The city’s Law Department is bankrolling legal fees for three city employees ensnared in criminal investigations — including Molly Schaeffer, Mayor Adams’ asylum seeker operations director who was recently subpoenaed in a federal corruption probe, the Daily News has learned.
Schaeffer was served with the subpoena last week by federal investigators from the Manhattan U.S. attorney’s office. Sources have confirmed the subpoena is requiring Schaeffer to deliver grand jury testimony as part of an investigation looking into kickbacks on city contracts that has also ensnared multiple other top aides to the mayor, including Tim Pearson, a senior adviser who announced his resignation this week.
In a letter to Councilwoman Gale Brewer on Wednesday, the Law Department confirmed it’s currently representing three city employees in connection with criminal matters. The letter, which was obtained by The News, did not name the three employees or the investigations they’re facing but sources familiar with the matter confirmed one of them is Schaeffer and that she’s receiving free legal representation in connection with the contracts probe.
The letter specifies it’s the Law Department’s understanding that the three city employees it’s providing free representation for “are neither targets nor subjects of the investigations.” That means they aren’t expected to face criminal repercussions and the Law Department referred to the trio in the letter as “witnesses” and current municipal employees.
The identities of the other two city employees receiving free legal representation were not immediately clear but all three are being represented by Yankwitt LLP, a White Plains-based firm, with the Law Department picking up the cost, the letter says.
Schaeffer is specifically being represented by Benjamin Allee, a partner at the firm. He did not reply to a request for comment.
The Law Department letter says law firm partners representing the three city employees are being paid $600 per hour.
Schaeffer did not return a request for comment.
The investigation she was subpoenaed in is separate from the corruption probe that resulted in Adams being indicted last week on criminal charges alleging he solicited and accepted bribes from Turkish government operatives in exchange for political favors.
Schaeffer has played a leading role in overseeing billions of dollars in contracts with private companies to provide services like food, shelter, security and case management to thousands of migrants coming through New York City. She has worked closely with Pearson, a former NYPD inspector who was given sweeping powers by the mayor to award migrant contracts.
Pearson’s detailed daily schedules, obtained by The News via a Freedom of Information Law request, show he sat down with Schaeffer four times in April 2023, her first month in her current job, for meetings labeled “asylum seeker updates,” and then met daily to discuss the migrant crisis starting in May 2023.
The feds investigating Pearson, who has known the mayor for decades, seized his phones and raided his home last month. His attorney has denied Pearson engaged in any wrongdoing but he announced his resignation from the administration Monday after the mayor for months rebuffed demands to fire him.
Besides the federal scrutiny, Pearson is facing four civil lawsuits from former and current NYPD employees accusing him of sexual harassment and professional retaliation. He has enjoyed Law Department-funded legal representation in those four lawsuits, though it remains unclear whether he’ll continue to receive that now that he’s out of the administration.