Archive for the ‘Ethics’ Category

0Audit: Bridgeport Housing Authority rents too affordable, undercharged tenants millions since 2004

Federal auditors found the Bridgeport Housing Authority improperly set rental rates for more than 150 tenants, causing the authority to forego millions in revenue that it could have reinvested in its properties.

The U.S. Department of Housing and Urban Development Inspector General, following up on a previous report that faulted the authority for offering employees “Cadillac” health insurance, said the authority, also known as Park City Communities, has not updated its flat rent since 2004.

Since the cost of housing has risen since 2004, the authority should have updated its flat rents, according to the report released last month.

Auditors said they couldn’t precisely estimate how much revenue the authority lost, but said it was at least “millions.”

In the most recent year, the authority missed out on about $600,000 because it undercharged 161 tenants an average of $300 per month.

According to the audit, new staff at the authority are implementing its recommendations, including updated flat rents.

The report also raised two issues related to unreported conflicts of interest.

Authority officials failed to disclose an apparent conflict of interest when they contracted with a director’s family member to perform work for the authority’s federal programs. After discussing the issue, the executive director took corrective action and terminated the contract.

The authority also had a longstanding contract with an individual who later became an elected official and thus had a HUD-defined conflict of interest. However, officials did not inform HUD or obtain the required approval. After discussing the issue, authority officials agreed to request the waiver, and HUD officials indicated that they were inclined to approve a waiver for this individual to run an after-school program.

1New Democratic Party landlord gets bond commission funding for another property

The new landlord for the Connecticut Democratic Party received bond commission funds last week to renovate a different property totaling $320,000.

The Capital Region Development Authority will lend the money to 360 Main Street Associates at 3 percent interest for 20 years with a balloon payment in year three.

According to the bond commission agenda, CRDA funding will “assist in conversion of underperforming commercial space into 20 units of housing, including 16 micro units.”

The Connecticut Democratic Party recently moved to 30 Arbor Street. The property owner, 30 Arbor Street LLC, is controlled by Carlos Mouta, according to the Secretary of the State’s online database.

Mouta also controls 360 Main Street Associates according to the same database.

On May 23, according to party filings with the Federal Elections Commission, the Democrats paid $1,420 to 30 Arbor Street LLC for rent.

On June 12, the party made two rent payments to the same entity: $2,334.75 and $994.

0Election regulator says contractor donations to state parties can be “problematic”

New legal advice from the agency that regulates Connecticut elections suggests that state contractors using a common workaround to give money to state political parties could be violating the law in certain scenarios.

Previous advice from the State Elections Enforcement Commission, in the form of an opinion of counsel provided to the Connecticut Democratic Party in 2007, suggested the party “expressly state that it is soliciting funds only for its federal account,” with the word “federal” underlined, “to avoid the appearance of violating the ban against soliciting prohibited contributions.”

New advice issued earlier this month outlines an even more cautious view from the agency suggesting some prominent examples of executives of companies with close ties to the state, including Northeast Utilities CEO Thomas May, may have violated state campaign finance laws by donating to the Democratic Party’s federal account with the intent of supporting candidates for state office.

May’s solicitation, first reported by The Courant, asked his employees to give to the party’s federal account and “to join me in financially supporting Connecticut’s Governor Dannel P. Malloy.”

State parties are allowed to keep two separate accounts, one to support candidates for state and local office and another for federal candidates.

The ethics and contracting reforms enacted following the resignation and imprisonment of former Gov. John Rowland made it illegal for state contractors to donate to candidates.

The state contractor ban also prevents them from contributing to a party’s state account. The ban does not apply to candidates for federal office or to a party’s federal account.

Parties are allowed to transfer funds from their federal account to the state account, using the national party as an intermediary, and then to provide direct support for candidates for state office, significantly weakening the ban and obscuring the connections between contractors and the politicians they support.

Even without directly transferring funds, the party accounts are accounting devices with little practical distinction. Parties pay some of their employees with money from both accounts. If an employee paid partially by each account solicits a state contractor to donate to the party, which account is doing the solicitation?

In a July 2, 2014, opinion of counsel, SEEC’s lowest level of legal advice, the agency expanded on its previous advice to the Democratic Party, this time to the principal of a state contractor, William Ducci. According to the Federal Elections Commission website, Ducci has donated to a number of Republican candidates for federal office.

