NYS Attorney General Eric Schneiderman Is Taking Political Donations From Those He Could or Should Be Investigating- Despite a (Playboy) Model Being Involved This Is NOT A Model That Serves The Public Well

WNYC and News News 4 New York have partnered to report on Attorney General Eric Schneiderman’s office taking contributions from the potential targets of his investigations

You probably don’t come to read stories at Noticing New York for shallow analysis.

WNYC and News 4 New York have partnered to produce a pair of stories about how New York State Attorney General Eric Schneiderman’s office is often taking political donations from those they are investigating.  Although I don’t know what to think when not-for-profit news organizations increasingly “partner” with for-profit news organizations, these articles ought to grab public attention.  (Note: The more sensationally presented News 4 New York story had to conclude with a disclaimer of ownership relations between NBC and companies mentioned in their investigative story.)

    •    WNYC:Could Some Political Donations to New York's Attorney General Be a Conflict of Interest? Interview by Jami Floyd, February 18, 2016

    •     News 4 New York:I-Team: Why Did Former Playboy Playmate Donate $65K to Attorney General Eric Schneiderman?  By Chris Glorioso and Ann Givens, February 18, 2016

Both stories state that Attorney General Schneiderman isn’t being accused of any wrong doing.  Both stories also note statements from a Schneiderman spokesman that Schneiderman has investigated his own political donors, and in the WNYC report, Chris Glorioso states that the Attorney General’s office says this “evidence that he is unbiased and not swayed by these political contributions.”  According to Glorioso, the spokesman also said that in cases where donors stand to benefit from investigations that “those investigations began from the ground up, they began from New Yorkers who may have been wronged in one way or another, or from whistleblowers who called out wrong doing in the financial sector.”

Is the investigation of an Attorney General of his own donors evidence of a lack of bias, a lack of problems with receipt of the money received?

An uncle of mine was in the public relations business in the 1970s and there is a story I was privy to growing up told as a cautionary tale in my family about a fabled, wealthy publicist of the time.  I found it fascinating.  I won’t use names because I have never been able to find anything anywhere documenting the allegation although I did read that records that might have said something one way or another about the facts were burned after the publicist’s death.

The story was that when clients came to the publicist he told them that it was his job to tell the public everything good about the client, everything the client would want the public to know and everything it was the goal of the client to put out to enhance the client’s name and brand, but that he also needed to know what he would need to steer around. He explained that he needed to know all the client's secrets, the skeletons in the closets.  This man was recognized as being an exceedingly good publicist and did a good job for his clients, but if there ever came a time when a client thought about abandoning the use of his services, or if they began to think his fees verged on being too much, the situation could become uncomfortable. . .

. . . Was there reason for the client’s to be uncomfortable?  Was there ever an instance of private confidences having been breached?   I don’t know that there ever was.  I only know that the feelings of discomfort were part of the story that was told and that everyone knew from his flamboyant life style that the man’s fees were high.

I tell this story because it reminds me of another seeming paradox that might bring people up short when they first think about it.  Campaign finance reform expert and advocate Lawrence Lessig has written about how elected officials across the spectrum, both Democrat and Republican, “have an interest in extending the reach of regulation, because by increasing the range of regulated interest, you increase those who have an interest in trying to influence . .regulation.”  (This quote is from Lessig’s book, “Republic Lost.”)

Why do electeds benefit from regulation?  Is Lessig’s view that they necessarily want to enforce regulation?  No, it is that, as gatekeepers who get to collect political contributions in the money-in-politics “gift economy” that Lessig writes about, it’s good to have lots of “targets for fund-raising.”   Lessig tells us how federal lawmakers seek to be on certain “cash cow” committees which because of their regulatory power “primarily because members of those committees are able to raise large amounts of campaign money with little effort.”

Professor Lawrence Lessig appearing in the documentary, “The Internet's Own Boy: The Story of Aaron Swartz.”  Mr. Lessig's preface to the second edition of "Republic Lost" is a lamentation of our loss of activist Aaron Swartz.

In other words, Lessig quoting the work of Peter Schweizer and his book “Extortion,” describes an “extortion game.”  “What if politics is really largely about fund-rasing and making money,” is one of the quotes Lessig picks up from Schweizer.    

Later in analyzing what causes the campaign contributions, whether it originates with the hopes of the donor, or with the politicians and electeds soliciting contributions, and how much blame to put in the system itself Lessig writes:

Think about a more pedestrian version of this sort of extortion: We wouldn’t look to the failure of a local Mafia to give the victims of its extortion benefits as proof that there is no extortion. The victims are trying to avoid penalties; they’re not seeking special favors.

It’s particularly uncomfortable to apply this analogy to a state attorney general, because as Glorioso stressed in his WNYC interview:

Prosecutors are not just politicians, they are law enforcement officers.  They have subpoena power.  More than a law maker or a governor they can act unilaterally to penalize an entity, or to force an entity to cough up information.  So particularly here in New York where the Attorney general’s Office has been called the “Sherif of Wall Street,” a subpoena or a decision to investigate can have tremendous consequences in the market place.   

