Thursday, January 22, 2015

Sheldon Silver, New York Assembly Speaker, Took Millions in Graft, US Says

See http://bit.ly/sheldon-silver-charged-2015 for a plain text version of the US charge against Silver:

Approved:
Assistant United States Attorneys
Before : THE HONORABLE FRANK MAAS
United States Magistrate Judge Southern District of New York
SEALED COMPLAINT
UNITED STATES OF AMERICA
* Violations of
18 US. C. SS 1341, 1343, - . 1346, 1349, and 1951
SHELDON SILVER,
: COUNTY OF OFFENSE .
Defendant. NEW YORK
SOUTHERN DISTRICT OF NEW YORK, ss . ;
ROBERT W. RYAN, being duly sworn, deposes and says that he is a Criminal Investigator with the United States Attorneys Office for the Southern District of New York, and charges as follows:
COUNT ONE
1. From at least in or about 2000, up to and including the date of this Complaint, in the Southern District of New York and elsewhere, SHELDON SILVER, the defendant, willfully and knowingly, having devised and intending to devise a scheme and artifice to defraud, and to deprive the public of its intangible right to SILVERs honest services as an elected legislator and as the Speaker of the New York State Assembly, would and did transmit and cause to be transmitted by means of wire communication in interstate and foreign commerce, writings, signs, signals, pictures, and sounds for the purpose of executing such scheme and artifice, to wit, 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.
(Title 18, United States Code, Sections 1343 and 1346.)
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COUNT TWO
2. From at least in or about 2000, up to and including the date of this Complaint, in the Southern District of New York and elsewhere, SHELDON SILVER, the defendant, willfully and knowingly, having devised and intending to devise a scheme and artifice to defraud, and to deprive the public of its intangible right to SILVERs honest services as an elected legislator and as the Speaker of the New York State Assembly, for the purpose of executing such scheme and artifice and attempting to do so, placed in a post office and authorized depository for mail matter, a matter and thing to be sent and delivered by the Postal Service and deposited and caused to be deposited a matter and thing to be sent and delivered by private and commercial interstate carrier, and took and received therefrom, such matter and thing, and knowingly caused to be delivered by mail and such carrier according to the direction thereon, such matter and thing, to wit, 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.
(Title 18, United States Code, Sections 1341 and 1346.)
COUNT THREE
3 . From at least in or about 2000, up to and including the date of this Complaint, in the Southern District of New York and elsewhere, SHELDON SILVER, the defendant, and others known and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and with each other to commit honest services mail fraud in violation of Title 18, United States Code, Sections 1341 and 1346 .
4 . It was a part and an object of the conspiracy that SHELDON SILVER, the defendant, willfully and knowingly, having devised and intending to devise a scheme and artifice to defraud, and to deprive the public of its intangible right to SILVERs honest services as an elected legislator and as the Speaker of the New York State Assembly, for the purpose of executing such scheme and artifice and attempting to do so, placed in a post office and authorized depository for mail matter, a matter and thing to be sent and delivered by the Postal Service and deposited and caused to be deposited a matter and thing to be sent and delivered by private and
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commercial interstate carrier, and took and received therefrom, such matter and thing, and knowingly caused to be delivered by mail and such carrier according to the direction thereon, such matter and thing, in violation of Title 18, United States Code, Sections 1341 and 1346, to wit, SILVER agreed with others known and unknown, including a coconspirator not named herein ("CC1) , to use the power and influence of his official position to induce certain real estate developers with significant business before the State of New York to retain the law firm of CC1 in exchange for hundreds of thousands of dollars in secret bribes and kickbacks paid to SILVER by the law firm, which were masked as legitimate income earned by SILVER as a private lawyer.
(Title 18, United States Code, Section 1349. )
COUNT FOUR
E . From at least in or about 2000, up to and including the date of this Complaint, in the Southern District of New York and elsewhere, SHELDON SILVER, the defendant, willfully and knowingly, did obstruct, delay, and affect in any way and degree commerce, and the movement of articles and commodities in commerce, by extortion, as those terms are defined in Title 18, United States Code, Section 1951, and did thereby obtain property not due SILVER or his office and to which SILVER was not entitled, under color of official right, to wit, SILVER used the power and influence of his official position to obtain for himself millions of dollars masked as legitimate income earned by SILVER as a private lawyer. -
(Title 18, United States Code, Section 1951. )
COUNT FIVE
6 . From at least in or about 2000, up to and including the date of this Complaint, in the Southern District of New York and elsewhere, SHELDON SILVER, the defendant, and others known and unknown, willfully and knowingly did combine, conspire, confederate, and agree together and with each other to willfully and knowingly obstruct, delay, and affect in any way and degree commerce, and the movement of articles and commodities in commerce, by extortion, as those terms are defined in Title 18, United States Code, Section 1951, and did thereby obtain property not due SILVER or his office and to which SILVER was not entitled, under color of official right, to wit,
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SILVER agreed with others known and unknown, including CC1, to use the power and influence of his official position to obtain for himself hundreds of thousands of dollars masked as legitimate income earned by SILVER as a private lawyer.
