Rev. Flake 'looting' lesson
By: Isabel Vincent & Melissa Klein
NYPost.com,October 9, 2011
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New York political kingmaker and religious leader Floyd Flake rakes in the cash -- and leaves wreckage behind, critics say.

For five years, the former congressman headed one of the largest churches in the country in Queens while simultaneously running a small college in Ohio -- pocketing hundreds of thousands in salary and benefits from both places.

Now Wilberforce University faculty members say he bled them dry, setting the storied black Protestant college on the road to financial ruin.

“He came in and looted the place,” said Robert Fitrakis, a lawyer for the faculty who filed a complaint last month with the Ohio Attorney General’s Office.

The faculty is seeking to oust the current board and Flake’s handpicked successor, charging that they have breached their legal and financial duties.

The faculty members claim that after Flake became president in 2002, his compensation and perks skyrocketed, he hired cronies as high-priced administrators, he failed to raise enough money and he insisted on a pricey contract with the Princeton Review, where he sat on an advisory board.

In his last year at the college, 2008, Flake pulled down a total compensation package of $340,100, which included his salary of $145,833 and a retirement benefit of $149,267. He also had a $45,000 expense account.

Almost all of Wilberforce’s revenue, about 90 percent, comes from taxpayer dollars, including federal financial aid and government grants.

And Flake earned the outsize salary while working at the college only one day a week, said a faculty member.

“He would fly out on Monday morning, get here in the afternoon, leave sometime on Tuesday morning,” said Richard Deering, a professor who has been at the 600-student college since 1968.

The college maintained on its tax filings that Flake worked 40 hours a week during the first five years he was there. But Flake also said he worked 40 hours a week at a nonprofit he ran out of his New York home, according to that group’s federal tax reports.

Flake tooled around the campus in a new $54,000 Cadillac Escalade. He apparently rejected the off-campus house the college offers its presidents. Instead, he bought a $190,000 condo in a town closer to shops and restaurants.

That 2005 purchase came in the same year that his salary nearly doubled, from $120,000 to $204,998, and his expense account shot up to $39,300 -- almost exactly what would be needed to put a 20 percent down payment on the condo.

Although the college did provide an expense account, Flake claimed in a 2007 interview that he and his church, the Greater Allen Cathedral of New York, paid for his trips to Ohio.

The controversy is just the latest swirling around Flake, who served in Congress from 1987 to 1997. His Empowerment Development Co. was part of the consortium seeking to build a casino at Aqueduct, a deal under federal investigation.

Flake, a Democrat, was indicted on tax-evasion and embezzlement charges two decades ago -- charges that were eventually dropped.

In addition, two of his political protégés, state Sen. Malcolm Smith and Rep. Gregory Meeks, who succeeded him in Congress, are under federal investigation for their roles in forming a Queens charity.

Flake, the son of a janitor who grew up in a Houston housing project, made important inroads on the New York political scene when he took over the pulpit of Greater Allen in Jamaica in 1976.

The church’s congregation now numbers some 23,000. It runs a school and develops affordable housing. Flake’s endorsements are highly sought after by politicians.

As the congregation grew, so did Flake’s prestige, and wealth.

He left Queens in 2001, moving to a sprawling $3 million, five-bedroom mansion in the tony village of Old Westbury on Long Island. He drives a 2011 Mercedes Benz valued at $96,000.

In order to maintain his lifestyle, the church paid him a housing allowance in 2008 and 2009 totaling $460,400, according to tax records. He was also pulling down $217,725 in salary from the church in 2010, plus another $12,994 from the Empowerment Development Group, the Aqueduct racino company. And he got $37,750 more from Empowerment Ministries, a nonprofit he and his wife run out of their home.

The charity -- with a mission to “spread the word of Jesus Christ” -- also paid his wife, Margaret Elaine Flake, $37,750 in 2010. And she took in $228,455 from Greater Allen Cathedral, where she is co-pastor.

