Frank Morano

1026 Sinclair Ave

Staten Island, NY 10309
347-742-7902
August 8, 2010

Enforcement Counsel
NYS Board of Elections
40 Steuben Street
Albany, NY 12207-2108

To the NYS Board of Elections:

I write today to make a formal complaint regarding and request a formal inquiry into the
campaign finance practices of the housekeeping account of the NYS Independence Party
(FILER ID A51115) and other accounts affiliated with or controlled by the leadership of
the State Independence Party. There are several areas, which seem irregular, improper or
outright violations of the law. Just so you understand my interest in this and my
perspective, I’ve served on the state committee of the Independence Party since the Fall
of 2002 and served on the state Executive Committee since 2005. I resigned both of
those posts last month after a series of political disagreements with the rest of the state
leadership and a deep disagreement with the state Chairman regarding the direction of the
party. I think much of our disagreement over direction can be illustrated by the shady
campaign finance practices on display within the Independence Party. Below are several
instances or circumstances that I believe cry out for greater scrutiny.

• How expenditures are made. Sitting on the State Committee for the last eight
years (and the executive committee for the last five), I can tell you that I never
once voted on a single expenditure. This begs the question….how does the party
decide what to spend money on? I know that the State Chairman frequently
charges restaurant or hotel bills related to party business to the party’s account
and I’ve seen the First Vice-Chairman Tom Connolly direct the Treasurer to write
checks for things like room rentals, etc. So is it just Mackay and Connolly that
get to make decisions about spending? Is there any oversight of their spending
habits or any committee or body that they are answerable to? If the answer to
those questions is no, then I think donors (or potential donors) should be made
aware that. I can certainly tell you that there’s nothing whatsoever in the state
party rules governing the process by which money is spent. I think this lack of
transparency, approval and oversight, coupled with all of the media reports related
to the housekeeping accounts questionable spending practices begs the question,
who’s in charge here?
• Where the money goes. What the money has been spent on is in a word alarming.
Here are just a few areas that I think raise some red flags.
- The payments to Special Election Operations LLC of $750,000 have
already been written about at great length in the press and have resulted in
an investigation by the Manhattan DA’s office that has already yielded
one indictment. If that weren’t troubling enough, when a reporter for The
NY Post asked the state Chairman Frank Mackay who the principals
behind this firm were or who had recommended them, he feigned
ignorance. This is all the more alarming when one sees that the Albany
address the company used as on its paperwork didn’t house any such
company or entity. It appears that the vast majority of this money was
used by a Queens political consultant to purchase a house. I think this
begs several questions. Who directed the party to make these payments to
this company? What did the company tell the party it would be doing with
the money? Why did the State Chair not immediately reveal the identity
of the principals behind the company (did he really not know or was this
motivated by some other intent to conceal the true purpose of the funds?)?
Why was this company not formed until after the election it was hired to
do campaign work in? These are but a few of the questions that a
controlling legal authority like the Board of Elections needs to ask the
state IP leadership.
- The other troubling trend is the spending that involves ties to Chairman
Frank Mackay’s wife. I hesitate to mention this since I’ve known both
Frank and Kristin for many years, and have never held her in anything but
the highest regard. That being said, there are some disturbing
expenditures, as was reported by The New York Post, on July 22, 2010.
For instance, the Independence Party Chairman’s Club (FILER ID
C28101) paid Gene Gentile, a consultant and Kristin Mackay’s former
business partner, $11,517 for almost no verifiable work. For example,
Gentile claimed that one $4,000 payment was to develop a book
chronicling the history of the Independence Party. No such book has been
published. Where did the money go? What was this payment for? While
no IP book was published, Frank Mackay did write and publish a book
about his days in the music industry entitled “The Network Interviews”.
Is this the book that Gentile was paid to help develop? If so, it seems that
the IP Chairman’s Club is being used as little more than a slush fund to
benefit the Chairman’s private business interests and funnel financial
benefits to his wife’s business associates. Gentile also claimed that he’d
set-up social networking websites for the party over the years and been
responsible for other endeavors. Currently, both the state and Suffolk
County parties (the latter of which Mackay also Chairs) have almost no
internet presence to speak of and have websites that could’ve been
designed by sixth grade communications class for a spring break project.
If this is indeed what Gentile was paid for (which to me is not the least bit
clear), it seems to me as if he was paid (with party funds), far in excess of
the market value of these services. Was this an ancillary benefit to
partnering with Mackay’s wife? I think the donors to this Chairman’s
Club would be very anxious to know.
 - In addition to the aforementioned questionable expenditures, I’m disturbed
by the number of payments that went directly from the State
Housekeeping Account to other accounts that were solely controlled by
Mackay. These include a $25,000 payment to the Suffolk County
Independence Party (in July of 2009), which was listed as a
reimbursement, $1,000 to the Suffolk County Independence Party which
was listed as a contribution, two contributions of $12,000 each to the
Chairman’s Club (in December 2007 and January 2008), and a $3,000
contribution to the Chairman’s Club in August 2007. These accounts have
almost no oversight at all and are also essentially controlled completely by
Frank Mackay. It might not come as a shock to see that examining the
campaign finance disclosure reports of these committees; one finds several
large payments to other companies with ties to Mackay’s wife, including
Roosevelt Strategies, the principal of which is Anthony Manetta, another
former partner of Kristin Mackay. Again, it seems as if these accounts
serve no verifiable political purpose aside to be a slush fund for Mackay
and his business associates.
• Direct Payments to party leaders. As I’ve observed and noted, it seems as if the
only two people who have any say whatsoever in how IP money is spent are
Frank Mackay and First Vice-Chairman Tom Connolly (currently on the staff of
State Senator Carl Kruger, who is under Federal Criminal investigation for
deceptive campaign finance practices). It’s no wonder then that Mackay and
Connolly so often believe that the best use of Independence Party funds is to pay
themselves off. Here are just a few instances where the housekeeping account is
used solely to line the pockets of those who control it:
- $7,218 to Connolly in November 2009
- $7,122 to Connolly in March 2010
- $5,000 to Connolly in March 2009
- $3,280.75 to Connolly in June 2008
- $2,241.71 to Connolly in June 2008
- $2,218 to Connolly in January 2010
- $2,204.40 to Connolly in July 2008
- $2,000 to Connolly in April 2010
- $1,872 to Connolly in November 2009
- $1,712 to Connolly in July 2009
- $1,673.90 to Connolly in September 2008
- $1,560.35 to Connolly in July 2009
- $1,532. 26 to Connolly in January 2010
- $1,512 to Connolly in June 2009
- $1,492.20 to Connolly in January 2010
- $1,392.65 to Connolly in April 2009
- $1,382 to Connolly in August of 2009
- $1,332.20 to Connolly in May 2010
- $1,309 to Connolly in May 2009
- $1,274.42 to Connolly in July 2008
- $1,272 to Connolly in April 2009
 - $1,267 to Connolly in October 2009
- $1,256.20 to Connolly in July 2008
- $1,228.16 to Connolly in October 2008
- $1,165.05 to Connolly in October 2008
- $1,137 to Connolly in November 2008
- $1,089 to Connolly in September 2009
- $1,026.14 to Connolly in August 2008
- $1,011.45 to Connolly in September 2008
- $1,008.60 to Connolly in October 2008
- $944.28 to Connolly in April 2010
- $943.54 to Connolly in September 2008
- $60,000 to Mackay in March 2009
- $2,462.53 to Mackay in September 2008
That is over $62,000 to Connolly and Mackay each in just two years!! That’s incredible.
This doesn’t include anything they were given from the Rensselaer County Independence
Party (which Connolly controls) or the Suffolk Independence Party (which Mackay
controls). What’s particularly alarming is the $60,000 payment to Mackay and the
$5,000 payment to Connolly that came just days after a windfall contribution to the party
by Michael Bloomberg. Was this the Mayor’s intention? Was the party’s decision to
back several candidates at the behest of the Mayor’s aides (e.g. Dan Halloran for City
Council and James Molinaro for Borough President) the result of the Mayor’s
contributions (and Mackay’s pay day)?? These are the questions that I think the donors to
the IP are entitled an answer to.

