Approved:

 

 

Assistant United States Attorneys
Before: THE HONORABLE FRANK MAAS

United States Magistrate Judge
Southern District of New York

SEALED COMPLAINT

 

UNITED STATES OF AMERICA
. Violations of
v. - 18 U.S.C. 1341, 1343,
. . 1346, 1349, and 1951
SHELDON SILVER,
COUNTY OF OFFENSE:
Defendant. NEW YORK

SOUTHERN DISTRICT OF NEW YORK, SS.:

ROBERT W. RYAN, being duly sworn, deposes and says that
?he is a Criminal Investigator with the United States Attorney?s
Office for the Southern District of New York, ?and charges as follows:

COUNT ONE

1. From at least in or about 2000, up to and including
the date of this Complaint, in the Southern.District of New York and
elsewhere, SHELDON SILVER, the defendant, willfully and knowingly,
having devised and intending to devise a scheme and artifice to
defraud, and to deprive the public of its intangible right to 
honest services as an elected legislator and as the Speaker of the
New York State Assembly, would and did transmit and cause to be
transmitted.by means of wire communication.in interstate and foreign
commerce, writings, signs, signals, pictures, and sounds for the
purpose of executing such scheme and artifice, to wit, 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.

(Title 18, United States Code, Sections 1343 and 1346.)

 

 

COUNT TWO

2. From at least in or about 2000, up-to and ineluding
the date of this Complaint, in.the Southern.District of New York and
elsewhere, SHELDON SILVER, the defendant, willfully and knowingly,
having devised and intending to devise a scheme and artifice to
defraud, and to deprive the public of its intangible right to 
honest services as an elected legislator and as the Speaker of the
New York State Assembly, for the purpose of executing such scheme
and artifice and attempting to do so, placed in a post office and
authorized.depository for mail matter; a matter and thing to be sent
and delivered by the Postal Service and deposited and caused to be
deposited a matter and thing to be sent and delivered by private and
commercial interstate carriery such
matter and thing, and knowingly caused to be delivered by mail and
such carrier according to the direction thereon, such matter and
thing, to wit, 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 a private
lawyer.

(Title 18, United States Code, Sections 1341 and 1346.)
COUNT THREE

3. From at least in or about 2000, up to and including
the date of this Complaint, in the Southern.District of New'York and
elsewhere, SHELDON SILVER, the defendant, and others known and
unknown, willfully and knowingly did combine, conspire, confederate,
and agree together and with each other to commit honest services mail
fraud in violation of Title 18, United States Code, Sections 1341
and 1346.

4. It was a part and an object of the conspiracy that
SHELDON SILVER, the defendant, willfully and knowingly, having
devised and intending to devise a scheme and artifice to defraud,
and to deprive the public of its intangible right to honest
services as an elected legislator and.as the Speaker of the New'York
State Assembly, for the purpose of executing such scheme and artifice
and attempting to do so, placed in a post office and authorized
depository for mail matter, a matter and thing to be sent and
delivered by the Postal Service and deposited and caused to be
deposited.azmatter and thing to be sent and.delivered by private and

 

,commercial interstate:carriery and took and received.therefrom, such
matter and thing, and knowingly caused to be delivered by mail and
such carrier according to the direction thereon, such matter and
thing, in violation of Title 18, United States Code, Sections_l34l
and 1346, to wit, SILVER agreed with others known and unknown,
including a co~conspirator not named herein to use the
power and influence of his official position to induce certain.real
estate developers with significant business before the State of New
York to retain the law firm of in exchange for hundreds of
thousands of dollars in secret bribes and kickbacks paid to SILVER
by the law firm, which were masked as legitimate income earned by
SILVER as a private lawyer.

(Title 18, United States Code, Section 1349.)
COUNT FOUR

5. From at least in or about 2000, up to and including
the date of this Complaint, in the Southern.District of New'York and
elsewhere, SHELDON SILVER, the defendant, willfully and knowingly,
did obstruct, delay, and affect in any way and degree commerce, and
the movement of articles and commodities in commerce, by extortion,
as those terms are defined in Title 18, United States Code, Section
1951, and did thereby Obtain.property not due SILVER or his office
and tO?which.SILVER.was not entitled, under color of official right,
tO?Wit, SILVER used the power and influence of his official position
to obtain for himself millions of dollars masked as legitimate income
earned by SILVER as a private lawyer. 

(Title 18, United States Code, Section 1951.)
COUNT FIVE

6. From at least in or about 2000, up to and including
the date of this Complaint, in the Southern.District of New'York and
elsewhere, SHELDON SILVER, the defendant, and others known and
unknown, willfully and knowingly did combine, conspire, confederate,
and agree together and with each other to willfully and knowingly
obstruct, delay, and affect in any way and degree commerce, and the
movement of articles and commodities in commerce, by extortion, as
those terms are defined in Title 18 United States Code, Section 1951,
and did thereby obtain.property not due SILVER or his office and to
which SILVER was not entitled, under color of official right, to wit,

 

 

SILVER agreed.with others known.and unknown, including to use
the power and influence of his official position to obtain for himself
hundreds of thousands of dollars masked.as legitimate income earned
by SILVER as a private lawyer.

(Title 18, United States Code, Section 1951.)

The bases for deponent?s knowledge and for the foregoing
charges are, in part, as follows:

7. I am a Criminal Investigator with the United States
Attorney?s Office for the Southern District of New York 
and have been in that position for approximately eight years .

I have been.personally involved.in the investigation of this matter
along with Special Agents of the Federal Bureau of Investigation (the
and other Criminal Investigators of the USAO SDNY
(collectively, the ?Investigative Team"). Previously, I was a
Special Agent of the U. . Department of Housing and Urban Development
Office of the Inspector General for three years, and
prior to that I was a Special Agent of the Internal Revenue Service
Criminal Investigation for 14 years. While with the
USAO SDNY, and I have participated in multiple
investigations of public corruption.offenses, among'other'offenses.

8. I am familiar with the facts and circumstances set
forth below from my participation in the investigation of this
matter, from my personal knowledge, and from my conversations with
other law enforcement officers, including members of the
Investigative Team and others. Because this Affidavit is being
submitted for the limited purpose of establishing probable cause,
I have not included every fact I have learned during the
investigation. Where the actions, statements, and conversations of
others are recounted herein, they are related in substance and in
part, unless otherwise indicated.

