April 24, 08

NEWS / CHIEF OF STAFF OF NEW YORK CITY COUNCIL MEMBER, AND ANOTHER STAFFER, INDICTED FOR EMBEZZLING $145,0

MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, and ROSE GILL HEARN, the
Commissioner of the New York City Department of Investigation,
announced today the unsealing of an Indictment charging ASQUITH
REID, Chief of Staff to a New York City Council Member (the
"Council Member"), and JOYCINTH ANDERSON, a/k/a "Sue," a staffer
of the Council Member, with embezzling at least $145,000 in New
York City Council discretionary funds. According to the
Indictment unsealed in Manhattan federal court:
New York City Council Discretionary Funds
The New York City Council (the "Council") has allocated
millions of dollars annually in funds to certain non-profit
organizations, purportedly for the public benefit. Public
expenditures made as a result of such allocations are referred to
as "discretionary funds," with elected members of the Council
having broad discretion to designate the non-profits eligible to
receive such funds. After the budget was passed each year, since
at least 2003, the Council identified the non-profits receiving
discretionary funds in Schedule C to the budget.
Each Council member controls a certain portion of the
discretionary funds for designation to non-profit organizations,
and Council members designate various non-profits to receive
their allotted funds. Non-profits are then required to apply
through an intermediary, often a New York City agency, for actual
disbursement of the funds. In addition to the discretionary
funds distributed at the time of the annual budget, since at
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least 2003, millions of dollars worth of additional discretionary
funds have been allocated to "holding codes" in the names of
fictitious non-profits. After the passage of the budget, each
year since at least 2003, the funds in the holding codes have
been distributed to various non-profits associated with various
Council members.
Since at least April 2005, in his role as Chief of
Staff to the Council Member, REID has been the contact person for
the Council Member’s requests for discretionary funds.
The Donna Reid Memorial Education Fund
The Donna Reid Memorial Education Fund (the "Donna Reid
Fund") is a non-profit organization in the State of New York. At
the time it was founded, the Donna Reid Fund’s mission was "to
provide educational assistance to public school children by way
of after school tutoring in various topics, and to provide
assistance to various Parent Teacher Associations of public
schools by assisting them in the establishment of educational
programs for children."
Since April 2005, the Council Member has allocated
approximately $356,000 in discretionary funds to the Donna Reid
Fund. During this time period, discretionary funds allocated by
the Council Member have constituted more than three-quarters of
the Donna Reid Fund’s total income.
In June 2004, the Council Member first designated the
Donna Reid Fund as a recipient of discretionary funds. In
August 2004, the Donna Reid Fund applied for the funds through
the New York City Department for the Aging ("DFTA"). DFTA
employees rejected the application, however, finding an improper
conflict of interest based on the fact that the address reported
for the Donna Reid Fund was the residence of REID, the Council
Member’s Chief of Staff.
In November 2004, after DFTA rejected the Donna Reid
Fund’s initial application, the Donna Reid Fund applied for the
discretionary funds through the New York City Department of Youth
and Community Development ("DYCD"). DYCD employees approved the
Donna Reid Fund’s application. Since November 2004, DYCD has
disbursed approximately $356,000 in discretionary funds to the
Donna Reid Fund. Nearly all the funds have been wire-transferred
from City of New York’s bank account to the Donna Reid Fund’s
bank account in New York, New York.
In March 2007, the New York City Council’s Division of
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Finance directed that approximately $14,000 in discretionary
funds, which had been initially allocated to holding codes in the
names of two fictitious non-profits -- New York Foundation for
Community Development and American Association of Concerned
Veterans -- be re-allocated to the Donna Reid Fund. These funds
were ultimately wire transferred from the City of New York’s bank
account to the Donna Reid Fund’s bank account in New York, New
York.
The Embezzlement Scheme
Since April 2005, while some portion of the
approximately $356,000 in discretionary funds provided to the
Donna Reid Fund appears to have been used for legitimate
purposes, REID, aided by ANDERSON and other criminal associates,
has allegedly embezzled at least $145,000 of the funds. REID
embezzled the money in a variety of ways, including, but not
limited to, requesting two co-conspirators and ANDERSON to cash
approximately $93,000 in checks issued by the Donna Reid Fund,
and sending approximately $31,000 in Donna Reid Fund monies to
individuals, including family members and friends, in Jamaica via
Western Union wire transfers. He also spent approximately
$18,000 on a hall used for events for a political club controlled
by the Council Member, and more than $3,000 on campaign
literature for the Council Member.
The Indictment charges REID and ANDERSON each with mail
fraud conspiracy and money laundering conspiracy. They each face
a maximum sentence of 20 years in prison on each of these charges
if convicted.
In addition, the Indictment charges REID with two
counts of witness tampering for allegedly directing two
witnesses, who were subpoenaed to testify before a federal grand
jury, to lie about working for the Donna Reid Fund and about
financial transactions they conducted with REID. REID faces a
maximum sentence of 20 years in prison on each of these two
charges if convicted.
In total, REID faces a maximum sentence of 80 years in
prison if convicted on the charges announced today. ANDERSON
faces a maximum sentence of 40 years in prison if convicted on
the charges. Both defendants also face: 1) a fine on the money
laundering conspiracy count of the greater of $500,000 or twice
the gross gain or loss from the offense; 2) a fine on the mail
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fraud conspiracy count of the greater of $250,000 or twice the
gross gain or loss from the offense; 3) the imposition of
restitution; and 4) the forfeiture of the proceeds of the
offenses. On each witness tampering charge, REID faces a fine of
the greater of $250,000 or twice the gross gain or loss from the
offense.
Mr. GARCIA praised the investigative work of the New
York City Department of Investigation.
The prosecution is being handled by the Office’s Public
Corruption Unit. Assistant United States Attorneys KATHERINE
LEMIRE and RUA KELLY are in charge of the prosecution.
The charges contained in the Indictment are merely
accusations, and the defendants are presumed innocent unless and
until proven guilty.
08-091
http://www.nyc.gov/html/doi/pdf/pr_reidindictment_41608.pdf