Stewart Staffers Indicted for Embezzling
U.S. Attorney says $147,000 of taxpayer money went into aides' pockets
The U.S. Attorney for the Southern District of New York unsealed an indictment for two staffers to Council Member Kendall Stewart (D-Brooklyn) for embezzling $147,000 of discretionary funds.
Stewart’s chief of staff, Asquith Reid, and staffer Joycinth Anderson, used a non-profit called The Donna Reid Memorial Education Fund, to siphon $31,000 to friends and relatives in Jamaica through Western Union wire transfers. Part of the embezzled money was used on behalf of Stewart, such as $3,000 for campaign literature and $18,000 for a hall used by a political club controlled by the council member. The nonprofit has received $356,000 in discretionary funds since 2005.
Reid received the bulk of the stolen money, $93,000, by asking two co-conspirators and Anderson to cash checks issued by the Donna Reid Fund, which received its funding directly from the City of New York’s bank account.
Reid started the nonprofit in memory of his young daughter who died of cancer.
As of this afternoon, the two aides will be terminated, according to Stewart’s press liaison Michael Roberts.
While some of the $356,000 in discretionary funds was used for legitimate purposes, the indictment claims that the nonprofit, which was to provide educational assistance to public school students, was a mere channel to funnel money to Reid and Anderson.
During a press conference at U.S. Attorney for the Southern District of New York Michael J. Garcia’s office, Garcia said the staffers loyalty should have been to the city’s taxpayers.
“They were driven by greed,” Garcia said. “Because the system lacked controls and accountability, they got a way with their criminal activities until today.”
In a statement, Stewart claimed that neither he nor his office had any involvement or knowledge about the embezzlement.
“While I believe in the presumption of innocent until proven guilty I must say that I’m deeply disappointed over the allegations leveled at Mr. Reid and the embarrassment that this actions – right or wrong – have caused me, my hardworking staff and the people of my district,” Stewart said in the statement.
Stewart, who is leaving office in 2009 due to term limits, is planning a primary battle against state Sen. Kevin Parker (D-Brooklyn) later this year.
The embezzlement stemmed from the controversial act -- which dates back to 2003 -- of allocating millions of dollars in discretionary funds to “holding codes” in the name of fictitious nonprofits. In the case of the Donna Reid Fund, the money was allotted to two fake nonprofits called the New York Foundation for Community Development and American Association of Concerned Veterans. Once the budget passed, the money in the holding codes was distributed to real nonprofits such as the Donna Reid Fund.
As is protocol to receive allotted discretionary funds, the nonprofit applied to the New York City Department for the Aging (DFTA). The DFTA rejected the application due to a conflict of interest because the nonprofit’s address was also Reid’s residence. The nonprofit then applied through the Department of Youth and Community Development, which approved the application.
The staffers are also charged with two counts of witness tampering in January and February of this year, in which Reid directed a subpoenaed witness to lie about working for the Donna Reid Fund and the financial transactions.
Both staffers are charged with mail fraud conspiracy and money laundering conspiracy. Anderson faces 40 years in convicted. Reid faces a maximum of 80 years.
Stewart’s chief of staff, Asquith Reid, and staffer Joycinth Anderson, used a non-profit called The Donna Reid Memorial Education Fund, to siphon $31,000 to friends and relatives in Jamaica through Western Union wire transfers. Part of the embezzled money was used on behalf of Stewart, such as $3,000 for campaign literature and $18,000 for a hall used by a political club controlled by the council member. The nonprofit has received $356,000 in discretionary funds since 2005.
Reid received the bulk of the stolen money, $93,000, by asking two co-conspirators and Anderson to cash checks issued by the Donna Reid Fund, which received its funding directly from the City of New York’s bank account.
Reid started the nonprofit in memory of his young daughter who died of cancer.
As of this afternoon, the two aides will be terminated, according to Stewart’s press liaison Michael Roberts.
While some of the $356,000 in discretionary funds was used for legitimate purposes, the indictment claims that the nonprofit, which was to provide educational assistance to public school students, was a mere channel to funnel money to Reid and Anderson.
During a press conference at U.S. Attorney for the Southern District of New York Michael J. Garcia’s office, Garcia said the staffers loyalty should have been to the city’s taxpayers.
“They were driven by greed,” Garcia said. “Because the system lacked controls and accountability, they got a way with their criminal activities until today.”
In a statement, Stewart claimed that neither he nor his office had any involvement or knowledge about the embezzlement.
“While I believe in the presumption of innocent until proven guilty I must say that I’m deeply disappointed over the allegations leveled at Mr. Reid and the embarrassment that this actions – right or wrong – have caused me, my hardworking staff and the people of my district,” Stewart said in the statement.
Stewart, who is leaving office in 2009 due to term limits, is planning a primary battle against state Sen. Kevin Parker (D-Brooklyn) later this year.
The embezzlement stemmed from the controversial act -- which dates back to 2003 -- of allocating millions of dollars in discretionary funds to “holding codes” in the name of fictitious nonprofits. In the case of the Donna Reid Fund, the money was allotted to two fake nonprofits called the New York Foundation for Community Development and American Association of Concerned Veterans. Once the budget passed, the money in the holding codes was distributed to real nonprofits such as the Donna Reid Fund.
As is protocol to receive allotted discretionary funds, the nonprofit applied to the New York City Department for the Aging (DFTA). The DFTA rejected the application due to a conflict of interest because the nonprofit’s address was also Reid’s residence. The nonprofit then applied through the Department of Youth and Community Development, which approved the application.
The staffers are also charged with two counts of witness tampering in January and February of this year, in which Reid directed a subpoenaed witness to lie about working for the Donna Reid Fund and the financial transactions.
Both staffers are charged with mail fraud conspiracy and money laundering conspiracy. Anderson faces 40 years in convicted. Reid faces a maximum of 80 years.