OVERVIEW

9. SHELDON SILVER, the defendant, has engaged in and
continues to engage in a secret and corrupt scheme to deprive the
citizens of the State of New York (the ?State?) of his honest
services, and to extort individuals and entities under color of
official right, as an elected legislator and as Speaker of the New
York State Assembly (the ?Assembly?) . For more than a decade, SILVER
repeatedly has represented publicly that his outside income as a
private lawyer is derived.from private citizens who seek;hinlout for
legal services in personal injury matters, and that none of his

4

 

 

clients has any business before the State. SILVER also has
represented through the State?s mandatory financial disclosure
filings that he derives his outside income as a private lawyer from
?representing individual clients? in ?personal injury actions? as
?of counsel? to the law firm Weitz Luxenberg, P.C. (?Weitz 
Luxenberg?). These representations were and are materially false
and misleading. In.truth and in fact, obtained.millions
of dollars in outside income as a direct result of his corrupt use
of his official position to obtain attorney referral fees for
himself, 
State, and not as a result of legitimate outside income SILVER earned
as a private lawyer. 

10. The investigation to date has revealed.that SHELDON
SILVER, the defendant, received more than $6 million in outside
income from two law firms since late 2002, consisting of the
following:

a. Approximately $700,000 in undisclosed bribes
and kickbacks obtained in a scheme described in detail below, whereby
his power and influence as an elected legislator and as
Speaker of the Assembly to induce real estate developers with
business before the State to retain and continue to use a real estate
law firm (the ?Real Estate Law Firm?) controlled by an attorney who
previously had worked as counsel in the.Assembly 
and who caused SILVER to be paid for such referrals by the Real Estate
Law Firm.

b. More than $5.3 million in payments from Weitz
Luxenberg in the form of: a salary of approximately $120,000
annually, totaling more than $1.4 million during the relevant time
period, which SILVER received based on.his official position.rather
than any work he was expected to perform for clients of the firm,
plus (ii) approximately $3.9 million.inaattorney'referral fees, over
$3 million of which SILVER obtained through a corrupt scheme
described in greater detail below, whereby SILVER obtained referrals
of asbestos cases frOm a doctor (?Doctoral?) by using his official
position to secretly direct $500,000 in State funds to Doctorml?s
research and provide additional.benefits to Doctor?1 and his family.

11. SHELDON SILVER, the defendant, had no involvement in
the work of the Real Estate Law Firm or Weitz 8c Luxenberg' asbestos
practice, and he has never performed any legal work whatsoever for
either the Real Estate Law Firm?s real estate developer clients or
'Weitz aibuxenberg?s asbestos clients. In.short, as set forth below,

 

there is probable cause to believe that SILVER obtained approximately
$4 million in payments characterized as attorney referral fees solely
through the corrupt use of his official position.

12. When, in or about 2013, the Moreland Commission to
Investigate Public Corruption (the ?Moreland Commission?) began to
investigate outside income earned.by SHELDON SILVER, the defendant,
and other State legislators, SILVER took legal action and other steps 
to prevent the disclosure of such information to the Moreland
Commission. 

BACKGROUND

The Legislature and
Silver?s Authority and Cbmpensation as Assembly Speaker

13. I have learned the following from my review of
publicly available State government documents, and my training,
experience, and participation in the investigation:

a. The New York State Legislature (the
?Legislature?) is seated in the State Capitol in Albany. As provided
for in Article of the New?York State Constitution.and State law,
the Legislature consists of two houses: the.Assembly, which.has 150
elected members, and the State Senate (the ?Senate?), which has 63
elected.members. The leader of the Assembly; who is elected.by its
members, is referred to as the Speaker of the Assembly.

b. members of the Legislature generally are
permitted to hold outside employment and earn outside income at the
same time they serve as legislators . However, because of the obvious
potential for abuse that arises when members of the Legislature
receive outside income, State law restricts to some degree such
employment to avoid, among other things, conflicts and potential
conflicts of interest. Additionally, as discussed in greater detail
below, State law requires members of the Legislature to disclose
annually certain information about their outside income, including
the sources of that income.

. In or about 1976 SHELDON SILVER, the defendant,
was elected.as a member of the.Assembly'in.an.Assembly District that
comprises much of lower Manhattan. In or about 1994, SILVER was
elected Speaker of the Assembly, a position he continues to hold more
than two decades later.

 

d. Pursuant to the Rules of the.Assembly and.other
provisions of State law and practice, the Speaker of the Assembly
has significant power over the Assembly, including appointing the
chairperson and members of all Assembly committees, creating
subcommittees and task forces and appointing the chairperson and
members thereof, overseeing the Assembly's rules and regulations,
presiding over the Assembly, and controlling legislative sessions,
including bringing certain legislation.to the floor for debate. In
addition, the Speaker of the Assembly plays a key role in negotiation
of the State budget and the allocation of certain State funds to
various entities.

e. As a member of the Assembly, paid the
same annual base salary as other Assembly members, which currently
is $79,500. In addition to his base salary, SILVER is paid an
additional salary of $41,500 for serving as Speaker of the.Assembly.
Accordingly, total annual monetary compensation for his
official duties is $121,000, plus per diem pay, a car and driver,
and travel reimbursement.

SilVer?s Power and Influence Over
the Real Estate Industry and Health Care Funding

The Real Estate Industry

 

14. I have learned the following about the role of SHELDON
SILVER, the defendant, in regulating the State? real estate industry
from individuals who are in the business of lobbying State elected
officials'on behalf of, among other entities, a New Yorkebased real
estate developer (?Developer?l") (the ?Lobbyists?), a
representative from Developer?l, representatives of another New
Yorkubased real estate developer records obtained
from the Moreland Commission after the Governor of the State
disbanded it as described in greater detail below, public records,
investigation:

a. The Legislature, including the Assembly, has a
significant role in regulating the real estate industry in the State.
In particular, the Legislature regulates the real estate industry
by, among other things, passing laws governing real estate taxation,
rent, land use, and other matters. In addition to controlling key
aspects of real estate regulation, the State also sponsors and
provides governmental subsidies and tax incentives that have
significant financial value to certain participants in the real
estate industry. Among other programs of this nature are a

