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Inside the Steve Levy money machine

Suffolk County Executive Steve Levy, right, marches down

Suffolk County Executive Steve Levy, right, marches down Fifth Avenue during the 2010 St. Patrick's Day parade in Manhattan. (March 17, 2010) Credit: Newsday / Alejandra Villa

Suffolk County Executive Steve Levy, a longtime advocate of campaign finance reform and candidate for governor, has gotten more than $200,000 in contributions from law firms and title companies that have received more than $7 million in county business since 2006, state and county records show.

The law firms and title companies were chosen by County Attorney Christine Malafi, a close friend and political confidante of Levy's. Since he became county executive in 2004, his administration has made changes in county procedures that have resulted in Malafi's having greater discretion in awarding millions of dollars in county business.

Levy's successful fundraising is a critical part of his appeal to Republicans since his highly publicized defection from the Democratic Party two weeks ago, when he announced his candidacy for governor. He has a $4-million campaign fund, compared with $640,000 raised as of January by his Republican challenger, former congressman Rick Lazio of Brightwaters.

Records show that three title agencies that contributed more than $73,000 to Levy secured the lion's share of county title business - nearly $1.3 million, or more than 75 percent of the county's total title business - from 2006 through 2009. One of the companies, Liberty Title, closed last year after federal authorities indicted its president, Brian H. Madden of Greenlawn, on charges of embezzling more than $4.7 million. The case is pending.

In addition to the title companies, nine law firms retained by Malafi have contributed more than $146,000 to Levy and have received more than $6 million in county business since 2006.

A 10th outside legal counsel, the Garden City firm of Berkman, Henoch, Peterson & Peddy, which has longtime Nassau Republican ties, has not contributed to Levy. It did $107,005 in county work from 2006 through 2009. Another firm, the New York firm of Putney, Twombly, Hall & Hirson, didn't contribute to Levy. It received $284,311 in legal work from the county, according to records.

Contributions reviewed by Newsday came from the law firms. These totals do not include possible contributions from individuals connected with those firms.


Levy: I don't confer on picks

In interviews, Levy said he does not confer with Malafi on selecting outside counsel, or any outside company, and rarely knows which ones are selected until after the fact. "I'm too busy for that," he said. He said there was no connection between contributions and the awarding of business.

"If a company wants to contribute, fine," he said. "If they don't, that's fine, too."

In his bid for governor, Levy has touted his reputation as a fiscal conservative and hands-on manager and has vowed to reform Albany. He relies on a close circle of advisers, among them Malafi, a longtime friend, and her husband, Democratic Suffolk County Legis. Louis D'Amaro, who is a former aide. Both Levy and Malafi said in interviews that they have never pressured anyone to contribute to Levy.

"Absolutely not. Never," Levy said.

Under state law, professional services, such as work done by law firms and title companies, are not subject to competitive bidding. While it is neither unusual nor illegal for vendors seeking municipal business to contribute to elected officials, Levy has criticized the practice and has twice proposed local laws to limit it.

In 1996, as a county legislator, he proposed banning contributions from county vendors of more than $500 to county executive candidates and more than $200 for county legislative candidates. His proposed legislation said, in part, "there exists a public perception that government contracts are often awarded on the basis of political contributions and not upon the qualifications and cost-effectiveness of the proposed contractee."

In 2006, as county executive, he proposed public financing of campaigns. Both resolutions failed.

Levy said he still supports campaign finance reform but believes it is appropriate for him to accept contributions from vendors, because "You don't unilaterally disarm." He added that he believes strongly that he is playing within the rules.

"Is Suffolk County unique where you will have lawyers contributing to countywide officials?" he said. "No. It's perfectly legal, legitimate and common throughout the state and throughout the nation."


Vendors choose not to play

The perception that contributions are a necessary part of winning county business - dubbed "pay to play" by political insiders - discourages some vendors from even seeking county business because they're not willing to contribute, said Jeffrey Koch, chairman of the political science department at SUNY Geneseo. "Competition produces the fairest outcome," he said.

Malafi's practice of selecting title companies is a sharp change from previous practice. Then, about a dozen title companies were awarded business on a rotating basis by the county's real estate division. Because insurance regulators set rates for title companies, their prices are generally the same and officials believed spreading the work around ensured fairness and faster service, according to two former county officials.

Some time after Levy appointed her county attorney, Malafi took over the job of selecting title firms, which research chain of ownership and claims on property before it is bought or sold. She said she did that because her department handles property closings for the county.

Just three companies - Advantage Title Insurance, Abstracts Inc. and Liberty Title - got nearly $1.3 million in county business from 2006 through 2009. Records show that Liberty Title contributed $31,823 to Levy in the same period. Advantage, of Huntington, contributed $18,900 to Levy; and Abstracts Inc., of Garden City, contributed $23,200 to Levy and $1,900 to D'Amaro, Malafi's husband.

