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Uptown Politicians Scramble to Return Donations in Midst of Federal Probe

By  Carolina Pichardo and Jeff Mays | April 13, 2016 4:52pm 

 State Sen. Adriano Espaillat and Adam Clayton Powell said they will return donations their campaign received from businessmen embroiled in a federal investigation that's rocked the NYPD and City Hall.
State Sen. Adriano Espaillat and Adam Clayton Powell said they will return donations their campaign received from businessmen embroiled in a federal investigation that's rocked the NYPD and City Hall.
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Nigel Chiwaya and Gabriela Resto-Montero

UPTOWN — Two candidates currently running to replace Rep. Charles Rangel for the 13th congressional district are scrambling to return campaign donations they received from businessmen embroiled in a federal investigation that's rocked the NYPD and City Hall.       

State Senator Adriano Espaillat and Adam Clayton Powell said they are returning the donations their campaign received in 2014 from businessman Jona Rechnitz, the businessman whose name came up as part of the US Attorney's probe of alleged pay-for-favor corruption in the NYPD, records show.

Powell, who received $5,200 in 2014, said their office already returned $2,600 the year after Powell ran, since he decided not to run that election year. The remaining $2,600, Powell's campaign manager, Michael Oliva said, will be returned in the coming days. Oliva said he instructed the treasurer to return the money last week.   

Espaillat, who received $14,000 from Rechnitz in 2014, said his office returned the funds last week, although he's yet to return the campaign donations his office received from another name in the investigation, former Hudson River Cafe owner, Hamlet Peralta.

Espaillat got $250 in campaign donations in 2014 for his Congressional run from the disgraced restaurateur embroiled, who federal prosecutors charged last week with running a Ponzi scheme to bilk investors out of $12 million.  

Rechnitz was also allegedly a victim of Peralta's Ponzi scheme.

Peralta, 36, who ran the now-shuttered eatery in Harlem, scammed investors into giving him money for a bogus wholesale liquor business before using their cash for personal profit or to pay back other investors, according to Manhattan U.S. Attorney Preet Bharara.

The scam lasted from approximately July 2013 to 2014 — the same period of time during which Peralta donated the money to Espaillat's campaign, federal prosecutors claim. Peralta had also donated $125 to Espaillat in 2005, when he ran for Borough President, records show.

Espaillat's office said Tuesday that they planned to return the entire $375 in donations by Friday.

“Since learning of the investigation, out of an abundance of caution, we are returning the contribution,” Espaillat's campaign manager Eric Taylor told DNAinfo New York.

The state senator's campaign also took nearly $15,000 in 2014 from businessman Jona Rechnitz, whose name has also come up as part of the US Attorney's probe of alleged pay-for-favor corruption in the NYPD, records show. Rechnitz was also allegedly a victim of Peralta's Ponzi scheme.

Taylor said that Espaillat, who is currently running to replace Rep. Charles Rangel for the 13th congressional district, already returned $14,000 to Rechnitz on Friday, April 8.

He added that the state senator met Rechnitz in “passing years ago” and added “there’s no relationship” with either him or Peralta.