(Title 18, United States Code, Section 1951. )
The bases for deponents knowledge and for the foregoing charges are, in part, as follows:
7 . I am a Criminal Investigator with the United States Attorneys Office for the Southern District of New York (WUSAO SDNY) , and have been in that position for approximately eight years.
I have been personally involved in the investigation of this matter along with Special Agents of the Federal Bureau of Investigation (the WFBI) and other Criminal Investigators of the USAO SDNY (collectively, the Investigative Team) . Previously, I was a Special Agent of the US. Department of Housing and Urban Development – Office of the Inspector General ("HUDOIG) for three years, and prior to that I was a Special Agent of the Internal Revenue Service – Criminal Investigation (WIRSCI) for 14 years. While with the USAO SDNY, HUD-OIG, and IRSCI, I have participated in multiple investigations of public corruption offenses, among other offenses.
8 . I am familiar with the facts and circumstances set forth below from my participation in the investigation of this matter, from my personal knowledge, and from my conversations with other law enforcement officers, including members of the Investigative Team and others. Because this Affidavit is being submitted for the limited purpose of establishing probable cause, I have not included every fact I have learned during the investigation. Where the actions, statements, and conversations of others are recounted herein, they are related in substance and in part, unless otherwise indicated.
OVERVIEW
9 . SHELDON SILVER, the defendant, has engaged in and continues to engage in a secret and corrupt scheme to deprive the citizens of the State of New York (the State) of his honest services, and to extort individuals and entities under color of official right, as an elected legislator and as Speaker of the New York State Assembly (the Assembly) . For more than a decade, SILVER repeatedly has represented publicly that his outside income as a private lawyer is derived from private citizens who seek him out for legal services in personal injury matters, and that none of his
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clients has any business before the State. SILVER also has represented through the States mandatory financial disclosure filings that he derives his outside income as a private lawyer from "representing individual clients" in "personal injury actions" as Wof counselto the law firm Weitz & Luxenberg, PC. (WWeitz & Luxenberg) . These representations were and are materially false and misleading. In truth and in fact, 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, including from clients with substantial business before the State, and not as a result of legitimate outside income SILVER earned as a private lawyer. -
10. The investigation to date has revealed that SHELDON SILVER, the defendant, received more than 6 million in outside income from two law firms since late 2002, consisting of the following:
cl . Approximately 700, 000 in undisclosed bribes
and kickbacks obtained in a scheme described in detail below, whereby SILVER used his power and influence as an elected legislator and as Speaker of the Assembly to induce real estate developers with business before the State to retain and continue to use a real estate law firm (the Real Estate Law Firm) controlled by an attorney who previously had worked as SILVERs counsel in the Assembly (CC1) , and who caused SILVER to be paid for such referrals by the Real Estate Law Firm.
b. More than 5.3 million in payments from Weitz & Luxenberg in the form of: (i) a salary of approximately 120,000 annually, totaling more than 1.4 million during the relevant time period, which SILVER received based on his official position rather than any work he was expected to perform for clients of the firm, plus (ii) approximately 3.9 million in attorney referral fees, over 3 million of which SILVER obtained through a corrupt scheme described in greater detail below, whereby SILVER obtained referrals of asbestos cases from a doctor ("Doctor1) by using his official position to secretly direct 500,000 in State funds to Doctor1s research and provide additional benefits to Doctor1 and his family.
11. SHELDON SILVER, the defendant, had no involvement in the work of the Real Estate Law Firm or Weitz & Luxenbergs asbestos practice, and he has never performed any legal work whatsoever for either the Real Estate Law Firms real estate developer clients or Weitz & Luxenbergs asbestos clients. In short, as set forth below,
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there is probable cause to believe that SILVER obtained approximately 4 million in payments characterized as attorney referral fees solely through the corrupt use of his official position.