Flake, 66, is also able to take his congressional pension, which is estimated by the National Taxpayers Union at $24,000 a year.

Despite their hefty compensation, the Flakes continually mortgaged their home, taking out three loans against it after the initial one for $1.4 million in 2001, according to Nassau County records. As of November 2010, they owed $879,789 on the property.

The couple gets a minister’s tax break on the 7,279-square-foot house, bringing their current school-tax bill down to $38,209 from $66,895.

In 2002, Flake was recruited to become president of Wilberforce, which is affiliated with the African Methodist Episcopal Church and from which he earned a bachelor’s degree in 1967. The school, near Dayton, was founded in 1856 and claims to be the oldest private black college in the country.

The school had hit hard times, and “he was brought in as the savior, the messiah,” Fitrakis said.

It was supposed to be a one-year appointment for Flake, who at the time was heading the charter-school division of Edison Schools Inc. His Wilberforce salary was initially $114,395.

Flake quickly got rid of most of the administrators, replacing at least two with his associates.

He hired Marshall Mitchell, his former congressional chief of staff who also worked at Edison Schools, as a $76,000-a-year vice president of institutional advancement.

He brought in Amia Foston, a community-development staffer at his church, as a vice president earning $76,000.

Flake insisted on using high-school courses from the Princeton Review for students who needed remedial lessons.

Not only were the classes inappropriate for college students, but faculty members also accuse Flake of self-dealing since he sat on a Princeton Review advisory board at the time, according to the faculty complaint.

The university spent $1,180,998 on the Princeton Review over six years, according to the complaint, which says federal money paid for the classes.

A spokesman for the Princeton Review confirmed Flake served on its advisory board from about 2001 to 2009 and was compensated with stock options.

In the spring of 2003, Flake declared a state of financial emergency and said he wanted to slash the number of majors offered at the college by two-thirds. Faculty members agreed to a 10-percent cut in their salaries or their retirement contribution.

Two years later, he was giving his pals huge raises.

Mitchell, who was earning $80,000 in 2005, got a $64,000 bump. He, too, was only on campus a few days a week, according to Deering.

Foston continued to get an $80,000-a-year salary -- at the same time he was enrolled as a full-time graduate student at another university, he said.

Mitchell, who no longer works at Wilberforce, said his salary went up when the university’s accountants determined the school’s finances were stable. He maintains he spent most of his time at the Ohio campus but had a deal to go back to his home near Washington, DC.

While Flake managed to secure federal grants to improve the university’s phone and computer systems, the money did little to help the college in the long run, Deering said.

Flake did not bring in any big private donations but did manage to get pal Hillary Rodham Clinton to speak at the 2007 commencement.

Total enrollment at Wilberforce dropped from 1,190 in the fall of 2002 to 591 this fall, below the number needed to break even, faculty say.

The complaint charges that the college will be “totally insolvent” in about 2 1/2 years.

Flake did not respond to requests for comment.

A snapshot of the Rev. Floyd Flake and wife Margaret Elaine Flake’s income in 2008:

Salary from Wilberforce University: $145,833

Retirement benefits from Wilberforce University: $149,267

Expense account from Wilberforce University: $45,000

Salaries from Greater Allen AME Cathedral; Empowerment Development Corp. and Empowerment Music Recording: $221,728

Salary from Empowerment Ministries nonprofit: $68,000

Housing allowance for $3 million Old Westbury, LI, home from Greater Allen AME Cathedral: $230,200

Congressional pension: $23,000 (estimate)

Princeton Review Advisory Board: stock options

Margaret’s salary from Empowerment Ministries: $43,000

Margaret’s salary from Greater Allen AME Cathedral: $230,009

Total: $1,156,037 plus stock options

melissa.klein@nypost.com

Are Corrupt NY Politicians Cashing in on Aqueduct Gambling?
Submitted by Peter Flaherty on Wed, 02/03/2010 - 23:22
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Well, it didn’t take long. Danny Hakim of the New York Times reports today:

Three days after awarding a lucrative state contract to a company connected to the Rev. Floyd H. Flake, one of New York’s most influential black pastors, Gov. David A. Paterson summoned Mr. Flake to his Harlem office Monday morning and sounded him out about his political support.

