I-Team: Why Did Former Playboy Playmate Donate $65K to Attorney General Eric Schneiderman? | NBC New York

I-Team: Why Did Former Playboy Playmate Donate $65K to Attorney General Eric Schneiderman?

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    State Attorney General Eric Schneiderman has received a $65,100 donation from a Texas model who holds the title, "2010 Playboy Playmate of the Year." Why is a model from Texas interested in the re-election of New York's top law enforcement officer? Chris Glorioso reports. (Published Thursday, Feb. 18, 2016)

    So far in 2016, the biggest single campaign contribution to Attorney General Eric Schneiderman comes from a Texas model who holds the title of 2010 Playboy Playmate of the Year.

    Hope Smith, formerly Hope Dworaczyk, donated $65,100 to Schneiderman's re-election campaign on Jan. 13, according to campaign finance records.

    Why is a model from Texas interested in the re-election of New York's top law enforcement officer

    Calls and emails to Smith were not immediately returned, but the former Playboy model recently married a billionaire who has donated heavily to Schneiderman's political campaign in the past.

    Her husband, Robert Smith, is the founder of Vista Equity Partners, a private equity fund that has attracted nearly $1 billion in investments from the New York Common Retirement Fund, a public pension, over the last seven years.

    During that same time, Robert Smith donated more than $150,000 to the attorney general’s war chest. Most of the donations came after 2012, when Schneiderman launched

    investigation into whether private equity funds evade taxes by classifying client payments as investments rather than management fees.

    To date, there have been no charges or settlements related to the private equity probe, and there is no evidence Robert Smith’s private equity fund was ever subpoenaed.

    Robert Smith did not respond to the I-Team’s request for comment about his donations.

    Schneiderman’s office said political donations have had no influence on the private equity investigation or any other probe launched by the state’s top prosecutor. Damien LaVera, a spokesman for Schneiderman said the state’s top prosecutor has a record of pursuing investigations regardless of whether he has taken donations from companies or industries under investigation.

    “Attorney General Schneiderman has fought throughout his career to combat fraud and provide New Yorkers the open and honest government they deserve, which is why he has prosecuted more than 70 corrupt officials and their cronies, proposed the most comprehensive set of ethics and campaign finance reforms the state has ever seen, and taken on some of the worst offenders on Wall Street," LaVera wrote in an email to the I-Team.

    As a policy, he said the attorney general requires political donors “to certify they and the entities they own or control have no matters currently pending before or recently resolved by his office.” LaVera did not say whether there were any policies on returning donations to companies or individuals that may not know they are under investigation.

    James Tierney, a former Maine attorney general who now directs Columbia University's National State Attorneys General Program, said he believes Schneiderman and other elected prosecutors make ethical decisions without regard to campaign contributions.

    But he also said there are real concerns about the appearance of conflicts of interest when hedge fund and private equity donors could benefit greatly by attorney general investigations into their competitors.

    “This poses a very difficult public policy problem and does create the kind of perception of inappropriate behavior that we all have to live with in an increasingly cynical world,” Tierney said. “It’s a matter of great concern for the attorneys general.”

    Compounding the problem, Tierney said, hedge funds and private equity firms are not transparent about their investments. That means the funds can allege some sort of wrongdoing about another company - and it is impossible for prosecutors to know if a resulting investigation could be seen as posing a conflict of interest.

    “They will attempt to spin an investigation to a law enforcement official,” Tierney said. “You don’t know whether they’ve bought long or short” and may stand to benefit from any probe. 

    Despite accepting campaign donations from wealthy financiers, Schneiderman has been a champion of campaign finance reform. Last year, he proposed sweeping legislation that would lower contribution limits and create public financing for candidates running for state office in New York.

    Still, the I-Team found other examples where Schneiderman has taken campaign cash from the very people and industries affected by his investigations.

    The attorney general’s investigation into Airbnb could benefit the hotel industry. Hotel owners and hospitality companies have donated nearly $100,000 to Schneiderman since 2010. His investigation into online sports betting sites DraftKings and FanDuel could benefit traditional casinos. The I-Team found the casino industry has donated more than $48,000 to Schneiderman since 2010.

    The attorney general’s office said both of those investigations were launched because of clear wrong-doing by the companies.

    NBCUniversal, the parent company of NBC New York, owns a stake in FanDuel. NBCUniversal also donated $10,000 to Schneiderman.

    In one of Schneiderman’s most recent announcements, he touted a cash settlement with Barclays and Credit Suisse after his office investigated high frequency trading platforms owned by the banks. After the investigation was launched, Barclays and Credit Suisse lost market share, while IEX – another trading platform – gained market share.

    Two Schneiderman donors, activist hedge fund investors David Einhorn and William Ackman, benefited from the investigation because their hedge funds own stakes in IEX. Einhorn and Ackman have donated more than $177,000 to Schneiderman since he first ran for office.

    There is no evidence the decision to investigate competitors of IEX had anything to do with political donations from IEX investors. Representatives of Einhorn and Ackman said they would not comment.

    Schneiderman's office said the high frequency trading case began with a whistleblower tip within the investment bank.

    His office also pointed to a recent probe into cable internet speeds as an example of Schneiderman investigating the very companies that have donated to his campaign. Targets of the cable internet investigation have donated more than $100,000 to Schneiderman.

    “The examples provided for this story paint a clear picture of an attorney general who will go after anyone who tries to take advantage of New Yorkers no matter how rich or powerful they are, or to whom they have given political contributions,” LaVera said.

    Though Schneiderman’s plan for campaign finance reform has been well received by good government watchdog groups, some have expressed unease about his acceptance of political donations from Wall Street, when the New York Attorney General’s Office is often thought of as a “sheriff of Wall Street.”

    “That what he is doing is not illegal shows why we need to reform our campaign finance system and take the questionable gifts and conflicted money out of the system,” said Dick Dadey, Executive Director of Citizens Union.

    “Almost every state elected official has such conflicts when raising campaign money, but it doesn’t make it any more right.”


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