BY Melissa Grace and Erin Einhorn
Sunday, September 11th 2011, 4:00 AM
A mayor - under oath - taking questions on the seedy side of New York politics.
A prosecutor - under fire - in urgent need of a win after a string of ugly defeats.
And a once-powerful political party trying to save its reputation.
It's all part of what makes the trial of political operative John Haggerty - expected to get underway this week - a must-watch political event.
Haggerty stands accused of pocketing more than $1 million of Mayor Bloomberg's cash for a 2009 poll-watching operation that never materialized.
He says he did nothing wrong because the mayor made the payment as an unrestricted campaign contribution to the Independence Party - a move his lawyers say was an effort to hide the transaction. That's where the case gets dicey for Bloomberg.
"The mayor violated [campaign finance rules], and Haggerty is going down for it," said one prominent campaign finance lawyer. "[Bloomberg] signed a form that said that he would only spend money on his campaign through his campaign committee....If [the money] wasn't for his campaign, then Haggerty couldn't have defrauded him."
Bloomberg's aides are confident the mayor is in the clear because they say the money was to benefit all of the party's endorsed candidates.
The city campaign finance board has postponed its review of Bloomberg's campaign until after the Haggerty trial, but even if the board finds that Bloomberg did nothing wrong, the trial could draw the mayor's name into the campaign muck he has always avoided.
The prospect has Bloomberg confidantes concerned.
"Haggerty has no legal defense," said one person close to the mayor. "What he has is the ability to create a circus and...hope one juror doesn't like the mayor enough that they'll have a hung jury."
The case already has stained the reputation of the Independence Party, which is fighting for its political future.
Manhattan Supreme Court Judge Ronald Zweibel is expected to rule this week on a request by prosecutors to prevent the defense from putting Bloomberg's campaign practices on trial.
But if they're allowed, it could turn the sensational prospect of a sitting mayor on the stand into a spectacle.
"You have a vivid enough imagination to imagine where it might go," said one Haggerty confidante. "All kinds of things: Horse-trading on term limits, any number of campaign-related issues, politically-related issues."
And if the jury thinks Bloomberg got what he deserved, the other big loser could be Manhattan District Attorney Cy Vance - already reeling from a string of big losses.
"You have to win cases like this if you bring them or it can look politically motivated," said defense lawyer Mark Bederow, a former Manhattan assistant district attorney. "You better have the goods, or you're opening yourself up to political criticism if you lose."
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