Prosecutors say the key to powerful Assembly Speaker Sheldon Silver being able to pocket $4 million in bribes and kickbacks for 15 years was simple:
Behind the scenes, prosecutors say, Silver set up twin schemes using two law firms to reap millions of dollars by aiding developers pursuing tax breaks and a doctor who wanted state funds for cancer research.
With what Manhattan U.S. Attorney Preet Bharara described as “particular cleverness and cynicism,” Silver is alleged to have utilized every dodge in the book.
He disguised bribes as “referral fees.” He used state funds with little oversight to advance his scheme. He tapped a lobbyist as an intermediary. Even some of those involved in his plots didn’t know the full extent of what he was doing.
And because Albany’s financial disclosure requirements for politicians are so anemic, Silver was able to keep all this secret for years.
On Thursday, Silver — a Democrat who has served as speaker for 21 years and become one of the most powerful politicians in New York — surrendered to the feds to face a five-count criminal complaint charging him with corrupt acts from fraud to extortion.
Facing a maximum of 20 years on each count, he pleaded not guilty and was released on $200,000 bond. Outside court, he exuded quiet self-confidence, stating, “I’m happy the issue is coming to the air in the legal process. And I’m confident when all the issues are aired I will be vindicated.”
Bharara quickly moved to seize $3.8 million in eight of Silver’s accounts at six banks, hoping to recover what he said was just under $4 million in ill-gotten gains.
And Bharara — who’s made a name for himself pursuing Albany pols and picking up where the disbanded anti-corruption Moreland Commission left off — said Silver abused his public position for huge personal gain.
“Over his decades in office, Speaker Silver has amassed titanic political power,” Bharara said. “During that same time, Silver also amassed a tremendous personal fortune — through the abuse of that political power.”
Since 2002, the year he joined the personal injury law firm, Weitz & Luxenberg, Silver’s disclosure forms have cryptically revealed he’d received hundreds of thousands of dollars in “fees” from Weitz or simply from “law practice.”
He always insisted that none of his law clients had any business with the state — a lie, prosecutors said Thursday — but there was no way to check because in public court files, there was no sign of Silver appearing on specific cases.
As far back as 2000, a lobbyist requested favorable treatment on rent laws for his big developer clients. In response, Silver, 70, told the lobbyist to have his clients switch some of their legal work to the Goldberg firm, the complaint alleged.
They complied, and soon after, Silver was secretly receiving what would ultimately be $700,000 in kickbacks from that firm, prosecutors say.
For these “fees,” Silver the lawyer — who has no background in tax law — did no actual work. Silver the speaker, meanwhile, used his domination over the Assembly to extend tax breaks that saved the developers millions, Bharara charged.
“Silver received a share of all fees that the (law firm) received from representing Developer 1 and Developer 2,” the complaint alleged — 25% of the fees obtained from Developer 1 and 15% from Developer 2.
One of the developers was Leonard Litwin, the biggest political donor in New York State, sources familiar with the matter said.
Litwin — through a network of companies under the umbrella firm Glenwood Management — has donated more than $10 million to pols from both parties from 2005 through 2014. That includes $200,000 to Silver and political committees Silver controls.
Glenwood develops and manages thousands of luxury units in the city worth $1 billion. Over the years, it’s received various tax breaks, including some through a program called 421-a that encourages affordable housing. The program is regulated by Albany, and Silver has repeatedly moved to extend it.
Litwin and Glenwood have not been charged with any wrongdoing. The firm did not return calls.
The “referral fee” method also worked well with the Weitz law firm, prosecutors said.
Prosecutors charge that Silver got a doctor he was introduced to through a mutual acquaintance to refer dozens of patients to the firm, which specializes in asbestos cases. In exchange, Silver collected a “referral fee” for each patient sent over by the doctor. Silver didn’t know and never met the patients and knew nothing about asbestos-related legal work, prosecutors said.
The doctor — identified by sources as Dr. Robert Taub of New York-Presbyterian Columbia University Hospital — wanted something in exchange, prosecutors said.
“It turns out the doctor is in luck, because Sheldon Silver has access to enormous amounts of public money,” Bharara said.
In 2005 and 2007, Taub asked Silver for financial help for his cancer research. Silver had the state Health Department steer two grants totalling $500,000 from a fund Silver controlled to the doctor’s program.
On one grant filed by Silver, the group stated the money was urgently needed to study the effects of asbestos release at Ground Zero during the 9/11 cleanup efforts.
As the doctor sent patients to Weitz, the firm paid Silver referral fees that ultimately totalled $3.2 million.
In 2008, the doctor requested more funds. This time Silver told him the program was over, so the doctor began referring fewer patients to Weitz and more to another law firm that was quietly funding his research.
At one point, Silver asked why the referrals to Weitz had slowed. The doctor explained about the other law firm, but he continued to refer some patients to Weitz.
In 2008, prosecutors said, Silver directed $225,000 in state funds to a nonprofit that included a board member who was one of the doctor’s relatives.
Then in May 2011, Silver sponsored an “official resolution” issued by the Assembly honoring the doctor. And in 2012, Silver helped arrange a job for another of the doctor’s kin at a nonprofit that had received millions of dollars in state funds sponsored by Silver.
With Barry Paddock