More than $30,000 in donations scored a Manhattan real estate mogul a sitdown with Mayor de Blasio at the home of a City Hall insider later convicted of bribing cops, evidence obtained by the Daily News shows.
The evidence includes photos of de Blasio dining on May 21, 2014, with Andrew Penson, who at the time had an urgent concern about the impact of the city’s Midtown East rezoning project on the value of the land he owned beneath Grand Central Terminal.
Prosecutors scrutinized the dinner, the details of which have not been previously reported, as a key episode in their 2016 probe of de Blasio’s fund-raising practices, a source familiar with the investigation said.
The dinner was part of a pattern in which de Blasio officials solicited donations to his nonprofit Campaign for One New York from people with business before the city, the source said. De Blasio then made inquiries to relevant city agencies on behalf of those donors, prosecutors explained in 2017 when announcing they would not bring charges against Hizzoner.
De Blasio used the Campaign for One New York to advance his political agenda, including his signature policy of universal pre-K. He shut the nonprofit down in 2016.
A key element of the fund-raising pattern investigated by prosecutors, the source said, was that de Blasio would deliver a donor’s concerns to the relevant city agency knowing that the donor was not going to get what he or she wanted.
“He played the system. He was accepting money from individuals with business before the city with no intention of helping them. He’s like a slot machine that just takes your money,” the source familiar with the investigation said.
Manhattan federal prosecutors have said in court filings they chose not to pursue charges in part due to a Supreme Court ruling that redefined the elements of public corruption.
Nonetheless, the dinner shows de Blasio’s responsiveness to big-moneyed donors like Penson with business before the city. It highlights the blurred lines between campaigning and governing that alarmed the feds in 2016 and have dogged de Blasio throughout much of his administration.
Finally, the dinner puts the lie to de Blasio’s claim that he barely knew Jona Rechnitz, who arranged the meeting, and Jeremy Reichberg, who hosted the meal.
“These are stale, recycled accusations. The administration has and never will make decisions based on financial contributions,” City Hall spokesman Bill Neidhardt told The News.
Rechnitz, a star government witness, is appealing a sentence of five months behind bars and five months in home confinement for his many corruption schemes. Reichberg is serving a four-year sentence for bribing high-ranking NYPD cops.
“Throughout the administration, there was not a desire to break the law. There was a desire to look at the maximal way to operate that ended up with a lot of sloppiness,” a former de Blasio aide said.
Roughly $1 billion was at stake for landlord Penson when he contacted Rechnitz for help getting facetime with de Blasio. Rechnitz was a close ally of the mayor at the time, giving Hizzoner advice on staffing decisions and meetings to attend, emails introduced in corruption trials have shown.
The mayor’s fund-raiser at the time, Ross Offinger, told Rechnitz that Penson could get the meeting if he made a donation to the Campaign for One New York, according to the source.
Records show that on the night of the dinner, Campaign for One New York received six donations totaling $35,000, including $10,000 from Penson’s company Argent Ventures. The source said Rechnitz gathered donations from other sources to ensure Penson got his meeting. Offinger declined to comment.
Present were Reichberg, Rechnitz, Offinger, Penson and two diamond dealers Rechnitz hoped to impress, the source said.
At the conclusion of the meal, which included catered short ribs, de Blasio, Rechnitz and Penson went into a first-floor office in Reichberg’s home, the source said.
For 45 minutes, Penson briefed de Blasio on his concerns that the mayor’s city planning director, Carl Weisbrod, was wrongly freezing his company out of the lucrative rezoning of Midtown East. As the holder of valuable air rights to Grand Central, Penson believed he should have a voice in the process, the source said.
“[Penson] was very direct. He thinks Carl is acting in bad faith, there’s a corrupt bargain,” the source said.
De Blasio, the source said, replied that he trusted Weisbrod “implicitly.” But the mayor promised to call Weisbrod and discuss Penson’s concerns, the source said. The feds subpoenaed de Blasio’s phone records and confirmed he called Weisbrod after the meeting, the source said.
Prosecutors only vaguely alluded to the dinner while Rechnitz was on the stand in corruption trials involving NYPD brass and former jails union boss Norman Seabrook. Rechnitz doctored an email from de Blasio after the meeting to make it appear he was harshly scolding the mayor for not helping Penson. He then forwarded that email to Penson.
“Zowie, you got big ones,” Penson wrote back, emails introduced at trial show.
Penson did not get his way. A rival company, SL Green, benefited from the rezoning and developed the $3.3 billion, 77-story skyscraper One Vanderbilt.
That likely factored heavily in federal prosecutors’ decision not to bring charges against de Blasio, experts said.
“It’s not enough to accept money where what you’re expected to do in return is a meeting or something that doesn’t rise to an official act,” said Columbia Law School Prof. Dan Richman.
Penson was furious.
“It is shocking that a progressive city administration which was showing such promise would … bestow such an enormous subsidy on one of the richest real estate companies on the planet. But the facts speak for themselves,” Penson wrote in a September 2014 letter to Weisbrod.
He called the rezoning process an example of “crony capitalism or corporate welfare,” evidence obtained by The News shows. Penson charged in a lawsuit that the city made a $475 million giveaway to SL Green.
The source with direct knowledge of the dinner said the FBI investigated an allegation at the heart of Penson’s lawsuit: that Weisbrod improperly favored SL Green and one of its directors, John Alschuler.
SL Green, Weisbrod and Alschuler said through a spokesman they were never contacted by the FBI and denied wrongdoing. SL Green touted $220 million in infrastructure improvements as part of the One Vanderbilt project.
Penson’s lawsuit was resolved in August 2016 for an undisclosed sum. The Metropolitan Transportation Authority agreed to buy the land beneath Grand Central for $35 million in 2018. The rail hub’s air rights were sold for another development that year.
The Manhattan U.S. attorney’s office announced in 2017 it was closing the de Blasio investigation.
“In considering whether to charge individuals with serious public corruption crimes, we take into account, among other things, the high burden of proof, the clarity of existing law, any recent changes in the law, and the particular difficulty in proving criminal intent in corruption schemes where there is no evidence of personal profit. After careful deliberation, given the totality of the circumstances here and absent additional evidence, we do not intend to bring federal criminal charges against the mayor or those acting on his behalf relating to the fund-raising efforts in question,” then-Acting U.S. Attorney Joon Kim said only five days after his predecessor, Preet Bharara, was fired by President Trump.
Penson and Rechnitz declined to comment.
The meeting is an example of the type of influence-peddling by the real estate industry that came under scrutiny in the trials of top state legislative leaders Sheldon Silver and Dean Skelos, who were both convicted of bribery schemes involving real estate moguls and developers.
The sleazy, transactional conduct exemplified by the dinner is now less common in New York politics thanks to those cases and the de Blasio fund-raising probe, a Democratic strategist said.
“It’s a great example of what de Blasio often did. He would be responsive to a donor, literally bring [an issue] to whoever in government was supposed to be looking at it, but then leave it there,” the strategist said.
“He’s sloppy, he’s lazy, he plays fast and loose.”
The strategist added that the decision to take the meeting was not unique to de Blasio.
“This is what politicians for a generation did,” the strategist said.
“To say de Blasio was unique or out of the box for taking a meeting like that is just naive.”
