Assembly Tax Committee Chair Grapples With ‘Nightmare’

The second-most-powerful member of the state Assembly is grappling with what one of his aides has described as a “bookkeeping nightmare.”The chairman of the tax-writing Ways and Means Committee of the Assembly, Herman “Denny” Farrell Jr., is trying to account for incongruities in the balance sheets of his multiple campaign committees, which show a cumulative negative balance of more than $120,000.Five of Mr. Farrell’s committees have a negative balance, including one that is $50,000 in the red, according to filings posted on the Web site of the state Board of Elections. Farrell 08, which has $7,700, is the only one of Mr. Farrell’s committees that has positive funds.Mr. Farrell, a Harlem representative who has led the New York County Democratic Committee since 1981 and is a close ally of Assembly Speaker Sheldon Silver, is said to be planning a run for City Council next year to replace Robert Jackson, who is term-limited.Election officials say they cannot explain the puzzling balance figures, but that they are leaving it up to Mr. Farrell to decide whether to correct them.After a New York Sun reporter contacted him about the balances, Mr. Farrell directed the treasurer of his county party to sort through boxes of paperwork, bank statements, and receipts to figure out the cause of the discrepancies.Mr. Farrell’s complex web of committees is unusual for a state lawmaker. Most legislators have one active committee and some, like Mr. Silver, also have a separate political action committee that doles out political contributions.While no one is accusing Mr. Farrell, 76, of the misuse of campaign funds, the disarray of his political finances could pose a problem for him if he moves to the City Council from the Assembly. The City Council job pays more than the Assembly post, and Mr. Farrell, who served from 2002 to 2006 as chairman of the New York State Democratic Party, might have the clout to win the post of council speaker.Mr. Farrell intends to shut down his accounts and consolidate his committees in advance of a possible run to shield him from the scrutiny of the city’s Campaign Finance Board, whose enforcement of campaign finance laws is more aggressive than state oversight.Over election cycles, Mr. Farrell opened new accounts without closing old ones. State law prohibits him from deactivating committees that fail to show a zero balance.The result is what one aide to the lawmaker called a “multi-headed hydra” of accounts: Farrell 02, Farrell 04, Farrell 06, Farrell 08, Committee for H.D.F., and Manhattan Connection, a political action committee.While online campaign finance records seem to indicate that Mr. Farrell’s coffers are empty, the accounts show regular spending activity. Many of the committees with negative balances show expenditures during the same filing periods.Committee for H.D.F., for instance, has a balance of negative $21,000 as of the last mandatory filing date on January 15. It spent $2,000 over the six-month period, including payments to Verizon, Sprint, and the W. 151st Street Block Association.Farrell 06 is $50,000 in the red, but spent $660 at Wal-Mart and $100 at Target, among a dozen other expenditures.The financial troubles also extend to the Manhattan party committee, which is running a deficit.Mr. Farrell has kept the party afloat over the years by loaning it money from his own political funds. The party account has $27,000, but owes Mr. Farrell $57,000, according to the most recent records.The source of the negative balances is not entirely clear. It’s possible that Mr. Farrell received contributions that were not entered into the campaign finance system. A large part of the problem appears to have to do with the way in which funds were transferred between his accounts.An aide to Mr. Farrell said his campaign treasurer, Marcia Coleman, who handled Mr. Farrell’s finances while serving as executive director of his Albany legislative office, would transfer funds and record expenditures, but not receipts.For instance, records show that last November, Farrell 02 shifted $20,000 to Farrell 08, which then sent the money to the Democratic county party as a loan.Records show that Farrell 08 transferred $20,000 to the party account, but no record exists of it ever receiving the money to begin with. The result, as it appears on the Board of Elections system, is a $20,000 loss for Farrell 08.Mr. Farrell said the electronic software used by the state Board of Elections does not flag imbalances between contributions and expenditures.“The system does not allow for errors to be caught,” he said. “When we went to electronics, we lost the ability to catch our errors as we were making them. Now, it requires audits to catch them.”A spokesman for the Board of Elections said that 300 out of about 10,000 active state and local filers in its database have negative balances.The elections board, which has a staff of 55, does not audit committees unless it receives a formal complaint. Mr. Farrell, a spokesman said, is not obligated to balance the books.“There’s nothing to compel him at this time to do anything,” the official said.

Assembly Tax Committee Chair Grapples With ‘Nightmare’

Assembly Tax Committee Chair Grapples With ‘Nightmare’

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