Jun.14, 2010

A top Republican political consultant was accused on Monday of stealing $1.1 million from Mayor Michael R. Bloomberg during the campaign last year and using part of the money to buy a house.

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The consultant, John F. Haggerty Jr., 41, lied to Mr. Bloomberg and other aides by saying that he would spend the mayor’s money, which was funneled through the state Independence Party, on Election Day ballot security and poll watching last November, said Cyrus R. Vance Jr., the Manhattan district attorney.

But Mr. Haggerty, who set up a company, Special Election Operations L.L.C., to execute the Election Day plan, spent $32,000, Mr. Vance charged, and kept about $750,000 for himself. The balance of the money, $450,000, went to the Independence Party.

About $600,000, Mr. Vance said, went toward Mr. Haggerty’s purchase of his childhood home in Forest Hills Gardens, Queens. Mr. Haggerty even wrote out bogus checks from Special Election Operations, Mr. Vance charged, in an effort to cover up the crime.

“The defendant’s fraud was an audacious scheme to steal funds in order to buy a house, cynically misusing our political party process to hide what is common thievery,” Mr. Vance said at a news conference.

Of the five counts listed in the indictment — first-degree grand larceny, second-degree money laundering and three counts of falsifying business records — the first is the most serious and carries a maximum punishment of 25 years in prison. But election lawyers say that if convicted, Mr. Haggerty would most likely face a few months.

Mr. Vance also filed a civil forfeiture action against Mr. Haggerty and his company, seeking the seizure of Mr. Haggerty’s house.

The indictment culminates a politically sensitive investigation by Mr. Vance. Before the indictment, there was buzz in the political world about the unusual way that the mayor’s campaign directed the payment, using personal checks from Mr. Bloomberg rather than the campaign’s official account.

Some lawyers and political analysts say the case could prove embarrassing to the mayor, in shining an unwelcome spotlight on one of his least favorite topics: how he spends his own money.

“The mayor filed a statement with the Board of Elections that he would only make campaign expenditures through his campaign committee,” said one lawyer familiar with the case who spoke on the condition of anonymity because of the investigation. “But what might have happened here is instead of doing that, he gave personal funds to political parties to make political expenditures for him, and that could be stretching the rules.”

Mr. Vance emphasized that his office had found “no criminal misconduct” on the part of the mayor or his campaign.

But he added that a grand jury was reviewing evidence, and suggested that such evidence might pertain to the Independence Party. A lawyer for the party, under order from a judge, is expected to testify on Thursday before a grand jury.

When Mr. Vance was asked on Monday if the Independence Party was cooperating, he said flatly, “No.”

Asked how the mayor’s sophisticated campaign team might have been a victim of fraud, Mr. Vance hinted at the close relationship between the campaign and Mr. Haggerty, a longtime Republican activist who has worked for George E. Pataki and Jeanine F. Pirro, among other officials and candidates.

“They trusted him,” Mr. Vance said.

Mr. Haggerty pleaded not guilty Monday at his arraignment before a State Supreme Court judge, Larry R. Stephen. A lawyer representing him, Raymond R. Castello, pleaded not guilty on behalf of Special Election Operations.

Mr. Haggerty was released on his own recognizance. After the hearing, Mr. Castello told reporters that the investigation began as an inquiry into the possibility that money had been spent illegally by Mr. Haggerty.

“The indictment doesn’t show any money being spent illegally,” he said, adding that Mr. Haggerty had spent “hundreds of hours” working on ballot security issues.

Mr. Castello added: “He didn’t believe he was doing anything illegal. Mr. Haggerty has cooperated fully with the district attorney.”

Mr. Haggerty is now working on Carl Paladino’s campaign for governor.

Mr. Paladino’s campaign manager, Michael Caputo, said Mr. Haggerty would remain on the team, calling him “a loyal and straightforward man of character.”