Two aides to a NYC City Council member were indicted Wednesday on charges that they stole taxpayer money meant for charity, and federal prosecutors warned that the case is just the beginning of a criminal probe into shady City Council budget schemes.

Prosecutors unsealed an indictment accusing the former chief of staff to Councilman Kendall Stewart of skimming at least $145,000 from a charity, the Donna Reid Memorial Education Fund, that had received council funds. Another Stewart staffer was accused of assisting in the theft.

The indictment said money was diverted through what are known in the City Council as “discretionary funds,” which are intended for city nonprofit groups and handed out by each council member, typically to organizations in their districts.

In some cases, council members make up fake charities, list them in the budget and then quietly distribute that money to pet projects and groups later in the year. The practice is known in the council as a “reserve fund.”

Federal prosecutors on Wednesday did not say that the bogus charity practice, which dates back many years but was just brought to light in recent weeks, constitutes criminal activity. But U.S. Attorney Michael Garcia said his office and the city Department of Investigation were taking a “hard look” at the scheme.

(Source: WCBSTV)