LATEST PAPER
87° Good Afternoon
87° Good Afternoon
News

Sheldon Silver arrested on federal corruption charges, FBI says

Sheldon Silver, the longtime Democratic leader of the

Sheldon Silver, the longtime Democratic leader of the State Assembly, leaves FBI offices in Manhattan on Thursday, Jan. 22, 2015. Silver is charged with official corruption, federal prosecutors said. Photo Credit: John Roca

Assembly Speaker Sheldon Silver, one of the most powerful men in New York politics over the last two decades, was arrested Thursday on federal corruption charges alleging he steered real-estate legislation and funneled state medical research funds in return for $4 million in illegal kickbacks.

The news sent shock waves through the State Capitol, with the Assembly abruptly canceling session, and eventually it could jumble the balance of political power in the state. As Assembly Speaker, Silver is one of three men who control the flow of legislation and the $142 billion state budget.

Silver (D-Manhattan), 70, was charged on five counts of conspiracy, fraud and extortion that, collectively, carry up to 100 years in prison. He was arraigned in Manhattan and released on $200,000 bail. Speaking briefly before surrendering to law enforcement, Silver said he was confident "I'll be vindicated."

U.S. Attorney Preet Bharara and FBI officials charged that for more than a decade Silver, a lawyer, received kickbacks disguised as "attorney referral fees" through schemes that hinged on his power as one of the three most influential men in state government. Following a 20-month investigation, Bharara said Silver "amassed a tremendous personal fortune" through the "abuse" of office.

"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?" Bharara said at a news conference. "Today, we provide the answer: He didn't."

Bharara said Silver never did "a lick of work" to amass the money, which was deposited in six different banks. Silver reported earning at least $650,000 last year in outside income.

"He simply sat back and collected millions of dollars by simply cashing in on his public office and his political influence," the prosecutor said.

Bharara said the federal investigation of Silver began in June 2013 -- before a state panel known as the Moreland Commission was formed by Gov. Andrew M. Cuomo to probe possible violations of state election laws. Bharara noted that Moreland had begun to seek similar information about state legislators' outside incomes but was stymied in court. Cuomo shut down the commission before it completed in cases, after he and lawmakers reached a deal on new ethics laws.

"These charges go to the very core of what ails Albany -- a lack of transparency, lack of accountability and a lack of principle joined with an overabundance of greed, cronyism and self-dealing," Bharara said.

One scheme allegedly involved getting a doctor to refer asbestos patients to Silver's firm, Weitz and Luxenberg of Manhattan. Silver allegedly received $3.3 million in referral fees and, in exchange, used a health-care fund he controlled to direct $500,000 to the doctor's research hospital.

"Silver, as we allege, in the early 2000s forms a relationship with a doctor who is an expert in asbestos-related disease and who can get Silver what he wants because he treats many patients who might have asbestos-related claims," Bharara said. "Silver wants referrals so that he can substantially increase his income -- even without doing a lick of work. So, as alleged, he asks the doctor to refer people who have asbestos diseases to Silver at the firm of Weitz & Luxenberg, with which Silver had conveniently formed an affiliation. But the doctor wants something, too. What the doctor wants is money to fund his research at a hospital in New York."

Beginning in 2010, the doctor began receiving funding from another law firm and referred patients there instead of Weitz. Silver, Bharara said, visited the doctor in his office to ask why referrals to Silver's firm had decreased. When referrals picked up again, Silver helped find a job for a member of the doctor's family and in 2011 got the Assembly to pass an "official resolution" honoring the physician, Bharara said.

The complaint didn't name the doctor but identified "The Mesothelioma Center," which points to a center headed by Dr. Robert Taub. State records show the Assembly approved a Taub resolution May 10, 2011. Taub did not immediately respond to calls seeking comment.

The second scheme alleged that Silver worked to "induce real estate developers with business before the state" to use a real estate firm with ties to the Speaker to challenge property-tax assessments. Silver made $628,132 in referral fees and later helped landlords win favorable legislation, even though he's regarded as a tenants' advocate, the prosecutor said.

"When rules come up for renewal that are absolutely critical to the financial success of those developers, the developers are pleased with how Sheldon Silver comes out on their issues," Bharara said.

The complaint cites an unnamed developer who used the firm with ties to Silver to seek tax reductions.

The prosecutor said the developer was the largest political contributor in the state since 2005, which the New York Public Interest Research Group and other watchdogs routinely have identified as Leonard Litwin, who heads the New Hyde Park-based Glenwood Management, a sprawling real estate company.

Further, Bharara said the developer paid eight lobby firms $900,000 in 2014, which matches lobby records filed by Glenwood. A Newsday review of campaign contributions show's Litwin-related entities donated $200,000 to political action committees controlled by Silver, matching another reference Bharara made in the complaint.

Glenwood didn't immediately return calls for comment.

Silver was first elected in 1976, representing Manhattan's Lower East Side. He ascended to Speaker in 1994 and is just one year away from tying the record for the longest tenure in that post.

He's been known as a shrewd negotiator, sometimes called the "Sphinx of Albany" for his ability to navigate politics and wait out others for deals he favored. He is a champion of liberal causes, including rent control in New York City, and unions. But he's faced controversy.

In 2000, a Syracuse Assemblyman unsuccessfully tried to overthrow Silver, citing the leader's autocratic style. In 2003, a top Silver aide was accused of sexual misconduct and taken out of the Capitol in handcuffs. In 2012, Silver drew fire for approving spending $103,000 in state funds to approve a secret settlement to end a sexual harassment claim against then-Assemb. Vito Lopez.

 

With John Riley

Comments

We're revamping our Comments section. Learn more and share your input.

News photos & videos