When Mayor Eric Adams of New York City announced that he was abandoning his bid for a second term, he cited, among other reasons, a decision by city regulators to deny matching funds to his campaign.
But he made no mention of an ongoing inquiry by the same regulators, the Campaign Finance Board, that is focused in part on whether to claw back $10 million in so-called matching funds from his successful mayoral campaign in 2021.
The inquiry is extraordinary not only for the amount of money potentially involved, but because the regulators are seeking to use evidence from the federal corruption case against Mr. Adams, which was abandoned by President Trump’s Justice Department under highly unusual circumstances earlier this year.
In June, the board began issuing subpoenas for documents and testimony to at least half a dozen people involved in the mayor’s federal case, according to seven people with knowledge of the matter. Some of the subpoenas were served on people who had cooperated with federal prosecutors and were expected to testify at the mayor’s trial; others went to people cited in the indictment or involved in his fund-raising. The subpoenas to those involved in the case have not been previously reported.
The inquiry is also unusual because the Campaign Finance Board has never in recent history sought to claw back matching funds from a mayoral candidate — let alone $10 million. Nor has it ever deployed subpoena power to gather evidence from a list of federal witnesses who had been set to testify at a mayor’s bribery and fraud trial.
But neither has a sitting New York City mayor been indicted in modern history, nor has one seen the charges against him — centered on his campaign fund-raising — cast aside by a presidential administration.
Some of those who received subpoenas spoke with the investigators while others exercised their Fifth Amendment rights, several of the people said.
In February, the board notified the mayor’s campaign that it was investigating potential “campaign-related fraud and activity that may constitute a breach of certification” for providing public matching funds.
The finance board’s inquiry is part of an expansive audit it is conducting of the mayor’s 2021 and 2025 campaigns. The audit has already resulted in the board’s denial of millions of dollars in matching funds to the mayor’s campaign this year.
The campaign has maintained that it has consistently followed the law, and its lawyers have filed two lawsuits against the board in connection with its inquiry.
In the more recent litigation, lawyers for the mayor’s campaign have sought to overturn the denial of matching funds and disputed the board’s arguments that the campaign has withheld documents.
A spokesman for Mr. Adams’s campaign referred questions to the campaign’s lawyer, who had no immediate comment.
Frank Carone, one of the mayor’s closest advisers who was helping to oversee his campaign, scoffed at the board’s investigation.
“It is and has been evident that the Campaign Finance Board has exceeded its authority, jumped to a conclusion in search of facts, then applied those specious facts, no matter how tenuous or irrelevant to justify itself,” Mr. Carone said in a statement.
Tim Hunter, the spokesman for the Campaign Finance Board, declined to answer detailed questions about the unusual nature of the investigation.
“The Campaign Finance Board routinely cooperates with law enforcement agencies on investigations of potential criminal activity, whether by referring our findings to other agencies or offices, or responding to incoming inquiries from them,” Mr. Hunter said in a statement. “The C.F.B. does not comment on the status or findings of ongoing audits.”
Board lawyers have also sought access to documents and other evidence from the closed federal corruption case against the mayor, as reported by Politico New York. In March they joined a request by The New York Times to the federal judge who presided over the mayor’s corruption case to unseal search warrant affidavits from the investigation that led to his indictment.
They also recently asked the judge who presided over the case to amend an order that limited disclosure of other evidence in the case. The judge granted the request last week.
The city’s campaign finance program is designed to provide public funding to limit the impact of big money in politics and broaden the pool of those who can afford to run for office, from City Council seats to citywide races such as for comptroller and mayor. The publicly funded system, which provides an eight-to-one match for donations up to $250, has been credited with helping elect the most representative City Council in history.
But it has also been plagued by abuse, principally through the illegal use of straw donors, a practice by the mayor’s campaign that has been repeatedly exposed by news outlets and investigations.
In August, the mayor’s former chief Muslim community liaison pleaded guilty to conspiring to commit wire fraud for arranging illegal contributions to the mayor’s first mayoral campaign, by way of straw donors.
Winnie Greco, the mayor’s former director of Asian affairs at City Hall, has also been under federal investigation for potential solicitation of illegal contributions from foreign nationals. After leaving City Hall, she volunteered for the mayor’s now-suspended re-election campaign, only to lose that position after offering a reporter a small potato chip bag stuffed with cash.
The Trump administration’s decision to abandon the Adams case early this year led to the resignation of the interim U.S. attorney in Manhattan and several other prosecutors and prompted the judge to suggest there was a corrupt bargain between the mayor and the president’s administration.
The finance board over the years has referred criminal cases to some of the city’s five district attorneys, who have charged bundlers in several cases. including one who raised funds for the mayor’s 2021 campaign. Some cases have led to convictions, but few have resulted in jail or prison sentences.
The clawback of funds, however, particularly such a large amount in such a high-profile case, would doubtless provide a strong deterrent.
It is unclear how Mr. Adams’s campaign would repay such an enormous amount, should the board choose to demand that the funds be returned.
The legal defense fund he created to underwrite his expenses during the corruption case is $3 million in the red, according to filings with the city from earlier this year.