NEW YORK, Sept 26 (Reuters) - For all the focus on political intrigue, the vagaries of campaign-finance law and the spectacle of Mayor Michael Bloomberg on the witness stand, the case against John Haggerty boils down to an old cliche: follow the money.

That was the message from prosecutors to a jury in Manhattan Supreme Court Monday, as testimony began in the trial of Haggerty, a longtime Republican operative charged with stealing more than $1 million from Bloomberg during his 2009 reelection campaign.

Haggerty's motive was a $600,000 house purchase, money he didn't have, Assistant District Attorney Brian Weinberg told the jury.

"What he did have was access to one of the largest mayoral campaigns this city has ever seen -- Mayor Michael Bloomberg's 2009 reelection campaign -- and with it the mayor's money," Weinberg said.

But defense lawyer Raymond Costello accused the mayor and the Manhattan District Attorney's office of using Haggerty as a convenient scapegoat to deflect attention from what he suggested were campaign finance violations committed by Bloomberg and his campaign aides.

"This case is not about theft," he said in his opening statement. "This case is about winning at all costs. That's what Michael Bloomberg is about."

The mayor himself -- whom Weinberg promised would testify, along with several of his top lieutenants -- is not expected to take the stand until next week.

PUTTING BLOOMBERG ON TRIAL

Many of the basic facts of the case are essentially undisputed.

In 2009, the Bloomberg campaign determined that it needed what's known as ballot security -- observers who are hired to monitor polling places on Election Day, ensure that eligible voters are able to cast ballots and respond to problems such as broken machines.

Kevin Sheekey, a veteran Bloomberg advisor, suggested that Haggerty run the operation, as he had done in 2005 in partnership with the Republican Party. Bloomberg, a billionaire who finances his own campaigns, then made a pair of contributions totaling $1.2 million to the Independence Party with the expectation that it would help fund the ballot security program.

Prosecutors said Haggerty used the money he received from the party to buy the house, and argued that Bloomberg would never have made the donation without assurances from Haggerty about his operation.

But Haggerty's lawyers say he did in fact provide ballot security and that the money was no longer Bloomberg's to control once it landed in the Independence Party's bank account.

As Costello moved through his opening, it became clear that the defense strategy is to put Bloomberg and his campaign-finance methods on trial, rather than Haggerty.

In particular the defense focused on Bloomberg's decision to send money to the Independence Party rather than directly to Haggerty. But as Sheekey pointed out, this mirrored the way Bloomberg had handled the matter in the 2001 and 2005 elections. In those years, he made sizable personal contributions to the Republican Party, which then headed up an extensive ballot security operation.

Howard Wolfson, the 2009 campaign's spokesman and now a deputy mayor, has said the indirect funding was appropriate because political parties traditionally provide ballot security.

But Costello argued that the mayor was wary of being associated with the practice, which sometimes carries negative connotations. And he said that the contribution -- if it was intended to help the Bloomberg campaign -- may have broken campaign-finance laws, since the Independence Party was barred by state law from using the money to help a specific candidate.

"You'll see this accusation for what it is: a trumped-up charge to avoid any examination of Michael Bloomberg and his people," Costello said.

HAGGERTY'S EMAILS

Prosecutors began laying their foundation by calling Sheekey as the first witness Monday.

In a 2009 email introduced as evidence, Haggerty laid out the plan: more than 1,300 poll watchers and hundreds of additional workers to monitor the city's polling places on Election Day.

Haggerty also noted that the chairman of the Independence Party, Frank MacKey, was "fully cooperative" with the proposal and that Sheekey had asked to "wash in" an extra $100,000 for the party to keep as a contribution.

Assistant District Attorney Eric Seidel asked Sheekey if he relied on those promises when he recommended that the mayor spend the money.

"It was based on John's representation on what would occur on Election Day and his budget and its estimate of what it would cost," Sheekey said.

But Haggerty's lawyers argued that Bloomberg had no ability to control the money once it left his account and landed in the hands of the Independence Party.

"John Haggerty did not commit a crime for a very simple reason: no victim, no crime," Costello told the jury. "No money was ever stolen from Michael Bloomberg. ... He knew, as you do, that once you give a contribution to a political party, it's a gift. You no longer control that money."

The case is People v. Haggerty, New York State Supreme Court, New York County, No. 2598/2010.

For the prosecution: Assistant District Attorneys Eric Seidel, Vanessa Richards and Brian Weinberg.

For Haggerty: Raymond Costello of Shaub, Ahmuty, Citrin, & Spratt and Dennis Vacco of Lippes, Mathias, Wexler, Friedman.

(Reporting by Joseph Ax)

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