NEW YORK CITY — The arrests of state Sen. Malcolm Smith, Queens City Councilman Daniel Halloran and two GOP bosses on bribery charges has thrown a cloud over an already-weak Republican Party and the GOP candidates vying to be mayor.
Billionaire supermarket magnate John Catsimatidis and former MTA Chairman Joe Lhota, the two leading contenders for the nomination, have not been accused of any wrongdoing. But both nonetheless found themselves ensnared Tuesday in the investigation, which party bosses told DNAinfo.com New York they fear has just begun.
"Clearly it throws clouds over them," said Baruch College professor Doug Muzzio, who said the charges undermined every member of the Republican Party, prompting questions about what other candidates may have done to lock down coveted endorsements.
“If [the chairs] could be bribed for 20 or 40 thousand by Halloran... Were there any counteroffers?" he asked. “The question is, is this it, or is this the tip of the proverbial iceberg?"
For Catsimatidis, the alleged corruption struck very close to home.
The billionaire appeared to be the only Republican contender who was made aware of the investigation before Tuesday's early morning arrests, saying in a statement that his campaign and company "have fully cooperated with law enforcement."
Queens party vice-chairman Vincent Tabone, who was arrested Tuesday on charges he accepted $25,000 in bribes and was promised an additional $25,000 to help secure Smith's spot on the GOP ballot, is also a close associate of Catsimatidis, working for both his campaign and as a lawyer in the real estate department of Catsimatidis' Red Apple Group since 2008.
According to city campaign finance records, the campaign paid Tabone $3,000 on Feb. 16 — two days after the aide allegedly took a hefty cash bribe from an undercover FBI agent posing as a real estate developer, according to the criminal complaint.
Catsimatidis' staffers painted Tabone's alleged attempts to get an opponent on the ballot as a stinging slight.
“This is a betrayal of Shakespearean proportions. Someone who you trust, who works for you, is in fact double dealing and trying to get another party on the Republican ballot," said aide Rob Ryan, who said that Tabone was removed from both the company and campaign's payrolls Tuesday.
He officially resigned from the party Wednesday morning, a source close to the party said.
But despite the close connections, Catsimatidis and his supporters tried to argue that the scandal would actually benefit his campaign.
"I think it helps our campaign," he told reporters ahead of a GOP debate in Midtown Tuesday evening, according to video posted by Capital New York. He also suggested — without providing evidence — that Lhota's team may be further involved.
"All of the people that got indicted for this, most of them had endorsed our opponent, Mr. Lhota," Catsimatidis said.
Among those arrested was Bronx GOP Chairman Joseph Savino, who last month endorsed Lhota for mayor, calling him "the most qualified candidate in this race."
Lhota also recently snagged the endorsements of all of the council's Republican members, including Halloran, the alleged leader of the scheme.
Lhota's spokeswoman declined to comment on Catsimatidis' suggestion that Lhota may be further involved, which is not supported by any public documents or official statement.
In a statement Wednesday, Lhota called the arrests "a disturbing example of why the people of New York have lost trust in their public officials."
"I applaud the US Attorney for his vigilance in rooting out corruption and prosecuting violators of the public’s trust to the fullest extent of the law," he said, adding that, "when convicted, they should not only be incarcerated but they should also be stripped of any public pensions."
But it's not just Republicans that are being dragged through the mud.
The investigation also spilled into the Democratic contest following an allegation that, in addition to bribing county chairs, Halloran had tried to sell off $40,000 to $80,000 in his City Council discretionary funding to curry favor.
That prompted a wave of complaints against the Democratic frontrunner, City Council Speaker Christine Quinn, who had overhauled the member item system following a previous corruption scandal.
"Sadly, today's news is the latest in a long line of wrong and improper use of discretionary funds," said Public Advocate Bill de Blasio, a Democratic mayoral contender.
"To restore the public trust, we need a real investigation into this troubling pattern of abusing taxpayer dollars for political gain."
Former Comptroller Bill Thompson echoed the criticism. Thompson, who is also vying for the Democratic mayoral nod, called the member-item system "a broken system that, despite claims to the contrary, has clearly not been adequately reformed under the Speaker's leadership."
Quinn called the allegations against Smith and the other politicians "a reprehensible abuse of the public's trust" and said the Council's Standards and Ethics Committee would immediately launch its own investigation.
Still, observers said that, regardless of which candidates are dragged into the scandal, it's the public that will ultimately lose.
"The biggest losers in this are the voters," said Fordham Political Scientist Christina Greer, who predicted the scandal threatened to temper voter turnout in the primaries this September.
“When we have these high-profile cases of just abject corruption, it really turns voters off."
Smith, a Democrat, who had chaired the Independent Democratic Conference, has been stripped of the committee assignments and coalition leadership post he held in Albany, and state Sen. Daniel Squadron has called on him to resign.
Reps for Halloran and Smith have both denied the charges.
"The councilman denies the allegations and looks forward to clearing his name. When the full story comes out he is confident that he will be vindicated," Halloran's spokesman said..