Daily News finds 2 Bronx lawmakers have cozy ties to nonprofit organizations

By Robert Gearty and Barbara Ross
rgearty@nydailynews.com

Sunday, May 10th 2009

Welcome to the Bronx - where allegations of corruption and collusion seem to grow on trees.

In a twin probe, the Daily News has found two Democratic state lawmakers with close campaign ties to nonprofit groups that use taxpayer funds. Federal law bars nonprofits from giving money or resources to political campaigns.

One, Sen. Pedro Espada Jr., dubbed the Bronx's "Teflon Pol," has repeatedly dodged charges of using a publicly funded health clinic for political purposes.

The other, Assemblyman Peter Rivera, sponsored nearly $1.3 million to a nonprofit whose employees helped his campaigns.

The probe follows The News' revelations that former Bronx Borough President Adolfo Carrion Jr. did not pay an architect who designed Carrion's home renovation. Carrion had approved zoning changes and sponsored $7 million in tax money for a project the architect designed.

Carrion, now a White House deputy, recently paid the bill — two years after the job was done and after The News exposed the arrangement.

Here's what The News found about Rivera and Espada.

Espada's pals at health clinic

Pedro Espada is in the middle of another campaign funding mess.

After years of ducking charges that he uses the resources of his Soundview Health Clinic to promote his political campaigns, the Daily News found a new crop of such allegations again last fall.

In a bruising race in which he defeated incumbent Sen. Efrain Gonzalez Jr., many Soundview employees, medical vendors and Espada relatives who work for the clinic gave to his campaign.

Espada campaign literature printed in full-color on glossy paper was mailed to the same voters who got remarkably similar literature from Soundview.

One clinic ad featured four pictures of Espada, including one identical to the campaign literature; the same bulk mailing permit number appears on both campaign and clinic pamphlets.

Espada's campaign staff distributed leaflets at the same time and locations as Soundview clinic health fairs where staff distributed free condoms and food, including granola bars stamped "Vote for Pedro Espada."

In an interview, Espada — dressed in a pink shirt with monogrammed French cuffs, powder blue floral tie and matching pocket hankie — scoffed at the idea he uses the clinic to get elected.

"Soundview Health Clinic does not participate in political rallies. We participate in health fairs," he said. When clinic staff distributed free food, "you did not need to be a registered voter or even a citizen" to get some, he added.

Espada's effort to distinguish between his political and medical careers comes after years of the two being inseparable.

At one time, Soundview — supported primarily by public funds — paid Espada up to $379,000 in salary and benefits. He no longer receives that salary. Soundview also hires its own affiliates – which are controlled by Espada – to clean and guard its three clinics.

In 2000, Espada was brought to trial on charges of using $200,000 from a Soundview HMO to pay off a 1996 campaign debt. He was acquitted after arguing that the HMO can do what it wants with federal money.

In 2005, six Soundview employees were convicted of multiple counts of misusing the clinic's taxpayer funds to aid the campaigns of Espada and his son.

They admitted they ordered clinic staff to do campaign work on taxpayer time, told them to write checks to Espada's campaign so he could get matching money, reimbursed the employees in cash, gave voters food intended for poor mothers and children and closed an HIV clinic on Election Day 2000 so employees could get out the vote.

Soundview even paid the legal fees of the indicted staffers. Nonprofits are allowed to pay legal bills of employees accused of wrongdoing, but the employees must pay it back if convicted.

The News estimates the bill exceeded $1.4 million. Espada concedes the costs were extensive: "We had huge legal bills because of the investigation. . . . The individuals, once accused, have a right [to a lawyer] under our bylaws which were approved by the state."

Soundview's board included two of the four indicted supervisors: Sandra Love, the clinic's $239,904 senior vice president, and Maria Cruz, its $141,131 vice president of operations.

All but one of the convicted Soundview employees are back at the clinic. Espada claims the six have paid back their loans.

