JCOPE Complaint - Citizens Committee and City Councilperson Margaret Chin

8/18/2019 JCOPE Complaint - Citizens Committee and City Councilperson Margaret Chin

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DAVID GRANDEAU

Complainant,

v.

CITIZENS COMMITTEE FOR NEW YORK CITY, INC &

NEW YORK CITY COUNCILPERSON MARGARET CHIN

Respondents.

IN THE MATTER OF AN INVESTIGATION INTO CITIZENS

COMMITTEE FOR NEW YORK CITY, INC. FOR FAILURE TO

REGISTER AS A LOBBYIST ON BEHALF OF NEW YORK

CITY COUNCILPERSON MARGARET CHIN client), FOR

FAILURE TO FILE BIMONTHLY REPORTS AND FOR

FAILURE TO REPORT LOBBYING EXPENSES

CONCERNING PLASTIC BAG LEGISLATION AND IN THE

MATTER OF AN INVESTIGATION INTO

NEW YORK CITY COUNCILPERSON MARGARET CHIN FOR

FAILURE TO FILE A CLIENT SEMI ANNUAL REPORT


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INTRODUCTION

David Grandeau (Grandeau or Complainant) files this Complaint on

behalf of the residents of New York State. Based on the information detailed in

this Complaint, Grandeau respectfully urges the New York State Joint

Commission on Public Ethics (the Commission) and/or The Office of the New

York State Attorney General to investigate the Citizens Committee for New

York City, Inc. and New York City Councilperson Margaret Chin for engaging in

a lobbying campaign funded by a New York City member item, for failing to

register and properly report lobbying expenditures and hiding the true identity

of the groups attempting to influence New York State and New York City

government and public officials thereof.

Upon information and belief this Complaint is jointly filed against the

Citizens Committee for New York City, Inc. (Citizens Committee) and New York

City Councilperson Margaret Chin (Chin). At all times relevant to the illegal

conduct alleged herein, Respondents were acting jointly, severally, and in

cooperation with others, including, but not limited to the New York City Council

Members, Citizens Committee board of directors, Citizens Committee

employees, Citizens Committee corporate donors, funders, supporters and their

executives and managerial agents, industry groups, trade associations, and


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others, both known and unknown.

Beginning at least as early as July of 2015 and continuing to date, the

Citizens Committee has engaged in lobbying and lobbying activities as defined

under §1-c (c) of the Lobbying Act on behalf of their client Chin. The Citizens

Committee conduct includes but is not limited to attempts to influence, support,

pass, oppose, defeat, and/or impact the passage and/or introduction of both state

and local legislation specifically Plastic Bag legislation and the introduction

and/or intended introduction of legislation to impose a tax on plastic bags to be

introduced in the New York City Council. The Citizens Committee conduct

constitutes “lobbying” and “lobbying activities” within the meaning of the Lobby

Act and, with respect to specific conduct detailed herein, since the Citizens

Committee spent well over $5000 annually during the relevant time frames, the

Citizens Committee has engaged in illegal lobbying activities by failing to

register as a lobbyist and report its lobbying expenditures on behalf of their

client, Chin. Such registration and reporting would have required the

identification and listing of the sources of funding for the Citizens Committee,

information that has been improperly withheld and shielded from public review.

Further the Citizens Committee use of a 501(c)(3) front group to mask the true

identity of those individuals and organizations funding the lobbying effort has

allowed and facilitated those individuals and organizations to launder their

financial involvement and transfer large sums of money to be used to influence

public officials without the knowledge or notice to the public or the public


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officials whom are targeted.

To the extent known, the Complaint will describe in detail concrete

examples of illegal lobbying by the Citizens Committee where the Citizens

Committee has spent in excess of $5000 to influence legislation in flagrant

violation of the Lobby Act.

I. Councilperso n Margaret Chin

Councilperson Margaret Chin is a councilperson duly elected and serving

in the New York City Council. Councilperson Chin has discretion to recommend

and allocate New York City funds in the form of “member item allocations in the

New York City Budget.

A. Councilperson Chin’s Conduct is Intended to Retain

Citizens Committee to Act as a Lobbyist.