On Friday, New York state awarded a franchise for video gaming machines at Aqueduct racetrack to something called the Aqueduct Entertainment Group (AEG), which will pay the state hundreds of millions for the opportunity. Making the pitch for AEG was Flake, who while a member of Congress in the nineties, faced serious ethics charges.

Two of Flake’s close associates and protégés are Rep. Gregory Meeks and state Senator Malcolm Smith. As we exposed on Sunday, Meeks and Smith are deeply involved in a nonprofit called the New Direction Local Development Corporation that appears to function as their slush fund.

Meeks and Smith have no formal role in AEG but as the New York Post pointed out in an editorial yesterday:

…the list of folks involved with Flake's Aqueduct Entertainment Group reads like a New Direction class reunion.

There's Darryl Greene, a minor partner in the venture and a former business partner of Smith's. His wife was a founding board member of the charity, along with Smith's wife.

Greene also was convicted in 1999 of stealing $500,000 in city and corporate cash through a minority-hiring scam.

And, of course, there's Flake himself, who's long been among Smith's closest political confidantes.

No surprise, then, that the Rev. Edwin Reed, the CFO of the development arm of Flake's Jamaica church, doubles as New Direction's treasurer.

It might seem odd that New York’s first African-American governor would have solicit the support of characters like Flake, but in Empire State politics, nothing is given away, except of course for taxpayers’ money. According to the New York Times:

A week earlier, Mr. Flake had publicly expressed support for Attorney General Andrew M. Cuomo, who is widely expected to challenge Mr. Paterson in the Democratic primary, saying to The New York Times that “he’d be a great governor.”

The comments by Mr. Flake and other black leaders expressing enthusiasm for Mr. Cuomo unnerved Mr. Paterson’s staff as it works to shore up his support in the black community, which would be crucial to the governor’s hope of staying in office.

Could all this just be a coincidence? The New York Times continues:

The effort to build a casino at the Aqueduct racetrack has been a tortuous eight-year-long process, and critics have portrayed the final round of negotiations as Albany at its worst, with no formal process and scant disclosure.

In fact, the Aqueduct Entertainment Group received poor ratings in a ranking of the bidders compiled by the state’s Lottery Division, according to several people with knowledge of the process.

While in Congress, Flake stood trial for 17 counts of fraud, embezzlement and tax evasion. According to Politics in America:

In April 1991, the government’s case against Flake — which consisted of charges that he embezzled funds from a housing project run by his church and evaded taxes — was dismissed after a federal judge barred prosecutors from presenting what one called “the heart” of the case to the jury.

Despite that victory, the entire episode made Flake “damaged goods” in the eyes of many Democrats, hurting his prospects for advancement in Washington.

It apparently does not preclude advancement back home, where a desperate governor is running for re-election.

Related:

Rep. Gregory Meeks’ Charity Looks More Like Slush Fund
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Rep. Gregory Meeks (D-NY), already under scrutiny for his relationship with Ponzi billionaire Allen Stanford, is deeply involved with a nonprofit group in Queens, New York called New Direction Local Development Corporation. Our review of IRS tax returns, New York state budget records, and other documents suggests that New Direction does little development. Instead, it appears to operate to the benefit of Meeks and a state Senator named Malcolm Smith, and much of the money it has raised is simply unaccounted for.

New Direction has received at least $56,500 in New York state taxpayer funds since 2001, at the direction of Smith in the form of “member items,” the state equivalent of an earmark. The group’s largest donation of $250,000 came in 2004 from a company called International Airport Centers, which successfully sought permission to build an airport cargo facility near JFK airport in their districts. New Direction also collected thousands of dollars for Hurricane Katrina victims.

The funds appear to have been paid out for meals and entertainment, and to cronies of the two politicians in the form of consulting fees. Payments were also made to satisfy IRS penalties. Large sums of money seem to simply disappear from the group’s own filings.

