New York State Assembly Speaker Arrested on Federal Corruption Charges

Sheldon Silver, the speaker of the New York State Assembly, left the courthouse on Thursday in Manhattan. (PHOTO CREDIT: Sam Hodgson for The New York Times)

The speaker of the New York State Assembly, Sheldon Silver, was arrested on federal corruption charges on Thursday and accused of using the power of his office for more than a decade to secure millions of dollars in bribes and kickbacks and then covering up his schemes, according to court documents.

Mr. Silver, a Democrat from the Lower East Side of Manhattan who has served as speaker for more than two decades, is accused of a range of corrupt dealings that capitalized on his official position. They include using his position to obtain corrupt payments misrepresented as referral fees from a law firm, funneling state research funds and other benefits to a doctor who in return referred asbestos claims to the law firm where the speaker worked, and secretly helping real estate developers win tax breaks.

In recent years, a steady parade of lawmakers in Albany have been charged with corruption, and the complaint against Mr. Silver outlines a capital culture rife with back-room dealing, where money and influence shape public policy for the benefit of private agendas.

Mr. Silver, 70, surrendered to agents with the Federal Bureau of Investigation early on Thursday in Lower Manhattan, and the charges were announced at midday by the United States attorney for the Southern District of New York, Preet Bharara.

“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?” Mr. Bharara said at a news conference. “Today, we provide the answer: He didn’t.”

Mr. Bharara said Mr. Silver had produced “a nice profit on being a public official.” He added, “Politicians are supposed to be on the people’s payroll, not on secret retainer to wealthy special interests they do favors for.”

Albany’s systemic corruption — and a series of cases brought by the same federal prosecutors who charged Mr. Silver on Thursday — prompted Gov. Andrew M. Cuomo, a fellow Democrat, to create a special anticorruption panel, known as the Moreland Commission, to investigate wrongdoing and work to clean up state government.

But in March, Mr. Cuomo abruptly shut down the commission — “to the great relief of Sheldon Silver,” Mr. Bharara said.

Before the governor disbanded it, the panel had ​issued subpoenas as part of an investigation into the outside income earned by lawmakers, subpoenas that Mr. Silver and other lawmakers challenged in court.

At the news conference, Mr. Bharara offered a stinging assessment of a state capital where money flows freely and deals are cut behind closed doors — sometimes at the expense of taxpayers, and to the enrichment of lawmakers. He said the charges against Mr. Silver “go to the very core of what ails Albany.”

Mr. Bharara added, somewhat ominously, that his office had a number of other public corruption investigations that were still continuing. “You should stay tuned,” he said.

The arrest of Mr. Silver, one of the most powerful politicians in the state, sent immediate shock waves through the political establishment and upended the new legislative session. The Assembly canceled its session on Thursday as Democrats planned to meet privately to plot a course of action. The state Republican Party issued a statement calling for Mr. Silver to resign, joining several Democrats who also said he should step down.

Mr. Silver, entering 26 Federal Plaza before 8 a.m. to surrender, said, “I hope I’ll be vindicated.”

Later in the morning, his lawyers, 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.”

In a statement, Richard Frankel, the F.B.I. special agent in charge, said, “Those who make the laws don’t have the right to break the laws.”

“As alleged, Silver took advantage of the political pulpit to benefit from unlawful profits,” he said. “When all was said and done, he amassed nearly $4 million in illegitimate proceeds and arranged for approximately $500,000 in state funds to be used for projects that benefited his personal plans.”

The criminal complaint outlining the charges accuses Mr. Silver of “using the power and influence of his official position to obtain for himself millions of dollars of bribes and kickbacks masked as legitimate income.”

He is charged with honest services mail and wire fraud, conspiracy to commit honest services mail fraud, extortion “under the color of law” — using his official position to commit extortion — and extortion conspiracy.

The complaint maintains that for more than a decade, Mr. Silver devised a scheme “to induce real estate developers with business before the state” to use a real estate law firm controlled by a lawyer who had once worked as Mr. Silver’s counsel. That lawyer, according to the complaint, orchestrated payments to the speaker for referrals to the firm.

The complaint, referring to the personal injury firm, Weitz & Luxenberg, also said that “there is probable cause to believe that Silver received approximately $4 million in payments characterized as attorney referral fees solely through the corrupt use of his official position.”

Prosecutors, according to the complaint, said Mr. Silver did no work for the payment. Investigators could find no court appearances by him and no records at either law firm that showed he had done any legal work whatsoever, except for one case in which he represented an employee of the Legislature in a property dispute, but took no fee.

The authorities seized approximately $3.8 million of Mr. Silver’s money on Thursday morning.

The investigation of Mr. Silver began in June 2013 and picked up speed after Mr. Cuomo shut down the Moreland panel.

The inquiry by Mr. Bharara’s office and the F.B.I. focused in part on payments that Mr. Silver received from the real estate law firm, which is not identified in the complaint but which a person briefed on the matter said was Goldberg & Iryami, which specializes in seeking reductions of New York City real estate taxes.

While it is legal for lawmakers, who work part time, to hold outside jobs, investigators said Mr. Silver failed to list all the payments from the Goldberg firm and Weitz & Luxenberg on his annual financial disclosure filings with the state.

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SOURCE: NY Times | William K. Rashbaum, Thomas Kaplan and Marc Santora