AMID $LUSH PROBE
By TOM TOPOUSIS
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April 22, 2008 -- City Comptroller William Thompson is blocking funds to scores of community groups across the city because of the ongoing probe into the City Council's slush fund, The Post has learned.
The organizations - mostly neighborhood groups - receive grants from members of the council or Speaker Christine Quinn, through a secretive process that is under active investigation by the US Attorney's Office and the city's Department of Investigation.
Thompson has refused to register any new contracts with groups that have been allocated council funds, effectively barring the release of money they've been expecting since the current city budget was approved last June, sources said.
Thompson wants to ensure there are no irregularities with the grants, sources said.
A source familiar with discussions between City Hall and Thompson's office said they are trying to hammer out a process to make sure the money goes where it's supposed to.
Before the slush funds were exposed - amounting to over $17 million over the last seven years - many groups operated programs and incurred bills in anticipation of being paid by the city, said another source.
Thompson spokesman Jeff Simmons declined comment.
Thompson's refusal to register new contracts began after it was revealed that council leaders had created phantom organizations that were used to reserve $17 million for grants since 2002.
The money, effectively a slush fund, was transferred from the phantom organizations to genuine not-for-profits selected by Quinn and other council members after the budget was approved each June.
Quinn recently suggested a sweeping overhaul in discretionary funding by requiring all large groups to file a formal request for proposals.
Quinn infuriated many members of the council by proposing that mayoral agencies be given the final say over which groups received the so-called member items.
The hold on registering new contracts affects a small portion of the hundreds of groups that get a share of the council's $50 million annual member items, better known as pork.
Because of the ongoing probe and recent arrests of council aides, council leaders are now trying to determine whether its members should be provided legal representation paid for by the city if they are called for questioning by the US attorney or DOI.
Quinn has already hired two taxpayer-funded sets of lawyers, Sullivan & Cromwell, to represent the entire council, and Lee Richards III to represent her, in dealings with the US attorney and the DOI.
The Post reported last week that Sullivan & Cromwell signed a one-year contract last October for about $95,000. Richards will be paid $600 an hour, less than his usual rate.
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