Sheldon Silver charges may mark turning point: prosecutor

23 Jan 2015 | Author: | No comments yet »

Accused Assembly Speaker Sheldon Silver’s lawyer has experience defending corrupt pols.

The criminal complaint against New York’s powerful Assembly Speaker Sheldon Silver probably came as a shock to his fellow politicians and constituents in New York. Silver lawyer Joel Cohen represented former state Controller Alan Hevesi when he was accused of helping himself to taxpayer money for personal expenses. The high-profile-yet-nearly-immobile education policies and politics of the Empire State may have cracked this week, the result of rapid climate change within New York’s Democratic leadership. Cuomo’s decision to pull the plug on his corruption-fighting Moreland Commission panel will have repercussions far beyond Thursday’s indictment of Sheldon Silver, insiders said.

That reportedly includes keeping pictures of Winfrey’s living room out of the National Enquirer, and helping her win a defamation suit against a Canadian newspaper. The Republican-controlled State Senate authorized an additional $850,000 in payments to an outside law firm on Jan. 14, eight days before Silver was charged with taking “kickbacks” disguised as legal fees in exchange for official favors. The scheme federal prosecutors laid out in the 35-page complaint against Silver looks an awful lot like what passes for standard practice in this area of the law. The move, some said, raised questions about Cuomo’s commitment to rooting out Albany’s pay-to-play culture and could harm his efforts to cast himself as an anti-corruption reformer. “It has a huge impact. [US Attorney] Preet [Bharara] confirmed that this is a result of the Moreland investigation, and that begs the question whether or not the governor knew about this information when he decided to disband the panel. And according to the state comptroller’s office, another state agency acting on behalf of the now-defunct Moreland Commission to Investigate Public Corruption requested $200,000 for a Buffalo-based “litigation support” firm for “data collection and analysis, to assist the federal government.” The Moreland Commission was created by Governor Andrew Cuomo in July 2013 after two senators and an assemblyman were indicted and lawmakers adopted no reform proposals.

Silver is accused of accepting millions of dollars in “referral fees” for sending clients to Weitz & Luxenberg, a New York firm that specializes in asbestos litigation. In the meantime, he must surely vacate the powerful role that he has occupied and has used to foil, frustrate, delay and defenestrate many an important education-reform initiative within the state legislature — at least those opposed by the teachers unions, whose foremost champion he has been. But they said his decision to shut down the panel after it subpoenaed Silver’s and other Assembly members’ financial records looked like business as usual after the feds were able to take the same information to build a case against Silver. The Albany mainstay has survived pretty much anything thrown at him in his two decades as leader of the Assembly, but a stunning five-count criminal complaint may be too steep of a hill for the Manhattan Democrat.

Remove the state’s second-most-powerful politician from the equation, and what the government calls illegal kickbacks, and this looks pretty much like how the asbestos-litigation business works. Silver’s demise would not, in and of itself, cause New York to raise the cap on charter schools, much less enact a tax-credit scholarship program, both hated by the union and its buddies (a list that extends beyond the speaker). Mickey Carroll of Quinnipiac University’s polling institute called the timing of the charges against Silver — a day after Cuomo delivered the State of the State Address with Silver at his side — was “very, very political.” “If I were the governor, I’d be keeping a very wary eye on this US attorney. That theory is not universally accepted, she said, but is motivated by the idea that lawyers should refer clients to firms that will do the best work, not pay them the biggest cut.

Democratic political consultant George Arzt called the developments “an earthquake of seismic proportions” that would make short- and long-term governing difficult. “I don’t think anyone is happy in the political establishment given the repercussions to other members of the Legislature and other elected officials in high positions,” Arzt said. “Obviously, it’s bad for the speaker, but it’s also a bad reflection on government, and it adds to the negativity. After being passed over for U.S. attorney general and having a few high-profile convictions overturned recently, some wondered if the hard charging U.S. attorney for the Southern District of New York was in a funk. Lawyer Peter Angelos, who’s made enough off of asbestos litigation to buy the Baltimore Orioles, gave more than $500,000 to the Mesothelioma Applied Research Foundation, and Dallas law firm Baron & Budd supports the Asbestos Disease Awareness Organization and sponsored the National Comprehensive Cancer Network Guidelines for Mesothelioma.

