Lower East Side Political Clubs Battle Over Campaign Finance Disclosure Rules

(Left to right) Karen Blatt and Jacob Goldman of the Truman Democratic Club and Carline Laskow; Lee Berman of Grand Street Democrats.

Karen Blatt and Jacob Goldman (left) of the Truman Democratic Club and Carline Laskow and Lee Berman (right) of Grand Street Democrats.

It’s easy to tell from the campaign flyers likely littering your front doorway that election day in New York City is almost here. The Democratic Primary takes place tomorrow, Tuesday, for mayor, City Council and other local offices. If you live on Grand Street, you have probably received lots of campaign propaganda for an obscure hyperlocal race — that of district leader in the 65th Assembly District, Part A.

District leaders are elected party officials — volunteers who serve as conduits between constituents and higher ranking office holders, help run polling sites and play a part in judicial elections. Part A in the 65th AD covers the Grand Street Cooperatives and a few other buildings in the immediate area. The incumbents are Karen Blatt and Jacob Goldman of the Truman Democratic Club. For the first time since anyone can remember, the Truman Club faces a contested election this year. Blatt and Goldman are being challenged by Caroline Laskow and Lee Berman, two Lower East Side residents who have formed a new club called Grand Street Democrats.

The contentious campaign found its way onto the pages of the New York Post this past summer after a local activist with Grand Street Democrats filed a complaint with the State Board of Elections, asserting that the Truman Club has, “not registered with the state and has not submitted financial disclosure statements for at least 18 years.” The Post seized on the complaint in the most local of all races for one reason, noting that the club “for years served as the home base for disgraced former Assembly Speaker Sheldon Silver.”

In recent days, we have been talking with some of the key players on both sides about the campaign finance issue and have checked with election law attorneys. Here’s what we found:

The complaint was sent by Jeremy Sherber to the enforcement division of the State Board of Elections on July 18. Sherber wrote, “We ask that you immediately investigate the situation and seek disclosure reports not only for the current year but also for their many years of political activity.” Sherber ran a search of the state’s campaign finance database, which turned up $84,000 in donations from political committees to the Truman Club during the past couple of decades. He found another $7,000 in donations in New York City campaign records.

Sherber noted that neither Blatt nor Goldman had individually filed campaign finance statements. Pointing out that campaign committees are not required to disclose these types of expenditures, Sherber wrote, “Counting individual and corporate contributions that do not appear in the database, the Truman Club is likely hiding hundreds of thousands of dollars… Voters have the right to know who is supporting political activity in our neighborhood, and how that money is being spent.”

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We contacted the State Board of Elections to find out if an investigation is ongoing. A spokesperson replied, “The Enforcement Counsel, Risa Sugarman, has no comment with regard to the investigation.  She generally does not comment on any investigation or complaint.” The spokesperson referred us to a section of the Campaign Finance Handbook that covers reporting by political clubs. According to the manual, “When a political club raises or expends funds in connection with an election it is most likely obligated to register and make disclosures.” It also spells out “activity not triggering registration and disclosure requirements.”

Three election lawyers we consulted offered their interpretations of the law. A leader in the field, Jerry Goldfedder, said that disclosure reports must be filed for election-related activities, but are not required for other expenses (such as rent, general mailings, meetings, etc.) Sarah Steiner, who represents Grand Street Democrats, has a different point of view. She noted that any political committee raising more than a $1,000 for a campaign must file with the state. “Once you have a reporting requirement,” said Steiner, “you can’t really pick and choose what’s reported and what’s not.” Her recommendation to political clubs is to set up a separate committee for election-related activities out of “an abundance of caution.” Meanwhile, the Truman Club’s attorney, Jessica Loeser, argued “it’s not the prevailing wisdom” that even non-campaign related contributions must be reported. She said reporting requirements for clubs have only been tightened in the past couple of years. It’s unfair, Loeser suggested, to apply the new standard to donations the club received 10-20 years ago. [As a point of information, Loeser is a former Lower East Side district leader and Truman Club leader.]

So the bottom line is this: Blatt and Goldman were definitely required to file disclosure reports for their campaigns, and they didn’t do that on time. Blatt also accepted a donation of $1,689 from the Truman Club, exceeding the allowable limit (the ceiling for contributions is $1000). Whether the Truman Club was required to report all of its contributions over the years — campaign related and non-campaign related — is what’s now being debated.

Jacob Goldman, Karen Blatt.

Jacob Goldman, Karen Blatt.

