Moreland co-chair received donations from intel-gathering contractor

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ALBANY—The founder of the intelligence firm that is finalizing a contract with the state's Moreland Commission to Investigate Public Corruption has given $20,000 in campaign contributions to one of its co-chairs, records show.

Jules Kroll, the founder and CEO of K2 Intelligence, donated $10,000 to Nassau County District Attorney Kathleen Rice, a Democrat, in 2009 and another $10,000 last year.

Kroll has also contributed a total of $25,000 to Attorney General Eric Schneiderman, including a $5,000 donation in 2012. Schneiderman's office is staffing the 25-member commission, convened in July by Gov. Andrew Cuomo after legislators left Albany having done nothing to address a spate of recent scandals.

Aides to both Rice and Schneiderman insisted they had nothing to do with approving the contract, which could be worth as much as $175,000. Rice recused herself from the vote, according to Moreland Commission spokeswoman Michelle Duffy. But the irony is apparent: the commission is charged with examining the pay-to-play culture that prosecutors and good-government advocates say is pervasive in state government.

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“The Moreland Commission should make clear how they chose this particular company,” said Bill Mahoney, research coordinator for the New York Public Interest Research Group. “Government contracts are big business and making huge campaign contributions is a time-tested marketing strategy. Among the commission's recommendations must be a limit on the size of campaign contributions that would-be contractors can make to public officials.”

Capital reported on Monday that the Moreland Commission, which has no fixed budget appropriation, sought special approval to enter into the K2 contract for data analysis. The spending will be diverted through the Cuomo-controlled Division of Budget. K2 uses software called Palantir that was developed for counter-terrorism purposes. The Moreland Commission has requested publicly available data on campaign contributions and lobbying spending, and suggested on Tuesday that it would subpoena legislators for lists of their business and law clients as well as records of soft-money “housekeeping” committees.

Moreland Commission spokeswoman Michelle Duffy said K2 was selected after commissioners and their staffs evaluated the costs and services of several vendors, including several major accounting firms.

Duffy said that Rice recused herself from “any decisions involving K2” to “avoid even the appearance of impropriety.” Eric Phillips, a spokesman for the Rice campaign, said, “Jules Kroll has been a supporter of the district attorney's work in Nassau for years. They've never had a reason to speak about contracts, they've never spoken about contracts, and his last contribution to the D.A. pre-dates the creation of the Moreland Commission by a year.”

Schneiderman spokesman Matt Mittenthal insisted “neither the Attorney General nor his staff had a vote or a role in the selection of this contract.”

The contract should be finalized and executed this week, Duffy said.