial investments are placed with investors who happen to be his biggest contributors."
And according to Rachel Leon, executive director of Common Cause/NY, "Wearing both hats is a potential conflict because his private life, family life and charitable life could all bleed into his public life."
"Eliot Spitzer has made it a double standard practice to live by a different set of rules than every one elseespecially when it is politically convenient for him." Suozzi said. "In this case, he claimed jurisdiction over trustsuntil the law applied to him. Failing to consult the ethics commission is a classic display of arrogance. sitting on this board is a clear conflict of interest, and his presence on the trust board is a continued abuse of authority and show of disrespect to the people of New York."
-- attachment --
Thomas R. Suozzi
P.O. Box 112 Carle Place, NY 11514
July 13, 2006
Mr. Paul L. Shechtman
Commission Chair
New York State Ethics Commission
Alfred E. Smith State Office Building, 11th Floor, Suite 1147
80 South Swan Street
Albany, NY 12224
Re: Attorney General Eliot Spitzer and the Bernard and Anne Spitzer Charitable Trust
Dear Mr. Chair:
I request that the New York State Ethics Commission, in accordance with it duties and responsibilities set forth in Executive Law Sec. 94(15), investigate and report on the activities and actions undertaken by the Office of the New York State Attorney General, and Eliot Spitzer as Attorney and individual, in relation to the Bernard and Anne Spitzer Charitable Trust ("BASCT"). We know the following facts to be true:
Fact one
It has been determined that since 2001 Eliot Spitzer has been a trustee of the Bernard and Anne Spitzer Charitable Trust;
Fact Two
Eliot Spitzer was elected in the General Election in November, 1998, and took the oath of office as Attorney General of New York State on January 1, 1999;
Fact Three
The BASCT is registered under New York State Law and is subject to the New York State Estates Powers and Trusts Law ("EPTL") and is registered as "EPTL" with the Registration Section of the Charities Bureau in the Attorney General's Office;
Fact Four
Eliot Spitzer has never asked for or previously received a waiver from the State Ethics Commission and he has publicly stated that he refuses to submit a request for review by same;
Fact Five
The Attorney General's Office has authority and jurisdiction under EPTL Art 8-1.4(m) to institute appropriate action to ensure compliance with this section and secure proper administration of any trust to which the statute applies;
Fact Six
EPTL Article 8-1.4(i) authorizes the Attorney General and his staff to investigate transactions and relationships of trustees to determine whether or not a charity is being properly administered;
Fact Seven
The Attorney General's oversight, subpoena and enforcement authority over the administration of the BASCT, represents a gross violation of NYS Public Officers Law Sec. 74.3 (e)(f)(g)(h) - Code of Ethics.
Based on the aforementioned facts, we request that the Commission provide the following relief:
1. Investigate the role of Eliot Spitzer as a trustee with the BASCT;
2. Investigate the role of Eliot Spitzer as Attorney General with relationship to BASCT;
3. Investigate whether employees or staff of the Office of the Attorney General were restrained in fact or per se from proper regulation or oversight of BASCT due to the close relationship between the Attorney General, the trust donors (his parents) and the members of the BACST board;
4. Determine if, in fact, a conflict of interest exists between the office of the Attorney General and BASCT;
5. Determine if the Attorney General's office may not regulate the BASCT or, in the alternative,
6. That the Attorney General should resign from his position as BASCT trustee;
7. In the event that the Attorney General resigns from his position as a BASCT trustee, determine if the Attorney General's office should recuse itself from its regulatory role over BASCT.
Please advise us at your earliest convenience of the results of your investigation into this matter.
Sincerely,
Thomas R. Suozzi
-- attachment --
Spitzer and the seven factsA tale of conflicted interests
Fact one:
It has been determined that since 2001 Eliot Spitzer has been a trustee of the Bernard and Anne Spitzer Charitable Trust;
IRS Form 990 tax filings have, since 2001, listed Eliot Spitzer as a trustee of The Bernard and Anne Spitzer Charitable Trust.
