WPCNR FBI WIRE. Special to WPCNR From the Federal Bureau of Investigation. July 31, 2018:
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced Friday that former New York State Assembly Speaker SHELDON SILVER was sentenced to seven years in prison after having been found guilty a second time by a federal jury of using his official position to obtain nearly $4 million in bribes in exchange for his official acts and obtaining another $1 million through laundering the proceeds of his crimes.
SILVER had previously been found guilty of the same offenses by a jury in November 2015, but the conviction was overturned by the U.S. Court of Appeals for the Second Circuit as a result of the Supreme Court’s decision in McDonnell v. United States.
SILVER was sentenced in Manhattan federal court by U.S. District Judge Valerie E. Caproni, who also presided over the two-week jury trial.
U.S. Attorney Geoffrey S. Berman said: “When he assumed his powerful position at the top of New York State government, Sheldon Silver took an oath to do the work of the people. Instead, he leveraged his tremendous influence to pad his bank account and line his pockets. Sheldon Silver has been given a lengthy sentence of seven years in federal prison.
We hope today’s fittingly stiff sentence sends a clear message: brokering official favors for your personal benefit is illegal and will result in prison time. I thank the career prosecutors of this Office for their perseverance in this important case for the people of New York.”
According to the evidence introduced at trial, court filings, and statements made in Manhattan federal court:
For more than two decades, SHELDON SILVER served as Speaker of the New York State Assembly, a position that gave him significant power over the operation of state government.
SILVER used this immense power – including, in particular, his power over the real estate industry and his control over certain health care funding – to unlawfully and corruptly enrich himself.
Among other things, SILVER unlawfully solicited and obtained client referrals worth millions of dollars in exchange for his official acts, and attempted to disguise this money as legitimate outside income earned from his work as a private lawyer.
In particular, SILVER claimed, on financial disclosure forms required to be filed with New York State and in public statements, that the millions of dollars he received in outside income while also serving as Speaker of the Assembly came from a Manhattan-based law firm, Weitz & Luxenberg P.C., where SILVER claimed to work representing individual clients in personal injury actions.
These claims were materially false and misleading – and made to cover up unlawful payments SILVER received due to his official power and influence as an elected legislator and the Speaker of the Assembly.
The schemes provided SILVER with two different streams of unlawful income: (i) approximately $700,000 in kickbacks SILVER received by steering two real estate developers with business before the state legislature to a law firm with which he was associated, and (ii) more than $3 million in asbestos client referral fees SILVER 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 Weitz & Luxenberg.
Unlawful Income From a Real Estate Law Firm
SILVER, a lawyer, entered into a corrupt relationship with Jay Arthur Goldberg, P.C., later known as Goldberg & Iryami, P.C., which specialized in making applications to New York City to reduce taxes assessed on properties.
Beginning in at least approximately 2000, SILVER approached a prominent developer of residential properties in Manhattan, Glenwood Management Corp. (“Glenwood”), and later approached another developer, The Witkoff Group LLC (“Witkoff”), and asked them to hire Goldberg & Iryami.
The developers – both of whom lobbied SILVER and others on real estate issues because their businesses depended heavily on favorable state legislation – agreed to use Goldberg & Iryami as SILVER had requested. Over the years, Witkoff and Glenwood paid millions of dollars in legal fees to Goldberg & Iryami.
SILVER received a cut from the legal fees amounting to nearly $700,000. SILVER had no public affiliation with Goldberg & Iryami and performed no legal work to earn those fees, which were payments for SILVER having arranged the business through his official power and influence.
While continuing to receive the fees and in furtherance of the scheme, SILVER took official action beneficial to Glenwood and Witkoff. For example, while SILVER was publicly associated with advocating for tenants, a proposal that benefitted Glenwood was in substantial part enacted in real estate legislation in 2011 with SILVER’s support. SILVER also approved more than $1 billion dollars in state financing for Glenwood.
