Published reports on Rudy's shaggin adventures indicate that Mayor Rudy used a shell game to hide his approval and/or knowledge of public security for his girlfriend. Instead of billing security expenses to the NY city police department, the expenses were billed to obscure city offices that did not have anything to do with providing security. Ultimately, the police department reimbursed the other city departments. So, now the traditional media is focused on this accounting shell game. However, if you pick up the shell, underneath we may find that the nature of some of the expenses were inappropriate and could form the grounds for a taxpayer lawsuit by some enterprising New Yorker to compel Rudy to reimburse the city for funds used to pay for his personal shaggin expenses.
The reported allegations focus on (1) Rudy billing the city or taxpayer for personal security and chauffer services for his mistress and her friends and (2) a suspected effort to cover-up the wrongful use of taxpayer monies for these personal services.
First the shell game allegations. Politico reported that Mayor Rudy "billed obscure city agencies for tens of thousands of dollars in security expenses" which included "expenses incurred on 11 trips to Southampton, where the woman who would become Giuliani’s third wife had an apartment, as well as for campaign travel during his abortive 2000 Senate run."
In 2001, the New York Post reported that "city detectives have once again been assigned to protect Mayor Giuliani's girlfriend, even as he has scaled back the size of his estranged wife's police detail." Thus, Rudy "provided a police driver and city car for his mistress Judith Nathan," who "used the PD as her personal taxi service."
As Kagro X noted, Nathan's security detail was approved by the NYPD "after a stranger made an unspecified threat to her." However, the "commissioner at the time was Bernard Kerik, who was recently indicted on tax fraud charges in an unrelated matter." The credibility of Nathan's need for security is diminished by the fact that "Nathan forced police to chauffeur her friends and family around the city -- even when she wasn't in the car."
Then the cover-up allegations. Published reports indicate that Rudy scattered his security expenses around town by initially billing the expenses to obscure city offices that address issues like loft law, disabled people and court-appointed attorneys.
The former city officials said Giuliani expanded the budget for his security detail at the time. Politico.com reported yesterday that many of the security expenses were initially billed to obscure city agencies, effectively hiding them from oversight.
The apparent cover-up continued when the mayor's office refused to provide details when the "New York City comptroller began to question the accounting" in 2001 and 2002. Grabbing a Bush mantra, the mayor's office refused to provide the information to city security due to "security concerns."
When the New York City comptroller began to question the accounting, Mayor Giuliani's office declined to provide details to city security, officials told ABCNews.com today.
"The Comptroller's Office made repeated requests for the information in 2001 and 2002 but was informed that due to security concerns the information could not be provided," a spokesperson for the comptroller's office said.
Rudy's office would not provide any information to the city comptroller. In 2002, the city comptroller asked Mayor Bloomberg's administration to review this matter. Mayor Bloomberg's office "concluded that the expenses were for legitimate security purposes but referred the matter to the city’s Department of Investigation for further review." The Department of Investigation refused to discuss the matter with The New York Times:
A spokeswoman for the agency declined to comment about the matter and would not say whether it had produced a closing memorandum, a standard practice in any investigation, saying it was "gathering the files related to the investigation."
Years later, the initial defense proffered by Rudy's campaign for this strange accounting method of "allocating security expenses to small city offices that had nothing to do with mayoral protection" is that it was a practice that existed for years before he took office. This defense was vaporized when former Mayor Koch and former budget officials from prior administrations said they did not allocate security expenses to obscure city offices:
Joe Lhota, a deputy mayor in Giuliani's City Hall, told the Daily News Wednesday night that the administration's practice of allocating security expenses to small city offices that had nothing to do with mayoral protection has "gone on for years" and "predates Giuliani."
When told budget officials from the administrations of Ed Koch and David Dinkins said they did no such thing, Lhota caved Thursday, "I'm going to reverse myself on that. I'm just going to talk about the Giuliani era," Lhota said. "I should only talk about what I know about."
Moreover, former officials and independent experts described this novel accounting method as simply wrongful:
Former Mayor Ed Koch and City Controller William Thompson, along with budget officials from the Koch and Dinkins eras as well as independent budget experts, described the bookkeeping practice as shoddy and wrong.
Taking a peek under the shell. Newsday reports that Rudy's expenses totaled "nearly $1 million in 2000 and 2001 " for a "wide variety of travel." Did Rudy ever itemize his expenses between personal shaggin and business? Should the taxpayer foot the bill for an otherwise valid security detail for Rudy when he is traveling for some shaggin with a mistress? After all, "Giuliani's visits to the Hamptons cost taxpayers at least $3,000 a day in NYPD salaries and overnight motel lodging." Let's not forget that Rudy decided to "provide a security detail for [then-mistress] Nathan while they were dating [while he was] still paying for security for his then-wife Donna Hanover."
