Though he helped found the
organization and sent it $57,000 in member items, Senate President Malcolm
Smith has maintained
that he has no knowledge of the day-to-day operations of the New Direction
Local Development Corp., the non-profit that federal authorities are now
probing for potential abuses. New Direction was located in the office portion
of a one-story building in Southeast Queen that shares space with a
laundromat and gym.
But also located in the building’s office space: Great
Abstract Company, LLC, a mortgage title company that Smith served as vice
president of for more than four years, according to his personal income
disclosures with the Legislative Ethics Commission.
Founded in August 2004, Great
Abstract was also located at 219-10 South Conduit Avenue, in Springfield
Gardens, incorporation and property records show.
The for-profit and non-profit
also shared at least one common employee: Joan Flowers, a board member for New
Direction who has reportedly been subpoenaed in the federal probe, and who was
in care of the organization’s books for at least several years, according to
the group’s tax returns.
Flowers, meanwhile, earned at
least $1,000 working for Great Abstract in 2008, according to her 2009
financial disclosure with the Legislative Ethics Commission. Flowers also drew
up both the 2000 incorporation documents for both New Direction and the 2004
incorporation papers for Great Abstract.
Previous media scrutiny into
New Direction has focused on four of Smith’s former aides (including
Flowers)—who were also officials at New Direction—and the potential misuse of
funds steered to the group by Smith and others. The group’s tax returns offer
little information accounting for how New Direction spent hundreds of thousands
of dollars in funding drawn from government grants and private donations,
including at least $31,000 that was supposed to go to Hurricane Katrina victims.
The group’s treasurer has said
he could not account for how the funds were spent.
Blair Horner, legislative
director at NYPIRG, said the common connections between Great Abstract and New
Direction raise new potential issues, though are not evidence of any wrongdoing
“Obviously, the overlap does
raise questions, and it’s up to Senator Smith to make crystal clear what the
deal was between the business and everything else,” Horner said.
A Smith spokeswoman declined to
comment and did not return a request for Great Abstracts’ tax records.
Reached by phone, Flowers
declined to comment, but Flowers’ attorney Larry Levy, did speak on her behalf.
Flowers’ filing with the
Legislative Ethics Commission does not list her position with the company. Levy
said he also was not sure of Flowers’ position, but he did say that it had been
Flowers’ decision to close the mortgage title company in early 2009 because of
the poor real estate market—and because she had gotten a job as Smith’s
$145,000-a-year government counsel.
Levy declined to release any
documentation showing the number of hours Flowers had spent working for the
non-profit and the for-profit companies or payroll records. He said that the
non-profit’s records had been taken by federal investigators, while the
mortgage title company was not part of the inquiry.
The number of employees at
Great Abstract remains unclear. Levy said that it definitely had employees
beyond Smith and Flowers—though not many—but he could not provide information
on their names or how many there were. Still, he said that no one involved with New Direction besides Smith and
Flowers had also worked for Great Abstract.
A July 2006 property transaction
involving Great Abstract bears the signature of a woman named Lenora Knight.
Flowers served as the notary public for the deal.
Flowers and her husband have
owned, or currently own, several other businesses registered at the 219-10 S.
Conduit Ave. address including a law firm, a fitness center, a physical therapy
clinic and a political consulting firm, which has received nearly $250,000 from
Smith, Rep. Greg Meeks—who also help found New Direction—and then-State Sen.
David Paterson between 2000 and 2009. (Flowers was also Paterson’s campaign
treasurer in 2007, when Great Abstract made its only political donation, for
$3,500 to Paterson’s account. At the time, Great Abstract listed an address in
Levy said that New Direction
was located in a physically separate location within the building from Great
Abstract, though he could not say where exactly the mortgage title company had
been located. Great Abstract may have been run out of Flowers’ law office, he
Though the one-story property Flowers
and her husband own at 219-10 S. Conduit is fairly large, the vast majority of
the floor space is taken up by the gym at one end (Cross Island Sports and
Fitness Center) and a physical therapy clinic (Flowers Physical Therapy) at the
other. A sign still advertises Flowers’ law office, though it was unclear from
outside the building where that is located. There is an office that appears
vacant on a corner of the building near the physical therapy clinic, but no
visible remains of the now-defunct New Direction or Great Abstract.
Levy said that all the business
dealings between New Direction and the for-profits had been kept separate. He
argued that the 21,000-square-foot space at the building offers ample room for
all the different businesses to co-exist separately.
“There’s also a gym, there’s a
dry cleaner,” Levy said. “None of them got any non-profit funds. [Great
Abstract] had absolutely nothing to do with New Direction. It did not give any
money to the title company.”
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