Federal prosecutors and the F.B.I. areinvestigating whether Lt. Gov. Brian A. Benjamin of New York played a role in an effort to funnel fraudulent contributions to his unsuccessful 2021 campaign for New York City comptroller, and have issued subpoenas to his campaign advisers and the State Senate.
The inquiry stems from a federal indictment filed late last year charging a Harlem real estate investor, Gerald Migdol, with wire fraud, aggravated identity theft and other crimes. Mr. Migdol, a longtime supporter of Mr. Benjamin’s, was accused of orchestrating a plan to misrepresent or conceal dozens of illegal contributions to Mr. Benjamin’s campaign.
Mr. Benjamin has not been accused of wrongdoing, and he was not named in the indictment. But prosecutors from the Southern District of New York subsequently issued several grand jury subpoenas late last year seeking records from Mr. Benjamin’s campaign committee, some of its paid staffers and firms consulting for the campaign, according to three people with direct knowledge of those actions, which have not been previously reported.
The prosecutors sought documents and communications related to Mr. Migdol and several associates, campaign fund-raising records and guidance on how involved Mr. Benjamin was in the campaign’s efforts to raise money.
More recently, prosecutors began seeking records from the State Senate, where Mr. Benjamin represented much of Harlem from 2017 until last summer, when he was tapped by Gov. Kathy Hochul to be her lieutenant governor.
A subpoena served on the Senate secretary in recent weeks sought information about Mr. Benjamin and discretionary state funding he helped direct to his district during his time as a senator, according totwo officials briefed on the document, who like others spoke on the condition of anonymity to discuss the investigation.
It is unclear whether the inquiry will result in charges against Mr. Benjamin. But even the existence of a federal investigation into New York’s second highest-ranking state official has the potential to become a significant political liability not only for Mr. Benjamin but also for Ms. Hochul, at a time when both Democrats are preparing for competitive primaries in June.
The existence of the Senate subpoena was first reported on Friday by The Daily News. The News also said subpoenas went to the Division of the Budget and to the Dormitory Authority, which oversees state funding programs that lawmakers can use to direct money to pet projects in their districts.
The investigation, being conducted by agents fromone of the F.B.I.’s public corruption squads in New York and federal prosecutors who handle matters involving government officials, appears to be examining whether Mr. Benjamin directed state funding in some way to benefit Mr. Migdol in exchange for the contributions.
It is unclear whether Mr. Migdol has signed a cooperation agreement with prosecutors to provide information about Mr. Benjamin in exchange for leniency. But there have been indications in recent months that he may have been providing such information or may have entered into negotiations about cooperating some time after entering a not guilty plea in November.
For example, at least two subpoenas that appear to be part of the investigation into Mr. Benjamin were issued shortly after Mr. Migdol’s arrest, and the Benjamin inquiry is being handled by the same prosecutors who brought the case against Mr. Migdol, people with knowledge of the matter said.
A few months after the arrest, as the investigation appeared to gather steam, the U.S. attorney’s office, with the consent of Mr. Migdol’s lawyers, asked the presiding judge to postpone a routine pretrial conference for 60 days “to permit additional time for the parties to discuss the case.”
If convicted, Mr. Migdol faces a maximum of 20 years in prison on the wire fraud charge and a mandatory two-year term for aggravated identity theft.
His lawyer, Joel Cohen of Stroock & Stroock & Lavan, declined to comment, as did press officers for the State Senate majority and the governor’s office. The U.S. attorney’s office and the F.B.I. also declined to comment.
When asked about the subpoenas, a spokesman for Mr. Benjamin’s lieutenant governor campaign referred to a statement released when Mr. Migdol was arrested last year. “Neither Lt. Gov. Benjamin nor his campaign are being accused of any wrongdoing, and they are prepared to fully cooperate with authorities,” the statement said.
Ms. Hochul inherited the governorship in August, pledging a new era of transparency and ethical rigor in Albany after her predecessor, Andrew M. Cuomo, became the latest high-ranking New York state leader in recent years to resign amid scandal. Choosing Mr. Benjamin, 45, a rising star from Harlem, to replace herself as lieutenant governor was her first major act in office.
