State officials are accusing the Brooklyn Academy of Music Local Development Corporation of misusing hundreds of thousands of dollars earmarked for the BAM cultural district in Fort Greene.
The BAM LDC spent $257,000 to pay consulting fees to its own salaried chairman, former BAM chairman Harvey Lichtenstein, between 2002 and 2004, according to tax filings now being reviewed by the New York Assembly Committee on Corporations, Authorities and Commissions.
“There are laws that govern expenditures of quasi-governmental agencies like BAM LDC,” said Assemblyman Richard Brodsky (D–Westchester) chairman of the committee. “We are concerned about whether those laws are being observed.”
Lichtenstein’s consulting fees were $75,000 in 2004, $111,035 in 2003, and $71,113 in 2002, according to income-tax returns. He also received a salary of $73,353 in 2004 and $35,678 in 2002, according to records. The LDC didn’t pay him a salary in 2003. The funds were raised privately and did not come out of public funds, according to a spokesman for the group.
The Bergen Record, a New Jersey newspaper, first reported the consulting payments.
Officials for the LDC, which has since been swallowed up by the Downtown Brooklyn Partnership, said that that they had not violated the law, and theat Lichtenstein was worth the money he was paid.
“While Mr. Lichtenstein was never an employee of BAM LDC, and therefore was never compensated as such, he did receive compensation as a consultant to the organization,” said Jay Kriegel, a spokesman for the group. “Unfortunately, BAM LDC’s 2004 tax return was ambiguous and allowed the interpretation that Mr. Lichtenstein was compensated as both an employee of — and as a consultant to — the LDC. A technical amendment is now being prepared to eliminate any confusion.”
He added that Lichtenstein’s “service merits the level of compensation he received.”
Lichtenstein is a powerhouse in the arts world well known for transforming the 1908 Beaux Art Brooklyn Academy of Music from an underused relic that rented out concert halls for evening karate classes into the cutting-edge arts center it is now.
He began to push a plan to transform the area around it into a Lincoln Center–like arts center before his 1999 retirement from the academy. In 1997, he formed the LDC and within a few years, he had scored $75 million in city funding and $2.3 million from the state to enact his vision.
But progress on the $650 million arts district — which would include a Visual and Performing Arts Library designed by architect-of-the-moment Enrique Norten, a Frank Gehry-designed playhouse for Theatre for a New Audience and a dance studio topped by a 20-story residential tower — was moving slowly under the LDC.
“Projects have languished for a while,” Deputy Mayor Daniel Doctoroff, who oversees economic development projects, told The New York Times, in August of last year.
City officials took over the project’s reins last summer, transferring control to a new group headed by Joe Chan, who last worked as a top advisor to Doctoroff.
Chan’s Downtown Brooklyn Partnership has kept Lichtenstein as a consultant and paid him about $75,000 a year, according to the Bergen Record. The former Doctoroff aide said that Lichtenstein was well worth the price.
“Harvey has a very unique ability to basically speak with decision makers, and frankly people who make programmatic decisions in the art world,” said Chan.
The inquiry into Lichtenstein’s group is part of a larger effort to increase oversight of the thousands of local development corporations that are funded by state and local government agencies, but left to operate with little supervision. While the LDC is the first Brooklyn group singled out by the state Assembly, it is not likely to be the last.
“We are asking questions of a number of local development corporations across the state,” said Brodsky.
“These are quasi-governmental agencies that use public money with very little transparency about their budgets, their compensation policies or their [decision-making] policies.”
Legal experts said it was unlikely that the LDC violated the law when it paid the leader twice but Assenblyman Hakeem Jefferies (D–Fort Greene) said that the double-dip raises questions of public accountability because the group has received public money.
“[These groups] must be subject to a high level of scrutiny to make sure that public dollars are being spent in the most effective fashion,” said Jeffries. “The consulting fees raise a serious red flag in respect to the group’s overall mission.”