2 years ago
NEW YORK — When a high-profile New York developer needed a lawyer to settle a dispute over a commercial skyscraper last fall, he called Frank Carone — a partner at the sprawling firm Abrams Fensterman in Downtown Brooklyn.
Carone took on the case, arguing in a November filing that the developer, Fortis Property Group, was entitled to maintain ownership of the 36-story tower amid the objections of a lender.
Now Carone is chief of staff to Mayor Eric Adams, a Democrat, and Fortis is pursuing a luxury condo project near the Brooklyn waterfront that will require city permits and oversight. A recent public disclosure shows the company has been actively lobbying the new mayoral administration.
That potential conflict of interest is one of many facing the attorney as he undertakes an expansive role in City Hall. A POLITICO analysis of Abrams Fensterman’s clients from last year — compiled through court records and news articles — found more than 40 whose financial interests are intertwined with municipal government.
After years operating as the man behind the curtain — a dealmaker who built a legal empire by forging relationships with the politicians and officials who often determined the fate of his clients — Carone now plays a leading role in municipal government.
His prominent title and long friendship with Adams afford him sweeping power in City Hall, where he serves as a confidant to a mayor who has long counted on him for legal and political counsel, connections to campaign donors and friendship.
And Abrams Fensterman’s network of clients sets up a situation with little recent precedent in New York: While former Mayor Mike Bloomberg hired private-sector executives and his successor Bill de Blasio’s top political staffer, Emma Wolfe, had deep ties to unions and activist groups, virtually no one in their respective administrations came to the job with such vast ties to city government.
“There is tremendous concern whenever you have a wheeler and dealer from the private sector in an enormously powerful government office where they have a chance to reward their friends,” said John Kaehny, the executive director of government watchdog group Reinvent Albany.
Municipal law in New York prohibits employees from using their publicly-funded jobs for financial gain — a requirement that extends to spouses, siblings, children and business partners.
To that end, Carone said the firm bought him out in an agreement inked on Dec. 31, the day before Adams took office. During an interview last week, he described the deal as “a complete financial separation” that included removing him from all leases, loans and bank accounts. His name was taken off the company’s masthead; his picture deleted from the website. He has pledged to recuse himself anytime a client of Abrams Fensterman — where his brother Anthony is still a partner — comes before City Hall.
“I went through all that trouble on purpose, and whether the firm does well or the firm just disappears in bankruptcy, it’s of no moment to me,” Carone said. “That’s a previous life. I still have fond relationships with friends, but that’s a different world I live in now.”
Potential conflicts
Carone said he did not seek guidance from the city Conflicts of Interest Board before taking the job, and is policing himself on a case-by-case basis, rather than adhering to a written policy that would govern interactions with former clients.
“Mr. Carone goes above and beyond the law by recusing himself from working on matters involving any of his former clients. He documents those recusals with counsel, who then alerts other relevant administration officials,” Maxwell Young, communications director for Adams, said in a prepared statement.
And an Abrams Fensterman representative said in a statement that the firm “takes seriously the need to anticipate and prevent potential conflicts of interest.”
Two de Blasio appointees — Deputy Mayor Alicia Glen and Housing Commissioner Vicki Been — sought the conflict board’s advice on how to handle city deals involving an affordable housing company both had prior connections to. The board granted them both waivers to weigh in on the transactions, provided they had cut financial ties. (The approvals, reported by the Daily News, didn’t shield them from criticism from government reform groups, however.)
Carone’s arrangement — which he described in detail for the first time in the interview, and which he said far surpasses legal requirements — has already drawn scrutiny.
Kaehny warned that former business associates might try to capitalize on a preexisting relationship with Carone to pressure agencies to render favorable decisions.
“The nature of Carone’s job was that he was a fixer, a connector, a dealmaker for a large number of people with power and political interests in Brooklyn,” Kaehny said. “So it’s pretty hard to see him being able to seal himself off from that entire world.”
In local government, opportunities to affect a business’ bottom line abound.
The city housing department, for example, has discretion over which projects receive tax-exempt bonds. The buildings agency hands out permits that determine how quickly developments can be constructed. And city transportation officials install pedestrian plazas and bike lanes that impact property owners.
The appointees to some of the agencies with expansive control over private projects have political ties to Adams and Carone. The administration recently named Eric Ulrich, a former City Council member who briefly worked as a senior adviser to Adams, to lead the buildings department. The transportation agency is being run by another former Council Member, Ydanis Rodriguez, one of Adams’ leading campaign surrogates last year.
A former government official said a call from City Hall can prompt an agency into action. Case in point: Earlier this year, the mayor’s team quietly nudged the Department of Transportation to remove one of its car-free pedestrian plazas in Brooklyn, only to immediately reverse course.
Carone's honor system
During the interview Tuesday, seated at the head of a wooden conference table covered in books and copies of the New York Law Journal in his airy office on the ground floor of City Hall, Carone described an honor system to avoid past clients who come before the administration.
He said he designed the process with Kostelanetz & Fink partner Claude Millman — an attorney who frequently represents clients before the city’s conflicts board — after financially separating from the firm. Abrams Fensterman saw significant growth when Carone was a partner, allowing him to add a $2.2 million apartment overlooking the East River to his personal residential portfolio, which also includes a waterfront home in Mill Basin, Brooklyn.
“The process that we endeavored after this divestiture was very simple: Any matters that, certainly, I worked on or knew of, even if I didn’t work on, I would recuse myself,” Carone said. “If a matter involving my previous firm comes up — and it has happened from time to time — I inform [City Hall’s] counsel’s office, with a copy to the requisite policy maker. That would be a deputy mayor or a commissioner.”
