SCANNED ON 712212008

SUPREME COURT OF THE STATE OF NEW YORK

EW YORK COUNTY

PRESENT:

HON. JOAN B. LOBlS

Justice

/I...

PART 6

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MOTION SEQ. NO.

MOTION CAL. NO.

Defendant.
The following papers, numbered 1 to

a
[ ] No

were read on thls

P - ' && e/for

,

t
l d f

PAPERS NUM

Notice of Motion I Order to Show Cause -Affidavits - Exhibits Answering Affidavits - Exhibits Replying Affidavits

Jfl

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Cross-Motion:

[ ] Yes

MOTION DECIDED IN ACCORDANCE WITH ACCOMPANYING DECISION AND ORDER

Dated: Check one:

$h/Op
JOAN WLOBIS, J.S.C.

FINAL DISPOSITION

[ ] NON-FINAL DISPOSITION

For an Orcicr Convening ;I Summary Judicial Inquiry Piirsuant to New York City Charter 5 I 109
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Decision and Order

agul n Lt -

N E W YOliK CITY COUNCIL and QUINN, Spcakcr of the New York

Rcspondents.

Motion Sequence Numbers 001 and 002 are consolidated for disposiition.

111 Motion

Sequence Number 001 pcti tioncrs James Riches, Jonathan Weiss, Carmen Colon, Philip DePaolo,

Marcjucz Claxton, Peter Killen, Emmnnuel Gonzdcz, Jr., and Rafael Martinez Alequin bring this
special procccding ag;iinst respondents the New York City Councll (the City Councll) and

Christine Quiiln, the Spcakci- of tlic City Councll, lor an orcier granting tlicir rcqiiest [or ; Sumrnary I Judicial Inquiry, pursuant to Ncw York City Charter 4 1109, with respect to claims of
ai1

allcgccl

violation or neglect of duty by rcspondcnts. Respondents move lo dismiss thc pctition. In Motion Sequence Numher 002, the United Statcs moved for IC;IVC event the court wcic to gixit the petition, for
;I

to inlervene in this pi.occcdin2 atlci, in lhc

period of ninety (90) days of any

slay

101- Iriitiial an

testimony that would confer immunity on any witncss. At oral aigumcnL on Jiine 26, 3008, this U ~ L I I - I
granted the 1-cquestlor leave l o intervene, on consent of petitioner ;incl respondents

The eight petitioncrs coiiimcnced this pi-oceeding alter Ieaiiiiiig o r a practice that has been going 0 1 7 for a niinibcr of years with r-espcct lo the budget process iii New York City. On April
2, 2008, an ai-ticlc in the New Yoi-k Post repoi-tcd publicly for t l ~ c first time ihat Speaker Quiniis
d 1orls. office hid millions of taxpayer dollars by allocating y m t s to fictitious nonprofit oi-ganiz,1-

Followjiig the publicaiioii of this article, Spcnkel- Quinii held a iiew conferencc llie ncxl day. She announced that she had leanicd oftliis praclice in the spring of2007 and had ordered i t stopped. She hrtlier revealed h a t wlieii she lcarned i n the LiIl of2007 that, despite her directivc, menibcrs ofllcr finance staff were continuing the practice of using iiniiies of fictitious organiz:itioiis
LO

set aside

money, Speaker Quinn alerted investigators horn the lliiited Statcs Attorneys Office and lhc New
York City Department 01 lrivestigation (1301).