Espada contends he was the real target of then-Attorney General Eliot Spitzer's investigation: "Do you think for one minute that Mr. Steamroller was after these ladies? No! He was after me! And I was totally cleared!"

Espada has also repeatedly ignored laws requiring pols to reveal who gives them donations and what they do with them.

For more than three years the city Campaign Finance Board has tried to collect $61,750 in fines for illegal actions by Espada's Soundview staff in his 2001 run for borough president.

Espada has agreed to come up with the cash by August.

"He has absolutely done a cha-cha around the campaign finance law — spirit and letter," fumed one prominent Bronx political veteran.

Espada pulled the same stunt in the most recent election, running up $13,000 in fines by failing to file six campaign finance disclosure reports.

Last August, the state Board of Elections told Espada he'd be held liable for $13,553in fines. Espada blamed the problem on an "inexperienced" clinic lawyer.

Group got $1.3M and Rivera got lots of help

Peter Rivera took a slightly different approach, sponsoring nearly $1.3 million in taxpayer money for a nonprofit group whose workers have helped his campaigns.

Rivera arranged for up to $979,000 to go to NETS (Neighborhood Enhancement for Training Services), a nonprofit that has employed his son, campaign treasurer and treasurer of his political club.

Some NETS workers have carried petitions for Rivera and, in one case, pressed to keep his district intact when the Legislature was redistricting in 2001.

The troubled group appears to have done little with the money, spending $430,000 in state funds for a community center that has yet to open after seven years.

The group has spent only $80,000 of the $549,000 in "member items" Rivera has sponsored or co-sponsored since 2005, so last month he responsored $319,000 for the group.

NETS hasn't filed tax documents in years and is no longer considered a registered charity by the state attorney general.

Rivera, an eight-term Democrat who last year sponsored a bill requiring all New York public schools to view "An Inconvenient Truth," defended his use of taxpayer dollars to support NETS.

"I think it's very worthwhile," Rivera said of NETS. "They do a whole bunch of programs. They have seniors they support. They have after-school programs they have worked on, activities that they take people around."

He emphasized that NETS "is not involved in my campaign at all. Individuals [at NETS] have, but to a minimal capacity."

The Rivera/NETS relationship is longstanding. NETS' Web site says Rivera has been its sponsor since 1992, the year he was first elected to the Assembly.

Several NETS employees have actively supported Rivera's political ambitions.

David Griffiths, NETS' director since 2003, is Rivera's campaign treasurer. Griffiths' predecessor as NETS' director, Luis Diaz, was a Rivera staffer.

The head of NETS' board, Pat Tomasulo, is president of Rivera's political club, the Community Democratic Club. NETS' program director, Lizandra Martinez, is the club's treasurer. Both carried petitions for Rivera in the last election, records show.

In 2001, Martinez, Diaz and Rivera's son, Peter Jr., then a NETS' employee, testified at a Senate hearing on reapportioning legislative districts. They advocated leaving some districts intact, including Rivera's, to ensure adequate Latino representation.

Rivera also recruits from NETS. The head of his Assembly staff is a former NETS employee. NETS and Rivera's law office shared a Parkchester address for several years.

About seven months ago, NETS moved to White Plains Road — to the same address Rivera uses for his campaign.

NETS also reported on its tax return that the books were in the care of Rivera's law firm, although Rivera claimed that wasn't true, stating "I'm a little surprised it says that."

What NETS does with all this money remains a mystery, in part because the last tax form it filed dates to 2005.

For instance, in 2002 NETS bought a former synagogue, a transaction arranged and subsidized with taxpayer help by Rivera. The plan was to turn it into a community center.

NETS' director Griffiths said the group bought the Young Israel Temple on Virginia Ave. for $430,000 with a bond-backed state grant. Another $375,000 in capital funds from Rivera went to renovate the first floor.

Rivera insisted NETS has run services out of the building. The community center has never opened and the building has been vacant for years. Three weeks ago, the front door windows were covered with paper and no one answered the door.