According to its website, the New Direction mission is to:

…foster economic development in Southeast Queens. Such economic development shall include rehabilitation and revitalization of commercial districts, the creation of affordable housing, and an increase in home ownership in the area.

According to the same website:

Founded February, 2001 by the initiatives of congressman Gregory Meeks and senator Malcolm Smith, New Direction Local Development Corporation, (" NDLDC") is incorporated in New York State as a not for profit corporation. It applied for and received not for profit recognition under Section 501(c)(3) of the Internal Revenue Code.

From 2002 to 2008, the group’s address was the office of a lawyer named Joan Flowers, who served as campaign treasurer for both Meeks and Smith. Flowers is a well-connected political operative, who is also the current campaign treasurer of New York Governor David Paterson.

The money raised for Katrina victims raises numerous questions. New Direction set up a special fund called New Yorkers Organized to Assist Hurricane Families (NOAH-F).

In 2005, Meeks’ campaign committee donated $10,000 to NOAH-F, but according to a 2008 amended filing (below), received $5,000 of it back under circumstances that remain unclear.

New Direction received at least $15,000 from other donors for Katrina relief, including proceeds of $11,210 from a benefit gospel concert, but New Directions reported only a single expenditure of $1,392 for aid to Katrina victims on its tax returns.

This photo is from the Winter 2005 newsletter of Assemblywoman Barbara Clark. The original caption reads:

"Big Check" for a Big Cause: Assemblywoman Clark presents a check for eleven thousand, two hundred and ten dollars ($11,210) on behalf of the community to Chairman Congressman Gregory Meeks and Treasurer Mortimer Lawrence, Esq. of the New Yorkers Organized to Assist Hurricane Families (NOAH-F) relief fund. The total proceeds were raised by the Hurricane Katrina Gospel Benefit Concert.

The Times-Ledger, a Queens newspaper, reported:

U.S. Rep. Gregory Meeks (D- St. Albans) laid out a detailed plan to support 30 families displaced by Hurricane Katrina during an emergency meeting Friday with other elected officials from southeast Queens, clergy and area residents. The congressman said the plan would help support the families for six months, which includes full rent payments and utilities up to $1,500 a month for those displaced by the storm. The fund-raising goal for the plan would be $270,000. He said there would be no administrative costs attached to the effort.

"Every dime, every dime would go to these 30 families," Meeks said. He said a special fund, called NOAH's Families, or New Yorkers Organized to Assist Hurricane Families, was created to help storm victims. (emphasis ours)

Meeks’ involvement with another nonprofit, the so-called Inter-American Economic Council, drew headlines in late 2009. The nonprofit was funded almost entirely by billionaire Allen Stanford, who was charged last year with operating a “massive Ponzi scheme” involving about $8 billion in certificates of deposit.

Sometimes accompanied by his wife, Meeks took six trips to Caribbean destinations such as Antigua and St. Lucia, courtesy of Stanford’s nonprofit.

The Miami Herald reported that former Stanford employees alleged that in 2006, Stanford asked Meeks to retaliate against a renegade Stanford executive named Gonzalo Tirado in Venezuela who was attempting to blow the whistle on Stanford fraud.

Allegedly, Stanford asked Meeks to call Venezuelan strongman Hugo Chavez. Stanford wanted Chavez to go after the whistleblower, who was indicted a year later. Meeks had not comment on the Miami Herald story and has been mum since.

Subpoena of Aqueduct Entertainment Group will probe Rev. Floyd Flake's multimillion-dollar empire
BY ROBERT GEARTY AND BARBARA ROSS, DAILY NEWS STAFF WRITERS, Sunday, February 14th 2010,
LINK

The feds also requested documents related to pork-barrel items Smith sponsored for New Direction and nonprofits tied to Flake, sources say.

One of Flake's partners in AEG, Darryl Greene, was booted from the consortium after questions arose about his 1999 guilty plea to stealing $500,000 through a no-show job recruiting minority firms.