The New York Times indicates that Rudy had been a mayor "who seldom left the city" until he started traveling the "state and beyond" due to his senate bid against Hillary Clinton and his relationship with his mistress. It is unclear how much money was expended on true mayoral business versus shaggin. However, there was a significant increase in security detail expenses after Rudy started dating Nathan in 1999:
Overall travel expenses for the mayor’s office — which included a broad range of trips beyond just those involving the security detail — were clearly growing at the end of the mayor’s term, according to the city comptroller, with a 151 percent increase from the fiscal year 2000 to the 2001 fiscal year, to $618,014 from $245,896.
Some of the expense reports show that the mayor’s security detail traveled to upstate New York towns during the period in late 1999 and early 2000 when he was seeking the United States Senate seat.
However, the documents also show that only a part of the spending was incurred by Mr. Giuliani’s detail as it traveled to accompany him to many places, including Washington, where he conducted city business, and Southampton, where he raised money and where Ms. Nathan had her condominium.
Another significant portion of the money was spent on travel for police detectives who accompanied his second wife, Donna Hanover, on various trips, including several to California.
Rudy's next defense may be fuzzy math. While Rudy loves to toss out "facts and figures" to support his self-proclaimed fame as stellar mayor or policy arguments, The New York Times found that "all" of the statements reviewed were "incomplete, exaggerated or just plain wrong." Similar to Bush, Rudy will stand by his stats even after they have been clearly discredited.
Is it time for a taxpayer lawsuit? Do we have to wait for NY officials to investigate and prosecute Rudy? Maybe not. When public officials dip into public monies, taxpayers have the right to file lawsuits to prevent the waste of taxpayer funds.
New York General Municipal Law § 51 provides taxpayers with a right to file suit against public officials who waste taxpayer monies:
§ 51. Prosecution of officers for illegal acts. All officers, agents, commissioners and other persons acting, or who have acted, for and on behalf of any county, town, village or municipal corporation in this state, and each and every one of them, may be prosecuted, and an action may be maintained against them ... to prevent waste or injury to, or to restore and make good, any property, funds or estate of such county, town, village or municipal corporation....
Waste is defined in § 51 to include officers or agents of local government (e.g., county, town, village or municipal corporation) who allow or pay for any fraudulent, illegal, unjust, or inequitable claims or expenses:
In case the waste or injury complained of consists in any board, officer or agent in any county, town, village or municipal corporation, by collusion or otherwise, contracting, auditing, allowing or paying, or conniving at the contracting, audit, allowance or payment of any fraudulent, illegal, unjust or inequitable claims, demands or expenses, or any item or part thereof against or by such county, town, village or municipal corporation....
Section 51 authorizes a taxpayer lawsuit "when the acts complained of are fraudulent, or a waste of public property in the sense that they represent a use of public property or funds for entirely illegal purposes." [Resnick v. Town of Canaan (2007) 38 A.D.3d 949, 832 N.Y.S.2d 102]
The taxpayer action is based on a public official's misconduct, such as fraud, collusion, corruption or bad faith. [Lavin v. Klein (2004) 783 N.Y.S.2d 815] Last year, a NY state comptroller faced a felony charge of defrauding the government and other felonies based on his seemingly similar "use of state employees as chauffeurs and aides to his wife, a law enforcement official said, charges that could have yielded a prison sentence had he been convicted." In this case, the official paid back $83,000 to cover the driver's services because there was "no security threat to justify the use of a driver for his wife." After the Attorney General's office commenced an investigation, the official reimbursed another $90,000. This investigation found that the official used 4 state workers as not just a chauffeur, but also as a "companion, running errands and helping with her physical therapy after she had knee surgery." The final bill for fraud was $206,000.
The objective of a taxpayer lawsuit is to obtain a court judgment mandating Rudy to pay back the monies wrongfully expended on his mistress. The court "shall enforce the restitution and recovery thereof" and has the discretion to "adjudge and declare the colluding or defaulting official personally responsible therefor, and out of his property, and that of his bondsmen, if any, provide for the collection or repayment thereof, so as to indemnify and save harmless the said county, town, village or municipal corporation from a part or the whole thereof...."
Rudy may also have violated the Gift and Loan Clause of the New York State Constitution, which provides that:
"No . . . city . . . shall give or loan any money or property to or in aid of any individual, or private corporation or association . . . ; nor shall any . . . city . . . give or loan its credit to or in aid of any individual, or public or private corporation or association . . . ."
The Gift and Loan Clause "prohibits a municipality from expending money for the benefit of a private individual or concern unless the expenditure is in furtherance of a public purpose and the municipality is contractually or statutorily required to do so."
[Landmark West! v. City of New York (2005) 802 N.Y.S.2d 340]
Hard to see how having taxpayers pay for a chauffer or security for a mistress would constitute a public purpose or be statutorily permissible if it constituted fraud when similar services were provided to a public official's wife.
Some enterprising NY kossack may want to research the law and file a taxpayer suit to compel Rudy to provide restitution for "borrowing" taxpayer monies for personal services.