N.Y. Assembly Speaker Silver Accused of Running 15-Year Graft Scheme

By and | January 23, 2015

New York Assembly Speaker Sheldon Silver reaped millions of dollars in kickbacks in a 15-year conspiracy that involved medical referrals, real estate developers and law firms, the U.S. said.

Silver, 70, used his position to refer asbestos cases from a doctor to Weitz & Luxenberg PC, a personal injury law firm, and to induce developers to retain another law firm, collecting as much as $6 million in kickbacks, according to a complaint unsealed Thursday in Manhattan federal court. Charged with five counts including conspiracy and fraud, the lawmaker faces as long as 20 years in prison on each count.

“I am confident that after a full hearing that I will be vindicated of these charges,” a subdued Silver told reporters as he walked out of Manhattan Magistrate’s Court Thursday, wearing a charcoal pinstripe suit with a maroon tie. He was freed on a $200,000 bond and ordered to restrict his travel to the continental U.S. Silver must advise officials before traveling outside New York, New Jersey or Washington.

Silver’s arrest may damage the influence of the state’s most powerful lawmaker at the start of a new legislative session, potentially throwing into doubt Governor Andrew Cuomo’s bid to work with his fellow Democrat to boost spending on education and infrastructure. Silver must leave office if convicted.

Titanic Power

“During his decades in office Sheldon Silver has amassed titanic political power,” Manhattan U.S. Attorney Preet Bharara said in a statement. “But at the same time Silver also amassed a tremendous personal fortune — through the abuse of that political power.”

The U.S. froze $3.8 million of Silver’s funds, allegedly connected to the scheme. Silver’s arrest follows a long-running public-corruption investigation by the Federal Bureau of Investigation and U.S. prosecutors.

Elected to the Assembly in 1976, Silver, a lawyer and a Democrat, has been speaker since 1994, with a legislative district in lower Manhattan that includes the World Trade Center, the site of a multibillion-dollar redevelopment after the Sept. 11 terrorist attack.

For more than a decade, Silver repeatedly said publicly and in mandatory financial disclosure filings that his outside income as a private attorney was from public citizens who sought him out for personal injury matters and that none of his clients had any business before the state, Robert Ryan, an investigator with the Manhattan U.S. Attorney, said in the criminal complaint.

Materially False

“These representations were and are materially false and misleading,” according to the felony complaint. “Silver has obtained millions of dollars in outside income as a direct result of his corrupt use of his official position to obtain attorney referral fees for himself.”

Silver funneled $500,000 in state funds to a doctor for research and benefits to him and his family, according to the complaint. In exchange, the doctor, who wasn’t identified in the complaint, referred asbestos cases to Weitz & Luxenberg. The speaker received more than $3 million from the law firm in referral fees, the U.S. said.

Weitz & Luxenberg “did not know that any referrals brought to the firm by Mr. Silver related in any way to the alleged actions on his part to benefit the referring doctor,” Marcia Horowitz, a spokeswoman for the law firm, said in an e-mailed statement. “Weitz & Luxenberg was not involved in any of the wrongdoing the government alleges.”

Silver was also paid at least $700,000 by another firm seeking to represent real estate developers who did business with the state, according to prosecutors.

Confidence Vote

Silver won a vote of confidence from the majority of the chamber’s Democrats after they met behind closed doors for almost two hours, said Assemblyman Joe Morelle, the majority leader from Rochester.

“I’m continuing to support the speaker and I would say that the members overwhelmingly in the conversation we just had are continuing their support,” Morelle said.

Assemblyman Jeffrion Aubry, a Queens Democrat and assistant speaker, said before the meeting that his party stands behind Silver.

“Until you’re proven guilty, you’re innocent,” Aubry said in an interview in Albany.

Democrats hold a wide majority in the chamber, and Silver was re-elected to the post with broad support Jan. 7 amid news reports that he was being probed by federal investigators. Next year, Silver would become the longest-serving speaker in New York.

Closed Doors

In Albany, decisions on legislation and the budget are made behind closed doors by the Assembly speaker, the governor and the Senate majority leader, known as the “Three Men in a Room.”

Assemblyman Brian Kolb, the Geneva Republican who leads the minority in the chamber, said for the first time that Silver should resign as speaker.

“This is hanging over his head as speaker and I don’t think he can continue to oversee the people’s work,” Kolb told reporters in Albany. “The charges make him weakened in terms of negotiations with the governor.”
He said with Silver as speaker, the chamber will still function, but under “a dark cloud.”

Assemblyman Charles Barron, a Brooklyn Democrat, said he asked his fellow party members at the meeting to join him in pressing Silver to resign. Silver’s legal troubles kept the chamber from holding a session Thursday where it was to vote on a resolution for Martin Luther King Jr., he said. Barron voted against Silver as speaker Jan. 7.

Step Down

“I think it’s a distraction,” Barron said. “He should step down.”

In 2000 Silver resisted a challenge to his power by Assemblyman Michael J. Bragman, a Democrat from the Syracuse area who had criticized Silver for what he said was a lack of transparency and an autocratic style. Silver, defended by his allies, stripped Bragman of his majority leadership, two offices and more than $1 million in staff funding.

The Assembly chamber, where the doors are almost always open, was locked for about 30 minutes Thursday both from the front and through a back entrance that leads to Silver’s office. His spokesman Michael Whyland and his counsel James Yates conferred outside the speaker’s office.

Albany Corruption

Corruption in Albany has overshadowed some of Cuomo’s accomplishments, including a bill legalizing same-sex marriage in the fourth-most-populous state and the first four consecutive on-time budgets since 1977.

Cuomo, also a Democrat, created the anti-corruption panel, called the Moreland Commission, in July 2013, after two senators, including former Democratic Senate leader John Sampson, and an assemblyman were indicted in separate corruption cases earlier that year.

Cuomo disbanded the commission in March after lawmakers approved a unit to investigate election-law violations, among other new ethics rules.

Now, as Bharara investigates his administration after aides tried to stop Moreland members from probing his campaign and supporters in the real estate industry, Cuomo is pressing for more ethics changes.

Shut Down

Federal prosecutors in New York had convened a federal grand jury to investigate Silver’s outside income sitting since June 2013, according to the U.S.

Bharara said that after the Moreland Commission was shut down, it turned over its files to his office, which merged its information with the government’s own ongoing probe.

Among the panel’s targets were the outside jobs held by lawmakers. Silver, who makes $121,000 annually as speaker, earned at least $650,000 in 2013 as an attorney with Weitz & Luxenberg, according to his financial-disclosure filings.

This isn’t the first time Silver has been scrutinized in public. Questions about his handling of sexual-assault accusations against a former top aide have followed him since the allegations were made in 2001 and 2003. He was criticized in 2013 by a state ethics panel for protecting a Brooklyn assemblyman accused of sexual harassment.

With assistance from Elise Young in Trenton.

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