Council Member Stephen Levin Introduces Legislation To Allow For Legal Defense Trusts

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Press Contact:
Elizabeth Adams
917-885-5424
EAdams@council.nyc.gov

Council Member Stephen Levin Introduces Legislation to Allow for Legal Defense Trusts

The bill would allow for the creation of a distinct legal defense trust for public officials.

NEW YORK— Council Members Stephen Levin (33rd District, Brooklyn) and Andrew Cohen (11th District, Bronx) introduced legislation today to allow for public officials to create standalone legal defense trusts (LDTs) to raise funds for legal services. Intro. 1325 is common sense legislation that would allow for a responsible and distinct system to be created so public officials can accept donations and pay legal fees related to governmental, administrative, criminal or civil investigations having to do with a political campaign, issue advocacy, or the holding of a civil office or political party position.

Legal defense trusts have been used by federal, state, and local jurisdictions to allow officials to establish accounts to pay for legal defense fees in a regulated and transparent manner. New York City’s Conflict of Interest Board ruled in 2017 that donations to legal defense funds qualify as “gifts” under the conflict of interest law and as such must be capped at $50 per donor. This ruling opened the door to a common sense solution for covering legal fees in a regulated and clear manner. Today, the Council is advancing meaningful public policy that would establish a transparent system that is accountable and distinct from the campaign finance system.

“Every public official would hope to never have to set one of these up, but if they were to, it’s important that they have the tools for a fair defense, and that it is done in a way that is regulated, accountable, and not tangled up in campaign finance,”said Council Member Stephen Levin. “In effect, the legal defense trust would serve as a regulated ‘lockbox’ that allows public officials to cover potential needed fees, prevents campaign funds from being improperly used, and honors the public’s trust in the responsible use of their tax dollars.”

"We have a presumption of innocence." said Council Member Andrew Cohen. "Being able to present a quality defense is fundamental to our system of justice. Under the existing law you can be found free from any wrong doing and still end up bankrupt- and that is not justice." 

The legislation creates strict requirements around the creation of an LDT. No campaign funds or public funds would go into the trust, and there would be no co-mingling of assets. This ensures finance limits are respected, campaign funds are allocated only to campaigns, and LDT funds cannot be used as a loophole to circumvent campaign contribution limits. Each trust would also be set up and overseen by an independent trustee for maximum accountability.

The bill imposes strict limits on who can donate, how much, and where. The following would be prohibited under the legislation:

  • Lobbyists, anyone doing business with the city, corporations and LLCs would not be allowed to donate to an LDT. All donations would have to be reported to the conflicts of interest board and posted online.

  • Contributions are limited to $5,000 per donor.

  • The trust is managed by a trustee(s) who is responsible for overseeing each LDT and who cannot be an elected official or beneficiary themselves.

  • Penalties are specified in the legislation for any rule violations.

Common Cause New York has also expressed their support of the proposed legislation, and drafted a 2017 policy proposal that informed much of the legislation: “Council Member Levin's bill introduces a workable solution to this problem for New York's public officials,” said Executive Director, Susan Lerner. “We look forward to working with the Council member on this bill.”
 
In order to allow for a responsible, transparent and distinct system, public officials should have the means to set up a legal defense fund in the event of an investigation. This legislation provides a clear framework to set up a separate account with strict regulations on usage and clear and detailed record keeping of donations.
 

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