January 23, 2015

DOJ Catch Of The Week — New York State Assembly Speaker Sheldon Silver

Photo Credit: Sheldon Silver

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “catch of the week” goes to long-time New York State Assembly Speaker Sheldon Silver. Yesterday, the US Attorney’s Office for the Southern District of New York and the FBI’s New York Field Office jointly announced their arrest of Silver on charges he used his official position to receive nearly $4 million in bribes and kickbacks concealed as income from an outside law practice. In addition, the government seized several million dollars of Silver’s assets pending the resolution of this matter. See DOJ Press Release.

According to the government, for more than two decades Silver used his substantial power as New York’s top legislator to unlawfully enrich himself by soliciting and obtaining client referrals worth millions of dollars in exchange for his official acts. And he attempted to disguise this money as legitimate outside income earned from work as a private lawyer with Manhattan-based personal injury law firm, Weitz & Luxenberg P.C. The government claims Silver’s scheme provided him with two different streams of unlawful income: (i) approximately $700,000 in kickbacks he received by steering two real estate developers with business before the state legislature to a real estate law firm run by a co-conspirator, and (ii) more than $3 million in asbestos client referral fees he received by, among other official acts, awarding $500,000 in state grants to a university research center of a physician who referred patients made ill by asbestos to Silver at Weitz & Luxenberg.

Silver allegedly took various efforts to disguise his unlawful outside income and prevent the detection of the scheme, including the following misrepresentations:

  • Claiming he performed legal work consisting of spending several hours each week evaluating legal matters brought to him by potential clients when in fact he did no such work and obtained referrals based on his corrupt arrangements.
  • Claiming his law practice involved the representation of “plain, ordinary simple people” when in fact he represented some of the largest real estate developers in the State of New York, whose interests are in many ways dependent on state legislation.
  • Claiming he found clients by virtue of his having been a “lawyer for more than 40 years” when in fact he found his asbestos and real estate developer clients solely by virtue of his official position.
  • Claiming “[n]one of his clients have any business before the state” when in fact Silver’s outside income included millions of dollars of fees obtained through real estate developers with significant business before the state and a prominent physician to whom Silver provided state funding and other benefits.

The government further alleges Silver thwarted the Moreland Commission to Investigate Public Corruption so that it would not learn of his illegal outside income. He apparently did this by filing legal motions on behalf of the Assembly and taking other action to block the Moreland Commission’s investigation into legislative outside income. And by negotiating with the Governor of New York to prematurely terminate the Moreland Commission.

US Attorney Preet Bharara did not mince words in how the government views the scope and scale of Silver’s alleged corruption and how it fits into the larger “show-me-the money culture of Albany:”

As today’s charges make clear, the show-me-the-money culture of Albany has been perpetuated and promoted at the very top of the political food chain. And as the charges also show, the greedy art of secret self-reward was practiced with particular cleverness and cynicism by the Speaker himself. . . . Politicians are supposed to be on the people’s payroll, not on secret retainer to wealthy special interests they do favors for. These charges go to the very core of what ails Albany – a lack of transparency, lack of accountability, and lack of principle joined with an overabundance of greed, cronyism, and self-dealing.

The government has charged Silver with two counts of honest services fraud, one count of conspiracy to commit honest services fraud, one count of extortion under color of official right, and one count of conspiracy to commit extortion under color of official right. Each of these counts carries a maximum penalty of 20 years in prison.

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