De Blasio Gave Up on Running for Congress — But He Can Use Money He Raised to Pay Off His Old Debts
Owing hundreds of thousands of dollars to lawyers and taxpayers for past misdeeds, the city’s former mayor can now redirect campaign funds to his creditors, say campaign finance experts.
Twice in the last eight months former Mayor Bill de Blasio has publicly flirted with a run for office, first openly talking about his desire to be elected governor and then launching a run for Congress.
Twice he’s bowed out after just a few weeks.
Some might see that as a political debacle, but between those two failed candidacies, de Blasio has succeeded in raising a bundle of cash with nearly $700,000 that he gets to keep.
What he will do with all that money depends on a complicated and murky set of campaign finance rules and regulations.
As THE CITY has documented, the former mayor — whose fundraising tactics have attracted the attention of prosecutors and ethics watchdogs for years — could certainly use that cash to pay off hundreds of thousands of dollars in debts.
At last count, de Blasio still owes $425,000 to a lobbyist law firm that represented him when he was the mayor and the Manhattan U.S. attorney and Manhattan district attorney investigated allegations of pay-to-play.
And the city Department of Investigation found he owes another $320,000 to the taxpayers for using an NYPD detail during his ill-fated run for the White House in 2020.
De Blasio announced he was considering running for governor in November and dropped the idea in January. He then announced he was running for the newly drawn 10th Congressional District May 20 and dropped out Tuesday, tweeting out a terse video in which he declared: “It’s clear the people of #NY10 are looking for another option and I respect that. Time for me to leave electoral politics and focus on other ways to serve.”
As of Friday, he still had just under $245,000 in his gubernatorial exploratory committee, New Yorkers for a Fair Future, and $450,000 in his congressional campaign. Some of that money came from donors who featured prominently in de Blasio’s past ethically challenged fundraising ventures, THE CITY reported this week.
“De Blasio spent less than 15% of the more-than $500,000 that he raised for his Congressional run, which itself strongly suggests that de Blasio has been using his purported Congressional run to build a war chest to use as a slush fund to pay off outstanding liabilities,” said Aaron Foldenauer, an election and campaign finance lawyer who ran his own long-shot campaign for mayor last year.
“It turns out that de Blasio’s short-lived run for Congress was the perfect tool for him to convince donors to give him new money which he can now use to pay off his old debts.”
Foldenauer said the rules allow de Blasio to transfer the $450,000 he has left over from the congressional run to New Yorkers for a Fair Future, the state committee he set up when he was exploring a run for governor.
He said that would allow him to pay off his debt to Kramer Levin & Naftalis, the law firm that repped him in the investigations that resulted in no criminal charges, but did generate admonitions from prosecutors that he’d solicited checks from entities seeking favors from City Hall — the very definition of pay to play.
NYPD Bill: $320,000
As for the $320,000 he still owes for use of the NYPD detail during his White House bid, some election lawyers said he could also choose to ship the congressional money over to one of his federal campaign accounts to tidy up that outstanding debt.
Currently, his federal campaigns are broke. The presidential campaign committee, De Blasio 2020, owes $57,373 and had $822 cash on hand as of Friday, Federal Election Commission filings show. A political action committee he created while he was thinking of running for president, the Fairness PAC, has $30,625 in debt and $9,069 cash on hand.
Neither of those negative balances includes the potential cost of paying for the security detail — which de Blasio said last week at an unrelated press conference that he’s still actively appealing with the city’s Conflicts of Interest Board.
“There is an appeals process underway,” he said. “I’m not going to jump ahead of due process. There is due process here. We are having ongoing conversations to provide the information and that will result in an outcome. That outcome happens, we’ll follow up.”
As THE CITY reported last month, the conflicts board explicitly told de Blasio ahead of his presidential run in May 2019 that he wouldn’t be permitted to charge city taxpayers for the travel and lodging expenses of his NYPD detail on federal campaign jaunts.
De Blasio went ahead and billed taxpayers $320,000 anyway, rather than using his federal campaign funds to foot the bill.
Saurav Ghosh, director of federal reform for the Campaign Legal Center, said the FEC’s website makes clear its rules allow for funds to be transferred from a candidate’s older campaign for federal office to a more current federal run — while they don’t mention the possibility of funds flowing from a newer campaign to an older one.
“It looks like he’s permitted to use his congressional funds — to transfer those to his presidential committee,” said Ghosh. “I can’t see any rule that would prohibit this.”
The nonpartisan government watchdog group filed a complaint with the FEC in August 2019 over de Blasio’s intermingling of funds between his 2020 presidential campaign committee and a federal and state PAC that each included the moniker “Fairness PAC.”
That complaint, which likened de Blasio’s financial maneuvers to a “shell game,” is still pending with the FEC, an FEC spokesperson confirmed on Wednesday.
While de Blasio said he created the NY Fairness PAC to boost the candidacies of fellow progressive Democrats in New York, most of the money went to consultants that were working to boost him politically, state Board of Elections records show.
Even recently, while de Blasio was still mayor and mulling a run for governor at the end of 2021, the NY Fairness PAC spent more than $70,000 on polling conducted by Washington DC-based firm GQR, those records indicate.
At the same time, the PAC was taking in considerable donations from his longtime contributors, such as supermarket magnate John Catsimatidis and cardboard mogul Dennis Mehiel — who each gave $15,000 in December.
De Blasio didn’t respond to a message left on his cell phone seeking comment.
On the evening before he cut his congressional campaign short, de Blasio spent two hours chatting it up with about 20 Brooklyn voters in the Borough Park home of Alex Rapaport, director of the Masbia soup kitchen.
That sit-down was first reported by The Forward.
Rapaport said the informal event featured a discussion of a range of issues — focusing mostly on the Jewish community — including the fact that de Blasio would have a difficult time not being associated with the restrictions on normal life he imposed as mayor during COVID.
Rapaport said there was no hint in the mayor’s behavior that he was contemplating an off-ramp to his race for Congress.
“He was very animated and engaged,” said Rapaport. “I didn’t see it coming.”