While, on one hand, there is a question of how things may turn out when there is competition between various moneyed interests, there is a bigger problem when you are the public with no money to pony up in the game.  Then you lose out entirely, in practical terms dropping off the face of the political earth.

Near the end of the NBC story Lawrence Norden of the Brennan Center Democracy Program says: “As a general matter there is political science out there that says that the donor class has more influence over policy than the general public.”

Bill Maher on his Friday, February 13th Real Time showing speaking about how the average American has"only a minuscule, near zero, statistically non-significant impact upon public policy."

That is essentially what Bill Maher said in far more blunt terms on his last show a week ago:

Bill Maher:I just want to read one thing I read before on the show, it's a study, I am sure you are familiar with it, by two Princeton professors who said this is an oligarchy:

The preferences of the average American appear to have only a minuscule, near zero, statistically non-significant impact upon public policy.

 . . And they wonder why there's a revolution!

The professors Maher referred to are Martin Gilens and Benjamin I. Page (from from Princeton University and Northwestern University) and their report, Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens, uses in some cases some very academic sounding language to say these things; while they speak of “U.S. government policy” you can readily believe that with money in politics the way it is locally and in New York it is also true of New York City politics:

Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.

A summarizing preview was published (Oligarchy, not democracy: Americans have `near-zero' input on policy - report, April 15, 2014) containing these extracted quotes:

"Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts,". . 

While "Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association," the authors say the data implicate "the nearly total failure of 'median voter' and other Majoritarian Electoral Democracy theories [of America]. When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy."

If you are involved in a political fight and want something that a considerable portion of the moneyed elite with influence and access also want, you might have a chance of winning it. . .  And there are some good things that the elite might also want to pass.  There are no reasons why the elite shouldn't be almost equally on the same sides of certain social issues such as abortion or gay marriage.  A goodly portion of the moneyed elites might also not want there to be fracking in New York State where the NYC water supply could be poisoned or the environment of vacations homes surrounding the city ruined.

The influence of money has certainly been a problem when it comes to how the fossil fuels industry has frustrated appropriate measures to head off climate change.  That includes all the money spent on climate science denial.  Even so, there must to be a certain portion of the elite, a large one, that don’t want their children and grandchildren to live in world that perishes, ceasing to exist as we know it because of severe climate change.

Notwithstanding, Lessig in his book (where in the updated edition he also writes about the Gilens and Page study) cites issue after issue with documenting polls showing that the policy the government follows is what the elite, the top 1%, want, not what the majority of Americans want.

We normally think in terms of going to our elected officials to get government to do what we want it to.  But maybe that doesn’t make sense at all. Instead of beseeching and lobbying our elected officials, the public probably ought to be at the doorstep of the moneyed elites trying to influence their viewpoints given the documentation (and Lessig includes graphs in his book) that “as the percentage of the elite supporting a proposal goes up, the probability of that proposal raises,” but “as the percentage of average voters show support an idea goes from 0 percent to 100 percent, the probability that idea will be adopted doesn’t change.”

$65,100.00 from 2010 Playboy Playmate of the Year tops Schneiderman's contribution list?

The WNYC and News 4 New York stories pointed out mysteries and lack of public access to information about what was going on with the contributions coming in.  The hook for both the stories was to ask the question why a former Playboy model from Texas, Hope Hope Dworaczyk, now Hope Smith, the 2010 Playboy Playmate of the Year, contributed $65,100.00 to become the largest political donor to Attorney General Schneiderman this January.

Ms. Dworaczyk recently married private equity billionaire Robert Smith who has contributed a lot of money, $150,000.00,  to Schneiderman over the years with much of the cash contributed to Schneiderman after he launched a probe, and then closed that probe, into the fees that private equity firms charge their clients.  The print version of the News 4 report explained that Smith is “the founder of Vista Equity Partners, a private equity fund that has attracted nearly $1 billion in investments from the New York Common Retirement Fund, a public pension, over the last seven years.”

Compounding the problem of mystery and its deepening the appearance of impropriety, News 4 interviewed James Tierney, a former Maine attorney general, now directing Columbia University's National State Attorneys General Program who, News 4 said explained that:

hedge funds and private equity firms are not transparent about their investments. That means the funds can allege some sort of wrongdoing about another company - and it is impossible for prosecutors to know if a resulting investigation could be seen as posing a conflict of interest.

Would you like to consider yet one more layer of complexity?  With all the money and ownership interests affecting the press there is, similar to the situation with elected officials including Attorneys General such as Schneiderman, the question of what gets investigated by the press . . .

Part of the News 4 story related how Schneiderman has investigated and now halted in New York the Fantasy Sports Gambling industry (See the Frontline Report: The Fantasy Sports Gamble,
February 9, 2016).  NBC’s investment in this industry necessitated disclosure in its report, but there is money on both sides of the deal because NBC reported that Schneiderman has also taken money from the local regulated gambling industry which competes with fantasy sports gambling.