 

program known as the ?80/20 program,? under which qualifying
developers of residential rental real estate are eligible for
government-subsidized financing and tax credits, in exchange for
keeping at least 20 percent of units affordable for low and.moderate
income renters for a set period of time, and (ii) a program known
as the ?42lwa program? under which substantial real estate tax
abatements are provided for certain new residential real estate
developments. Several of these regulations and programs, in A
particular those relating to rent regulation and tax abatements
expire periodically and thus must be renegotiated.and reapproved.by
the Legislature, including the Assembly, if they are to continue.

b. In part due to the importance of the Legislature
to the real estate industry, real estate developers, including
Developer?l, are some of the largest contributors to campaigns of
candidates for State office and to political committees controlled
by leaders of the Legislature, including SILVER. For example, I have
learned that from in or about 2005 through in or about 2014,
Developer?1 has contributed more than $10 million.to candidates for
State office and State political committees, including to committees
of both major political parties, making it the largest political
contributor of any person or entity to State candidates or committees
during that time period.
contributions includes approximately $200,000 to SILVER and a
political committee SILVER controls. 

cL' Real estate developers and.associations of real
estate developers also retain lobbyists to lobby legislators,
including SILVER, among others, in order to ensure that their
interests are represented effectively before SILVER and other key
decisionunakers in.State government. ?For?example, in.orwabout 2014,
Developerml paid approximately $900,000 to eight different
lobbyists, including the Lobbyists, to lobby State government
officials, including SILVER.

Health Care Funding

 

15. I have learned the following from my review of
publicly available State government documents, individuals
currently or formerly employed by the New York State Department of
Health and my training, experience, and participation in
the investigation:

a. SILVER, the defendant, has exercised,
and continues to exercise, control over several sources of State

Developer?E?s more than $10 million in

 

funding as Speaker of the Assembly. Funding that SILVER has
controlled since becoming Speaker of the Assembly includes
discretionary money that is allocated.to the.Assembly for use by its
members (?member items?), and.capital funding through certain.State
public authorities that is available to projects backed by SILVER.
In addition to general?purpose member item funding and capital
funding, discretionary funds over which SILVER has exercised control
include funding available to the Assembly until in or about 2007 under
legislation entitled the New York State Health Care Reform Act
Specifically} until in.or about 2007, up to $8.5 million
was allocated to the Assembly annually under HCRA, to be disbursed
through DOH at the discretion of the Speaker of the.Assembly, 
SILVER (the ?HCRA?Assembly Pool?).

b. Until incn:about.April 2005, the HCRA~Assembly
Pool was not part of the State budget, and disbursements from the
HCRA~Assembly Pool were not disclosed in the budget. Beginning in
or about.April 2005 through in.or about 2007, the HCRAmAssembly Pool
was included in the State budget, but it was listed as a lump sum
$8.5 million line item, without any public disclosure of the
recipients of the funds from the HCRA?Assembly Pool or the purported
intended use of such funds.

c. To disburse funds from the HCRA?Assembly Pool,
a letter from SILVER was sent to DOH, accompanied by a form called
a Legislative Initiative Form, which provided the purported intended
purpose of the disbursement . 
of the HCRA?Assembly Pool funds or evaluating the intended use of
such funds. Grants from the HCRAmAssembly Pool differed from.other
grants that DOH has administered in certain limited.research areas,
which are subject to a formal application process and peer review.
Thus, SILVER was able to distribute money from the HCRA?Assembly Pool
at his discretion, with no public disclosure of the disbursements.

d. lklor?aboutijanuary'2007, the State, to increase
transparency about the spending of State funds, adopted legislation
called the Budget Reform Act of 2007 prohibiting ?lumpwsum?
appropriations by the Legislature, such as the HCRA-Assembly Pool.
Insteadq any'discretionary appropriations added.to the budget.by the
Legislature had to be itemized appropriations that, unlike
expenditures made from the HCRA?Assembly Pool, had to be publicly
disclosed. Pursuant to the Budget Reform Act of 2007 and as a

 

1 Pub. Health L. 5 

9

1301?1 had no role in selecting recipients? 

 

 

cost~saving measure, the HCRAwAssembly Pool was abolished and was
no longer available after 2007.

PUBLIC REPRESENTATIONS ABOUT HIS OUTSIDE INCOME

16. I have learned the following from records obtained
from the New York State Legislative Ethics Commission (the ?Ethics
Commission?), public records, and my training, experience, and
participation in the investigation:

a. Pursuant to the New York State Public Officers
Law, members of the Legislature are required to file financial
disclosure statements<maan1annual.basis with.the Ethics Commission.
The financial disclosure statement is entitled.?Annual Statement of
Financial Disclosure? (the ?Disclosure Form?) and is required to be
signed and presented for filing by the reporting individual;

b. A.primary purpose of the Disclosure Form is to
require legislators to disclose outside income, activities,
finances, and assets that may indicate a financial impropriety or
conflict of interest.

c. The Disclosure Form requires reporting
individuals to answer a variety of questions about themselves and
their spouses related.to, among other things, outside employment and
income, involvement corporations and political
parties, investments, assets, loans, gifts, and reimbursements.
Beginning in or about 2013, the Disclosure Forms have been posted
on the Internet by the New York state Joint Commission on Public
Ethics and available to the general public.

d. If a Disclosure Form is offered or presented
that knowingly contains a false statement or false information, it
may serve as the basis for prosecution under the New'York Penal Law.2

e. At all times relevant to this Complaint, the
Disclosure Form required reporting individuals to answer the
following questions ?completely,? among others:

i. Question No. 8 required reporting
individuals Who also are attorneys to give a ?general description
of the principal subject areas? of their practice.

