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Feds accuse Sheldon Silver of $4 million in schemes, kickbacks

ALBANY – Federal prosecutors accuse Sheldon Silver of getting $4 million over the years in a kickback and bribery scheme by using the power of his office as Assembly Speaker.

Silver, who has resisted efforts for broadest possible disclosure of outside incomes, “engaged and continues to engage in a secret and corrupt scheme” to deprive New Yorkers of his “honest services” as a government official, states the federal complaint that was made public against the Manhattan Democrat.

Silver, who has ruled as one of Albany’s three-men-in-a-room since 1994, turned himself into the FBI in New York City this morning.

Silver told reporters in Manhattan this morning that he hopes to be vindicated.

U.S. Attorney Preet Bharara Thursday afternoon said he has issued warrants allowing federal prosecutors to seize $3.8 million from Silver’s eight different bank accounts. He said Silver “secretly pocketed” millions of dollars through the power of his position in Albany. “He does nothing,” Bharara said of the work Silver claimed to have done at the law firms.

The alleged schemes involved kickbacks and bribes from real estate developers with business before the state to a doctor who referred asbestos cases to a Manhattan law firm where Silver served “of counsel” for years, according to the federal complaint by the U.S. Attorney’s Office in Manhattan. The doctor later got, with Silver’s help, $500,000 in research funding from the state, according to the court papers.

The five-count fraud and corruption complaint portrays a series of allegations in which a politician enriched himself at the public’s expense. Silver, a recent Buffalo News analysis showed, has negotiated more than $2 trillion worth of state budgets since he has become Speaker a generation ago.

Investigators said in the complaint that information prosecutors demanded and obtained from an anti-corruption panel – which Gov. Andrew Cuomo shut down last year – was used as part of the evidence in the case against Silver.

Federal investigators noted how Silver and other lawmakers took legal steps to try to stop the panel, known as the Moreland Commission, from looking at the full disclosure about their outside law firm clients.

Silver has long identified his outside income as coming from the New York trial law firm of Weitz & Luxenberg.

He has never identified his clients but his spokesman characterized the clients as “plain, ordinary simple people," court papers say.

The complaint against Silver says otherwise, and portrays a longtime effort by Silver to enrich himself by helping entities with business before the state that at the same time steered work to his law firms.

Besides the one firm, it was recently revealed Silver has also done work for a second Manhattan law firm, involved in real estate matters, for which he never reported the income on state financial disclosure statements. The complaint does not specifically identify that firm, but media reports have already said Silver got the income from Goldberg & Iryami firm.

The federal complaint alleges Silver took home $3 million in a scheme involving a physician who referred asbestos cases to Weitz & Luxenberg, and then Silver later helped the doctor get state funding for his research work. State health department officials were among those who raised red flags with investigators about the matter. The complaint said it was Silver who suggested to the doctor that he refer work to the law firm, which gets more than 60 percent of its income from asbestos-related cases.

Silver also got $700,000 from the firm after real estate developers, with business before the state, used the law firm to represent them. The complaint called them “bribes and kickbacks." The developer, not identified in the complaint, was a major political player, as well, making more than $10 million in contributions the past decade to various state politicians and political campaign accounts, including the Democratic Assembly Campaign Committee.

Since late 2002, Silver has gotten more than $6.2 million in outside income from the two law firms, the complaint states. Silver also makes a base $79,500 pay in the Assembly and a stipend of 41,500 for his Speaker’s post.

Investigators combed files to check out Silver’s claims that he did work on personal injury cases for “individual clients," but could find “no cases in which Silver had entered an appearance as a lawyer."

After getting a grand jury to issue subpoenas, investigators got documents from Weitz & Luxenberg showing Silver was credited with referring more than 100 clients to the firm over the years. Most were referred for asbestos litigation, not personal injury cases, the complaint states.

Investigators said records from the law firm showing “work actually performed by Silver" for the firm involved a single property dispute case – and that the represented individual worked for the Assembly.

The complaint said that Silver also received “corrupt kickbacks” from the real estate law firm from developers “who had and continue to have significant business before Silver and the state.” It said Silver performed “no work whatsoever” for the law firm. The complaint said one of the developer owns more than $1 billion worth of luxury rental properties with financial stakes in decisions made in Albany about the real estate industry.

The arrest of Silver comes one day after he was in Albany to attend Cuomo’s State of the State, an address in which the governor called for more complete disclosure of outside incomes of state lawmakers.

Silver, 70, was elected to the Assembly in 1970, representing the Lower East Side of Manhattan.

Silver’s attorneys, Joel Cohen and Steven Molo, said they are “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.”