Spitzer's Office Not Truthful About Conflict of Interest Charges, Says Suozzi Campaign

Spitzer's Office Not Truthful About Conflict of Interest Charges, Says Suozzi Campaign

Spokesman falsely claims that AG's office has no oversight over family foundations like the Spitzer family trust

Kimberly Devlin, campaign manager for Democratic Candidate for Governor Tom Suozzi, today presented documents showing that Attorney General Eliot Spitzer's spokesman was not truthful about the Attorney General's authority over charitable trusts, in order to avoid admitting a clear conflict of interest in Eliot Spitzer overseeing his own family's foundation.

"I have to assume that Eliot Spitzer knows the law, and that his spokesman was speaking with the Attorney General's full authority," Devlin said. "If that is the case, then Eliot Spitzer now owes the people of New York two explanations about his conduct in this situation -- why didn't he follow the law and why isn't he being truthful?"

On Monday, Suozzi pointed to an advisory opinion from the state Ethics Commission that made clear the conflict of interest in Spitzer sitting on the board of his family's trust, which is overseen by the Attorney General's office. In response, the Attorney General's official spokesman, Darren Dopp, claimed on Tuesday that the Ethics Commission's opinion does "not apply in this case" and denied that the Attorney General had oversight over charitable trusts.

Devlin noted that Dopp's claim is directly contradicted by Spitzer's own testimony at a 2001 Congressional hearing, 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…"

In the same 2001 hearing, the Attorney General actually called for the elimination of trusts just smaller than that of his family, citing "serious" abuses among family trusts, explaining that "what we often encounter is a failure on the part of the founder to distinguish between the assets that are his or hers and the assets that are the foundation's."

Dopp's claim on behalf of Spitzer also contradicts Opinion 79-66 issued by the Office of the Attorney General; New York State Ethics Commission Advisory Opinion 90-25; Section 74 of the Public Officers Law; Article 8 of the New York State Consolidated Laws; Estates, Powers and Trust Law 8-1.4, and the Statement of Scope defining the regulatory role of the Attorney General's Charities Bureau put forth by Spitzer's own office.

Though his family trust has contributed money to Spitzer's political allies, and hedge fund managers the trust has invested with have contributed hundreds of thousands of dollars to his campaign, Spitzer has denied even the appearance of a conflict of interest.

"Spitzer's denial doesn't pass the smell test," said Devlin. "This raises an obvious question -- why is the Attorney General hiding behind his spokesperson's obviously false statements? Does he feel so utterly unaccountable to the public that he not only ducks the law, but ducks the truth as well?"

THE SPITZER DOUBLE STANDARD
HE CLAIMED JURISTICTION OVER TRUSTS--UNTIL HE'D HAVE TO APPLY THE LAW TO HIMSELF

Eliot Spitzer refuses to admit that the foundation on whose board he sits is under his jurisdiction as Attorney General, but state law and Spitzer's official Attorney General website say otherwise.

Darren Dopp, a spokesman for Mr. Spitzer, said that the advisory opinion would not apply in this case, and that the attorney general's office did not have direct oversight of family trusts, which disburse private money, as it does of nonprofits, which solicit from the public. (The New York Times, Spitzer's Role in a Trust Is Questioned by Suozzi, July 11, 2006)

But that's not what Dopp had said the day before:

…his [Spitzer's] responsibility is limited to policing them and prosecuting them when they do wrong. (Albany Times Union, Apples or Oranges?, http://blogs.timesunion.com/capitol/?p=1608, July 10, 2006)

And Spitzer himself claimed he controlled these trusts when testifying before Congress:

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…I consider it a privilege to perform this important function (US House Congressional Testimony, CHARITIES RESPONSE TO SET 11, November 8, 2001)

And his official website says likewise:

The Attorney General's Charities Bureau is responsible for supervising charitable organizations to insure that donors and beneficiaries of those charities are protected from unscrupulous practices in the solicitation and management of charitable assets. The Bureau also supervises the activity of foundations and other charities to insure that their funds and other property devoted to charitable purposes are properly used. The Trusts and Estates Section protects the interest of the public as ultimate beneficiaries of gifts and bequests contained in wills, trust agreements, deeds and corporate charters. The Bureau is also responsible for monitoring charitable registrations as mandated by law. (Office of Attorney General Website, )

The Attorney General is responsible for overseeing the administration of charitable assets in the State of New York, representing the interests of beneficiaries of charitable dispositions and enforcing laws governing the conduct of fiduciaries of charitable entities…
The Attorney General has broad statutory authority to "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 is the public officer with primary enforcement authority with respect to the management of charitable organizations and oversees the conduct of the organizations' directors and officers. (Office of Attorney General Website, < www.oag.state.ny.us/charities/role.pdf>)

And New York's Estates, Powers & Trust Law (NY EPTL) gives the Attorney General jurisdiction over trusts:

Article 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.

(n) This section shall apply regardless of any contrary provisions of any instrument and shall be liberally construed so as to effectuate its general purpose of protecting the public interest in charitable uses, purposes and dispositions…

JUST TRUST ME, or, THE LAW DOESN'T REALLY COUNT HERE
The Spitzer camp says that there is nothing wrong with the Attorney General serving on his family's trust:

Spitzer's spokesman, Darren Dopp, said there is no law prohibiting the attorney general from serving as a trustee. Spitzer has recused himself from his office's business with the trust, although Dopp said there has not been any to date. "To suggest wrongdoing and malice where there is none is politics at its ugliest," Anderson added. Dopp characterized the attorney general's oversight of charitable trusts as minimal, although a guide to charities on the attorney general's Web site refers to the office's role in regulating them. (Newsday, Suozzi: Spitzer a lawbreaker, July 11, 2006)

But the State Ethics Commission stated otherwise in 1990:

The Commission concludes that a State officer or employee, who has been designated by his appointing authority as serving in a policy-making position or any employee who is under the direct control and supervision of a policy-maker, may not also serve as a director or member of the board of an organization that is regulated or licensed by his employing State agency. (State of New York State Ethics Commission, Advisory Opinion No. 90-25)

And New York State Law's Code of Ethics is clear:

Sec. 74. Code of ethics.
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.
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.
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.
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.(New York State Public Officers Law, Sec. 74)

BUT THOSE LAWS DON'T APPLY TO ELIOT SPITZER, SAYS ELIOT SPITZER

Dopp said Spitzer's lawyers believe he does not need Ethics Commission approval, and he said the circumstances of the employee in the 1990 case were "very different" than the attorney general's. (Newsday , Suozzi: Spitzer a lawbreaker, July 11, 2006)

The Ethics Commission appears to disagree:

It strikes at all similar situations, where a policy-making employee desires to serve or is serving on the board of an organization which is regulated or licensed by the State agency with which that individual is employed… a conflict of interest will always be raised in such circumstances. (State of New York State Ethics Commission, Advisory Opinion No. 90-25)

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