 

2 See, N.Y. Penal Law 175.30 (offering a false instrument for
filing in the second degree).

10

 

ii. Question No. 13 required reporting
individuals to list the ?nature and amount of any income in EXCESS
of $1,000 from EACH (Emphasis in original.)

f. As he was required to do, SHELDON SILVER, the
defendant, filed Disclosure Forms with the Ethics Commission on an
annual basis . For the calendar years 2002-2013 SILVER provided the
following answers to Questions 8 and 13 on his Disclosure Forms:

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Question 8 Question 13 
"General Description of the Nature of Amount of
Year Principal Subject Areas" of Practice Source of Income Income Income
2002 "Limited practice of law in the principal "Law Practice" "Fees" $20,000 to under
subject area of personal injury ciairns on $60,000
behalf of individual ciients. Since a
September 2002, of counsel to law "of counsel practice "Fees" $20,000 to under
Weitz Luxenberg" $60,000
2003 "Limited practice of law in the principal "Weitz Luxenberg of "Fees" $100,000 to
subject area of personal injury claims on Counsel" under $250,000
behalf of individual clients and of counsel
to law 
2004 [same as 2003] [same as 2003] "Fees" $100,000 to
under $250,000
2005 [same as 2003 and 2004] [same as 2003 and "Fees" $250,000 or over
2004] 
2006 [same as 2003-2005] [same as 2003-2005] "Fees" $250,000 or over
2007 "Limited to practice of iaw in the principal "Weitz Luxenberg" "Fees" $250,000 or over
subject area of personal injury claims on
behalf of individual clients and of counsel
to law firm."
2008 [same as 2007] [same as 2007] "Fees" $250,000 or over
2009 "Limited practice of law in the ?Law Practice (including "Fees" $250,000 or over
predominant area of personal injury claims Wait: 8: Luxenberg)? 
on behalf of individuai clients and of 
counsel to law firm."
2010 [same as 2009] "Law Practice" "Including of $250,000 or over
Counsel to 
Esq?
2011 "General practice of law with emphasis on "Law Practice" "Including of $250,000 or over
representation of individual clients and Counsel to W&i_
personal injury actions and of counsel to Esq."

2012 "General practice of law with emphasis on "Law Practice" "including of $350,000 to
representation of individual clients and Counsel to under $450,0003
personal injury actions and ?of counsei? to

2013 [same as 2012] "Law Practice" "including of $650,000 to
Counsel of under $750,000

 

 

 

 

 

17.

As reflected above,

from the beginning of his

employment as ?of counsel? to Weitz Luxenberg in 2002 through 2008,
the only source of income from the practice of law reported by SHELDON

 

3 203.2 was the first year for which the Disclosure Forms required
income exceeding $250,000 to be further broken down.

12

 

 

 

SILVER, the defendant, was ?fees? received from Weitz Luxenberg.
Beginning with his 2009 Disclosure Form, which was filed with the
Ethics Commission.in.or about May 2010, SILVER described.the source
of his legal income as ?Law Practice,? and noted that such source
?includ[edl? being of counsel to?Weitz &iLuxenberg. In.no year from
2002 through 2013 did SILVER report that he received income from.the
Real Estate Law Firm or from any law firm other than Weitz 8; Luxenberg.

18. Based on my review of an analysis by the Moreland
Commission of disclosures by SHELDON SILVER, the defendant, and other
members of the Legislature, SILVER.reportedwnore.outside income from
the practice of law than any other member of the Legislature in
calendar year 2012, the first year for which the Disclosure Forms
required a more detailed breakdown of outside income exceeding
$250,000.

.19 . I have learned the following from my review of public
statements made by SHELDON SILVER, the defendant, as well as
statements made by 8 official spokesperson, who has confirmed
that.his representations to the public1about outside income
were accurately reported and based on information provided to him
by SILVER:

a. SILVER has claimed publicly that his private
legal work consists of spending several hours each week evaluating
legal matters brought clients and.then.referring
cases that appear to have merit to attorneys at Weitz Luxenberg.

. b. SILVER has stated that he represents ?plain,
ordinary simple people.?

c. spokesman recently stated that
potential clients find SILVER by virtue of his being a ?lawyer for
more than 40 years,? and that SILVER's ability to find clients was
?not unlike any other attorney in this state, anywhere.?

d; SILVER further has insisted publicly on
numerous occasions that his legal work has no connection to his
official position or to State government, and official
spokesperson.recently stated.that clients have
any business before the state.? SILVER never has acknowledged
publicly receiving any money from a real estate law firm or providing
any sort of representation in real estate matters. Nor has SILVER
publicly acknowledged receiving any money from asbestos matters
specifically.

13.

 

THE INVESTIGATION OF OUTSIDE INCOME FROM LAW FIRMS

20. Based on information obtained from, among other
sources, the Investigative Team? prior investigations of corruption
. by members of the Legislature, cooperating witnesses related to those
investigations, and review of public disclosures and statements by
SHELDON SILVER, the defendant, a grand jury investigation was
initiated concerning the outside income of SHELDON SILVER, the
defendant, in or about June 2013. In connection with that
investigation, the investigative Team has, among other things,
obtained documents and witness statements voluntarily and pursuant
to grand jury subpoena; reviewed public records; obtained and
reviewed.material from the Moreland Commission under circumstances
described below; and conducted analyses of these records.

21. In light Of the fact that SHELDON SILVER, the
defendant, reported to the Ethics Commission.in his Disclosure Forms
that he had earned hundreds of thousands of dollars in legal fees
from a practice with a ?predominant? or ?principal? emphasis on
?personal injury claims on behalf of individual clients, I and other
members of the Investigative Team conducted searches on government
databases that litigated:?18tate and federal courts
to identify cases in which SILVER had entered an appearance as an
attorney from in or about 2002 to the present. This research
identified no cases in which SILVER had entered an appearance as a
lawyer.

22 . In order to investigate the sources of outside income
paid to SHELDON SILVER, the defendant, I obtained documents from
Weitz Lnxenberg pursuant to grand jury subpoena and learned the
following:

a. Weitz Luxenberg paid SHELDON SILVER, the
defendant, a base salary of approximately $120,000 annually.

b. SILVER received millions of dollars in
referral fees from Weitz Lnxenberg. Records reflect that SILVER
was credited with referring more than 100 clients to the firm, the
majority of which were referred for potential asbestos litigation,
rather than.negligence or other types of personal injury litigation
as SILVER had claimed publicly.4

 

4

I have reviewed Weitz Luxenberg?s website, which distinguishes
asbestos cases a type of products liability case from ?personal injury and
malpractice? cases.

