US News

PROBE OF $LUSH FLUSHED

Council Speaker Christine Quinn has told colleagues that she does not expect federal authorities to issue any indictments as a result of the council slush-fund scandal, but The Post has learned a “scathing report” could be on the way.

Several sources said they have been informed by Quinn (D-Manhattan), her staff or others familiar with the investigation that the US Attorney’s Office has found no basis to indict anyone from the council in the practice of funding sham organizations.

The sources said they were informed that there would be “a scathing report but no indictments” in the council’s longstanding practice, first reported by The Post last year, of funneling public money into fake charities to later spend it on pet projects.

Another source said, “There’s going to be recommendations on corrective measures, the failings of the administration of the monies, so to speak . . . but no indictments, no smoking-gun-type stuff.”

Another source said Quinn had been “confident it was over and she was fine” during a conversation.

Quinn declined comment through her spokesman, Jamie McShane.

The speaker has long maintained she learned of the practice in late 2007 and immediately informed federal authorities, who were probing another matter within her office.

The US Attorney’s Office in New York and the city Department of Investigation then began looking into the budgetary practice.

In April last year, two aides to Councilman Kendall Stewart (D-Brooklyn) were indicted on charges they embezzled $145,000 in grant money that Stewart had earmarked for an after-school tutoring program.

Then-Manhattan US Attorney Michael Garcia at the time said he was confident the investigation would yield further indictments.

Two council finance staffers were forced to resign, but Quinn admitted to the practice only after it was reported last April.

The DOI and US Attorney’s Office both declined comment yesterday.

Authorities have said the budgetary scheme dates to 2001, with $17 million stashed under fake charity names, although The Post found examples going back to the late 1990s, when Peter Vallone Sr. was council speaker.

In Fiscal Year 2007, 24 percent of the $3.6 million total in the slush fund was allocated to projects in Quinn’s district.