Fact Two:
Eliot Spitzer was elected in the General Election in November, 1998, and took the oath of office as Attorney General of New York State on January 1, 1999;
[Eliot] Spitzer was sworn in as attorney general by a justice of the peace during a party at his Columbia County home. (Daily News, Gov Plans Quiet Swearing-In, January 01, 1999)
Fact Three:
The Bernard and Anne Spitzer Charitable Trust is registered under New York State Law and is subject to the New York State Estates Powers and Trusts Law ("EPTL") and is registered as "EPTL" with the Registration Section of the Charities Bureau in the Attorney General's Office;
The Bernard and Anne Spitzer Trust is registered as "EPTL" with the Registration Section of the Charities Bureau in the Attorney General's office, which is the acronym for Estates Powers and Trusts Law. According to the Attorney General's website, The Bernard and Anne Spitzer Trust is subject to the New York State Estates Powers and Trusts Law.
More particularly, The Bernard and Anne Spitzer Trust is defined and subject to the provisions of Article 8-1.4 of the Estates Powers and Trusts Law.
Sec. 8-1.4 Supervision of trustees for charitable purposes
(a) For the purposes of this section, "trustee" means (1) any individual, group of individuals, executor, trustee, corporation or other legal entity holding and administering property for charitable purposes, whether pursuant to any will, trust, other instrument or agreement, court appointment, or otherwise pursuant to law, over which the attorney general has enforcement or supervisory powers
In addition, Attorney General Spitzer has repeatedly affirmed his authority over charitable trusts and private foundations. In a document describing the Attorney General's role in regulating charities, Eliot Spitzer said,
"As the chief law enforcement officer of the State of New York, I am charged with overseeing the administration of charitable assets in New York and regulating the solicitation of charitable contributions from New Yorkers." (The Regulatory Role of the Attorney General's Charities Bureau, http://www.oag.state.ny.us/charities/role.pdf)
Before a Congressional hearing, Spitzer said,
"As New York's Attorney General, I am charged with overseeing those charities that solicit funds in our state, as well as the charitable organizations, including foundations and charitable trusts, which are created in or hold assets in our state. It is my duty to help ensure that the interests of the public are protected when charitable funds are raised and spent. I consider it a privilege to perform this important function..." (House Congressional Testimony, House Energy and Commerce Committee, November 6, 2001)
Fact Four:
Eliot Spitzer has never asked for or previously received a waiver from the State Ethics Commission and he has publicly stated that he refuses to submit a request for review by same;
He [Eliot Spitzer] has never asked the state Ethics Commission to approve his work for the charity because, aides say, his post is unpaid and no laws or regulations bar him from serving as a trustee. (New York Daily News, Family charity is regulated by Spitzer's office, July 9, 2006)
But Spitzer said he's advised by lawyers and ethics experts who say he's done everything properly and does not need to seek an advisory opinion from the Ethics Commission. (New York Daily News, Eliot on charity role: Couldn't be prouder, July 12, 2006)
Fact Five:
The Attorney General's Office has authority and jurisdiction under EPTL Art 8-1.4(m) to institute appropriate action to ensure compliance with this section and secure proper administration of any trust to which the statute applies;
Subsection (m) of Article 8-1.4 allows the New York Attorney General to institute proceedings to secure compliance with state law and secure the proper administration of any trust, corporation or other relationship to which Article 8-1.4 relates.
8-1.4(m) The attorney general may institute appropriate proceedings to secure compliance with this section and to secure the proper administration of any trust, corporation or other relationship to which this section applies. The powers and duties of the attorney general provided in this section are in addition to all other powers and duties he or she may have. No court shall modify or terminate the powers and responsibilities of any trust, corporation or other trustee unless the attorney general is a party to the proceeding, but nothing in this section shall otherwise impair or restrict the jurisdiction of any court with respect to the matters covered by it. The failure of any trustee to register or to file reports as required by this section may be ground for judicial removal of any person responsible for such failure.