14

 

 

c. The USAO grand jury subpoena sought
records related to work actually performed by SILVER for Weitz a
Luxenberg. 
to a singleproperty dispute in which SILVER, along with other Weitz
Luxenberg attorneys, represented an individual who I learned
through.public records was employed.by the Legislature. SILVER did
not earn fees of any kind for that representation.

d. Weitz Luxenberg paid SILVER more than $3.2
million.in.referral fees from 2003 through in.or about November 2014
for asbestos cases that SILVER was credited with referring to Weitz
&:Luxenberg, compared.to less than $650,000 in referral fees for all
other matters (Specifically, negligence/personal injury and motor
vehicle accident cases) that he was credited with referring to the
firm.

23. Following receipt of the above informationq I, along
with other members of the investigative Team, attempted to contact
asbestos clients of Weitz Luxenberg for whom SHELDON SILVER, the
defendant, received referral fee credit. If the clients were
deceased, we attempted to contact surviving family members who might
be aware of the circumstances under which Weitz a Luxenberg was
retained. The Investigative Team spoke to more than ten such
individuals and learned the following:

a. None of the asbestos clients and/or surviving
family members had ever contacted SILVER to seek legal representation
or for any other purpose, nor had they ever been contacted by SILVER.
No asbestos client and/or surviving family member was aware of any
role played by SILVER in providing legal services to himself or
herself or a family member.

b. Several asbestos clients and/or surviving
family members identified Doctor?l, who specializes in treating
patients suffering from an asbestos?related cancer called
mesothelioma and works at a University in Manhattan
as a treating physician. Several of these
individuals also stated that Doctor?l had recommended that they or
their family member retain Weitz Luxenberg, One patient of
Doctor?l who retained Weitz Luxenberg recalled that Doctor-1 had
referenced his relationship with SILVER in recommending Weitz 
Luxenberg, but that patient also stated he had never spoken with
SILVER and SILVER played no known role in evaluating his case or
representing him.

15

 

 

c. Several of the clients and surviving family
members reside in states other than New York. After clients retained
Weitz Luxenberg, they engaged in regular contact with the firm.by
interstate telephone calls (with respect to the outwof~state
clients) and by United States mail and/or a private overnight mail
carrier. The firm provided and requested frequent mailings
concerning intake information, case status, and payments.

24. Based on records provided by Weitz Luxenberg, I
learned that certain therdefendant, from
Weitz 8; Luxenberg were made to a bank account in the name of ?Sheldon
Silver, Esq. IE and other members of the Investigative Team obtained
and reviewed records relating to this account and learned that, in
addition to depositing payments from Weitz LuXenberg into that
account, deposited hundreds of thousands of dollars in
payments from the Real Estate Law Firm into the account.

25. After identifying the additional source of income
that SHELDON SILVER, the defendant, obtained from the Real Estate
Law Firm, the Investigative Team obtained and reviewed records of
the Real Estate Law Firm concerning the payments that the Real Estate
Law Firm made to SILVER. Those records reflected that from at least
in or about 2004 through in or about December 2014, paid
nearly $700,000 from the Real Estate Law Firm in.what were described
as ?referral fees? attributed to referral of Developer?l
and Developer?2 to the Real Estate Law Firm.5

26. Based on my review of a preliminary analysis of the
records described above, I have determined.that SHELDON SILVER, the
defendant, received a total of more than $6 million in outside income
from 2002 to the present from.Weitz Luxenberg and the Real Estate
Law Firm, consisting of the following:

 

5 Financial records provided by the Real Estate Law Firm for the period
up to and including 2005 were incomplete. Accordingly, it is possible that SILVER
obtained even more money from the Real Estate Law Firm than is stated herein.

16

 

 

 

 

 

 

  
 

 

  
 

 
 
  

 

 
 
 

 

 
 

 

  
 

 

 

  
 

 

 

 

 

 

 

 
 

 

 

  

 

 

 
 

 

 

 

 

 

 

      y, .   
Grahams-ta!
2002 incomplete $0 $0 $37,384.66 $37,384 66
Records
2003 incompiete S0 S0 $120,000.00 $120,000.00
Records
2004 Atieast $0 $0 $120,000.00 $120,000.00 :3
$3,606.17 6
2005 At least $328,348.31 $0 $120,000.00 $448,348.31
$159,876.90 I
2006 $14,238.18 $300,723.98 $16,956.81 $120,000.00 $437,680.79 
2007 $0 $140,733.98 $0 $120,000.00 $260,733.98 
2008 $806.81 $239,313.57 $284,357.82 $120,000.00 $643,671.39 
2009 $14,086.45 $198,157.83 $0 $120,000.00 $318,157.83 
2010 $73,134.45 $570,017.75 $38,973.80 $120,000.00 $728,991.69 
2011 $240,994.86 $498,223.12 $63,631.21 $120,000.00 $681,854.47 -
2012 $104,356.82 $206,007.77 $5,047.70 $120,000.00 $331,055.61 
2013 $39,095.67 $357,520.65 $197,573.06 $120,000.00 $675,317.85 
$35,317.32 $440 605.75 $21 591 80 $120 000 00 $582 197 55 

 

   

 
 

 

 

     
 

 

 

 

 

   

 

 

 

 

means and methods:

of Doctor?l and his family.

27. 'As set forth above and explained in more detail
herein, I respectfully submit that there is probable cause to believe
that SHELDON SILVER, the defendant, obtained approximately $4
million of the income described above in exchange for his corrupt
and secret use of his official position through at least two different
steering real estate developers with
significant and continuing business before the State to the Real
Estate Law Firm, in exchange for kickbacks paid to him by Cle for
such.referrals; and (ii) soliciting and.obtaining referrals atlmeitz
Luxenberg from Doctor~l in return for directing State grants to
Doctorwl? research and undertaking other official actions on behalf

28.

3 ARRANGEMENT WITH THE REAL ESTATE LAW FIRM

I respectfully submit that there is probable cause

to believe that the payments from the Real Estate Law Firntdisguised
as attorney ?referral fees? and.not reported.by SHELDON SILVER, the

17

 

defendant, in his Disclosure Forms are, in truth and in fact, corrupt
kickbacks from the Real Estate Law Firm to SILVER in exchange for
improper use of his official.position.to induce real estate
developers who had and continue to have significant business before
the State to:retair1and.continue to retain the Real Estate
Law Firm.' 