In a statement provided to The Lo-Down, Blatt said, “The Truman Club has not spent money on candidates or elections because we have never had a contested race until now. The Truman Club’s activities have been focused on voter education and increasing voter turnout during elections.”  Blatt said she has hired a compliance specialist and registered a committee with the state Board of Elections. Once the application is processed, disclosure reports will be filed she said. As for the contribution exceeding the $1000 limit, Blatt said, “We received incorrect information from someone at the Manhattan Democratic County Committee (which interprets rules for clubs) about what the correct limit is for contributions. Jacob and I rectified the error and reimbursed the club from our campaign accounts.”

What about Jeremy Sherber’s contention that the Truman Club is “hiding” at least $100,000, and probably more, in donations? Blatt said, “Mr. Sherber’s wag-the-dog tactics hardly rise to me and Jacob not saying ‘where $100,000 went.’ The full story is that over the course of 20 years the Truman Club received $100,000 in donations. I would imagine that the contributions went toward operating expenses such as, rent, office supplies, nominating petitions, phone bill and meeting expenses such as food and room rental, etc., all your average club expenses.”

[Blatt is a relatively new district leader, having initially run for office in 2015; this is Goldman’s first election. He was appointed to serve out the remainder of David Weinberger’s term. Weinberger died in 2016.]

Photo from Grand Street Democrats' social media.

Caroline Laskow and Lee Berman. Photo from Grand Street Democrats’ social media.

It should be noted that Grand Street Democrats has filed campaign finance reports in this political cycle. The state’s database shows $18,450 in contributions. We surveyed other political clubs in Lower Manhattan, finding that most organizations do not file disclosure reports. Leaders of two clubs, Downtown Independent Democrats (DID) and Lower East Side Democrats, called the reporting requirements onerous for small, grassroots organizations dedicated to increasing local participation in the political process. Sean Sweeney of DID said his club submits disclosure statements as a result of a challenge several years ago from City Council member Margaret Chin (DID backed candidate Jenifer Rajkumar against Chin in 2013). Sweeney said the requirement is a burden and he’d like to see accommodations made for small neighborhood-based groups.

Financial reporting by political clubs is not a new issue. In 2013, Citizen Union, a good government group, released a report showing that 224 of 579 political clubs in New York failed to register with the state. At the time, Citizen Union Executive Director Dick Dadey said, “While Albany reeks of political corruption borne of cronyism and contemplates substantial changes to our campaign finance system, it’s clear that the most basic form of oversight – basic disclosure of political activity – is lacking… That so many political clubs could raise money, make expenditures, and participate in so much political activity in support of candidates without disclosure is but one more reason why a complete overhaul of enforcement of our state’s campaign finance laws is needed.”

The Post is not the only citywide media outlet to have taken an interest in the district leader campaign. In August, NY1’s Zack Fink looked at whether Sheldon Silver is continuing to influence club operations. “While it’s unclear how active in politics Silver has been in his old Assembly district on the Lower East Side,” noted Fink, “Judy Rapfogel, his former chief of staff, has been very active and is currently involved in the race for district leader,” helping collect petition signatures to put Blatt and Goldman on the ballot.

Silver was convicted on federal corruption charges in 2015 and forced to relinquish his Assembly seat. (The conviction was tossed out in July; prosecutors are planning to retry him). When asked about Silver, Blatt said, “Sheldon Silver, one of the longest serving members in the Truman Club, is no longer involved in the club.” She said of Rapfogel, “Judy Rapfogel is a dedicated member of the club… She is someone who cares deeply about my community and is a tireless volunteer. Jacob and I welcome her support and her involvement in our district leader race. She has personally helped tens of thousands of people on the LES and is an asset that any campaign would want to have on their side.”

Sherber said he’s glad Blatt and Goldman are now planning to file disclosure reports, but he added, “this raises red flags for me.” He referred to, “longstanding issues of trust in this community highlighted by the Silver and (William) Rapfogel convictions (Judy Rapfogel’s husband, Willie, was convicted and served jail time in relation with a kickback scheme at the Met Council on Jewish Poverty).”

Blatt said she and the Truman Club are committed to transparency and believe that clubs should follow the law. She added, “Jacob and I are planning for the future of the Truman Club. At a time when the country is being torn apart by divisive politics ~ after a particularly bruising political year ~ we will work on uniting our community and bringing important issues to the forefront, such as traffic and transportation improvements, sustainable development and ensuring our neighborhood is resilient from storm surges.”