• Use of housekeeping account for Campaign purposes. The reason that

housekeeping accounts exist is to allow parties to pay for things like office
expenses, stationary, small reimbursements for party functions, etc. The purpose
of a housekeeping account isn’t to be a type of PAC or campaign fund that aids
candidates and yet that’s exactly what the IP housekeeping account has become.
- As I mentioned before with respect to the payments to Special Election
Operations LLC, almost everything about the deal requires further
scrutiny. Even if both Haggerty and the IP leaders are telling the truth
about the intent of the payments though, it’s clear that these payments
were only going to be used for campaign use not standard housekeeping
business. This is a clear perversion of the intent and purpose of a
housekeeping account.
- In the fall of 2009, there was a hotly contested Democratic primary for
City Council in the North Shore of Staten Island (49th Council District)
between Ken Mitchell (incumbent) and Debi Rose. Even though the party
never endorsed Mitchell or voted on supporting his candidacy in any way
whatsoever, the party (through funds funneled through the housekeeping
account), did a series of mailings on Mitchell’s behalf to Democratic
primary voters. So, here you had a party injecting itself into another
party’s contest without any endorsement of one candidate over the other
and without the proper committee making the expenditures. Why was this
done? I think as the only two people who seem to be able to exercise any
 control over this account, Tom Connolly and Frank Mackay owe the IP
members and donors an explanation. With strict requirements in NYC
races regarding campaign contributions and expenditures, it would seem to
me that this was certainly (at the very least) an in-kind contribution in
excess of what’s permitted in council races and if it was coordinated with
the Mitchell campaign (as appears likely) could very will have brought his
campaign finance expenditures over the legal limit.
- In 2008, Mayor Bloomberg gave $1.2 Million in contributions to the
housekeeping account of the state party with the stated intention of
helping the Republicans keep their majority in the state senate. This
money was then used to fund mailings on behalf of candidates like Serph
Maltese and Frank Padavan, who were in competitive races. Aside from
looking like a blatant and intentional attempt to skirt the campaign finance
law, this seems like clear campaign use, not housekeeping use.
These are but a few of the many instances in which Mackay and Connolly have used
money that’s prescribed by law to be earmarked solely for housekeeping issues, for
anything but.

I realize that there’s not a whole lot the state BOE can do to enforce adherence to the
campaign finance law, but I think these shenanigans cry out for further investigation. I
would ask that you look seriously at each of the incidents I’ve outlined and make a
determination to see what if any laws were violated. Perhaps this can result in a series of
recommendations from the BOE to the state legislature as to how to give NY’s famously
week campaign finance laws teeth, so as to prevent future party leaders from abusing the
hard earned contributions of their donors or the trust of their members in the future. If
you think there’s a possibility that any of the aforementioned incidents are the product of
criminal malfeasance, fraud or abuse, I would encourage you to refer your findings to the
Albany County DA or the U.S. Attorney in any relevant jurisdiction. Please let me know
if there’s any way I can be of further assistance or if you’d like to discuss any of this
further.

Sincerely,

Frank Morano