As noted, the WNYC and News 4 New York reports both make clear that, when all is said and done, the Attorney General’s office, despite how troubling all of this must necessarily be, is not being accused of any wrong doing.  Indeed, while part of the purpose of this article to deepen the analysis points out that it is simplistically naive to believe the assertion of Attorney General’s office when it says that Scheiderman’s investigation of his own “political donors” is “evidence that he is unbiased and not swayed by these political contributions,” that doesn’t change that fact that nothing written here concludes that Schneiderman doesn’t strive to do the right thing in a troublingly warped and problematic system.

We can note in more detail here the questions about how elected officials including state attorneys general are essentially gatekeepers to benefit that can be politically derived, essentially collecting tolls, but one would expect or hope that, because an attorney general's office is comprised of attorneys with the licenses and personal integrity on the line, it would ensure that the office operates within legal bounds and mostly according to Hoyle.

Tim Wu during the Teachout/Wu campaign for Governor and Lieutenant Governor from this Citizens Defending  Libraries gallery of events page.

Further, it must certainly serve as an inherent check and balance on the office that so many attorneys working there have no doubt gone to work in the office precisely because they hope it is a place where they can do the right thing and accomplish idealistic objectives they likely came equipped with.  A recent case in point is that, this fall, Tim Wu, the Columbia Law Professor and highly influential open internet advocate (and Tweeter par excellence), joined the Eric Schneiderman’s office.  Mr. Wu is also recently famous by virtue of his political foray to become lieutenant governor as running mate of Zephyr Teachout.  It was a campaign that was startlingly effective.  Ms. Teachout is a protégée of Lawrence Lessig and a central tenet of the Teachout/Wu campaign was the overriding need for the kind of campaign finance reform that this article is about.

Still, in the final analysis, how does our warped system serve or not serve the public?  When it comes to moneyed interests being on the scene does Schneiderman stand on the side of the public if all the money is on the side of private moneyed interests?   Or does our state attorney general fulfill predictions of professors Gilens and Page that the actual interest of the public will have “only a minuscule, near zero, statistically non-significant impact upon public policy”?

Here is a perfect test case with a now escalating profile.  The New York State Attorney General regulates charities and is supposed to "to police fraud and abuse" and, for instance, the office was recently even given additionally clarified  powers “to bring judicial proceedings to unwind interested-party transactions."
A complaint about such fraud and abuse by the Brooklyn Public Library was recently filed by a newly formed group, Love Brooklyn Libraries, representing the public interest.  There is, however, a lot of private industry money on the other side, particularly real estate interest money that would like to see Brooklyn public libraries sold for a pittance, far less than their value to the public.  Part of the problem is that the composition of the board of the Brooklyn Public Library is extremely ill-suited to upholding the public interest with far too many competing agendas at odds to the public’s.  This is exactly what the Scheiderman’s office is supposed to be regulating.  He is supposed to prevent and insulate the public from exactly that kind of harm.

Read about the composition of the board of the Brooklyn Public Library and competing agendas at odds to the public’s.

Point of disclosure: I am a co-founder of Citizens Defending Libraries which has similarly brought such matters to the attention of the Attorney General’s office, not only with respect to the BPL and its trustees, but also with respect to the NYPL and, for instance, its sale of the Donnell Library.

Now if one were plotting it on one of those professorial graphs we talked about, it is important to know that the public almost universally opposes the sale and shrinkage of our libraries, the elimination of books and librarians and the deliberate underfunding of libraries in a time of plenty being being used as an excuse to do so.
The breaking headline news now escalating the status of this story: The New York Post has just come out with an eviscerating story about the sweetheart details of de Blasio's giveaway of the Brooklyn Heights library.  The developer to whom the de Blasio administration and the BPL trustees regulated by Schneiderman’s office wasn’t the highest bidder; his bid was 20% lower than another of the two bids that surpassed him.  It was an inferior bid in other respects as well.  See:  New York Post: Developer with ties to de Blasio scores job, despite being outbid, By Aaron Short, February 21, 2016.

The new facts in the Post article are further evidence of what Scheiderman needs to be investigating.  But even this needs to be put in context: David Kramer (of the Hudson Companies) was the low bidder for a library that should not even be sold.  Kramer and the other developers were only bidding for the value of the library site as a vacant lot.  There were being asked by the BPL and its trustees to bid only for the “tear-down” value of the library.  These bids were in no way related to the value of the library to the public from the public’s perspective, because de Blasio and the BPL trustees were selling off the library with no appraisal of the value of the library from the public’s perspective.  And it is important to remember that what we are speaking of is a recently enlarged and fully upgraded library that would cost more than $120 million to replace.

So that is the test case that the New York Post has now given an escalating profile: What Schneiderman does in this instance, a matter that the public cares about intensely, will tell us much about exactly how worrisomely warped our system is.

Citizens Defending Libraries on Thursday night outside an event where Mayor de Blasio and economist Paul Krugman were to discuss income inequity in NYC.