Councilperson Chin specifically allocated in excess of $5000 to The

Citizens Committee for New York City, Inc. (“Citizens Committee”) to “provide

reusable bag giveaways and outreach events about the environmental impacts of

single-use carryout bags”. As set forth below such activities were intended to

and did become part of Citizens Committee’s lobbying effort on behalf of

Councilperson Chin’s attempt to pass New York City bill 1135.

B.

Councilperson Chin has never filed a client semiannual

report

Councilperson Chin has never filed a client semiannual report detailing

the activity of her retained lobbyist Citizens Committee for 2015. By failing to


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file a client semiannual report Councilperson Chin has failed to disclose the

required facts related to her lobbying relationship with Citizens Committee.

There are sufficient facts in the record to commence an investigation by the

Commission of Councilperson Chin’s failure to file a client semiannual report

detailing her retained lobbyist’s activity in 2015 on behalf of its client

Councilperson Margaret Chin in violation of §1-j of the Lobby Act.

II. Citizens Committee

The Citizens Committee for New York City, Inc. (“Citizens Committee”) is

registered with the Internal Revenue Service (IRS) as a section 501(c) (3) tax

exempt, charitable organization, EIN 51-0171818.

A. Citizens Committee’s Conduct is Intended to Influence

the Outcome of Legislation

Citizens Committee’s 2015/2016 lobbyist registration statement that it

filed on behalf of Citizens Committee as both a lobbyist and a client states that

it has lobbied at the state and local level for the “plastic bag bill” and for

“member item funding”.

In fulfilling its stated goal of lobbying for plastic bag legislation and

member item funding, Citizens Committee publishes advertisements, op-eds,

letters to the editor, and maintains numerous web sites.

Citizens Committee has used advertising as one tool to influence


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legislation. Another effort they have used to influence legislation are their web

sites.

Recently, upon information and belief, Citizens Committee has created

and operated the web site www.bagitnyc.org. The “bagit” web site contains

grassroots lobbying activity including a call to action to contact elected officials

to support and/or pass plastic bag legislation, directions on how to encourage

retailers to engage in grassroots lobbying to support plastic bag legislation and

“action ideas” for individuals and groups to engage in grassroots lobbying

including contacting editorial boards to encourage grassroots activity by those

editorial boards.

These grassroots lobbying activities are intended to inflame and divide

communities and place pressure on elected officials to assist Citizens Committee

in their unreported lobbying efforts on behalf of their unnamed and unidentified

clients and/or donors.22

Citizens Committee’s efforts to influence the outcome of legislation and

the intended introduction of legislation—by advertising, web sites or any other

medium—clearly constitute lobbying and lobbying activities under the Lobbying

Act. Citizens Committee, on behalf of their true client, Councilperson Margaret

Chin are unregistered lobbyists. Citizens Committee has attempted to influence

a legislative item specifically, but not limited to plastic bag legislation in the

form of NYC Bill 1135.


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B. Citizens Committee Has Never Registered as a Lobbyist

on behalf of its client, Councilperson Margaret Chin

Citizens Committee has never registered as a lobbyist for its lobbying

activities on behalf of its client, Councilperson Margaret Chin, or reported its

lobbying expenditures related to the conduct discussed herein. The Lobbying Act

§1-e requires every lobbyist to submit a statement of registration with the

Commission if they have more than $5000 of reportable compensation and

expenses for lobbying in any calendar year for all clients individually. Further,

the Lobbying Act §1-h requires that any lobbyist required to file a statement of

registration pursuant to §1-e of the Lobbying Act who in any lobbying year,

reasonably anticipates that during the year such lobbyist will expend, incur or

receive combined reportable compensation and expenses in an amount in excess

of five thousand dollars shall file with the commission a bi-monthly written

report for each client on whose behalf it registers, on forms supplied by the

commission, by the fifteenth day next succeeding the end of the reporting period

in which the lobbyist was first required to file a statement of registration. Such

reporting periods shall be the period of January first to the last day of February,

March first to April thirtieth, May first to June thirtieth, July first to August

thirty-first, September first to October thirty-first and November first to

December thirty-first.