Records show that seven other title companies contributed no money to Levy and got a total of $222,747 in county business over the same period.

Malafi said she was unaware of the contributions. "I've never asked a title company if they're contributing to anybody," she said. "I don't ask other elected officials whether or not they're receiving a contribution."

Levy said he leaves the selection of title companies to Malafi. But he added, "When you do spread it out, you open it up to criticism that you're spreading it around to get more contributions," he said. "You're damned if you do and damned if you don't."

Owners of Liberty Title and Abstracts Inc. did not return calls.


Gives to Dems, Republicans

Joseph Willen, president of Advantage Title, said he had known Levy for years because he had done work for him when Levy had a private law practice.

"He always said to me, 'When I was a young attorney, you were there for me,' " Willen said, adding, "He remembered the good work we did."

Willen said his firm contributes to both Democrats and Republicans and that contributing "is part of being a title company. It seems to be expected of us. That said, I support candidates I believe in."

Under the county charter, the county attorney chooses which legal firms get county business.

When Malafi was first appointed in January 2004, she sought an ethics opinion about the propriety of her awarding legal work to her former law firm, Lewis, Johs, Avallone, Aviles, which is based in Melville. Malafi, who would not release the opinion to a reporter, said it recommended that her chief deputy, Lynne Bizarro, award all legal work for two years. In January 2006, Malafi said, she took over those duties.

County comptroller records show that in that same year, payments to her former firm from the county nearly quadrupled. In 2005, the county paid the firm $81,966. In 2006, the payment jumped to $306,139. Overall, it has received more than $1.1 million in county business since 2006.

In 2006, the firm also began contributing heavily to Levy. From 2006 through 2009, the firm contributed at least $100,676 to 50 candidates statewide. However, about 40 percent of that total - or $40,200 - went just to Levy.

Previously, according to county records, the firm contributed $1,500 to Levy in 2003.

Malafi said the firm's billing was from a case it had been assigned before she became county attorney and that she had given the firm only one case last year and one case the year before.

When hiring outside counsel, Malafi said as a practice she sends her request to hire a particular law firm to the county waiver committee, which may determine that a "request for proposal," which is a process for comparing vendors' prices and qualifications, is not necessary.


Waiver committee changed

Before the Levy administration, the waiver committee consisted of three representatives, from the departments of law, purchasing and county executive. In 2006, according to records, the committee was changed, replacing earlier members with the chief deputy county executive, in consultation with other county executive staff, and a representative from the law department, when needed. County procedures were also changed to state that the county executive, through this committee, had the sole discretion to grant or deny a waiver request.

Malafi said the waiver committee always approved her requests for waivers. "Hiring lawyers, you can't do it by RFP," she said. "You hire lawyers based on their ability and their track record."

Nonetheless, in 2005, records show, the county attorney's office did use the request for proposal process to hire the law firm handling workers' compensation cases. A separate committee that reviews RFPs rated several law firms and gave the highest rating to the Carle Place law firm of Cherry, Edson & Kelly, which had handled these cases for 27 years.

Despite that rating, Malafi said the committee made a mistake in its selection, according to a transcript of a 2006 legislative hearing held after a lawyer from Cherry, Edson complained about being replaced. She said another firm was equally qualified and that Cherry, Edson was more expensive.


Partner classmate of Levy

Malafi then selected Vecchione, Vecchione & Connors, a law firm in Garden City Park. Michael Vecchione, a firm partner, is a law school classmate of Levy's. Records show the firm has contributed $12,800 to Levy and $700 to D'Amaro since 2006.

County auditors reviewed the committee's rating of Cherry, Edson and found that it was correct, according to records.

Levy said the county stopped using Cherry, Edson because he said it had been "padding their bills." Paul Siminerio, a partner at Cherry, Edson, called that "an outrageous mischaracterization" and said the firm was paid a set amount by contract. He also said it was his firm's experience, prior to Malafi, that the county awarded legal work through the request for proposal process.

Records show that Cherry, Edson has contributed to Republicans and made one $700 contribution to Levy in 2003. Asked if he thought his failure to make additional campaign contributions to Levy contributed to his losing the work, Siminerio said, "I don't doubt that there's a correlation."

Lawyers at other law firms contributing to Levy either declined to comment or said that they contributed to a variety of political candidates.

Levy said his fundraising operation is successful, in part, because of its follow-through. County employees and supporters volunteer to make calls on their lunch hour and after work to people on mailing lists, he said.

And while Levy said he rarely makes calls himself, he also said, "There are times when, as a candidate, that you have to get on the phone and dial for dollars, or you're going to be left in the dust."

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