“The short answer to your question is that Connecticut law does not prevent a Connecticut state contractor from contributing to the federal account of the state party committee, to the maximum extent allowed by federal law,” wrote Shannon Clark Kief, SEEC’s legal compliance director. “There would be scenarios where such a contribution would be problematic, for example, if the contribution was solicited for the benefit of Connecticut (non-federal) candidates and that money was later used to make expenditures for that purpose.”

“Such expenditures, if coordinated with the state party committee’s state account, might be considered disguised contributions from the state contractor to the state party committee’s state account. Such contributions would be impermissible for a state contractor to make,” Clark Kief continued. “It is illegal for any person to, directly or indirectly, pay, give, contribute or promise any money or other valuable thing to defray the cost of any campaign or election to any committee, other than to a campaign treasurer. If the contribution was made to the federal account of the state party to defray the cost of a Connecticut candidate’s campaign, that too would be impermissible.”

SEEC spokesman Joshua Foley said “the basic answers are the same” although the law has changed in the time between the two opinions. “It’s more nuanced,” Foley said. “Our thinking on it, I guess, got more refined.”

Ducci, of Ducci Electrical, asked SEEC whether he could contribute to a state party’s federal account without negatively affecting his company’s state contracts.

“Frankly, after waiting all these months, I am very disappointed,” Ducci said. “I asked a very specific question as to whether or not I could contribute, and what I received was a five page ‘Opinion of Counsel.’ What I had hoped for was an answer to my question.”

“The opinion includes several different vague and highly subjective caveats, including who solicited the contribution, what purpose it was solicited for, what the money is ultimately spent on, and which political candidate the money ultimately goes to help, any one of which could make the contribution illegal,” Ducci said. “Bear in mind that most if not all of these are out of my control.”

”I’m not a lawyer, I’m a contractor.  I was trying to do the right thing by asking for a straight answer before making a contribution, but I can’t seem to get one,” Ducci said.

Because of the ambiguity, Ducci said, contractors might get away with giving to the party in power, “but it sure sounds pretty threatening if you are contributing to the other camp.”’

Donors to the Democratic Party’s federal account include:

Employees of companies involved in a joint venture selected by the Department of Transportation to manage a $500 million development in Stamford gave nearly $100,000 since DOT made the decision.

A former Republican-party donor gave almost $6,000 since the election of Gov. Dannel Malloy in 2010, while one of his companies received $4.3 million from the state bond commission and another got $18.2 million of contracts and subcontracts from DOT since 2011.

Two employees of Mystic Aquarium, a beneficiary of state funding, donated $6,000 in January, as have First Five companies, developers of affordable housing and other companies receiving state assistance.

Employees of another DOT contractor, HAKS Engineers, gave $45,000 in November possibly at a fundraiser attended by Malloy and have continued to give this year.

0Two medical marijuana providers dispense cash to Democrats

Last month, state officials announced the six companies selected to dispense medical marijuana across the state and already two companies have made donations to the Connecticut Democratic Party’s federal account.

Federal accounts allows state contractors and regulated businesses to contribute to state parties without violating the ban on their donations.

Angelo DeFazio, a pharmacist and entrepreneur, gave $9,750 at the end of April, topping off a previous donation of $250 to reach the annual maximum. A company of his, Hartford-based Arrow Alternative Care, received one of the six dispensary licenses.

Massachusetts resident John Glowik Jr., owner of the South Windsor licensee, Prime Wellness of Connecticut, gave $2,500, as did John Glowik III.

A Glowik company in Massachusetts had applied for a license there, but did not receive a provisional one.

0Community college president fined for ethics violations

The president of Norwalk Community College paid a $3,000 fine to settle allegations he violated the state’s ethics code by using his college’s foundation to pay for his wife to join him at four events.

David Levinson, who is also the vice president for community colleges for the Board of Regents, used $635 of Norwalk Community College Foundation funds to pay for the events.

According to CTSunlight, Levinson earned $273,491 in 2013.

In addition to the fine, Levinson repaid the cost of the events plus $113 in interest.

According to Levinson, the spending was legitimate. He paid the fine and signed a consent agreement to avoid “lengthy and costly legal proceedings.”

“The use of funds was with the Norwalk Community College Foundation’s full authorization and knowledge and there was no intent to subvert or violate the law,” Levinson said.

“At issue are changes in the Foundation accounts that now require obtaining permission from the state prior to disbursement. All of the funds were returned, with interest, as soon as we were made aware of a potential violation,” he said. “There will be no further reliance on the foundation to fund these activities.”

The Office of State Ethics said Levinson used his public office to obtain financial gain for his spouse and failed to follow the procedures for dealing with potential conflicts of interest.