The United Slates httomcy for thc SoLitl1crri District ofNcw York m d the DOT have
been coiiducliiig investiptions siiice in or about last siiiiinicr. In October 2007, the DO1 reqiicsted that the City Council producc certaiii documcnts 1-elatcdto tlic budgeting and allocation procedurcs

with respect to City Council Expeiise Meiiibcr lniliatives. During this proccss, tlic City Council
learned that certaiii funds wcre not bcing allocated to aclual organizations, bill wcrc held in I-escrve

aiid assigiied to fictitjoLis organizations called holding codes. Tlic investigaiion l i x 1-cvealedthal
the practice o f appropriating money to iionct istent organizations ai-osc from a bookkeeping

maneuver that reportedly dates from at least 1988, whcreby holding accoiiiits or lioldiiig codes
were cstablishcd by tlic Cily Council to liecp monoy in reserve for community progi-ains 01-other

riecds that arose during a given GscaI year, Diiriiig this time, [Liiids allocated to tlic tiolding coclcs
would be reallocated and cMxirsed to various community organizations, throuyh conlracts wilh City

agencies, including tlic Department for Ihe Aging aiicl tlic Depai-tiiieiit of Youlli a11d Co~iini~iiiity Dcvclopment.

Sincc 2001, approximately $17.4 million has bccii budgeted

ill

this iiialiiicr. But,

tlicrc is no allegation that fiinds werc cvcr disbursed to aiiy fictitious organizations or improperly
disbursed li-om thcse accounts. Ilic invcstigatioii is coiilintiiiig. On April 15, 2008, a federal grand

.jury sitting in the Southern District oINew York 1-etiimedai1 indictmcnt against two staff tiicnibcrs
o f a New York City Council meiiibei- [or conspiracy to commit iiiail fraud litid conspiracy to coiniiii t
n?oiicy launde~.iiigiii connection with 311 allcgcd sclic~iie embezzle money h-om a11 actual 1miprolit to

organization, tlic Doiiiia Reid Memorial Education Fuiid, rbr whicli liinds liad bccii appi-opriatcd by
the City Council.

Petitioners seek a siimiiiaryj~idicial inquiry, claiming that this is an allegcd violation

or neglect of duty by the City Coiiiicil. Tlicy scek to hold respondents accountablc [or what they
claiiii are gross impl-oprictics that strike at the hlndation of open govemmeiit. letitioiiers seek to have current M.ayor Michael Bloombcrg, cuixiit Comptroller Williaiii Thoiiipson, Spcakcr QLiiiin,

foriii er M ayor R ud o 1p li CY i 111i an i , fo riii el-Co nip t 1-0 r A 1:in H cvcs i and fomi er C i t y Co LI n c i 1 S p e:ik ei-s 11 c
~

Gi Klbrd Millcr- and Peter Valloiie, Sr., among others, teslify at a public lieariiig. Petitioners ~
that thc allcgatioiis 1-equire a ~ u I 1 piiblic disclosure of fiick, and h a t
:i

L I C

DO1 investi~~atioii or

investigation by the Uiiitcd States Attomey serves a diKerenl plllpose and docs not tnlcc thc placc

of a suiiiiiiary judicial iiiq uii-y.

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The section of tlic City Charter that petitioners rely on provides as follows:

[a] summai-y inquiry into aiiy allcgcd violation or neglect olduty i i i relation to the propci-&y, govcrnment or d i i r s oP the city may be conducted unclcr an ordcr to hc made by m y justice of the supreme court in the first, second or clcvcnth judicial district on application of the iiiayoi-, thc coiiiptrollcr, [lie public advocate, any five council members, the commissionei- ofinvcstig;itio~ior any five citIzciis who arc taxpayers, supported by affidavit to tlic cffect that oiie 01- mure officers, employees or otlicr pcrsons tliel-ciii named liavc knowledge or iiironiiation concerning such alleged violatioii or neglecl of duty. Such inquiry shall be conducted bcibrc aiid shall be controlled by the justice making the oi-der or any otlicr justice of the suprciiic court in the same district. Suclijustice may requii-e any oCliccr or employee or any other pcrsoii to attend arid be exaiiiiiicd in relation to the sutJ.jecl of the inquiry. Any aiiswcrs given by a witness in siicli inquiiy shall not be used against such witness in any criminal proceeding, except that for all false answers 011 material points such witness shall be subject to prosecutiori for perjury. The examination sliall be reduced to writing and shall he filed in the orrice oftlic clerk of such county witliiii tlic first, second or eleventh judicial district as tlie justice may direct, and sliall be a public rccord.

