Bloomy's 'All Stars'

City arranges new multimillion-dollar financing for Fulani's crew

The Village Voice/August 22, 2006
By Tom Robbins

Even though he was the odds-on favorite to win re-election last year, Mayor Mike Bloomberg took no chances. In addition to running as the Republican Party's nominee, the billionaire media mogul sought and accepted the nomination of the Independence Party, thus providing an alternative for those true-blue Democrats who could never pull the GOP lever, even while holding their noses in the privacy of the voting booth. It was the same strategy that had worked so well for him in 2001, when the 59,000 votes he polled as the Independence candidate put him over the top in that razor-close race.

But the second time around, Bloomberg took a fair amount of heat for the tactic: Reporters asked him why he was still associating with the zany crowd that controlled the city's Independence Party, which included Lenora Fulani, prone to tossing occasional anti-Semitic barbs, and her oddball therapy guru, Fred Newman, who openly approved of sex between shrinks and patients. Those questions increased in volume after Fulani publicly refused to disavow her own earlier comments, in a NY1 TV interview, that Jews are "mass murderers" and had "sold their souls to acquire Israel."

But Bloomberg's strategy was to be better safe than sorry, banking on the hope that most voters wouldn't notice and the rest wouldn't hold it against him. And he was right. The CEO-turned-politician scored an overwhelming 750,000-vote tally against Democrat Fernando Ferrer, with more than 74,000 cast for him on the Independence Party line.

Now, nine months after the little third party helped him achieve that crushing victory, Bloomberg's administration is poised to provide Fulani and Newman with new $12 million tax-free bond financing for a controversial nonprofit organization they have long controlled. The bond deal, due to be approved by the city's Industrial Development Agency next month, would allow a youth program called the All Stars Project to refinance $8.3 million in outstanding city bonds and add an additional $4.2 million to allow the group to make improvements at its headquarters on West 42nd Street—a space it acquired in 2002 with an earlier IDA bond deal from Bloomberg's administration.

Tax-free bonds for private businesses and nonprofit groups are awarded frequently by the city, but applicants have to show that the subsidies will benefit the public. All Stars has been the subject of repeated complaints and investigations concerning allegations that it is used to lure unwary people into Newman's so-called "social therapy" practice and into political activities like the Independence Party. The group has always denied it, and a probe last year by the office of state attorney general Eliot Spitzer did not result in charges of wrongdoing.

The financing deal is clearly attractive. The bonds would save All Stars several hundred thousand dollars in costs and mortgage-recording taxes, according to Good Jobs New York, which monitors city projects. So far, however, few specifics have been provided. The only information made public is a one-paragraph advertisement published in the New York Daily News on August 8. A spokesperson for the city's Economic Development Corporation, which oversees the IDA, confirmed the deal and said only that some of the new $4 million plus would go for new heating and ventilation systems for the All Stars headquarters, adding that more details will be available before a September 7 hearing on the matter.

Bloomberg spokesperson Stu Loeser said the mayor played "no role" in the bond deal, adding that Newman and Fulani have distanced themselves from the project. In February, Newman resigned from posts he held there, although he and Fulani remain leading figures in the group.

An All Stars spokesman confirmed the bonds will be used to "finance necessary renovations and improvements."

Whatever the details, the project appears to be a kind of consolation prize for the group, which had a decidedly unhappy experience in its most recent dealings with city government. In March, in a caustic letter, the group announced it was dropping its application for a $230,000 contract to provide after-school training to city schoolkids through the Department of Youth and Community Development. The move came after a 10-month-long inquiry that began shortly after a Voice story on the matter ("Fulani's City Hall Push," June 7, 2005). At the time, the Voice reported that Fulani and Newman had been invited into Bloomberg's inner sanctum at City Hall, where they had met with top city officials, including schools chancellor Joel Klein. Part of their pitch was to provide theater and music activities to schoolchildren. Bloomberg's aides were receptive to the idea. But All Stars officials confirmed that they were more interested in receiving the stamp of approval from City Hall than the cash. "It would be the city validating all of our work in this field," Gabrielle Kurlander, who lives with Newman and receives $200,000 as president of the group, told the Voice last year.

But the contract negotiations came just as the mayor was agreeing to take the Independence Party line, and the coincidence helped spark a spate of additional stories in the New York Post and on NY1. In the face of that publicity, the city's youth department announced that All Stars would get careful scrutiny before any contracts were awarded.

That investigation, along with a parallel one by Spitzer's office, put the after-school grant on hold. City officials never completed their probe, but on March 6, All Stars president Kurlander fired off an angry four-page letter to city youth department officials saying they'd had enough (see villagevoice.com for a copy). The letter offered—in remarkably frank language—Kurlander's version of her group's dealings with the youth agency and City Hall.

According to Kurlander, the after-school activities application started with the suggestion of a Bloomberg policy aide, Ester Fuchs, who "urged us to apply for a grant." (Fuchs told the Voice last year that the idea was broached by an All Stars lobbyist.) Kurlander said she "expressed concern" that the application "might fall victim to various forms of political gamesmanship" given the media attention to the group.

Despite city assurances that wouldn't happen, Kurlander wrote, the youth department's general counsel began contacting All Stars board members and supporters as far away as California "to inquire about their political affiliations." After a protest to Fuchs, Kurlander said, those inquiries were halted. But as the mayoral race heated up, NY1 broadcast a multipart series by reporter Rita Nissan, prompting a new series of inquiries.

The youth department's new questions, Kurlander wrote, "read like an inquisition from Senator Joseph McCarthy." She said the queries included questions about who on the board was "in therapy, about living and personal financial arrangements of principals associated with the program, and other intrusive and abusive lines of questioning."

All Stars again complained, Kurlander wrote, this time to both Fuchs and Bloomberg campaign director Kevin Sheekey (now a deputy mayor). Kurlander said City Hall aides "disingenuously" told her that it was out of their hands. She said that even after Spitzer dropped his own separate inquiry, the city's probe continued. The last straw apparently came when the Voice reported, several days before Kurlander's irate letter, that city sources were telling it the contract wouldn't be awarded.

The All Stars executive wrote that the city's inquiry had "degenerated into the worst form of 'policy by politics' " and a "corruption of governmental responsibility."

"Finally," Kurlander concluded, "while it is the case that some individuals in the All Stars community worked hard for Mayor Bloomberg's re-election, All Stars has always made it plain that it neither sought nor expected any special treatment or favors." At the bottom of the letter, Kurlander cc'd Fuchs, Sheekey, and Mayor Bloomberg.