Lt. Gov. Benjamin Resigns Following Campaign Finance Indictment

Lt. Gov. Brian A. Benjamin of New York resigned on Tuesday as the state’s second-in-command, hours after federal prosecutors unsealed an indictment accusing him of directing a brazen scheme to funnel illegal donations to his past political campaigns and cover up the criminal activity.

Gov. Kathy Hochul, who selected Mr. Benjamin to be her lieutenant governor less than a year ago, announced that he was stepping down “effective immediately.”

“While the legal process plays out, it is clear to both of us that he cannot continue to serve as lieutenant governor,” she wrote in a statement. “New Yorkers deserve absolute confidence in their government, and I will continue working every day to deliver for them.”

The five-count indictment said that Mr. Benjamin conspired to direct $50,000 in state funds to a Harlem real estate developer’s charity while he was a state senator. In exchange, the developer orchestrated thousands of dollars in illegal campaign contributions to Mr. Benjamin’s unsuccessful 2021 campaign for New York City comptroller and to his Senate campaign, the indictment said.

Mr. Benjamin was also accused of offering to help the developer, Gerald Migdol, obtain a zoning variance if he made a $15,000 donation to a separate fund for State Senate Democrats. The developer was arrested on federal charges in November.

“This is a simple story of corruption,” Damian Williams, the U.S. attorney for the Southern District of New York, said at a news conference before Mr. Benjamin’s resignation. “Taxpayer money for campaign contributions. A quid quo pro. This for that. That’s bribery, plain and simple.”

Mr. Benjamin’s resignation will complicate Ms. Hochul’s bid to be elected to her first full term as governor; she was catapulted into office after her predecessor, Andrew M. Cuomo, resigned in disgrace in August.

Despite his resignation, Mr. Benjamin is likely to remain on the Democratic primary ballot in June, along with two main challengers. Because Mr. Benjamin was designated as the Democratic Party’s nominee for lieutenant governor, his name could only be removed at this point if he were to move out of the state, die or seek another office.

There is no suggestion that Ms. Hochul was party to Mr. Benjamin’s alleged criminal conduct, which prosecutors said occurred when he was a state senator. Still, she took office last year promising to end an era of impropriety in Albany, and selecting Mr. Benjamin, 45, was among her first major decisions as governor.

The indictment — the result of an investigation by the federal prosecutors, the F.B.I. and the city’s Department of Investigation — accused Mr. Benjamin of subsequently engaging in a “series of lies and deceptions to cover up the scheme,” including falsifying campaign donation forms, misleading New York City authorities and giving false information as part of a background check to become lieutenant governor last year.

Earlier in the day, Mr. Benjamin pleaded not guilty at a brief appearance in Federal District Court in Lower Manhattan, and was released on $250,000 bond under terms that would require him to get special permission to travel to Albany. He left the courthouse without comment.

The governor, appearing at a news conference in Brooklyn on a mass subway shooting, initially declined to address Mr. Benjamin’s arrest. Lawyers for Mr. Benjamin, James D. Gatta and William J. Harrington, also initially declined to comment.

Mr. Benjamin said last week that he had been cooperating with investigators, after news outlets, including The New York Times, reported details of the investigation. Accompanied by his lawyers, the lieutenant governor met with prosecutors last week, according to a person familiar with the matter, and his top aides were privately reassuring allies that he expected to be cleared of any wrongdoing.

But at the news conference, Mr. Williams — who announced the charges with Michael J. Driscoll, the assistant director in charge of the New York F.B.I. office, and Jocelyn E. Strauber, commissioner of the city’s Department of Investigation — laid out an audacious corruption scheme. The indictment accused Mr. Benjamin of bribing Mr. Migdol to help secure small contributions for his comptroller race that could be used to obtain tens of thousands of dollars in public matching funds through a city program.

Prosecutors said that Mr. Benjamin first approached Mr. Migdol for help in March 2019, months before he announced a campaign for comptroller. In a meeting at Mr. Migdol’s home, the developer told Mr. Benjamin that it would be challenging to help because the pool of possible contributors he would turn to was the same one that he needed to solicit to support his own charity, Friends of Public School Harlem, a group known for giving out school supplies and groceries to needy families.

“Let me see what I can do,” Mr. Benjamin replied, according to the indictment.

In the months that followed, prosecutors said, the politician proceeded to use his State Senate office to secure a $50,000 taxpayer-funded education grant for the charity that Mr. Migdol had never requested, and used it as leverage to press Mr. Migdol to gather contributions.