29. I have learned.the following from.representatives of
the New York City Tax Commission (the ?Tax Commission") and an
attorney with.the Real Estate Law Firm a review of
documents obtained from the Real Estate Law Firm, and my training,
experience, and participation in the investigation:

a. While certain regulatory and taxation matters
and public subsidy programs are controlled entirely by the State,
to the extent not controlled.by the State, taxation.of buildings in
the City of New York (the ?City?) is controlled.by City government.

b. Owners of properties in the City can contest
their property taxes in.multiple ways. Among other things, owners
can ask the City?s Department of Finance for a reduced assessment,
which serves as a basis for taxes imposed. Owners also can file what
is known as a tax certiorari application with the Tax Commission
contesting the assessment.

c. Specialized law firms and law practices often
?handle real estate tax certiorari work. Tax certiorari attorneys
typically bill on a contingency fee basis and thus receive a

percentage of any reduction in taxes obtained as a result of tax
certiorari petitions or lawsuits filed on behalf of their clients.

d. is an attorney who previously served as
counsel to SHELDON SILVER, the defendant, in the Assembly and who
founded.and controls the Real Estate Law Firm, the practice of which
consists almost exclusively of real estate tax certiorari work.
Like others in the tax certiorari industry, the Real Estate Law Firm
bills its clients on a contingency fee basis, typically obtaining
as a fee up to 25 percent of any tax reductions it obtains on.behalf
,of its clients. The Real Estate Law Firm only has two attorneys who
work for it, namely, and Attorney~l.

 

5 Attorney?1 has provided information to the Government under an
immunity order pursuant to which Attorney-1?s testimony and other statements to
the Government cannot be used directly or indirectly in any prosecution of
Attorney?l except in.a prosecution.for perjury, obstruction.of justice, or making
false statements.

18

 

 . Developer?1 and Developer?2 both became clients
of the Real Estate Law Firm as a direct result of actions taken by
SILVER, as described below. SILVER received a share of all fees that
the Real Estate Law Firm received from.representing Developer?l and
Developerwz. The outside income that SILVER was paid by the Real
Estate Law Firm consists exclusively of share of fees the
Real Estate Law Firm obtained through its representation of
Developer?l and Developer?2. 

f. The vast majority of the Real Estate Law Firm's
tax certiorari filings relatsato smaller properties with.low initial
valuations and, therefore, little opportunity for significant
reductions in taxes and resulting contingency fees. In contrast,
the Real Estate Law Firm?s tax certiorari filings on behalf of
Developer?l and DeveloperMZ are for large properties with high
valuations and, thus, larger opportunities for reductions in
assessments and contingency fees. In or about 2011, for example,
the Real Estate Law Firm represented approximately 19 properties
owned by Developerwl and Developerw2, constituting less than

one percent of all properties represented by the firm that year,
yet those 19 buildings contributed more than 31 percent of all revenue
obtained by the Real Estate Law Firm that year.

g. SILVER has no background in real estate tax
certiorari work and no experience performing such work. There is
no record of SILVER ever appearing before the Tax Commission. SILVER
in fact performed no work for the Real Estate Law Firm whatsoever,
including in connection with the firm?s representation of
Developer?l and Developer?2.

h. The Real Estate Law Firm pays SILVER
periodically, often multiple times per year, by check, which is
mailed from the Real Estate Law Firm to SILVER at his home address
in Manhattan using the United States mail.

30. I have learned the following from individuals
employed by or lobbying on behalf of Developerml and Developer?2,
including the Lobbyists, and public sources:

a. Developer?l is a major real estate developer and
owner of luxury rental properties, collectively valued.at more than
$1 billion. In connection with these properties, Developer?l has
received substantial subsidies under the 80/20 program and tax
abatements under the 421?a program, and the properties are subject

19

 

 

to rent regulations that may be adopted or amended by the State. Due
to the overwhelming percentage of its business tied to State programs
and regulations, Developerml is dependent on the continued existence
of legislation and programs favorable to its business . Accordingly,
Developerwi often negotiates with leaders of State government,
including SHELDON SILVER, the defendant; it has retained lobbyists
to represent Developer?1 before the Legislature, including the
Lobbyists, in part specifically for advocacy to and, as
described above, it is the largest political contributor in the
State.

b. Legislation governing the 80/20, 421-a, and
rent regulation policies and programs, among other policies and
programs (collectively, the ?Real Estate Legislation") expires
periodically, thus requiring the Legislature to renew the Real Estate
Legislation in.order for the policies and programs to continue. The
Real Estate Legislation.ischnato expire agairiin.or'about June 2015,
and.negotiations concerning its renewal are expected to begin.in.the
very near future.

31. I have learned the following from.Attorney?1 and my
review of records obtained from the Real Estate Law Firm:

a. Attorneywl learned from that Developerwl
and.Developer?2 were referred.to the Real Estate Law 
SILVER, the defendant. Attorney?1 also was aware that the Real
Estate Law Firm paid SILVER 25% of the fees it obtained from
Developerwl, and 15% of the fees it obtained from Developer?2.

b. Attorney?l was aware of attorney ethics rules
that generally require fee share arrangements to be disclosed to
clients. Attorneywl believes that in or about 2009 the attorney
ethics rules were modified to require fee share arrangements to be
disclosed to clients in writing. Prior to did.not
know whether had disclosed the firm?s fee share arrangements
with SELVER to Developer~l or Developer~2, and Attorneyml had not
made any such disclosures. In light of Attorney?1?s belief,
Attorney?1 told that the Real Estate Law Firm should draft new
retainer agreements with Developerml and Developer-Q that explicitly
disclosed the fee share arrangements with SILVER. Nevertheless,
over the next approximately two years, neither nor Attorney-1
provided.new retainer agreements to Developer~l or'Developer?Z, nor
were the firm?s fee share arrangements with SILVER otherwise
disclosed to Developermi or Developerwz in writing.

20

 

 

c. In or about late 2011, Attorney?1 became
concerned because Attorneyel believed that the legislative
disclosure rules had changed such that SILVER might soon report on
his financial disclosure forms that he received.outside income from
the Real Estate Law Firm, and.Attorney?1 wanted the Real Estate Law
Firm's documents to be in order in the event of scrutiny.
Thereafter, in or about January 2012 the Real Estate Law Firm drafted
retainer agreements for Developer?l and Developer?2 that disclosed
the Real Estate Law Firm's fee share arrangements with SILVER.