Silver, who has been one of the most powerful men in Albany for more than two decades, was arrested Thursday on public corruption charges. (AP Photo/Mike Groll) NEW YORK (AP) — New York and its Democratic Gov. In securities class actions, plaintiff firms ally with union pension funds to bring cases since the law awards control of the case to the investor with the largest losses. (It’s hard to convince investment managers like Fidelity to sue their best clients.) Lead attorneys often share fees with referring law firms that seem to have no expertise in securities litigation, but do provide an invaluable conduit in to top union officials. The details of those fee splits are rarely made public, even though most states require lawyers to tell their clients how much they are being paid, and every class member in a securities lawsuit is a client. Cuomo is, to the best of my knowledge, the first Democratic governor ever to propose a program of private-school choice for kids and families in his state. Skelos’ spokesman, Scott Reif, said the money to Kirkland & Ellis was to “ensure compliance” with a document preservation request the Senate received from Bharara in May of last year.

The 70-year-old Democrat was taken into custody Thursday by the FBI on federal charges that he took nearly $4 million in payoffs and kickbacks, crimes that carry up to 100 years in prison and could cost him his political seat. Others (in Pennsylvania, Oklahoma, Arizona, maybe elsewhere) have tolerated this sort of thing when it originated outside of their offices, but this is the first time a state’s Democratic chief exec has taken the lead. Bharara has reportedly been examining campaign spending by Republican senators George Maziarz and Greg Ball, both of whom declined to run for re-election last year. The pattern is clear in the class actions I’ve observed over the years: A profusion of lawyers sue after some news event catches their eye or causes a stock to fall, then in an opaque but highly predictable process, the smaller firms retreat to the sidelines and the bigger firms take over. One can say that he follows in the footsteps of Democratic political figures like Colorado’s Roy Romer, Bill Clinton and — let’s be fair — Barack Obama, who have been outspoken supporters of charter schools.

Plus, the fact that he’s no longer the New York City police commissioner means he can relax, sit back and give Mayor Bill de Blasio advice on tense police relations—just like a Monday morning quarterback. When it comes time to split the fee, they often have to submit their billing records, but anybody in the business will tell you that the plaintiff firms horse-trade among themselves for billable hours to use in the “lodestar” calculation the judge uses to assess the fee request. Since much of those hours were performed by low-paid contract attorneys, the firms can all make big markups and have little incentive to compete with each other on price.

A spokeswoman for the state’s Office of General Services said the firm was hired to “extract and produce electronic materials” as “part of the state’s efforts to assist law enforcement agencies.” Silver has so-far directed $742,000 of a possible $845,000 to the Kasowitz firm, with the most recent payment made in November. The money was disguised as “referral fees,” Bharara said. “I’m confident that after a full hearing and due process I’ll be vindicated on the charges,” said Silver, who even paused on his way out of court to sign a sketch artist’s rendering of the scene. Onetime class-action kings William Lerach and Melvin Weiss seemed to have the unluckiest clients on earth, investors who happened to own stock in just about every company that announced bad news.

Along with the Senate majority leader and the governor, he plays a major role in creating state budgets, laws and policies in a system long criticized in Albany as “three men in a room.” He controls, for example, which lawmakers sit on which committees and decides whether a bill gets a vote. In a measure of his clout, he helped persuade Cuomo last spring to disband a state anti-corruption commission that was investigating Silver’s financial dealings and those of his colleagues.

Lerach and Weiss characterized the kickbacks as the “entitlement” due the intermediary firm or their “share,” but it was really just a way to get a portion of the more than $200 million in fees they earned over the period back to the plaintiffs who made it all possible. At a firm specializing in real estate tax law, Silver received big fees for using his political clout to steer powerful developers to the firm as clients, authorities said. The Ninth Circuit Court of Appeals in California rejected a cy pres distribution in 2011 after it was revealed that $25,000 was earmarked for a legal aid society whose directors included the husband of U.S. A graduate of Brooklyn Law School, Silver was first elected to the Assembly in 1976, representing a district on Manhattan’s Lower East Side, where he was born and still lives.

And thank goodness—Behari was involved in another savage incident at the jail just eight months after the first encounter, and these are just the episodes on record. We applaud Correction Commissioner Joe Ponte for finally showing Behari the door, but remain perplexed as to why this didn’t happen a long time ago. Councilman Jumaane Williams delivered perhaps the most memorable attacks, repeatedly chastising the company for not making any effort—as he saw it—to comply with the city’s laws, saying: “You have to see how you do not come off as good to people like us.” While Hantman made a display of trying to cooperate, they didn’t even pretend to be in a like mood, leading to a long afternoon at City Hall. Mark-Viverito’s campaign spent $20,000 retaining a law firm to represent her in the city Conflicts of Interest Board’s noncriminal ethics probe into the unpaid assistance the Harlem Democrat got from the Advance Group, which has business before the city, while she was vying for the speakership.

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