Lt. Gov. Brian Benjamin arrested in scandal involving real estate investor
Feds probe steering of state funds after alleged straw-donor scheme
UPDATED April 12, 2022, 3:40 p.m.: New York Lt. Gov. Brian Benjamin surrendered to authorities Tuesday morning to face campaign finance fraud charges.
The arrest follows an investigation by the FBI and federal prosecutors into whether Benjamin steered state money to campaign contributors, including a real estate investor, in return for fraudulent donations to a past campaign.
Benjamin, Gov. Kathy Hochul’s No. 2 and a former real estate developer, is expected to appear in Manhattan federal court Tuesday afternoon, NBC New York reported.
The arrest comes after Gerald Migdol, a Harlem real estate developer, was arrested in November and charged with wire fraud in connection to fundraising for Benjamin.
Prosecutors accused Migdol of making unauthorized donations under other names, including his associates and 2-year-old grandchild, to help Benjamin’s 2021 campaign for city comptroller secure tens of thousands of dollars in public matching funds.
Benjamin’s Senate campaign fund previously received $25,000 in contributions from the developer, but not in the developer’s name. Two $10,000 checks came from relatives of the developer and one $5,000 check from an LLC he controlled, the indictment alleges.
The indictment, which does not name the developer, alleges that Benjamin used his influence as a state senator to funnel a $50,000 state grant to a nonprofit controlled by the developer that donated supplies to Harlem schools. It also accuses him of covering up the scheme with lies and deceptions, including on the vetting forms he filled out prior to his selection in August as Hochul’s lieutenant governor.
But Benjamin did not attempt to hide the $50,000 grant he procured for the nonprofit. Rather, he presented an oversized novelty check to the organization at a September 2019 ceremony for that amount, with his signature on it.
From October 2019 through January 2021, Benjamin’s comptroller campaign received checks linked to the developer, but made via straw donors, and used those donations to receive matching funds from the Campaign Finance Board. A report by The City exposed the questionable contributions in January 2021, and the nonprofit stopped trying to collect the $50,000 grant, which was never delivered, according to the indictment.
Prosecutors also charged that Benjamin promised to help the developer secure a zoning variance in Harlem in exchange for a $15,000 campaign contribution. Benjamin was a past chairman of the community board that would issue a recommendation on the variance. The developer made the contribution, but the matter never came before the board.
The indictment notes that some donations to Benjamin’s Senate fund were flagged by the state Board of Elections because ownership information for the LLCs behind the donations was omitted. When a staffer requested the names from Benjamin, the senator emailed back, “What happens if someone refuses to provide the information?”
He never did provide it.
The Campaign Finance Board also denied his comptroller campaign matching funds for donations made via sequentially numbered money orders, according to the indictment.
Representatives for Benjamin, Hochul and the prosecutors didn’t comment on the arrest.
Benjamin, based in Northern Manhattan, went into politics after a stint developing market-rate and affordable housing. He represented Harlem and surrounding neighborhoods in the state Senate from June 2017 until being sworn in as lieutenant governor last September. Hochul had held the post before succeeding Gov. Andrew Cuomo when he resigned amid his own scandal.
The arrest and indictment complicates Hochul’s campaign for her first four-year term. She is a heavy favorite to win the Democratic primary in June but faces a closer contest in November against the Republican primary winner, which is expected to be Rep. Lee Zeldin of Long Island.
The scandal could weaken her leverage with the state legislature for the rest of this year’s session, which ends in late June. She has proposed several measures of importance to the real estate industry, especially a replacement for the 421a tax break, which expires June 15.
This article has been updated with additional information from the indictment.
[NBC New York] — Joe Lovinger