“Do you recognize the third entity on the list?” Mr. Benjamin texted Mr. Migdol in June, with a screenshot of Mr. Migdol’s charity listed among the projects receiving aid.

During a meeting in Mr. Benjamin’s Harlem office two weeks later, Mr. Migdol handed him three checks totaling $25,000 made out to his Senate campaign account — two in the name of the developer’s relatives and one from an L.L.C. he controlled, prosecutors said.

They said that Mr. Migdol then filled out campaign contribution forms and signed the names of his relatives in the presence of Mr. Benjamin, who accepted them despite knowing the contributions were really from Mr. Migdol, who was attempting to conceal his involvement. He also reminded the developer about the grant and his need for smaller contributions.

Mr. Benjamin delivered an oversized cardboard check for the $50,000 in state grant money the following September at a golf tournament for Friends of Public School Harlem, an event documented on Mr. Migdol’s Facebook page. Prosecutors said the funds were never actually dispersed.

Still, within weeks, Mr. Migdol began steering a series of fraudulent donations to the comptroller campaign. Some were made in the names of individuals, including his 2-year-old grandchild, who did not consent to them; others had donated money but were fully reimbursed. In one instance, he handed a bundle of donations to Mr. Benjamin on the street, according to the indictment.

While not listed by name in the indictment, Mr. Migdol began providing information to investigators after he was arrested in November on charges of wire fraud, aggravated identity theft and other crimes related to his role in the fund-raising scheme, according to the people with knowledge of the matter. He was referred to in Tuesday’s charging documents as “CC-1,” short for co-conspirator 1.

Mr. Migdol’s lawyer, Joel Cohen, declined to comment.

Prosecutors said that Mr. Benjamin called Mr. Migdol again on Oct. 21, 2020, with another proposal: If the developer contributed $15,000 to another specific political campaign committee, Mr. Benjamin said he would help him win support for a zoning variance from a city community board he had once led related to a property Mr. Migdol owned.

The indictment says the donation was made on Nov. 13, the same day campaign finance records show that Mr. Migdol transferred $15,000 to the New York State Democratic Senate Campaign Committee, an organization dedicated to electing Senate Democrats. The zoning variance sought by Mr. Migdol has not come before the community board to date.

Over time, Mr. Benjamin repeatedly hid his knowledge of the scheme from New York City and state authorities, the prosecutors said. Most notably, the indictment says that during a background check for his appointment as lieutenant governor, Mr. Benjamin twice falsely claimed that he had never “directly exercised” his governmental authority “concerning a matter of a donor” he asked for money.

Ms. Hochul selected Mr. Benjamin to be her lieutenant governor last August, shortly after Mr. Cuomo resigned following numerous allegations of sexual misconduct and she became governor. The decision was widely seen as a way for Ms. Hochul, a white moderate from Buffalo, to expand her appeal to nonwhite voters in New York City ahead of this year’s elections.

Mr. Benjamin spent much of his career in banking and affordable housing development before winning a State Senate seat representing most of Harlem in 2017.

In Albany, he was a leading proponent of criminal justice reform measures passed by Democrats after they won the majority in 2018. He finished fourth last year in the Democratic primary for comptroller.

It is unclear how carefully Ms. Hochul or her advisers vetted Mr. Benjamin before the appointment.

There had already been published reports by The City at the time showing that Mr. Benjamin’s campaign had benefited from apparent straw donations, as well as ethical concerns about his use of campaign funds for a wedding celebration and automobile expenses. (Mr. Benjamin later refunded the questionable contributions and reached an agreement to repay the campaign expenses in question.)

The other Democratic candidates for lieutenant governor are Diana Reyna, a former New York City councilwoman, and Ana Maria Archila, an activist backed by the left-leaning Working Families Party.

“The governor announced that she would bring a new day, and I’m not sure that’s the case,” Ms. Archila said in an interview on Tuesday, adding that she believed it would be difficult for Mr. Benjamin to continue in his job.

The news of Mr. Benjamin’s arrest spread throughout Harlem’s political community on Tuesday, with many expressing shock and others declaring his innocence. Mr. Benjamin, who rose from being the chairman of the Central Harlem community board, was considered a rising star.

“When this is all over with, it’ll be what I know: Brian did not do anything to break the law,” said Hazel N. Dukes, the president of the New York State chapter of the N.A.A.C.P., and one of Mr. Benjamin’s political mentors.

Benjamin Weiser contributed reporting.