New Yoi-k City Charter

1109. The City Council opposes tlic petition and

IIIOVCS

lo dismiss,

challengiiig the constitulionality olthc section, hotli on its f x c and as applied, The City Council

also disputes tlie propriety of utilizing this provision under thc Iactual circumstances presentcd here.

hi Matter of Green v. Gi~lliani, I57 M i x . 2d 138 (Sup. C1. N.Y, 3000), thcrlCo.
Public Advocate Mark Green brouglit a petition pursuant to 8 1109 for summary judicial inquiry as

to liow then-Mayor R~idolpli Giiiliaiii obtaincd tlic sealed juvenile and criminal records of Iatriclc Dorisiiioiid, who had been shot by :i New Yorli Cjtypolicc officer. Tlieiiiquiry was sought inlo how tlic Mayor obtair~ed information that IIC mnde public; wlietlicr tlic infoimatiou was fi-om scaled tlic
records; aiid, wlietlicr the release was madc without regard to tlic statutory protection ofsuch i-ccords
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froni disclosure. Respondent Mayor of the City of-New York tiiovcd to dismiss the pctitioii in lhal

case on siiiiilar grounds to thosc asserted herein, namely, that tj 1 109 was unconstitiitioiinl, hoth 011
ils face and as applied; that the dispute does not fill1 within the scopc of an inquiry iiildcr $ 1 109 because it does not coiiceim municipal convption or closelyrelated matters; that tlic underlying hcts arc undisputed and have been publicly addressed, and do iiot warrant a n inquiry; and, that the dispiite is primal-ilypolitical and an additional factual inquiry woLild constitute a wastc ofjudicial and public
reso~irces.The Hoiioi-able Louise Gruner Gans found that

5 I 109 was constitutional both 011 its race

and as applied; that

1109 does not apply only to allegatio~isof acts of coi-ruption and

WCI'C 1 0 1

iiiisapplication of City funds; and, h a t although there

questions of fact as t(o whctlier

1-1roi-iiiation made piiblic, ; summar-y inquiry would not be an inappropriate w x t t : was I

liespoiidents makc tlic idciitical argwneiits here. In addition, respondents also argue that a suiiiiiiary inquiry woLild likely h s t r a t c any criniiiial investigation concerning the rcscrvation

of f-iiiids to fictitious organizations, poiiitiiig to thc provision in tj 1 I09 [or a blaiiket gi-anting of
ininiunily for all testiiiiony in tlic iiiquiry. This argument, howcvcr, is more appi-opnatcly addressed

to the IJnited Slates reqitcst Ibr a stay, rather than the questioil of thc propriety of-holding of the

suiiirnary inquiry in he first inst ancc.

This court need iiot rcach the issiie of- whether or nol a stay is ~-cquired becausc

summary iiiqiiiiy is 1101wanaii~ed ur~dcl- nature of the allcgatioiis in the pe~ition.The siiiiimai-y tlic inquiryprovided for under

3 I109 was described by thc Appellate Division in Mitcliel v. CI-O~SCY,

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177 A.D.663, 670 (2d Dept 1917) its ii proceeding intended

to expose the acts of corruption and raids on the city treasury, then believed to be prevnleiit, and obviously riot to investigate the I propriety and wisdom of qiicstions of ; Icgislativc nature pending for deteniiinatioii 01- action. Tlic woiding of the act is apt for this purposc. The examin;ition is c o n f i d lo alleged (i.e. allcged i n lhe affidavit on which the order. is h s c d ) wrongful diversion or misapplication of any moneys or f i i n c i , or any violation of the provisions of law, 01- any dclinqiicncy to~ichingthe office or thc dischargc 01 ncglcct of duty. To hring this cast: within the act lhe affidavit must show these existing facts.

