Sheldon Silver Arrested and Charged with Mail and Wire fraud

Sheldon Silver: From http://assembly.state.ny.us/intro/

Sheldon Silver: From http://assembly.state.ny.us/intro/

By: Michael Fineman, Esq.
January 22, 2015, New York, NY

Today the Speaker of the New York State Assembly, Sheldon Silver, was arrested and arraigned on a Magistrate’s complaint charging him with several counts of corruption by wire and mail fraud. Mr. Silver was arraigned and released with a $200,000 personal recognizance bond.

The gist of the complaint against Mr. Silver amounts to two separate alleged schemes to receive kickbacks and bribes through the mechanism of attorney referral fees from two separate law firms. One law firm is the well known asbestos litigation firm Weitz & Luxenberg, and the other, an unidentified real estate law firm that specializes in tax certiorari cases. The government’s complaint states, “SILVER used the power and influence of his official position to obtain for himself millions of dollars in bribes and kickbacks masked as legitimate income earned by SILVER as a private lawyer.”

With respect to the Weitz & Luxenberg scheme, the complaint states that Mr. Silver received millions of dollars from the firm in the form of referral fees for about 100 clients referred to the firm for asbestos litigation. The investigator who swears out the complaint, Robert W. Ryan, claims that he, and his fellow investigators spoke to 10 of the Weitz & Luxenberg clients that were allegedly referred by Mr. Silver, or their surviving family members. Mr. Ryan claims that these people never met Mr. Silver and were all treated by the same mystery doctor referred to only as Doctor-1. Mr. Ryan further alleges that this mystery doctor received a state research grant in the amount of $500,000 during the same period of time.

As for the real estate scheme, Mr. Ryan states that Mr. Silver received referral fees from a two-member law firm that specialized in tax cases where the firm received a contingency fee in matters that they won tax savings or refunds for clients. The government claims that Mr. Silver has no experience in this felid of law, and that one of the members of the firm is an associate of Mr. Silver because of his work for the State Assembly earlier in his career. This lawyer is identified only as CC-1 – a common abbreviation for a co-conspirator number. According to the complaint, the other member, identified only as Lawyer-1, has been given immunity for his cooperation in the investigation.

It is important to note that being an assemblyperson the New York State Assembly is essentially part-time work, and assembly members usually have a full time job other than assemblyperson. Additionally, there is nothing unusual about attorneys paying other attorneys referral fees for cases that they have referred. I would venture to say that there is not a practicing attorney in the State of New York that has not either paid a referral fee, been paid a referral fee or both.

Another interesting fact is that this case, according to the complaint, was investigated by a grand jury since 2013; however, there is no indictment. This means that the U.S. Attorney’s Office has not actually presented any evidence to a grand jury, and that Mr. Silver was essentially arrested and charged with these serious allegations based upon the sworn statement of one investigator that works in the U.S. Attorney’s Office. While this is not unheard of to commence a federal case this way, it’s somewhat unusual in the Southern District of New York. The U.S. Attorney’s Office for the Southern District of New York is not shy about indicting a case. In fact, it is not unusual for a case to have numerous superseding indictments which either add charges or defendants before a case is taken to trial in the Southern District of New York.

The absence of an indictment does not mean that Mr. Silver did not commit the crimes he is accused of, however, as someone that practices criminal law in these very court houses, there is reason to be skeptical of the strength of the government’s case under the circumstances. For example, disgraced congressman Michael Grimm was indicted by a federal grand jury before he surrendered to face the charges.

The absence of an indictment at this point gives reason to believe that this is a political witch hunt. Stay tuned for future posts about what may be behind Mr. Silver’s arrest.

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