32. I have learned.the following from.representatives of
and lobbyists for Developer?1, including the Lobbyists, and
Attorney-l, and documents obtained from Developer~1 and the Real
Estate Law Firm:

a. Developer~1 owns several buildings in the
Assembly District of SHELDON SILVER, the defendant, as well as
buildings that benefit from the 80/20 and 421?a programs. By at
least in or about 2000, SILVER, in part through contact with the
Lobbyists, had referred Developerwl to the Real Estate Law Firm to
be retained for tax certiorari work for some of Developer?1?s
buildings. Prior to this retention, Developer?1 had retained law
firms other than the Real Estate Law Firm for its tax: certiorari work,
but in light of the significant business Developer-1 had.before the
State and to accommodate request, Developer?1 agreed to move
some of its tax certiorari business to the Real Estate Law Firm. Over
time, and with gave additional
business to the Real Estate Law Firm, so that by 2011, the Real Estate
Law Firm represented approximately 15 of Developerml's buildings.

b. In or about January 2012, the Real Estate Law
Firm sent retainer agreements to Developer?l that disclosed in
writing that the Real Estate Law Firm was sharing its fees from
Developer?1 with SILVER, and stated that SILVER was jointly
representing Developer?1 with the Real Estate Law Firm in tax
certiorari matters. SILVER had not disclosed to Developer?1
previously that the Real Estate Law Firm.had.paid him a share of the
fees that Developerwl had paid to the Real Estate Law Firm.

c. Developer?1 refused to_sign the retainer
agreements as written. However, after discussions through.at least
one of the Lobbyists with SILVER, including a meeting between that
Lobbyist and SILVER in legislative office, it was determined
that while the primary retainer agreements would not contain any
reference to Developerul would sign.a side letter (the ?Side

21

 

 

Letter?) concerning the Real Estate Law Firm's arrangement with
SILVER. The Side Letter was addressed to SILVER and stated, in
relevant part, that the purpose of the letter ?is to acknowledge that
you have assumed joint responsibility with our firm? for
representation of Developer?1's properties, and that ?as agreed,?
SILVER would receive a ?proportionate division of fees.? SILVER,
(20?21., and an authorized signatory of Developer?1 each signed the Side
Letter. Following the Side Letter's signature by SILVER, and
Developer?l, Developer-1 continued to have business before the
State, including before SILVER, and continued to retain the Real
Estate Law Firm, and the Real Estate Law Firm continued to pay SILVER
a portion of the fees it was paid by Developer?l.

d. Immediately prior to the Real Estate LaW'Firm?s
written disclosure to Developerwl of its fee share with SILVER, in
or about December 2011, SILVER contacted one of the Lobbyists to ask,
in sum and substance, whether in connection with the Lobbyist?s
activities lobbying SILVER with regard to legislation and other
matters before the Assembly the Lobbyist was acting on behalf of
Developer?l or ?the that nominally owned the buildings
ultimately owned by Developer?l. The Lobbyist replied that he
represented Developer?l. In.response, SILVER.indicated, 
substance, that there was nothing to worry about, because he 
SILVER), was only representing the LLCs. Immediately after
receiving this call, the Lobbyist contacted Developer?l through
another of its lobbyists because, in light of Developer?1's business
before the State, he was concerned and surprised that SILVER appeared
to have been getting money from Developer?l through the Real Estate
Law Firm.7

33. I have learned.the following from.representatives of
Developer?2 and from.Attorney?l, as well as from documents obtained
from Developer?2 and the Real Estate Law Firm:

a. Developer?2 is a real estate developer that owns
several properties in the Assembly District of SHELDON SILVER, the
defendant, and whose business is in part dependent on State

 

7 The Lobbyist who provided this information has entered into an
agreement with the USAO SDNY that confirms his status as a fact witness, states
that he will not be prosecuted for the conduct described herein, and obligates
him to provide truthful information to and cooperate with the Government. I
believe that the information attributed to this individual herein is reliable
because, among other things, it is corroborated by multiple other sources of
evidence.

22

 

 

governmental approVals for State tax abatement programs and other
official actions taken by State officials, including SILVER.

b. In or about 2005, SILVER asked the owner of
Developer?2 to hire the Real Estate Law Firm. SILVER.statedq in.sum
and substance, that SILVER.wou1d.appreciate it if Developerwz would
retain the Real Estate Law Firm for tax certiorari work on
Developer?2?s buildings. SILVER did not inform the owner of
Developerw2 that if Developer?2 retained the Real Estate Law Firm,
SILVER would receive a share of any fees Developer?2 paid to the Real
Estate Law Firm. In light of the significant business Developer?2
had before the State, Developer?2 accommodated.SILVER?s request and
moved certain of its tax certiorari business from other law firms
to the Real Estate Law Firm.

. In or about 2014 contacted Developer~2 and
disclosed to Developer?2 that the fees Developer~2 had been paying
to the Real Estate Law Firm were being shared This was
the first time Developer?2 learned of fee share with the
Real Estate Law Firm, and the owner of Developerw2 was extremely
concerned about receipt of its money, in part because of
potential legal and ethical issues created by receipt of
funds from Developer?2. 

34 . I have learned from Attorney-ml, who performs the vast
majority of the Real Estate Law Eirm?s work for Developer?1 and
Developer?2, that SILVER did not perform any legal work for
Developer?1 or Developer?2. I also learned from.Attorney?l and my
review of attorney disciplinary rules that an attorney is permitted
to receive referral fees from.a law firm.not employing that attorney
only in limited circumstances. In.particular, at least since in or
?about 2009, Rule 1.5(g) of the New Yorszules of Professional Conduct
prohibited division.of fees with a lawyer who is ?not associated in
the same law firm? unless, among other things, ?the division is in
proportion.to the services performed.by each lawyer or, by'a writing
given to the client, each lawyer assumes joint responsibility for
the representation,? and ?the client agrees to employment of the
other lawyer after a full disclosure that a division of fees will
be made, including the share each lawyer will receive, and the
client?s agreement is confirmed in writing.? Even before 2009,
client consent was required, as was a written disclosure if the
division of fees was not in.proportion.to the services performed by
each lawyer. Under these rules, I respectfully submit that SILVER,
who was not associated with the Real Estate Law Firm, was not
permitted to earn attorney referral fees because he had no

23

 

responsibility for the legal representation of Developer?1 or
Developer?2, had performed no services for these clients, and with
the exception of the side letter referenced above, had never
acknowledged in writing that he played any role in the representation
or shared any fees with the Real Estate Law Firm.