Unlawful Income From Asbestos Client Referrals
SILVER also entered into a corrupt arrangement with Dr. Robert Taub, who was a leading physician specializing in the treatment of asbestos-related diseases, through which SILVER issued state grants and otherwise used his official position to provide favors to Dr. Taub and his family so that Dr. Taub would refer and continue to refer his patients to SILVER at Weitz & Luxenberg, a firm with which SILVER was affiliated as counsel. Specifically, SILVER arranged for New York State to fund two grants – each for $250,000, and paid out of a then-secret and un-itemized pool of funds controlled entirely by SILVER – for a research center Dr. Taub had established. SILVER used his official position to provide Dr. Taub with other benefits as well, including helping to direct $25,000 in state funds to a not-for-profit organization for which one of Dr. Taub’s family members served on the board, and asking the CEO of a second not-for-profit to hire a second family member of Dr. Taub.
From approximately 2005 until his arrest, SILVER received more than $3 million from legal fees Weitz & Luxenberg received from patients Dr. Taub had referred to SILVER at the firm while SILVER was agreeing to and taking official actions to benefit Dr. Taub. SILVER did no legal work whatsoever on these asbestos cases, his sole role having been to use his official position and access to state funds to induce Dr. Taub to provide him with these lucrative referrals.
Silver’s Efforts to Cover Up the Schemes
SILVER took various efforts to disguise his unlawful outside income and prevent the detection of his criminal schemes. For years, SILVER listed on his official public disclosure forms that his outside income consisted of “limited practice of law in the principal subject area of personal injury claims on behalf of individual clients,” which was false and misleading. Beginning in 2010, SILVER’s disclosures changed to state that the source of his legal income was a “Law Practice” that “includ[ed]” being of counsel to Weitz & Luxenberg. SILVER never disclosed his relationship with Goldberg & Iryami or any work beyond what he claimed was a “personal injury” practice.
SILVER also repeatedly made false and misleading statements about his outside work and income in his public statements, including the following:
- SILVER claimed he performed legal work consisting of spending several hours each week evaluating legal matters brought to him by potential clients and then referring cases that appeared to have merit to lawyers at Weitz & Luxenberg. In fact, SILVER did no such work on the asbestos cases and obtained those referrals to Weitz & Luxenberg based on his corrupt arrangement with Dr. Taub.
- SILVER claimed his law practice involved the representation of “plain, ordinary simple people.” In fact, SILVER steered legal work to Goldberg & Iryami for some of the largest real estate developers in the state, for which favorable state legislation was critical to their business interests.
- SILVER claimed through his spokesperson that SILVER principally found clients by virtue of his having been a “lawyer for more than 40 years,” in a manner that was “not unlike any other attorney in this state, anywhere.” In fact, SILVER received money from referring his lucrative asbestos and real estate developer clients solely by virtue of his official position.
- SILVER stated through his spokesperson that “[n]one of his clients have any business before the state.” In fact, SILVER’s outside income included millions of dollars of fees obtained through Glenwood and Witkoff, both of which had significant business before the state, and Dr. Taub, to whose benefit SILVER provided state funding and other benefits related to SILVER’s official position.
In addition, SILVER attempted to thwart the Moreland Commission to Investigate Public Corruption, by filing legal motions on behalf of the Assembly and taking other action to block the Moreland Commission’s investigation into legislators’ outside income.
Finally, SILVER laundered part of crime proceeds through private investment vehicles, not available to the public, which yielded him another $1 million in ill-gotten gains.
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In addition to the prison sentence, SILVER, 74, of New York, New York, was sentenced to three years of supervised release.
SILVER was found guilty by a unanimous jury on May 11, 2018, of two counts of honest services wire fraud, two counts of honest services mail fraud, two counts of extortion under color of official right, and one count of engaging in illegal monetary transactions.
U.S. Attorney Berman praised the work of the Special Agents of the United States Attorney’s Office and the Federal Bureau of Investigation, which jointly conducted this investigation.
This case was prosecuted by the Office’s Public Corruption Unit. Assistant U.S. Attorneys Daniel C. Richenthal and Damian Williams are in charge of the prosecution.