12. When, in or about 2013, the Moreland Commission to Investigate Public Corruption (the Moreland Commission) began to investigate outside income earned by SHELDON SILVER, the defendant, and other State legislators, SILVER took legal action and other steps to prevent the disclosure of such information to the Moreland Commission. -
BACKGROUND
The Legislature and Silvers Authority and Compensation as Assembly Speaker
13. I have learned the following from my review of publicly available State government documents, and my training, experience, and participation in the investigation:
Gl . The New York State Legislature (the Legislature) is seated in the State Capitol in Albany. As provided for in Article III of the New York State Constitution and State law, the Legislature consists of two houses: the Assembly, which has 150 elected members, and the State Senate (the Senate) , which has 63 elected members. The leader of the Assembly, who is elected by its members, is referred to as the Speaker of the Assembly.
b. Members of the Legislature generally are
permitted to hold outside employment and earn outside income at the same time they serve as legislators. However, because of the obvious potential for abuse that arises when members of the Legislature receive outside income, State law restricts to some degree such employment to avoid, among other things, conflicts and potential conflicts of interest. Additionally, as discussed in greater detail below, State law requires members of the Legislature to disclose annually certain information about their outside income, including the sources of that income.
C . In or about 1976, SHELDON SILVER, the defendant, was elected as a member of the Assembly in an Assembly District that comprises much of lower Manhattan. In or about 1994, SILVER was elected Speaker of the Assembly, a position he continues to hold more than two decades later.
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d. Pursuant to the Rules of the Assembly and other provisions of State law and practice, the Speaker of the Assembly has significant power over the Assembly, including appointing the chairperson and members of all Assembly committees, creating subcommittees and task forces and appointing the chairperson and members thereof, overseeing the Assemblys rules and regulations, presiding over the Assembly, and controlling legislative sessions, including bringing certain legislation to the floor for debate. In addition, the Speaker of the Assembly plays a key role in negotiation of the State budget and the allocation of certain State funds to various entities.
6S . As a member of the Assembly, SILVER is paid the same annual base salary as other Assembly members, which currently is 79,500. In addition to his base salary, SILVER is paid an additional salary of 41,500 for serving as Speaker of the Assembly. Accordingly, SILVERs total annual monetary compensation for his official duties is 121,000, plus per diem pay, a car and driver, and travel reimbursement.
Silvers Power and Influence Over the Real Estate Industry and Health Care Funding
The Real Estate Industry
14. I have learned the following about the role of SHELDON SILVER, the defendant, in regulating the States real estate industry from individuals who are in the business of lobbying State elected officials on behalf of, among other entities, a New Yorkbased real
estate developer ("Developer1) (the Lobbyists) , a representative from Developer1, representatives of another New Yorkbased real estate developer ("Developer2) , records obtained
from the Moreland Commission after the Governor of the State disbanded it as described in greater detail below, public records, and my training, experience, and participation in the investigation:
cl. The Legislature, including the Assembly, has a significant role in regulating the real estate industry in the State. In particular, the Legislature regulates the real estate industry by, among other things, passing laws governing real estate taxation, rent, land use, and other matters. In addition to controlling key aspects of real estate regulation, the State also sponsors and provides governmental subsidies and tax incentives that have significant financial value to certain participants in the real estate industry. Among other programs of this nature are (i) a
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program known as the 8020 program," under which qualifying developers of residential rental real estate are eligible for governmentsubsidized financing and tax credits, in exchange for keeping at least 20 percent of units affordable for low and moderate income renters for a set period of time, and (ii) a program known as the 421a program” under which substantial real estate tax abatements are provided for certain new residential real estate developments. Several of these regulations and programs, in particular those relating to rent regulation and tax abatements, | expire periodically and thus must be renegotiated and reapproved by the Legislature, including the Assembly, if they are to continue.
b. In part due to the importance of the Legislature to the real estate industry, real estate developers, including Developer1, are some of the largest contributors to campaigns of candidates for State office and to political committees controlled by leaders of the Legislature, including SILVER. For example, I have learned that from in or about 2005 through in or about 2014, Developer1 has contributed more than 10 million to candidates for State office and State political committees, including to committees of both major political parties, making it the largest political contributor of any person or entity to State candidates or committees during that time period. Developer1s more than 10 million in contributions includes approximately 200,000 to SILVER and a political committee SILVER controls. -
c. Real estate developers and associations of real estate developers also retain lobbyists to lobby legislators, including SILVER, among others, in order to ensure that their t interests are represented effectively before SILVER and other key | decision makers in State government. For example, in or about 2014, Developer1 paid approximately 900, 000 to eight different lobbyists, including the Lobbyists, to lobby State government officials, including SILVER .