Section 1-o of the Lobby Act provides any lobbyist or client who knowingly

and willfully fails to file timely a report or statement required by this section or


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knowingly and willfully files false information shall be guilty of a class A

misdemeanor. In addition, any lobbyist or client who knowingly and willfully

fails to file a statement or report within the time required for the filing of such

report shall be subject to a civil penalty for each such failure or violation, in an

amount not to exceed the greater of twenty-five thousand dollars or three times

the amount the person failed to report properly.

There are sufficient facts in the record to commence an investigation by

the Commission of Citizens Committee’s failure to register and report lobbying

activity in 2015 on behalf of its client Councilperson Margaret Chin in violation

of §1-e and §1-h of the Lobby Act.

JURISDICTION OF THE COMMISSION

The Commission is authorized by Executive Law §94(12) (a) to commence

inquiries into possible violations of Article 1-A of the Legislative Law. Pursuant

to Executive Law §94(16) (d), the Commission is authorized to conduct any

investigation necessary to carry out the provisions of Executive Law §94.

Pursuant to this power and duty, the Commission may administer oaths or

affirmations, subpoena witnesses, compel their attendance and require the

production of any books or records that it may deem relevant or material. When

the Commission determines there has been a violation Article 1-A of the

Legislative Law authorizes the Commission to assess a civil penalty in an

amount not to exceed the greater of twenty-five thousand dollars or three times


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the amount the person failed to report properly.

In lieu of a civil penalty, the Commission may refer a violation of the

Lobby Act §1-e and §1-h to an appropriate prosecutor which, upon conviction,

shall be punishable as class A misdemeanor. Executive Law §94(12)(b) provides

that if the Commission determines that there is reasonable cause to believe that

a violation of Article 1-A of the Legislative Law has occurred, the Commission

shall send a notice of reasonable cause: (i) to the reporting individual or (ii) to

the complainant, if any.

FAILURE TO REGISTER AND REPORT EXPENDITURES

AS A LOBBYIST PURSUANT TO §1-e and §1-h OF THE LOBBY ACT

A. The New York State Lobbying Act

The Lobby Act requires registration by all entities engaged in lobbying

activity:

§ 1-e. Statement of registration. (a) (1) Every lobbyist shallannually file with the commission, on forms provided by thecommission, a statement of registration for each calendaryear….”

Only lobbyists are required to register under the Act. A “lobbyist” is defined

under the §1-c (a) and provides, “The term ‘ lobbyist’ shall mean every person

or organization retained, employed or designated by any client to engage in

lobbying….” The Act defines “lobbying” under §1-c (c) providing:

The term ‘ lobbying’ or ‘ lobbying activities’ shall mean anyattempt to influence:

(i) the passage or defeat of any legislation by either house of the

state legislature including but not limited to the introduction or


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intended introduction of such legislation or approval or disapproval

of any legislation by the governor;

(ii) the adoption, issuance, rescission, modification or terms of a

gubernatorial executive order;

(iii) the adoption or rejection of any rule or regulation having the

force and effect of law by a state agency;

(iv) the outcome of any rate making proceeding by a state agency;

(v) any determination:

(A) by a public official, or by a person or entity working in

cooperation with a public official related to a governmental

procurement, or

(B) by an officer or employee of the unified court system, or by a

person or entity working in cooperation with an officer or employee

of the unified court system related to a governmental procurement;

(vi) the approval, disapproval, implementation or administration of

tribal-state compacts, memoranda of understanding, or any other

tribal-state agreements and any other state actions related to Class

III gaming as provided in 25 U.S.C. § 2701, except to the extent

designation of such activities as "lobbying" is barred by the federalIndian Gaming Regulatory Act, by a public official or by a person or

entity working in cooperation with a public official in relation to

such approval, disapproval, implementation or administration;

(vii) the passage or defeat of any local law, ordinance, resolution, or

regulation by any municipality or subdivision thereof;

(viii) the adoption, issuance, rescission, modification or terms of an

executive order issued by the chief executive officer of a

municipality;

(ix) the adoption or rejection of any rule, regulation, or resolution

having the force and effect of a local law, ordinance, resolution, or

regulation; or

(x) the outcome of any rate making proceeding by any municipality


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or subdivision thereof.