The declaration would read, “I am hereby notifying you that this matter was part of my old firm. Please, I am recusing myself and do not speak about it in my presence,” he said. Young declined to provide a written copy of such an email.
Carone said he and the mayor’s lead attorney, former federal prosecutor Brendan McGuire, determined the process need not be codified in writing. “I’m still an attorney and I don’t want to do anything to jeopardize my standing, which is how I made my career up until this point,” Carone added.
Asked whether he considered proactively approaching the Conflicts of Interest Board with a roster of Abrams Fensterman’s plaintiffs and defendants who interface with City Hall, Carone pointed out the firm’s full roster includes some 21,000 clients.
“Why would I do that? The law doesn’t require it and why would I just make myself crazy and counsel crazy?” he asked.
Through Young, McGuire said Carone’s divestment ensures recusals are not required by law, although he voluntarily does them. As an example, McGuire pointed to Carone notifying counsel of his prior legal work with the Opportunity Charter School — a Harlem institution that is involved in an ongoing litigation.
Abrams Fensterman’s government relations work is difficult to track because the firm rarely appears in lobbying disclosures. Instead, in a setup he described in an interview last summer, Carone often referred his clients interacting with city agencies to a lobbying firm or hired one himself, such as Kasirer or Mercury Public Affairs.
But a POLITICO review of hundreds of state and federal cases from 2021 provides a window into the Brooklyn litigators’ client base, which includes many plaintiffs and defendants who appear before city agencies as a regular course of business.
The statement Abrams Fensterman issued said the company took several steps “to protect the integrity of this law firm, Frank and City Hall.”
“Our actions ranged from a complete divesture of Frank’s partnership to a review by an independent third party ethicist to ensure our various firewalls are strong, inviolate, and consistent with best practices,” according to the statement. “We think our actions have not only set a high bar but have created a new ethical standard for law firm partners who have gone on to public service.”
Key clients
Abrams Fensterman is a go-to firm for the city’s taxi industry. It handles insurance claims for dozens of cab companies whose owners are heavily regulated by the city’s Taxi and Limousine Commission, which Carone also sat on from 2011 through 2016.
Because of his prior involvement, Carone said Tuesday he has recused himself from matters involving the commission.
The law firm also represents major nursing homes and hospitals that do business in New York, including Northwell Health and Montefiore Medical Center, which are lobbying the Adams administration this year, according to public records.
Carone himself represented SELA Group, a Queens developer building office space in the Brooklyn Navy Yard — an entity whose governing body is effectively controlled by City Hall.
And Abrams Fensterman defended Uri Mermelstein, a real estate executive and the brother of city International Affairs Commissioner Ed Mermelstein, in a loan dispute last year. Mermelstein’s firm, Top Rock Holdings, is part of a team planning to develop the long-dormant Parkway Hospital site in Queens, which will include income-restricted housing coordinated with the city’s housing department.
The law firm has also represented Phipps Neighborhoods, a major affordable housing developer with active projects in the city, and the unionized correctional officers at Rikers Island.
Last month, Adams named RoseAnn Branda, executive partner at Abrams Fensterman, to a 19-member committee tasked with providing candidates for judgeships.
And from 2011 through 2019, Carone sat on the board of Riseboro Community Partnership — a social service and housing provider with nearly $30 million in pending city contracts.
Scott Short, CEO of Riseboro, said Carone was a natural choice for the unpaid board spot, given his role as a longtime fixture in Brooklyn politics.
“Riseboro was a major city contractor before Frank’s service on the board, and continues to be a major city contractor after Frank’s service on the board,” Short said in a brief interview. He said Carone never intervened in a city contract for the company.
Few rules for private-sector hires
Millman, Carone’s ethics adviser, said that conflicts of interest rules have often been discussed when the city charter comes up for occasional review, including through a commission he led in 1999. And while lobbying bans for departing government employees have periodically been strengthened, the city intentionally places fewer restrictions on incoming private-sector hires like Carone to ensure mayors can attract talent. Once an official is hired, he added, too many limits with past business associates could hamper decision making.
“There is a price to everything,” Millman said. “As you add rules and make life more complicated, it might discourage people from wanting to become public officials.”
Abrams Fensterman deals in more than just litigation.
The company also has hooks in the local political scene, defending the Brooklyn Democratic Party in its ongoing battle with breakaway factions and — more prominently — Adams in his successful bid last year to become New York City’s 110th mayor.
The two were so close, Adams paid Carone a mere stipend for use of his office space during the campaign. Carone acted as lawyer, political consultant, fundraiser, enforcer and friend for the candidate. He then played a leading role in the transition process, advising Adams on how to set up City Hall and who to hire. Some of the top picks — deputy mayors Meera Joshi and Lorraine Grillo, for instance — have prior relationships with Carone in addition to being well regarded as government veterans.
Carone said he is no longer involved in party politics, despite ties between the administration and several upcoming elections for local leadership slots.
“I may in my gut root for someone. I’m a competitive person, so of course I’m going to do that, but I’m not involved,” he said.
He then brushed off the prospect of favor-trading — the sort that sparked the interest of federal prosecutors under de Blasio — when presented with a hypothetical.
Asked about a developer dropping his firm’s name to a mid-level Department of Buildings aide in control of a coveted permit, Carone said that staffer would know to evaluate all matters on merit alone.
“If I’m involved, I’ll recuse myself, so there’s no obligation on commissioners to go further than what the law requires,” he said, before adding, “That’s conspiratorial. I think we’re getting a little far-fetched now.”
Carone was noncommittal about whether he’d ever return to the firm.
“I have no idea,” he said. “My horizons are — who knows? My main priority is doing a good job here and taking life where it takes me.”
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