N.Y. Mayor-Elect Dinkins’ Finances Are Target of City, Federal Probes : Politics: Focus is on the value of a transfer of stock in a broadcasting firm. The issue surfaced during the campaign this fall.

Federal and city investigators are looking into the finances of New York City Mayor-elect David N. Dinkins, including a stock transfer Dinkins made to his son, it was revealed Sunday.

Ann Driscol, a spokeswoman for the U.S. Attorney’s Office in Brooklyn, said that an inquiry was under way, but declined to elaborate. An official of the New York City Department of Investigation, which is conducting its own inquiry, confirmed it involved the transfer of stock Dinkins held in the Inner City Broadcasting Corp., whose board chairman is one of Dinkins’ longtime friends and a principal political mentor.

“There is a preliminary inquiry being conducted by our office in conjunction with the Department of Investigation into various financial transactions by Mr. Dinkins,” Driscol said.

Dinkins is scheduled to become mayor Jan. 1. A spokesman for Dinkins said he had hired Charles Stillman, a lawyer whose practice includes criminal cases, to represent him.

“My marching order from Mr. Dinkins is one-thousand-percent cooperation,” Stillman told the New York Daily News. “We want to put this thing to bed once and for all.”

The issue of the stock transfer arose in the midst of Dinkins’ winning mayoral campaign against former U.S. Atty. Rudolph W. Giuliani, who in the closing days of the election predicted the transfer would be the subject of prosecutorial scrutiny.

During the campaign, Dinkins, the Manhattan borough president, said he had valued the stock at more than $1 million in a background questionnaire he filed with New York state in 1983 after consulting with the company. But that same year, he submitted a financial disclosure to New York City, and listed the stock’s value at $20,000 to $60,000.

Dinkins said he transferred the stock to his son in 1985 for a $58,000 promissory note due in 1991 with interest. He said the value of the stock was in line with a buy-back offer the company was making to its shareholders.

With an accountant at his side during a tense campaign news conference, Dinkins said he valued the stock at the $1-million plus figure after consulting with Percy E. Sutton, Inner City Broadcasting’s chairman who is a former Manhattan borough president.

“There is nothing I value more than my integrity,” Dinkins said.

City and federal investigators are trying to determine the actual worth of the stock, whether taxes were due on the transfer and whether it was a legitimate transfer. Dinkins acquired the stock in the privately held company in 1972. Largely through stock splits, his holdings grew to 588 shares.

When stock sales are reported, capital gains taxes are paid on the difference between the purchase price of shares and the market value when the securities are sold. This is a relatively simple computation when a company is publicly traded. But when a company is not traded in the securities markets, valuations become more complex. Accountants often will study earnings and the balance sheet to fix the sale price.

Dinkins will not have to pay capital gains taxes until his son pays him for the stock.

Financial records made public by Dinkins during the campaign showed that he had not paid any gift tax when he transferred the shares to his son.

Dinkins said that after being elected Manhattan borough president in 1985, he transferred the stock to his son to avoid any conflict of interest. Inner City Broadcasting Corp. holds cable television licenses. The Manhattan borough president sits on the Board of Estimate, which regulates cable TV franchises.

During the campaign, Dinkins’ son declined to release financial records pertaining to the stock and the company refused to allow reporters to see its corporate records.

City and federal investigators are seeking to authenticate the handwritten agreement between Dinkins and his son and are trying to determine precisely when that document was written.

Dinkins failed to file income taxes for four years two decades ago, but no criminal charges were brought. He paid all taxes and penalties and repeatedly has apologized for his actions, promising they would never occur again.

In addition to looking at the stock transfer, the Department of Investigation is looking into whether Dinkins filed a misleading financial disclosure form when he valued the stock far lower on the city than the state financial questionnaire.

The stock transfer is part of a broader inquiry being conducted by federal prosecutors who are looking into cable television franchises in the New York City borough of Queens. Inner City Broadcasting has a 50% interest in a cable television company serving Queens.