The Commission is the regulatory body charged with determining if

registration is or was required by the aforementioned entities. The Commission

has just recently issued an opinion relative to the definition of lobbying and

more specifically whether advertisements, such as those placed by Citizens

Committee, would require registration and the concomitant reporting of

expenses. In addition, the Commission’s predecessor agency, the Temporary

Commission on Lobbying (TCL) has issued opinions on the matter and the

Commission has specifically stated it will follow any precedence established by

the TCL unless and until specifically superseded by Commission opinions. The

TCL has issued several opinions, 79-1, 84-1, 97-1, 00-2 and 00-3 that provide

clear guidance and a means to determine if any individual advertisement would

necessitate registration and/or reporting as a lobbying expense.

Opinion 79-1 holds that the Commission will conform to Federal case law,

United States v. Harriss , 347 U.S. 612 (1954), and consider any contacts with

legislators, the Governor or regulatory decision makers to be lobbying if the

contact is direct and further that direct contact will be interpreted to include

written or printed communications directed to the decision maker. In opinion

97-1 the Commission extended the definition of lobbying to include a n y attempt

to influence the defined activities that constitute lobbying “irrespective of how

contact is made”. The Commission specifically included, “A company’s use of

computer software and the Internet” as activities that would fall within the Act’s


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meaning of direct contact. In opinion 00-3 the Commission completed its

analysis of what would constitute a direct contact under Harriss requiring

registration holding that an advertisement urging listeners to contact a decision

maker constitutes lobbying even though it never specifically lists or identifies

the bill numbers of pending legislation. The Commission stated in plain

language a three-part test to determine if activity constitutes lobbying. Lobbying

under New York law, occurs “when the activity in question relates to pending

legislation, a position is stated, and the activity is an attempt to influence

decision makers”. Op-003

Commission opinions 84-1 and 00-2 make clear that activity that does not

meet the three part test set forth in opinion 00-3 could still be considered a

lobbying expense that would need to be reported if the expense is part of an

entity’s lobbying effort. Any expenditure of a registered entity that is used in

any fashion to assist the lobbying effort would be a lobbying expense requiring

its inclusion on the entity’s reports.

The commission’s most recent opinion 16-1 has further clarified the

Commission’s position on grass roots lobbying. It states:

“JCOPE finds that the communication need only relate to a Section 1-c(c)

activity. It need not reference a bill number, but a bill (or its defeat) must be the

intended byproduct of the lobbying. Similarly, it need not identify an executive

order or regulation, but it must be clear that an executive order or regulation is


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the subject of the lobbying. In sum, a grassroots communication constitutes

lobbying if it:

1. R e f e r e n c e s , s u g g e s t s , o r o t h e r w i s e i m p l i c a t e s a n a c t i v i t y c o v e r e db y L o b b y i n g A c t S e c t i o n 1 - c c ) .

2.T a k e s a c l e a r p o s i t i o n o n t h e i s s u e i n q u e s t i o n ; a n d

3.I s a n a t t e m p t t o i n f l u e n c e a p u b l i c o f f ic i a l t h r o u g h a c a l l t o

ac t i o n , i . e . , s o l i c i t s o r e x ho r t s t he p u b l i c , o r a s e g m e nt o f t he p u b l i c ,

t o c o nt ac t a ) p ub l i c o f f i c i a l s ) ;”

The extent to which the Commission’s opinions can require registration

and reporting of advocacy that does not involve direct face to face

communications with legislators has been challenged by the New York Civil

Liberties Union in the federal case of NYCLU v. Grandeau , 528 F.3d 122 (2d Cir.

2008). The suit was filed in 2003 alleging the Commission could not require the

reporting of advertising as a lobbying expense on First Amendment grounds.

Summary judgment was awarded to the Commission in a 2008 ruling that the

NYCLU’s First Amendment challenge was not, “as a prudential matter, ripe for

judicial review.” NYCLU v. Grandeau , 528 F.3d 122 (2d Cir. 2008).

