Political Nonprofits: Building Community or Aiding Corruption?
Government officials with ties to 501(c)(3) nonprofit organizations beware. Recent investigations of two New York state senators—Democrat Pedro Espada and Republican Vincent Leibell—have increased scrutiny of nonprofits that were once only seen as positive community-building programs.
Leibell, who had been elected Putnam County executive in November, pleaded guilty December 6 to tax evasion and obstructing justice during a federal inquiry into his dealings with his Putnam Community Foundation, which provides senior housing. Days before his plea, the longtime state senator announced he would not be assuming his new office in January.
Just one week later, Espada, who has served as state senate majority leader since 2009, pleaded not guilty last Thursday to embezzling a total of $500,000 in federal money that was intended for his Bronx-based healthcare service nonprofit, Comprehensive Community Development Corporation, widely known as Soundview.
During Leibell’s December 6 court appearance, the prosecution disclosed that a community foundation that provided senior housing in Putnam was the subject of a grand jury investigation. The Putnam Community Foundation’s attorney, William Aronwald, verified that the Foundation was the nonprofit in question, but he maintains that the Foundation is not part of any ongoing investigation. Sources have told the Courier that federal prosecutors had an additional 15 charges against him. The Courier has been unable to corroborate this, but, if true, it would suggest that the former county executive-elect gave investigators information in exchange for fewer charges.
The Putnam Community Foundation isn’t the only nonprofit with ties to Leibell. He also founded the Hudson Valley Trust—another nonprofit whose mission statement is completely different from the Foundation’s, though both organizations receive grant money from many of the same sources. The Trust’s purpose is to “foster the historical, environmental and architectural heritage of the Hudson River Valley.” Following Leibell’s guilty pleas, Roger Gross, current president of the Trust, told the Courier that the Trust has never been under investigation as far as he knew. Mary Conklin, who is likely to become chairman of the Putnam County Legislature in January is treasurer of the Trust.
In what is now the Trust’s most notorious project, the organization constructed a secluded, covered footbridge in a Patterson field. The bridge—reported to have cost $230,000 and publicly dubbed the “bridge to nowhere”—was defended this past June by Leibell as a “cost saving” measure after the Courier began investigating. He said that the bridge gave access to a scenic open field, which, according to many locals, is rarely visited by anyone. In June, the Courier discovered that the taxpayer-funded bridge was curiously built with a housing grant from the Dormitory Authority of the State of New York.
Upon its inception in 1996, the Hudson Valley Trust’s initial president was former county attorney, Carl Lodes. Today, Lodes is rumored to be the person referred to by assistant U.S. Attorney Perry Carbone as “Attorney No. 1” who participated in a government sting operation directed at Leibell. The unnamed attorney recorded Leibell on a Carmel sidewalk asking the attorney to deny any money transactions between the two. This was the source of the obstruction of justice charge.
Lodes’s only known ties to the Putnam Community Foundation are through his role as county attorney when he prepared the deeds for the parcels purchased by the Foundation after Leibell had convinced the Putnam County Legislators to sell two parcels to the group in 1999.
Although Leibell no longer had an official role with either the Foundation or Trust, he directed significant amounts of money to both groups through member items as a state senator. As of 2009, the Putnam Community Foundation had received nearly $11.2 million in taxpayer funded grants and the Hudson Valley Trust had been issued $1.7 million.
With help from state grants, projects conducted by the Trust over the years include the renovation of an unoccupied train station in Pawling. Public dollars also helped the Trust remake the former Patterson town hall into the Lawlor Building. Sitting next to the nonprofits’ rarely used footbridge, the building now houses office space for the Trust, the Putnam Community Foundation, the Patterson Historical Society, and other nonprofits. Leibell himself maintained an office there.
While the Trust has ostensibly focused on preserving historic sites in the former senator’s 40th state senate district, the Putnam Community Foundation has been focused on senior housing. The Foundation owns two senior housing locations in Brewster. For seven years, it has had plans for senior housing on a Carmel property it purchased from the county in 1999. At the time, seven county legislators voted to sell the parcel to the Foundation, with Legislator Tony Hay abstaining and then-legislator Robert McGuigan voting no.
The Foundation’s Carmel property, located on Stoneleigh Avenue adjacent to the Putnam Hospital Center, was purchased for $150,000 in 1999. In 2005, the hospital purchased nine acres of that land from the Foundation for $1.5 million to expand the hospital’s parking lot and expand their medical center.
Joseph DiVestea, president of the Foundation (originally its vice president), was also on the hospital’s board of directors from 2000 to 2007; he served as hospital chairman from 2003-2005. Although he is no longer directly affiliated with the hospital, his wife, Corrinne, is a member of the hospital’s foundation board of directors.
This past June, the Courier reported that the Carmel town board voted unanimously to reduce water and sewer district charges for the Foundation’s Carmel property after initial charges levied were deemed erroneous; these bills had not been paid for several years. The water and sewer fees on the land were reduced from $378,780 to $207,274.40 because the town listed the property as commercial rather than residential.
Leibell’s only opponent in the race for county executive, outgoing-Legislator Mary Ellen Odell, served on the Foundation’s executive board for some time. She said she wondered how anything was ever decided upon since meetings were rarely held, a violation of tax exemption rules for nonprofits under Section 501(c)(3) of the Internal Revenue Code. Odell also speculated that Leibell’s chief of staff, Ray Maguire, had been the one actually running those foundations.