NEW YORK CITY —The city recently picked one of Mayor de Blasio's top fundraisers to rep its pension funds in a potentially lucrative lawsuit against a Brazilian oil giant — and he got the plum assignment just three months after he donated $20,000 to the mayor’s nonprofit.
In February, the city Law Department, with input from City Comptroller Scott Stringer, chose attorney Jay Eisenhofer’s firm to help win back $250 million that the pension funds lost in investments when oil company Petrobras became embroiled in a wide-sweeping corruption scandal last year.
The Law Department picked his firm, Grant & Eisenhofer, after reviewing proposals from six firms that are pre-approved to represent the city’s five pension funds and its Deferred Compensation Plan.
Grant & Eisenhofer, which specializes in pension funds and securities litigation, filed a lawsuit on behalf of the funds and the deferred compensation plan on March 23 in Manhattan Federal Court — and it stands to make a killing off any settlement or judgment.
The firm will get between 10 percent and 16 percent of the money, depending on what’s recovered, according to the Law Department.
Eisenhofer, a co-founder and managing director at his firm, has been a major booster of the mayor since de Blasio's run for public advocate in 2009.
He was the fourth-biggest fundraiser for de Blasio’s mayoral campaign, bundling $82,250 in donations, according to city records. He also made the maximum campaign contribution — $4,950 — to de Blasio’s campaign for public advocate and to his 2013 mayoral run.
Eisenhofer’s most recent financial support was a $20,000 donation in November to the Mayor’s Fund to Advance New York City, a nonprofit that de Blasio controls and his wife, Chirlane McCray, heads.
The Law Department was unable to say whether the donation was made while it was deciding on the proposals from Grant & Eisenhofer and the other firms.
The mayor’s office is required to submit a list of the Mayor’s Fund’s contributors, their donation amounts and the purpose of the gift on a semiannual basis to the city’s Conflict of Interest Board. Eisenhofer’s donation was earmarked for “civic innovation,” according the most recent disclosure, which covers the period of Oct. 1, 2014, to March 31, 2015.
Under COIB rules, city officials are permitted to solicit contributions from prospective donors to the Mayor’s Fund.
But an official isn’t allowed to hit up prospective donors if they currently have or are about to have a business deal pending with the city and the official has influence over the outcome.
Under these circumstances, an official is expected not to engage in fundraising unless the agency “erects a ‘firewall’ permanently sealing the soliciting official from any involvement in making, affecting, or directing the outcome of the matter,” according to a COIB legal opinion on the Mayor’s Fund.
A spokesman for the Conflict of Interests Board declined to comment on Eisenhofer's donation.
The mayor’s office said Eisenhofer’s donation to the Mayor’s Fund was raised in full compliance with COIB requirements. It also said Eisenhofer made the donation as part of his role on the nonprofit’s board of advisors.
Both the mayor’s office and the Law Department also said that Grant & Eisenhofer had a relationship that predates the current administration.
Grant & Eisenhofer is among a group of firms eligible to represent the city’s pension funds and Deferred Compensation Plan in shareholder lawsuits.
The firms can pitch potential lawsuits to the Law Department as well as submit proposals when the Law Department asks for bids on a case. The Law Department consults with the comptroller’s office before choosing a firm.
Campaign finance records show that Eisenhofer also raised nearly $15,000 for Stringer’s campaign for comptroller in 2013.
When asked about the decision to go with Grant & Eisenhofer, the Law Department and Stringer’s office together issued the following statement:
"The Law Department and the Comptroller’s Office jointly determined that Grant & Eisenhofer’s litigation proposal was the best out of six proposals for the Petrobras case. The firm has represented the pension funds for well over 10 years as part of a pool of law firms, and its proposal stood the best chance to successfully recover money for the pension funds at a reasonable fee structure.”
Stringer and the Law Department didn't comment on the Eisenhofer's donation.
Some of Eisenhofer’s political donations during the 2013 mayoral campaign have come under scrutiny.
UNITE HERE, a labor union whose board chairman is de Blasio’s cousin John Wilhelm, also gave $175,000 to NYCLASS on June 1, 2013, records show. A few days later, NYCLASS donated that exact amount to New York City Is Not for Sale.
A de Blasio campaign spokesman has previously said neither he nor the campaign had any involvement in the NYCLASS donations.
The city’s lawsuit against Petrobras accuses its executives of knowing about a massive bribing scheme involving construction contracts and high-level politicians in Brazil.
The city’s pension funds and the Deferred Compensation Plan purchased securities from Petrobras in 2013 and 2014, according to the lawsuit. When the scandal broke, the securities’ value plummeted, with the funds losing $250 million, according to the Law Department.
Grant & Eisenhofer is also representing Forsta AP-fonden, one of Sweden’s national pension funds, in the city’s lawsuit against Petrobras. In a separate lawsuit, the firm is suing the oil company on behalf of a group of mutual funds.
Grant & Eisenhofer was founded in 1997. Its website says it has been involved in some of the largest securities class-action lawsuits, including one that recovered $3.2 billion from Tyco International.
Allan Ripp, a spokesman for Grant & Eisenhofer, declined to comment on Eisenhofer’s donations. He said the firm was picked for the Petrobras lawsuit because of its “reputation and track record.”