Health Care Funding
15. I have learned the following from my review of publicly available State government documents, individuals currently or formerly employed by the New York State Department of Health (WDOH) , and my training, experience, and participation in the investigation:
Gl . SHELDON SILVER, the defendant, has exercised, and continues to exercise, control over several sources of State

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funding as Speaker of the Assembly. Funding that SILVER has controlled since becoming Speaker of the Assembly includes discretionary money that is allocated to the Assembly for use by its members (member items) , and capital funding through certain State public authorities that is available to projects backed by SILVER . In addition to general-purpose member item funding and capital, funding, discretionary funds over which SILVER has exercised control include funding available to the Assembly until in or about 2007 under legislation entitled the New York State Health Care Reform Act (YHCRA) * Specifically, until in or about 2007, up to 8.5 million was allocated to the Assembly annually under HCRA, to be disbursed through DOH at the discretion of the Speaker of the Assembly, i.e. ,
b . Until in or about April 2005, the HCRAAssembly Pool was not part of the State budget, and disbursements from the HCRAAssembly Pool were not disclosed in the budget. Beginning in or about April 2005 through in or about 2007, the HCRAAssembly Pool was included in the State budget, but it was listed as a lump sum 8.5 million line item, without any public disclosure of the recipients of the funds from the HCRAAssembly Pool or the purported intended use of such funds.
C . To disburse funds from the HCRAAssembly Pool, a letter from SILVER was sent to DOH, accompanied by a form called a Legislative Initiative Form, which provided the purported intended
purpose of the disbursement. DOH had no role in selecting recipients
of the HCRAAssembly Pool funds or evaluating the intended use of such funds. Grants from the HCRAAssembly Pool differed from other grants that DOH has administered in certain limited research areas, which are subject to a formal application process and peer review. Thus, SILVER was able to distribute money from the HCRAAssembly Pool at his discretion, with no public disclosure of the disbursements.
• d. In or about January 2007, the State, to increase transparency about the spending of State funds, adopted legislation called the Budget Reform Act of 2007 prohibiting "lump-sum" appropriations by the Legislature, such as the HCRAAssembly Pool. Instead, any discretionary appropriations added to the budget by the Legislature had to be itemized appropriations that, unlike expenditures made from the HCRAAssembly Pool, had to be publicly disclosed. Pursuant to the Budget Reform Act of 2007 and as a
* Pub. Health L. S 2807–(1) (c) (iii) (B) .
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cost-saving measure, the HCRAAssembly Pool was abolished and was no longer available after 2007.
SILVER" S PUBLIC REPRESENTATIONS ABOUT HIS OUTSIDE INCOME
16. I have learned the following from records obtained from the New York State Legislative Ethics Commission (the Ethics Commission) , public records, and my training, experience, and participation in the investigation:
Pursuant to the New York State Public Officers Law, members of the Legislature are required to file financial disclosure statements on an annual basis with the Ethics Commission. The financial disclosure statement is entitled Annual Statement of Financial Disclosure” (the Disclosure Form) and is required to be signed and presented for filing by the reporting individual.
b. A primary purpose of the Disclosure Form is to require legislators to disclose outside income, activities, finances, and assets that may indicate a financial impropriety or conflict of interest .
C . The Disclosure Form requires reporting individuals to answer a variety of questions about themselves and their spouses related to, among other things, outside employment and income, involvement with notfor-profit corporations and political parties, investments, assets, loans, gifts, and reimbursements. Beginning in or about 2013, the Disclosure Forms have been posted on the Internet by the New York State Joint Commission on Public Ethics and available to the general public.
d. If a Disclosure Form is offered or presented that knowingly contains a false statement or false information, it may serve as the basis for prosecution under the New York Penal Law.”
Ge . At all times relevant to this Complaint, the Disclosure Form required reporting individuals to answer the following questions completely, among others:
i. Question No. 8 required reporting individuals who also are attorneys to give a general description of the principal subject areas" of their practice.
* See, e.., N. Penal Law S 175.30 (offering a false instrument for filing in the second degree) .

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