177 A.D. at 670

In the years AIer Mitchel, the langiiage of the Chartcr was changed to the present

language of any allegcd violation or neglect of duty in irelation to tlic property, goveiument or.

affdirs 0 1 the city. Pcti tioncrs q i i c that this Innguage broadens the scope of the provision so that
juclicial iriquiry is not limitcd to only 1nst;inces o f illegality. Petitioncrs asscrt t h a t the languase broadened the application of a suinmaryjudicial inc1iiii.y heyond Mitchels liriiitcd application of thc
section 10 circumstances conceining acts of coil-uption a n d inisapplication of New York C:i ty funds.

WhiIc fur-thel-ingtransparency in the budget proccss is ;I laudable goal, I do not h i d

forthat thc facts herein rise to the conduct 1-cquii-cd invocalion of this Ch:li-ter seclion. In thc years

sincc Mi tchel was decided and the Charter was ~iinended,other courts t h a t considcrcd the appropriatcncss of
:i

1 109 sui-ninary inquiry 1-ccognizcd that the sole legislativc p ~ r p o i n ethe ~

eiiactmcnt of section 1 109 was to bring acts of corruption to tlic publics attenlion by an investigation that thereafter shall be a public rccord, In 1.e Moskowitz (Lindsay), N.Y.l,..I., JiiIy 7, 1970, at I O ,

col. G T (Sup. Ct. N.Y. Co. 1970), ciiroting M.attcr of GI-eenfielciv. Ouill, 189 Misc. 91 (Sup. Ct.
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Kings Co. 1946). Where [tlliere is in fact no dispute as to tlic material fiicts . . . no need is shown
for a summaiy inquiry as contcinplatcd by [ $ 1 1091. I.arIiii1 v. Booth, 33 A.D.2d 542 (1st Ucpt

1969),

m,MattcrofT.arkiri, 5 8 Misc. 2d 206 (Sup. Ct. N,Y. 1968) (where, as here, the [acts Co.
SCI-VC 1 0 puiposc.). 1

arc uiidisputcd, ail inquiry would

In papers in response to the application ol- the United States for 3 slay, pelitioiiei-s counsel states that tlic puq3osc o r a suiiimary iiiquiry is to give citizen tax-payers a r-emedy ofpublic iii1onnation, eiiabliiig them to make the exer-cise 01their rights as citizens and tnx-payers more effective, and, by publicity, to concentrate the mind o f n democratic system on rncaningf-iilreform.

The matter at issue has already received sulxtantial publicity and press covci-agc. Tlic practice has
a1legedly slopped and investigations by govci-iiniciital a y i c i c s arc tinderway to hrther safeguard

the public and prcsuii~ably puiiish niiy wrongdoers. The primary purpose o r thc su~iimary inquiry,

as stated in Mitclicl, supra, is not met hcre.

Tlic dccisioii to hold a summary inquii-y is wholly discretionary, and upon a faclual review o r the allcgations, courts have denied requests on this ground. Larkin v. Booth, supra, 33

A.D.2d at 542 (holding thal the petitio11 did not prcscnt 2 propcr case for exercise of tlic discretion
ortho court to direct an inquiry.); Matter olcllv olNcw York, N.Y.L..I., Feb. 5 , 1964, at 14, col.

IF (Sup. Ct. N.Y. C h . 1904) (denying request to hold sun~nia~y inquiry into allegcd ncglcct of cityowned pier in the East Rivcr
iii

tlic cxercise of soundjiidicia.1discretion); Matler of S ~ ~ m i i i aInquiry ry

into the Use of Property ol-tlie City ofNew Yorlc (Selimiaii), 179 Misc. 505, 51 1 (Sup. C1 Bronx

Co. 1942). I holci that a summary iiiqLiiry under fj 1 100 is not wai-I-antcdhere

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Accordingly, the pctition is dciiicd aiid the proceeding is dismisscd.

111 vicw

of the

foregoing and the dismissal of the petition, the request by tlic United States for a stay (Motion

Suqucricc Nuriibcr- 002) is dcliied ns moot.

This conslilutes the decisiori, order id judgnient of the coiir1.

Dated: .luly

/b

,2008

.u
JOAN

. LOBIS, J.S.C.

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