"The 'show me the money' culture in Albany has been perpetuated and promoted at the very top of the political food chain." -- U.S. Attorney Preet Bharara
By LOUIS FLORES
A years-long pattern of alleged corrupt activities were simply and extensively detailed in a criminal complaint filed Wednesday against New York Assembly Sheldon Silver (D-Manhattan), ordering the arrest of and leading to the voluntary surrender by Speaker Silver to agents of the Federal Bureau of Investigation in Manhattan on Thursday morning.
By Thursday afternoon, Speaker Silver was arraigned and was released on $200,000 bail. Speaker Silver was not required to enter a plea at his court appearance.*
After posting bail, Speaker Silver made a statement to the press, saying, in part, "I am confident that when all the issues are aired, I will be vindicated."
"For many years, New Yorkers have asked the question : How could Speaker Silver, one of the most powerful men in all of New York, earn millions of dollars in outside income without deeply compromising his ability to honestly serve his constituents ? Today, we provide the answer : He didn't," U.S. Attorney Preet Bharara said, during a press conference Thursday afternoon, adding, "As alleged, Silver corruptly used his law license and took advantage of lax outside income rules as a cover to secretly pocket millions of dollars through his official position."
The complaint detailed an alleged stream of secret payments Speaker Silver received in outside income from a real estate law firm, widely believed to be Goldberg & Iryami, P.C., for which Speaker Silver, it was alleged, did no work. The real estate law firm appealed tax assessments for two large real estate developers, which had business before the state. The complaint alleged that Speaker Silver received a percentage of the legal fees paid by the two developers to the real estate firm at the same time when lobbyists for the real estate developers interacted with Speaker Silver in respect of real estate regulations, including a section of law, known as 421-a, reportedly abused by developers for profit. One of the real estate developers allegedly funneled $200,000 in campaign contributions to Speaker Silver or to campaign committees under his control.
The complaint also detailed how Speaker Silver was paid referral fees from another law firm, Weitz & Luxemberg P.C., for asbestos cases referred to the law firm by a doctor. In exchange for the referrals, it was alleged that Speaker Silver steered allocations to the doctor's medical center from a state taxpayer healthcare slush fund under Speaker Silver's control.
"For many years, New Yorkers have also asked the question : What exactly does Speaker Silver do, to earn his substantial outside income ? Well, the head scratching can come to an end on that score, too, because we answer that question today, as well. He does nothing," U.S. Attorney Bharara said, adding, "As alleged, Speaker Silver never did any actual legal work. He simply sat back and collected millions of dollars by cashing in on his public office and his political influence."
U.S. Attorney Bharara announced at the press conference that the court issued warrants allowing federal prosecutors to seize approximately $3.8 million "in alleged fraud proceeds."
In his remarks during the press conference, U.S. Attorney Bharara again repeated his constant complaint about how the corruption-fighting work by the Moreland Commission came to a premature end as a result of a budget deal negotiated by Governor Andrew Cuomo (D-New York). U.S. Attorney Bharara reiterated the jurisdiction his office exerted over the Moreland Commission's files, since the panel's investigations were merged with his office's own, ongoing investigations.
Richard Frankel, an FBI Special Agent in Charge in the New York City Field office, issued a statement, from which he read at the news conference, saying, in part, "We hold our elected representatives to the highest standards and expect them to act in the best interest of their constituents. In good faith, we trust they will do so while defending the fundamental tenets of the legal system. But as we are reminded today, those who make the laws don't have the right to break the laws."
With the Assembly legislative session cancelled on Thursday, apparently nobody was in charge in the State Assembly
In Albany, Speaker Silver's arrest upset the order of business as usual, at least temporarily. His absence led to the suspension of the planned session scheduled for Thursday ; however, a group of Assembly Democrats convened for a meeting Thursday morning for approximately an hour and a half, only to emerge to make a statement in support of Speaker Silver.
"This house will continue to function," said Assembly Majority Leader Joseph Morelle (D-Rochester), speaking on behalf of the Democratic majority, adding that, "and we will work over the next several weeks to make sure of that," further noting that, "Obviously, as it relates to the speaker, he has issued a statement. He has indicated that these charges are without merit, and he'll have his opportunity next week to be here. We'll be here on Monday in session, and and he'll have an opportunity to address that, I'm sure, in the days ahead."
In a press conference following his remarks, Majority Leader Morelle said that he continued to support the speaker, adding that, "And I would say that the members overwhelmingly in the conversation we just had, are continuing their support. And there is a strong feeling, as I think we should all reflect on, that there is a presumption of innocence, and we have every confidence that the speaker is going to continue to fulfill his role with distinction."
In announcing his support for Speaker Silver, Majority Leader Morelle admitted that he hadn't yet read the criminal complaint filed against the speaker. When asked if he believed that Speaker Silver could discharge all of his duties as speaker, Majority Leader Morelle answered that, yes, he believed that Speaker Silver could execute his responsibilities.
Majority Leader Morelle also denied each of : any talk took place that Speaker Silver should step down, that Speaker Silver's arrest was a distraction, or that Speaker Silver had ever explained to him how Speaker Silver earned his outside income.
During the press conference, Majority Leader Morelle added that the State Assembly was not investigating where the taxpayer money from Speaker Silver's slush fund went, deferring action, instead, to prosecutors. When he was asked who's in charge, Majority Leader Morelle said, "We are a collective body, and, you know, we have many members, who hold leadership positions, and they'll continue to hold those leadership positions, and we're going to continue to fulfill our obligations and responsibilities."
Some tenant's rights advocates seized on Speaker Silver's corruption of real estate regulations on behalf of his real estate developer supporters to call for an end to real estate laws that have been exploited by developers for profit at the expense of affordable housing and tenants' rights.
Mounting legal fees
In the time leading up to Speaker Silver's arrest, Speaker Silver reportedly dispersed $30,000 in funds from his campaign committee account to the law firm of Stroock Stroock & Lavan LLP, according to a report published by The New York Daily News, which questioned the apparent relationship in timing between the payment and news about the federal investigation into Speaker Silver's outside income.
Around the same time, Governor Cuomo made a payment of $100,000 out of his own campaign account to Morvillo Abramowitz Grand Iason & Anello PC, a firm which is representing Governor Cuomo in the federal investigation into reports of obstruction of justice by the Cuomo administration of the Moreland Commission, before it was abruptly shut down, according to a separate report by The New York Daily News.
* A prior version of this article incorrectly reported that Speaker Silver pleaded not guilty at his court appearance. Although Speaker Silver was not required to enter a plea in court, he publicly professed his innocence.