When the investigation was disclosed, her opponents moved quickly to try to link Ms. Hochul to Mr. Benjamin’s potential legal issues, previewing attack lines that may grow more intense and force the governor to a difficult choice about whether to distance herself from Mr. Benjamin, who she had hoped would help improve her standing with New York City voters, particularly in the Black community.
“Kathy Hochul’s poor judgment and lack of executive experience are on full display with her handpicked running mate,” Representative Tom Suozzi, a Long Island Democrat challenging Ms. Hochul, said on Saturday.
This is not the first time that Mr. Benjamin’s actions have raised ethical concerns, though the earlier cases are not known to have drawn federal scrutiny. Last year, The Daily News identified several suspicious expenditures from Mr. Benjamin’s Senate campaign account, including $6,700 spent on “constituent services” at a Harlem jazz club in 2018 right around the same time he held a wedding celebration at the venue.
Mr. Benjamin’s campaign denied at the time that the event was in any way inappropriate, calling it a “supporter appreciation/mobilization” event.
Last month, The Albany Times Union found a dozen cases where Mr. Benjamin claimed a taxpayer-funded reimbursement for travel to and from Albany at the same time he used a campaign debit card to pay for gas. Mr. Benjamin’s campaign denied he had profited from the practice.
Questions about the funding of Mr. Benjamin’s comptroller campaign first surfaced in January 2021, when The City identified nearly two dozen questionable contributions worth nearly $6,000 to his campaign that had been collected and delivered by Michael Murphy, a close associate of Mr. Migdol’s. They included contributions from several men who told the outlet that they had never given to the campaign and another from Mr. Migdol’s 2-year-old grandson.
After the report, Mr. Benjamin returned the contributions, which had also secured him thousands of dollars more from the city’s public matching funds program. He ultimately finished fourth in the Democratic primary for comptroller in June.
F.B.I. agents arrested Mr. Migdol in November. The indictment accused him of orchestrating a so-called straw donor scheme beginning in the fall of 2019 to coordinate donations in the names of people who had not authorized the payments to his preferred candidate or were being fraudulently reimbursed for the donations. Prosecutors did not identify the candidate, but campaign finance records show it was Mr. Benjamin.
In their indictment, prosectors charge that Mr. Migdol undertook the plan to help Mr. Benjamin’s campaign tap into New York City’s generous public matching program. The plan also could have helped donors get around restrictive contribution limits for individuals.
The matching program is designed to encourage candidates to accept small donations from average New Yorkers, rather than just seeking big checks from the wealthy. Candidates who qualify for the program receive $8 in public funds for every $1 of eligible contributions. The city will match up to $250 per contributor, or $100 if the contribution is made via money order.
By steering a series of small donations to Mr. Benjamin through straw donors, Mr. Migdol may have helped Mr. Benjamin secure many thousands of dollars more in public matching funds than he could have by giving a large lump sum in his own name.
The two men appear to have been close. Both had experience in real estate and an interest in Democratic politics in Harlem. Mr. Benjamin nominated Mr. Migdol for a local Democratic club award, which the businessman received at a ceremony in the fall of 2019, right around the time prosecutors say he began conspiring to unlawfully help Mr. Benjamin’s political campaign.
Mr. Migdol and his family also operate two nonprofits that distribute food, school supplies and other aid to students and families in the area, and social media posts and photographs suggest Mr. Benjamin was a regular presence at their events.
In 2019 the State Senate earmarked a $50,000 grant for one of the groups, Friends of Public School Harlem, Inc., state records show. The records do not specifically tie Mr. Benjamin to the grant, but it was administered as part of an annual educational aid program where members of the Legislature can designate funding for projects in their districts. The connection was first reported on Friday by The Albany Times Union.
Mr. Murphy — the associate implicated in Mr. Migdol’s straw donor operation — was listed as the nonprofit’s treasurer at the time.
A call to the nonprofit, where Mr. Murphy is still listed as a staff member, was not immediately returned on Sunday.
Luis Ferré-Sadurní and Jeffery C. Mays contributed reporting.