Fact Six:
EPTL Article 8-1.4(i) authorizes the Attorney General and his staff to investigate transactions and relationships of trustees to determine whether or not a charity is being properly administered;
Subsection (i) of Article 8-1.4 allows the New York Attorney General and his staff to investigate transactions and relationships of trustees to determine whether or not the charity is being properly administered.
(i) The Attorney General may investigate transactions and relationships of trustees for the purpose of determining whether or not property held for charitable purposes has been and is being properly administered. The Attorney General, his or her assistants, deputies or such other officers as may be designated by him or her, are empowered to subpoena any trustee, agent, fiduciary, beneficiary, institution, association or corporation or other witness, examine any such witness under oath and, for this purpose, administer the necessary oaths, and require the production of any books or papers which they deem relevant to the inquiry.
Additionally, the Rules and Regulations promulgated by the Attorney General's office authorize the Attorney General to pursue civil and criminal enforcement of the Estate Powers and Trust Laws.
Title 13 of the New York Code of Rules and Regulations
Part 104 and Part 105
Part 104 Civil Enforcement by the Attorney General
These rules and regulations shall not prohibit the Attorney General from initiating civil any action or proceeding authorized by law for failure to register and/or file financial reports pursuant to, and/or comply with, any provision of Article 8 of the EPTL, Article 7-A of the Executive Law, any other law or the common law.
Part 105 Criminal Enforcement by the Attorney General
(a) These rules and regulations shall not prohibit the Attorney General from initiating any criminal action authorized by law for failure to register and/or file financial reports pursuant to, and/or comply with, any provision of Article 8 of the EPTL, Article 7-A of the Executive Law, any other law or the common law
Fact Seven:
The Attorney General's oversight, subpoena and enforcement authority over the administration of the Bernard and Anne Spitzer Charitable Trust, represents a gross violation of NYS Public Officers Law Sec. 74.3 (e)(f)(g)(h) - Code of Ethics.
74.3(e) No officer or employee of a state agency, member of the legislature or legislative employee should engage in any transaction as representative or agent of the state with any business entity in which he has a direct or indirect financial interest that might reasonably tend to conflict with the proper discharge of his official duties.
Eliot Spitzer has a fiduciary responsibility to The Bernard and Anne Spitzer Charitable Trust. His financial interest as a fiduciary places him in direct conflict with enforcement of the Estate Powers and Trust Lawlaws his office is charged solely with enforcing.
74.3(f). An officer or employee of a state agency, member of the legislature or legislative employee should not by his conduct give reasonable basis for the impression that any person can improperly influence him or unduly enjoy his favor in the performance of his official duties, or that he is affected by the kinship, rank, position or influence of any party or person.
Not only is Eliot Spitzer a member of The Bernard and Anne Spitzer Trust, but so to are his father, mother and brother. Eliot Spitzer's position as a trustee of his family trust gives a reasonable basis for the impression that his family could improperly influence him or enjoy his favor should he be forced to take either civil or criminal action against the family trust.
74.3(g). An officer or employee of a state agency should abstain from making personal investments in enterprises which he has reason to believe may be directly involved in decisions to be made by him or which will otherwise create substantial conflict between his duty in the public interest and his private interest.
Eliot Spitzer has a fiduciary responsibility to The Bernard and Anne Spitzer Charitable Trust. His financial interest as a fiduciary places him in direct conflict with enforcement of the Estate Powers and Trust Law, which his office is charged solely with enforcing.
74.3(h). An officer or employee of a state agency, member of the legislature or legislative employee should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust.
The trust has taken several actions helpful to Eliot Spitzer's political career, including giving over a hundred thousand dollars to groups that have since endorsed and aided Spitzer's gubernatorial run and attacked his opponents, and managers of the hedge funds that the trust invested in contributing hundreds of thousands of dollars to Spitzer's campaign.
http://tomsuozzi.com/announcements/pr-061306a/