The Commission’s published guidelines to the Act have further stated

expenses related to a lobbying effort are reportable and is part of the amount

necessary to determine if the threshold has been met necessitating registration.

The guidelines read as follows:

Reportable expenses shall mean any expenditure incurred by or

reimbursed to the lobbyist for the purpose of lobbying. Reportable

expenses include, but are not limited to the following: advertising,

telephone, electronic advocacy, food, beverages, tickets,


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entertainment, parties, receptions or similar events, advocacy rallies,

consultant services, expenses for non-lobbying support staff, and

courier services when said expenses are part of a lobbying effort.

B. Citizens Committee’s grassroots activity

Citizens Committee sponsored websites in 2015 that included grassroots

communications constituting lobbying. These web sites were available to be

seen by New York State and City legislators along with the Governor and the

Mayor. The web sites generally encourage readers and/or listeners to contact

public officials to support legislation or the intended introduction of legislation

related to plastic bags in New York City and/or New York State

During the relevant timeframes, specific legislation was pending and/or

was intended to be introduced before the New York State Senate and Assembly

and/or the New York City Council that actions by Citizens Committee employees

and volunteers along with statements on the Citizens Committee and/or “bagit”

web site sought to influence. Since these web sites and associated activities cost

more than $5000, if the Commission were to determine they met the definition of

lobbying, Citizen Committee would be in violation of the Lobby Act for failure to

register and report their lobbying activity on behalf of their client Councilperson

Margaret Chin.

FAILURE TO FILE A CLIENT SEMI ANNUAL REPORT AND

REPORT EXPENDITURES

AS A CLIENT PURSUANT TO §1-j

OF THE LOBBY ACT


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A. The New York State Lobbying Act

The Lobby Act requires client semiannual reports be filed by all clients of

entities engaged in lobbying activity:

§ 1-j (a) (1) Semi-annual reports shall be filed by any client retaining,

employing or designating a lobbyist or lobbyists

A “client” is defined under the Act §1-c (b) and provides, “Theterm "client" shall mean every person or organization whoretains, employs or designates any person or organization to

carry on lobbying activities on behalf of such client.….”

Councilperson Chin specifically allocated in excess of $5000 to Citizens

Committee and directed that such funds be used to engage in a specific

grassroots lobbying campaign to support New York City Bill 1135. As a result

Councilperson Chin has retained Citizens committee as her lobbyist. Citizens

Committee accepted such funds and used them as directed by Councilperson

Chin to engage in a grassroots lobbying campaign to support New York City Bill

1135 by distributing the bags as directed by the client throughout the city and

using said delivery device (reusable bags imprinted with a grassroots lobbying

message) to further the client’s grassroots lobbying message following it’s own

lobbyist’s guidelines found on their grassroots lobbying web sites.

CONCLUSION

There is reasonable cause to believe, based on the record evidence, that

Citizens Committee has failed to register as a lobbyist for their client


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Councilperson Margaret Chin and has failed to report all of their expenses

incurred as part of their lobbying efforts for the year 2015 in violation of §1-e

and §1-h of the Lobby Act. Further there is reasonable cause to believe, based on

the record evidence, that Councilperson Margaret Chin has failed to file client

semiannual reports for 2015 and has failed to report all of her lobbyist’s

expenses incurred as part of their lobbying efforts on her behalf for the year

2015 in violation of §1-j of the Lobby Act. Complainant urges the New York

State Joint Commission on Public Ethics (the Commission) and/or The Office of

the New York State Attorney General to investigate the relevant facts. If either

or both the New York State Joint Commission on Public Ethics (the

Commission) and/or The Office of the New York State Attorney General

determines violations have occurred, they should take any and all steps

necessary to safeguard and protect the public’s interest. Section 1-a expressly

states the statute’s purpose, namely, “to persevere and maintain the integrity of

the governmental decision-making process in this state . . . it is necessary that

the identity . . . of persons or organizations . . . be publicly and regularly

disclosed[.]”

Respectfully Submitted,

David Grandeau, Esq.Complainant


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Documents

JCOPE Complaint - Citizens Committee and City Councilperson Margaret Chin