“State funds, even those derived from grants from private donors, may not be used to pay for spouse’s expenses,” said OSE Executive Director Carol Carson.

The foundation’s board president, Eleanor Riemer, wrote a statement of support for Levinson. “To the extent your wife’s participation in any event resulted in a violation of the state ethics code, we are confident any such violation was inadvertent and unintentional,” Riemer said.

0Carla’s Pasta founder gets return on political donations

Carla Squatrito, founder of Carla’s Pasta in South Windsor, gave $1,000 to the Connecticut Democratic Party last month, following up on another $1,000 donation in November.

Squatrito is a regular contributor to Democratic candidates and political action committees, giving $48,150 since 1999, according to the Federal Elections Commission. She made state-level contributions as recently as 2011, but as a recipient of state funds can no longer do so. Her recent donations to the state party went to its federal account.

The federal account allows state contractors and recipients of state funds to avoid the ban on their political donations.

Last year, the Department of Economic and Community Development awarded Carla’s Pasta a $4 million forgivable loan to fund an expansion project.

In 2012, Carla’s Pasta received a $2.2 million loan and $750,000 grant from the state to install a fuel cell.

“In Connecticut, the government works,” company vice president Sergio Squatrito told CT News Junkie when Gov. Dannel Malloy visited the new fuel cell. “Too many times businesses don’t step up and say ‘without the government this would not be happening.’”

1Gilbane grows state business, execs give back to Dems

Executives with the construction firm and state contractor Gilbane Building Co. donated $3,750 to the Connecticut Democratic Party’s federal account last month.

A party’s federal account can accept donations from any U.S. citizen including banned state contractors, making the state-level prohibition on their contributions moot.

Providence-based Gilbane has seen a growing amount of state business in recent years. According to the legislature’s transparency website, the state paid Gilbane about $900,000 in 2010, $1.5 million in 2011, $12.5 million in 2012 and $37.4 million in 2013.

The company is also part of the Stamford Manhattan Development Ventures. DOT selected the SMDV joint venture as preferred developer last year on a redevelopment project expected to cost half a billion dollars.

Although DOT selected SMDV, the agency has not announced a contract with the joint venture. The SMDV partners are JHM Group, Ciminelli Real Estate Corporation, ECCO III Enterprises and Gilbane.

Employees of the SMDV partners have been generously donating to the Democratic Party’s federal account.

 Weeks after DOT selected SMDV, John McClutchy Jr. of the JHM Group gave a $10,000 contribution to the state party. His wife and son each gave $10,000 as well.

– In November, employees of Buffalo-based joint-venture members gave another $27,500.

– In December, employees of SMDV partners contributed $32,500.

The contributions of Gilbane employees bring the running total to $93,750 since the announcement of preferred developer status.

Gilbane is also working on the $135 million Jackson Laboratory for Genomic Medicine in Farmington paid for with a forgivable state loan.

The state’s list of banned contractors does not include SMDV even though its principals are banned from making state-level political contributions.

2Connecticut insurance exchange hired marketing company for ‘legislative communications strategy’

Access Health CT, the health-insurance exchange implementing Obamacare in Connecticut, paid a marketing firm millions in part to “engage key legislators” but contends the agreement does not violate a ban on lobbying by quasi-public state agencies.

The original $7.2 million agreement with marketing consultant Pappas MacDonnell included $59,900 for a “legislative communications strategy.”

“The quick answer is, NO they do NOT do any lobbing for us, they are a Marketing Firm only,” said Kathleen Tallarita, spokeswoman for Access Health and a former state representative.

State agencies, including quasi-publics, are not allowed to hire lobbyists.

The agreement describes the goal of legislative communications:

“To establish Access Health CT as the marketplace for quality, affordable health insurance in Connecticut, Pappas MacDonnell will immediately engage key legislators to ensure that they understand what Access Health CT is, how it functions, its impact on Connecticut’s health insurance marketplace, and the potential implications of legislative action (or inaction) in the upcoming sessions.”

Connecticut law defines lobbying, with a few exceptions, as:

“communicating directly or soliciting others to communicate with any official or his staff in the legislative or executive branch of government or in a quasi-public agency, for the purpose of influencing any legislative or administrative action.”

Pappas designated its subcontractor, public affairs and lobbying firm Grossman Heinz, to work on the legislative strategy listing three individuals – all billing $300 an hour – Andrew Grossman, Chris Heinz and Lynn Pincus.