Flake did not return repeated phone calls and refused last week to speak about Aqueduct to reporters outside his church. In church, he defended the deal, insisting it would bring much-needed jobs to the area.

AEG spokesman Andrew Frank said Flake has agreed to invest $625,000 in the project through a firm called Empowerment Development Group.

That investment has raised questions about whether he's taking advantage of his considerable political clout to line his pockets.

Gov. Paterson, one of three Albany leaders who picked the consortium, is courting Flake's endorsement for reelection. Assembly Speaker Sheldon Silver (D-Manhattan), who can torpedo the deal, has asked for an investigation into how AEG was vetted.

Meeks, Flake's one-time aide, defended the deal as good for the neighborhood.

"I hear this stuff about Rev. Flake and Darryl Greene and no one has talked about the expertise for what they did," Meeks said. "They should get extra credit for trying to include the local community. Who's better in southeast Queens to do development work than Rev. Flake?"

Ever since he abruptly retired from Congress in 1997, Flake has mixed the spiritual and the entrepreneurial to build affordable housing, nurture small businesses and even transport churchgoers to Atlantic City casinos.

For decades, presidential, gubernatorial, mayoral, legislative and City Council candidates have sought his endorsement.

As his political influence has grown, so have the assets of his church - with some help from city, state and federal coffers.

The church's assets include 630 units of housing for low-income seniors, a half-dozen commercial properties in downtown Jamaica, a newly expanded grammar school and a multiservice center with clinics.

Flake's world today is lightyears away from where he started almost 35 years ago when he first became pastor of Allen AME Church in Jamaica.

Then, he lived in a modest Queens home. He and his wife, Elaine, had to go to the church basement to start a school and stuff a burgeoning congregation into the school's gym.

Church one of richest in U.S.

His 15,000-member congregation now packs into a relatively new cathedral funded with $23 million in tithes. His church, its sophisticated Web site says, has $92 million in assets, making it the 57th largest in the U.S.

In 1994, as Allen AME grew, Flake bought a home in Laurelton from his church for $90,000 and sold it in 2002 for $188,000, records show.

Today, Flake, 65, and his wife earn nearly $1 million from his Empowerment Ministries and "related" groups that include the for-profit Empowerment Development, 2008 tax forms show.

The forms say the nonprofit's mission is "to spread the word of Jesus Christ Our Lord and Savior through preaching, teaching, ministering, evangelizing and revivals." The for-profit's mission is to invest in Aqueduct's "racino."

In 2001, the Flakes bought a modern 7,200-square-foot home with three-car garage, fireplace and indoor pool on 2 acres in Old Westbury for $1.8 million. Today it's worth $3.6 million.

Because he's a minister, they pay half the property taxes their neighbors must cough up. Records show his typical $48,000 property and school tax bills are cut to about $27,000.

His rise to the top has not always been smooth. In 1990, a federal grand jury indicted Flake and his wife on charges of stealing money from a federally funded church program.

His chief accuser, a former aide, was killed in a car crash. A judge tossed many of the charges; prosecutors withdrew the rest.

Flake shocked the political community in 1997 when he announced he would not seek reelection to Congress.

Over the next decade, Flake was busy in the community with projects like the construction of a Veterans' Administration extended care facility in St. Albans.

He also held two jobs outside the church: part-time president of his alma mater, Wilburforce University, in Ohio, and president of Edison Charter Schools.

Once a proponent of school vouchers, Flake extended his political clout to support the creation of a new charter school in his region, the Peninsula Academy Charter School.

Peninsula operates out of trailers. A planned permanent facility will be built by the same firm that built Flake's 630 senior housing units and his Cathedral: The Benjamin Cos.

The local company listed as the developer of a permanent home for Peninsula is owned by Darryl Greene, the former AEG partner who was forced out. Peninsula's chief sponsor is Flake's former aide, Senate President Smith.

bross@nydailynews.com