The Weekend Wrap: September 29, 2024

NYC Mayor Adams indicted

Welcome to the Weekend Wrap! Here are the week’s white collar highlights.

Let’s begin with the non-Trump news for a change:

White Collar News

New York Mayor Eric Adams Indicted for Corruption

New York City Mayor Eric Adams has been indicted on federal corruption charges. Adams has been under investigation for some time. Things began to look ominous for him late last year when federal investigators approached his motorcade and executed a search warrant to seize his electronic devices — never a good sign. Now he has become the first sitting mayor of New York in history to face criminal charges.

New York Mayor Eric Adams

The indictment in the Southern District of New York charges Adams with conspiracy, wire fraud, two counts of soliciting campaign contributions from a foreign national, and bribery. The corruption allegedly began several years before he was elected in 2021, while he was serving as Brooklyn Borough President, and was related to both his 2021 and 2025 mayoral campaigns.

The indictment alleges that for nearly a decade Adams accepted luxury foreign travel and accommodations worth tens of thousands of dollars, as well as unlawful campaign contributions, from foreign individuals. It claims that as Adams’ “prominence and power grew, his foreign-national benefactors sought to cash in on their corrupt relationships with him.” In particular, the indictment alleges that in exchange for gifts of travel and campaign contributions from Turkish officials, Adams agreed to pressure the New York fire department to speed up the opening of a new Turkish consulate building despite concerns about its fire safety. This alleged quid-pro-quo is the primary basis of the bribery charge. There is another relatively minor allegation that he helped a Turkish businessman resolve a dispute with the Department of Buildings.

The indictment also alleges that Adams sought and accepted illegal contributions to his mayoral campaigns from corporate and foreign donors. These illegal contributions allegedly were disguised by funneling them through multiple straw donors, to evade contribution limits on foreign and corporate contributions. A Turkish official who facilitated many of these contributions also allegedly provided Adams with multiple luxury international flights and hotel stays and other travel benefits which Adams failed to disclose as required. These unlawful contributions from Turkish individuals form the basis of the two counts of soliciting campaign contributions from a foreign national.

Adams also allegedly “compounded his gains from the straw contributions by using them to defraud New York City and steal public funds.” New York has a program to provide candidates with funds to match donations from small individual donors. Adams allegedly applied for those matching funds relying on the false reported donations made through straw donors, and as a result unlawfully received more than $10 million in public funds. The wire fraud charge, which in many ways is probably the most serious, is based on this allegation of stealing public funds.

There are some almost comical allegations in the indictment about efforts by Adams and others to cover their tracks once the investigation began. For example, while being interviewed by the FBI and denying any criminal conduct, an Adams staffer allegedly excused herself to go to the restroom and while there deleted from her phone an encrypted messaging app she had used to communicate with Adams and other co-conspirators. In another example, when the FBI seized Adams’s electronic devices at the end of last year, his personal cell phone that he used for most of the communications related to the indictment was not recovered. When he produced that phone later in response to a subpoena, he told the FBI he had recently changed the password and now could not remember it so he could not unlock it for them.

These apparently aren’t exactly criminal masterminds.

Adams has denied his guilt and vowed to fight the charges. He will have a tough battle on his hands. The government likely has obtained the cooperation of some of the staffers and others involved, and clearly has extensive records of texts and emails sent in furtherance of the scheme. The paper trail of undisclosed luxury travel and illegal campaign contributions is going to be difficult to explain.

I will say that the indictment is a little thin on the “quo” side of the alleged bribery. It alleges a substantial number of gifts and illegal campaign contributions, but relatively little that Adams did in return. The primary allegation is that, at the request of his benefactors, he pressured the fire department to approve the Turkish consulate building — but that actually took place before he was even Mayor. Other than that, the indictment tells a story primarily of Turkish nationals seeking to curry favor with Adams but receiving relatively little in return. They were apparently building access and influence over the long term; the criminal investigation may have thwarted much of their ability to cash in on that influence.

I expect the alleged theft of millions in public matching campaign funds, along with the illegal campaign contributions, will end up being the real meat of the case. When it comes to the campaign contributions, his defense will probably be a lack of knowledge — that even if these illegal contributions were made and matching funds were improperly obtained, it was his staff who did it and he knew nothing about it. But if the indictment’s allegations about Adams’s personal involvement in the scheme are true, that defense will be difficult to maintain.

Finally, you may have heard some comments about the Justice Department’s so-called “60 day rule,” under which DOJ voluntarily avoids taking overt steps in criminal investigations that might influence an election if that election is less than 60 days away. It’s true we are less than 60 days from Election Day, but Adams is not running this November. The New York mayoral election takes place in 2025 and the Democratic primary is next June. The rule does not apply here.

SBF Cooperator Sentenced to Two Years