Thursday, January 22, 2015

Sheldon Silver arrested on federal corruption charges, FBI say

Assembly Speaker Sheldon Silver was charged Thursday with fraud and conspiracy in federal court in Manhattan, accused of taking $4 million in bribes and kickbacks disguised as legal fees from people and firms with business before the state.

A five-count criminal complaint says the scheme had two prongs -- more than $3 million Silver got from the personal injury law firm Weitz & Luxenberg for referrals from a doctor to whom he steered state funds, and $700,000 from a real estate law firm that got business steered to them by developers Silver favored.

The second firm was not identified, but sources said it was Goldberg & Iryami, a Manhattan real estate firm. The complaint said a partner at the firm was a former counsel to Silver and a co-conspirator.

The charges apparently stem from the work of the Moreland Commission on public corruption that Gov. Andrew M. Cuomo decommissioned last year, and the complaint says Silver "took legal action and other steps to prevent disclosure" of his legal fees to the commission.

Silver, 70, a lawyer, has represented the Lower East Side in the Assembly since 1976, and has been speaker since 1994. He was re-elected by his fellow Democrats in January.

Silver was arrested Thursday morning at FBI headquarters in Manhattan. He is scheduled to appear in court after 2 p.m.

U.S. Attorney Preet Bharara said at a news conference Thursday afternoon in Manhattan that New Yorkers have long wondered how Silver could perform his work as a legislator and still earn huge amount of money in private legal fees. "Today we provide the answer: He didn't," the Southern District prosecutor said.

According to the criminal complaint filed in U.S. District Court in Manhattan, "Silver used the power and influence of his official position to obtain for himself millions of dollars in bribes and kickbacks masked as legitimate income earned by Silver as [a] private lawyer.".

"As today's charges make clear, the show-me-the-money culture of Albany has been perpetuated and promoted at the very top of the political food chain," Bharara said. "And as the charges also show, the greedy art of secret self-reward was practiced with particular cleverness and cynicism by the speaker himself."

The New York Times reported that before entering 26 Federal Plaza, Silver said, "I hope I'll be vindicated."

According to The Wall Street Journal, Silver's attorneys, Joel Cohen and Steven Molo, said in a statement, "We're disappointed that the prosecutors have chosen to proceed with these meritless criminal charges. That said, Mr. Silver looks forward to responding to them -- in court -- and ultimately his full exoneration."

Albany legislators are required to disclose all outside income. Silver has reported income from Weitz & Luxenberg for years, saying it was the result of work for clients. The complaint said in fact the money was for "corrupt use" of his power.

The complaint said that despite his vast income from legal fees, Silver has never actually entered an appearance in a legal case litigated in federal or state court since 2002, and that although Weitz & Luxenberg records said the fees were for client referrals in asbestos cases none of those clients had ever contacted Silver.

Instead, the complaint said, the clients were referred by a doctor -- not identified -- who was a mesothelioma researcher, and Silver used his influence over state health funds beginning in 2003 to steer money to the doctor's research.

Silver earned the bulk of his outside income by giving names to Weitz & Luxenberg of people suffering from exposure to asbestos, the complaint said. He was paid a base annual salary of $120,000, beginning in 2003 and earned significantly more in referrals every year, the complaint said.

The least profitable year was 2007, with $260,733 in referral fees, and the best year was 2010, with $728,991 in referral fees being sent to Silver from Weitz & Luxenberg, the complaint said.

The complaint said the real estate firm, identified by sources as Goldberg & Iryami, specializes in seeking reduced tax assessments in New York City in return for a percentage of the savings.

It said Silver did not practice in that area of law, but was lobbied by two large developers on rent regulation and tax-abatement legislation, and received kickbacks from the law firm in return for referring those developers to the firm.

Silver's disclosure forms, the complaint said, never mentioned the real estate law firm and never mentioned fees relating to any type of practice other than personal injury.

Altogether, the complaint said, Silver has received $6 million in legal fees since 2002.

A representative from Weitz & Luxenberg issued a statement Thursday afternoon saying, "As the U.S. Attorney's Complaint makes absolutely clear, Weitz & Luxenberg was not involved in any of the wrongdoing the Government alleges, and the Firm, which has fully cooperated with the Government in this matter, was not aware of any improprieties whatsoever.

"There is nothing in this case or the related Moreland matter that calls in to question in any way Weitz & Luxenberg's total commitment to representing its clients according to the highest standards of law and ethics," it went on.

The other law firm declined to comment Thursday morning.

Three people -- a doctor, a lawyer and a lobbyist -- were given immunity from prosecution in return for providing information to investigators, according to footnotes in the criminal complaint against Silver. None were identified by name.

Shocked Democrats began filing into the State Assembly chamber early Thursday for a closed-door conference. The chamber doors, always open to the public, were locked -- allowing just Assembly members and staffers access.

The vast majority of Assembly Democrats later emerged from a two-hour closed-door meeting saying they still supported Silver and that he should remain as speaker.

Earlier in the day, a visibly shaken Assemb. Herman "Denny" Farrell Jr. (D-Manhattan) had arrived at the state Capitol.

"He just got arrested," Farrell said, declining to comment further on the arrest or how it could affect the Democrat-dominated Assembly.

Silver was born on the Lower East Side and graduated from Yeshiva University and Brooklyn Law School. He lives with his wife, Rosa, on the Lower East Side. They have four children, Edward, Janine, Michelle and Esther, and numerous grandchildren, according to an Assembly biography.