Investigations Into Spending Lead Speaker to Hire Lawyer

By Ray Rivera and RUSS BUETTNER

Christine C Quinn, the speaker of the New York City Council, has hired a criminal defense lawyer to represent her in federal and city investigations into Council spending practices, an aide said on Friday.

The move comes a week after disclosures that Ms. Quinn's office had appropriated millions of dollars to organizations that do not exist, instead routing the money to organizations favored by individual council members.

The lawyer retained by Ms. Quinn, Lee S. Richards III, a former federal prosecutor, will be paid with city funds, as will Sullivan & Cromwell, a firm that the Council has hired to assist in responding to the investigations.

Asked why the speaker felt she needed her own lawyer, Jamie McShane, a Quinn spokesman, said in an e-mail message that the lawyer would assist "the speaker in her cooperation" with inquiries by the city's Department of Investigation and the United States attorney's office.

Lawyers not involved with the matter said it was common for anyone approached in an investigation of this type, including witnesses, to hire a lawyer.

"When individuals are asked to speak to agents or to testify before a grand jury, they typically desire counsel who can guide them through the process and ensure their interests are protected," said Michael G. Considine, a former federal prosecutor who is now a partner with the firm of Day Pitney.

At a news conference on Friday called to announce proposed changes in the Council's budgeting procedures, Ms. Quinn did not mention Mr. Richards's hiring and emphasized that she was not a target of the inquiries.

She has said that the Council's use of fictitious organizations to hold money in reserve dated to 2001, five years before she became speaker, and that when she learned of the practice last year, she ordered that it be stopped.

Appropriating the money to fake organizations allowed council members to later tap the funds for projects without getting approval from the mayor.

Ms. Quinn called the news conference to unveil an overhaul that she said would impose new controls and oversight on how the Council spends its discretionary funds.

The changes would significantly limit the speaker's latitude over her own discretionary funds — which total $20 million to $25 million annually — by allocating grants through a competitive, merit-based process. The process would be overseen by the mayor's Office of Contracts, which would have final say over the allocations, with input from the speaker and the Council.

"They are a set of reforms I believe will give New Yorkers a full sense of faith in the idea that their taxpayer dollars are being distributed in an apolitical manner, a transparent manner and a manner which assures that their money is going to qualified organizations that are serving New Yorkers," Ms. Quinn said.

Under Ms. Quinn's changes, individual council members' items, known as earmarks, which last year totaled about $340,000 per member, would not be subject to competitive bidding. Ms. Quinn said that the earmarks are often doled out in relatively small amounts of $5,000 to $10,000 and that requiring competitive bidding for them would create too onerous a demand on the Little Leagues, churches and other community organizations that receive them.

Ms. Quinn said the council members' earmarks would, however, be subject to a more thorough review and certification process developed in consultation with the office of the New York State attorney general, Andrew M. Cuomo. A searchable database would also be created that could be reviewed by the public to easily identify how all member items are allocated.

An independent compliance officer would be hired to ensure that the Council adheres to procurement rules and follows proper accounting practices; Ms. Quinn said she would seek a change in the City Charter to make the position permanent. To ensure independence, the speaker would appoint the compliance officer to a four-year term that would overlap speakers' terms, and the officer could be removed only for cause.

Many of the groups that criticized Ms. Quinn last week praised her proposed changes, some of which will require approval from the full Council.

"Out of the public disclosure of this years-old inappropriate practice has come a good thing," said Dick Dadey, executive director of Citizens Union, a government watchdog group.

The changes, he said, "will bring an even greater level of transparency to the Council's review, discussion and enactment of the city budget, particularly as it relates to the often unknown process by which member items have been rewarded over the years."

The competitive process, however, would also not apply to Council initiatives, a much larger pot of money given out primarily at the speaker's discretion that goes to programs that reflect the Council's broader priorities.

The amount budgeted for those initiatives was $300 million last year, with the largest portion, $42 million, used to expand library service across the city to six days a week.

But some of the money was distributed very much like earmarks were, eventually ending up with nonprofit groups chosen by council members for programs like anti-gang and immigrant assistance initiatives.

For instance, the Council allocated $4 million last year for a domestic violence initiative. The speaker then distributed shares of that money to council members, in amounts ranging from $10,000 to $175,000, to give to organizations in their districts that deal with domestic violence.

Mr. Richards, the lawyer hired by the speaker, is a founding member of the firm of Richards Kibbe & Orbe.