A Utah tech company hired the brother of a high-ranking New York official, followed by a private meeting and contracts worth $1.4 million

NEW YORK (AP) — Ahead of the 2022 school year, education technology company 21stCentEd wanted to expand its presence in New York City’s public schools. So they turned to a man named Terence Banks, whose new consulting firm promised to connect clients with key government officials.

Banks was not a registered lobbyist. His day job at the time was overseeing the city’s subway system. But he did have at least one important connection: His older brother, David Banks, is New York City’s superintendent of schools and oversees the largest school system in the country.

Within a month of the hire, 21stCentEd had arranged a private meeting with the schools chancellor. In the two years since that meeting in October 2022, the company has received more than $1.4 million in Department of Education funds, nearly triple the previous amount, records show.

The siblings, along with their third brother Philip Banks, who serves as New York City’s deputy mayor for public safety, are currently embroiled in a major federal investigation involving several high-ranking members of Mayor Eric Adams’ administration.

Federal investigators last week seized the phones of all three brothers and at least three other high-ranking city officials, including Police Commissioner Edward Caban, who resigned Thursday. Tom Donlon, a retired FBI official, was sworn in as interim police commissioner on Friday.

The exact nature of the investigation – or investigations – has not been disclosed. Among other things, federal authorities are investigating the former police chief’s twin brother, James Caban, a former police sergeant who runs a nightclub security business.

On Wednesday, a city operations coordinator was fired after a Brooklyn bar owner told NBC New York that the assistant pressured him to hire the police chief’s brother to resolve noise complaints against his establishment.

Federal investigators are also looking into whether Terence Banks’ consulting firm, Pearl Alliance, broke the law by exploiting his family connections to help private companies win city contracts, according to a person familiar with the matter. The person spoke to The Associated Press on condition of anonymity because he was not authorized to disclose information about the investigation.

All three Banks brothers have denied any wrongdoing. David and Terence Banks have said they are not the target of the investigation. But state regulators say the family’s overlapping private and public sector work may have violated conflict of interest laws and city and state laws on lobbying for contracting.

“It appears that Terence Banks is using his family connections to help his client and enrich himself,” said Susan Lerner, executive director of Common Cause New York, a good governance organization.

Timothy Sini, Terence Banks’ attorney, did not respond to specific questions about the consulting firm. However, he wrote in an email: “The government has assured us that Mr. Banks is not the target of this investigation.”

At a press conference on Friday, David Banks said FBI agents had not returned his phone. He declined to answer questions about his relationship with his brother’s consulting firm. “We are cooperating with a federal investigation,” he said.

The city’s ethics rules prohibit relatives from lobbying each other. At a minimum, David Banks would have to get an exemption from the city’s conflict-of-interest committee before meeting with a company represented by his brother, said John Kaehny, executive director of Reinvent Albany, an organization that advocates for good governance.

“It is surprisingly arrogant or obtuse that David Banks, one of the city’s highest government officials, would ignore this basic, common-sense rule for managing conflicts of interest,” Kaehny said in an email.

Neither the Department of Education nor the Conflict of Interest Panel disclosed that an exemption had been requested.

A Department of Education spokesman, Nathaniel Styer, said all spending related to 21stCentEd came from individual schools and districts, which could make purchases of less than $25,000 without agency approval.

The Utah-based company trains teachers and offers curricula with a focus on artificial intelligence, robotics and automation.

Dylan Howard, a company spokesman, said Terence Banks was hired “to help 21stCentEd present our STEM solutions and services to decision makers in New York City public schools.” He said they learned about his consulting firm from a 21stCentEd employee who has since left the company.

The spokesperson could not say how the meeting with the school’s principal came about or whether Terence Banks attended. He added that Terence Banks had “not added value” to the company and that his contract was terminated last December.

21stCentEd was one of several companies with city contracts that hired Terence Banks’ consulting firm, according to a Pearl Alliance website that was taken offline after news of the federal investigation surfaced last week.

Another listed customer, SaferWatch, sells panic buttons to schools and police departments. Since August 2023, the company has received more than $67,000 in city contracts, according to city records.

The third Banks brother, Philip Banks, wields great influence in the NYPD as deputy mayor for public safety. A spokesman for SaferWatch, Hank Sheinkopf, declined to comment. The NYPD did not respond to emailed requests for comment.

In total, the Pearl Alliance listed nine clients with multimillion-dollar contracts, including a software company, a food delivery startup and a concrete-specialized company. At least seven of the companies have past or current contracts with the city.

It was unclear whether the federal investigation into the consulting firm run by Terence Banks was part of the investigation into the police commissioner’s brother.

Ray Martin, the city official who allegedly pressured a bar owner to hire James Caban, was “fired for cause” on Thursday after the mayor’s office learned of the allegations, according to Fabien Levy, the deputy mayor for communications.

Bar owner Shamel Kelly told WNBC-TV that Martin gave him what he felt was an ultimatum last year to either pay James Caban or risk having his business shut down. Kelly said James Caban demanded a $2,500 payment up front. He said he was interviewed by federal investigators and the city’s Bureau of Investigation on Thursday. The U.S. Attorney’s Office and the Bureau of Investigation declined to comment.

Attempts to reach Martin were initially unsuccessful. A cell phone number registered in his name no longer worked.

A lawyer for James Caban said he “unequivocally denies any wrongdoing” and has fully cooperated with law enforcement. Once the investigation is complete, attorney Sean Hecker said, “it will be clear that these allegations are baseless and without merit.”

Both David and Philip Banks remain in their government positions. Philip Banks’ attorney Benjamin Brafman declined to comment.

At a news conference Tuesday, Adams pointed out that his relationship with the Banks family goes back decades, to his time serving on the police force under the brothers’ father. He said he never met with Terence Banks about city matters.

“I’ve known the Banks families for years,” Adams said. “And when I know someone, I hold them to the same standards that I hold myself to.”