The agreement lists “legislation” in a description of the duties of two project managers: Logan Kelly ($75 per hour) and Quynh Tran ($60 per hour).

“As a secondary objective Pappas MacDonnell will also seek out legislators’ input on consumer outreach and Navigator programs to get their buy-in to aid in the coordinated consumer outreach process,” the agreement says.

Access Health agreed to pay Pappas another $10.3 million under an October 2013 addendum that does not mention legislative communications for a total payment of $17.5 million. According to Tallarita, the payments to Pappas include the cost of advertisements purchased by the firm on behalf of Access Health.

Separately, Access Health hired Global Strategy Group to handle public relations.

The Connecticut Health Investigative Team reported earlier this year that Access Health, considered one of the more successful state-based exchanges, spent $156.3 million to start up.

Access Health also paid Pappas $1,650 each for two “CEO messages.” The contract originally called for 15 such messages – totaling $24,750 – but Tallarita said the exchange only sent out two.

Access Health also paid three artists $24,980 each to paint murals.

0Democratic Party collects February donations from ESPN and Blue Sky Studios

The Connecticut Democratic Party continued to legally collect donations from state contractors using its federal account in February, according to the most recent Federal Elections Commission filing, raising a little more than $133,000 from all sources.

Six ESPN employees contributed $500 each for a total of $3,000. ESPN is a First Five company.

The Walt Disney Productions Employees PAC also contributed $5,000. Disney owns ESPN.

Joseph Carabetta, of Carabetta Management, gave $2,500 on Feb. 3.

On Feb. 28, the State Bond Commission approved a $2.5 million loan for renovation of 4-40 Vine Street Housing, a property managed by Carabetta. The loan is for 30 years at 1 percent interest.

Three employees of Blue Sky Studios contributed a total of $4,000. Blue Sky and ESPN have benefitted from Connecticut’s film tax credits. Blue Sky also received a $3 million state loan in 2011.

Kevin Segalla, founder of the Connecticut Film Center and CFC Capital, donated $5,000.

The latest report from the Republican Party is not available yet.

1GOP donor switches to Dems after Malloy election, bond commission approves $6 million in state support

Abul Islam was a generous donor to the Connecticut Republican Party – until the state elected a Democratic governor.

Islam, as the principal of a state contractor, can only give to the federal accounts of either party. A party’s federal account cannot benefit candidates for state office like a governor. Instead, they support candidates for U.S. Congress, Senate or President.

According to the Federal Elections Commission, Islam gave $350 to Democrats in April 2004, the first of his donations in the agency’s online database. At the time, then-Gov. John Rowland was facing the corruption scandal that led ultimately to his resignation and guilty plea to federal charges.

In 2008 and again in 2009, while the Republican M. Jodi Rell was governor, Islam gave $10,000 to the Connecticut Republican Party.

On Oct. 29, 2010, he gave another $2,500.

Days later, on Nov. 2, 2010, Connecticut elected Dannel Malloy, a Democrat, to be its next governor.

On the last day of 2010, before Malloy was inaugurated, Islam gave $2,500 to the Democratic Party. He followed that up with another $925 in 2011 and $2,500 more on Election Day 2012.

Islam said Malloy’s election is why he started giving to the Democratic Party and stopping giving to the Republican Party.

“I have been a longtime supporter of Dannel Malloy from his days as Mayor of Stamford,” Islam said.

Asked if he knew the federal account couldn’t benefit Malloy, Islam said, “Yes, I know that but I have been a supporter and a friend of Congressman John Larson for years, too.”

One of Islam’s companies, AI Engineers, has done about $18.2 million of work for the Department of Transportation since January 2011, including subcontracts, according to an agency spokesman.

AI Engineers did about $100,000 in business with the University of Connecticut in 2013, according to the state’s transparency website. In 2010, the company did a smaller amount of work for the UConn Health Center.

Last month, the state bond commission approved assistance for another company run by Islam, TAROB, including a $2.5 million 2 percent loan and a $1.8 million equity investment, to develop Residences at Riverview at 3 Constitution Plaza in Hartford.

The project will include 48 rental units and 20,000 square feet of commercial space.

The Capital Region Development Authority is providing the assistance to TAROB. Payments on the loan are deferred for six years.

The bond commission also approved $8.9 million for the Westport Housing Authority’s Sasco Creek Apartments. That property is managed by Millenium Real Estate. Bruce Whitaker Jr., Millennium’s owner, gave $5,000 to the Democratic Party’s federal account in November.