Suffolk County Executive Steve Levy, one of the most popular politicians on Long Island, stunned the political world Thursday by announcing he will not seek re-election in November after prosecutors raised questions about his campaign financing.

The county executive, 51, who has been in elected office nearly all his adult life, must turn over his entire $4-million campaign war chest to the district attorney's office. Last year Levy sought the Republican nomination for governor.

Thursday's announcement followed an investigation by Suffolk District Attorney Thomas Spota's Government Corruption Bureau. In a statement, Spota said his investigation revealed "serious issues with regard to fundraising and the manner in which it was conducted."

Over the past year, Newsday investigations have raised questions about Levy's campaign contributions, his financial disclosures and his wife's work for county vendors.

Levy's announcement set off a scramble for who will be his party's nominee for county executive this fall. Until recently, Levy's associates have said, he had talked about making another run for governor in three years.

"This closes the door on the one who would have most likely been [incumbent] Andrew Cuomo's next opponent," said Frank MacKay, chairman of the State and Suffolk Independent Party.

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Told officials yesterday

In midafternoon Thursday, Levy informed top Republican officials in the county, and later his Hauppauge staff. Afterward, he issued a statement announcing his decision.

"Questions have been raised concerning fundraising through my political campaign," Levy said. "Since this occurred under my watch, I accept responsibility. . . . In order to resolve these questions, I will be turning over my campaign funds to the Suffolk County district attorney."

In his own statement, Spota said, "There is no question that while the investigation revealed serious issues with regard to fundraising . . . I am confident that Mr. Levy did not personally profit. The forfeiture of his $4-million campaign fund demonstrates his acceptance of responsibility for these failings."

Spota added, "You can be assured that if I believed that his actions compromised his ability to govern, I would have sought his resignation."

He said his investigation "into Mr. Levy's conduct" has now ended. But he said an unspecified separate investigation "will continue with respect to the conduct of others." As for the $4 million, Spota said it would be distributed to those who wanted it back, but only after the November election. Anything not claimed will be donated to charity.

"I am satisfied that the actions taken by Mr. Levy resolve the investigation in the best interests of the citizens of Suffolk County," Spota said.

Levy's announcement -- and the disclosure that he had been the subject of a DA's investigation -- was an astonishing turn of events for a man who was once so popular that the last time he ran for office both parties endorsed him. His political fortunes began to change in March 2010, when Levy shocked even his own party leader by declaring his plans to leave the Democratic Party and run for governor as a Republican. Much of his war chest was raised when he was a Democrat.


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Suffolk politics altered

His decision not to run for re-election immediately changed the political landscape in Suffolk.

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"I'm stunned and speechless. . . . This just drastically changes the entire political year," said Richard Schaffer, the Suffolk Democratic chairman. "This is probably one of the most significant political things to happen in the county in a very long time."

Levy's short-lived bid for governor last year energized what had previously been seen as a lackluster race. Casting himself as a reformer, Levy vowed to "clean the place up both ethically and financially."

Questions about how he raised his money surfaced in April, when Newsday reported that Levy -- a longtime advocate of campaign finance reform -- had received $200,000 in contributions from law firms and title companies doing business with the county.

Newsday also reported that a company partly owned by Levy's longtime friend, Ethan Ellner, got more than $85,000 in county title work -- on Levy's recommendation -- even though Levy knew Ellner had been convicted of federal tax evasion, lost his law license for a year and was cited for "unconscionable trade practices" by Suffolk County consumer affairs officials.