35. I have learned the following from individuals
employed by or lobbying on behalf of Developer-l, including the
Lobbyists, my review of records obtained from the Moreland
Commission, and public sources:

a. In or about 2011, when the Real Estate
Legislation was last up for renewal, the Lobbyists met, on behalf
of Developer?1, with SILVER in his State office to advocate for
certain proposed terms for the new Real Estate Legislation. The
legislation.that was enacted.included Developerel's recommendations
in substantial part.

b. A document obtained by the USAO SDNY from the
Moreland Commission, which was prepared by an entity that represents
real estate developers, stated in connection with the 2011 rent
regulation reauthoriaation that SILVER was considerably more
favorable to the real estate industry'than.expected. Specifically,
the document states that ?though he may never be the
owners[?] advocate, given that the Governor wanted [certain
proposals] off the table and wanted to restore his reputation with
tenants, it would appear that he (Silver) could have successfully
pushed for more.?

CORRUPT RECEIPT OF.ASBESTOS REFERRAL FEES

36. I respectfully submit that there is probable cause
to believe that SHELDON SILVER, the defendant, obtained another
stream of corrupt payments by soliciting and obtaining asbestos
client referrals from Doctor?l in exchange for directing State grants
to Doctorwl?s research and undertaking other official actions on
behalf of Doctor?i and his family. 

37. I have learned the following, in sum and substance,
from Doctor?I,8 current and former DOH employees, and current and

 

5 Doctor?l has entered into an agreement with the USAO SDNY under which
he will not be prosecuted for the conduct described herein, and that obligates
him to provide truthful information to and cooperate with the Government. I
believe that the information attributed to Doctor?l herein is reliable because,
among other things, it is corroborated by multiple other sources of evidence.

24

 

former employees of Universitywl and its affiliated hospital and from
documents obtained from Doctor?1, University?1 and its affiliated
hospital, DOE, and the Office of the New York State Comptroller
and from my training, experience, and.participation.in the
investigation:

a. Doctorml is a well?known expert in.the field of
mesothelioma treatment and research. Doctor?1 treats mesothelioma
patients and conducts mesothelioma research.at University?1 and its
affiliated hospital. By at leastzhicn:about 2002, Doctor?1 created
a.center at'University~l that.was 
(the ?Mesothelioma Center?). Because of his expertise, Doctor?l
treats many patients who come from outside the State.

b. Compared to most other forms of cancer, there
is little funding for mesothelioma research, in part because the
disease is rare, affecting only approximately 3 500 patients per year
in the United States, and survival rates are low.

c. As funding is relatively scarce, certain
mesothelioma researchers, including Doctor?l, have sought and
received funding from law firms (or their affiliated foundations)
that have earned.large legal fees from the representation of
individuals who suffer firstmesothelioma. For many years, Doctor-l
served as a member of the scientific advisory board of a
not~forwprofit organization (the ?Asbestos Organization") that
sought 
Doctor?~l knew from his work with the Asbestos Organization that Weitz
Luxenberg did not, as of 2003, financially support mesothelioma
research.

d. Doctorwl knew SHELDON SILVER, the defendant,
through a mutual friend (the ?Mutual Friend?) who had worked in Albany
and was friendly with SILVER.

e. Doctor?1 never had referred patients to Weitz
Luxenberg before SILVER joined the firm in 2002 in part because
Doctor-l believed.the firm should.support mesothelioma research.and
it had not done so.

if . Soon after learning that SILVER had joined Weitz
Luxenberg, Doctor~l asked SILVER if Weitz Luxenberg would fund
mesothelioma research, and SILVER responded, in sum and substance,
that the firm would.not. Doctor?l also informed SILVER, in sum and
substance, that firms that represented patients with

25

 

 

asbestos?related diseases should financially support related
medical research. Thereafter, Doctor?l learned that SILVER wanted
Doctor-l to refer asbestos patients to SILVER at Weitz Luxenberg.

g. Based on request, Doctor?1 began to
refer patients to SILVER at Weitz Luxenberg. By making and
continuing to make referrals to SILVER at Weitz Luxenberg, Doctorul
intended to create and maintain a relationship with SILVER through
which Doctor?l could and did make requests of and receive benefits
from SILVER in his official capacity as Speaker of the Assembly,
including State funding for Doctor?1?s research.

h. patients to
SILVER, SILVER communicated.to Doctor?l, in sum and substance, that
State funds potentially were available for Doctor?l's research and
instructed Doctor~l to write a letter to SILVER requesting State
funds.

i. Pursuant to SILVER's suggestion, Doctor?I
drafted a letter to SILVER in which Doctor-ml requested that the State
provide $250,000 to the Mesothelioma Center that Doctor-l had
established at University?I. Computer records show that the first
draft of this letter was written on December 29, 2003, which Weitz
Luxenberg?s records show was approximately seven weeks after
Doctor?l made his first patient referral to SILVER at Weitz 
Luxenberg. The letter was addressed.to SILVER at District
Office in lower Manhattan and was dated January 7, 2004.

j. After Doctor?I had made initial referrals to
SILVER, SILVER instructed_Doctor?l not to tell the Mutual Friend
about the cases Doctor-l was referring to SILVER.

k. On.or about July 5, 2005, by letter from SILVER
on Assembly letterhead sent to DOH, SILVER directed that a State grant
in the amount of $250,000 be awarded to Doctorwl?s Mesothelioma
Center. In the letter, SILVER directed that the grant be paid for
from the HCRA?Assembly Pool. The Legislative Initiative Form that
accompanied.the letter stated.that the State money would support the
general operating expenses of Doctorml?s Mesothelioma Center and
attributed the request for funds, in part, to the need to study
mesothelioma as result of the release of asbestos into the air on.
September 11, 2001 and for related outreach to residents of lower
Manhattan, which is in Assembly district. VNeither the
letter nor the accompanying Legislative Initiative Form mentioned

26

 

 

the fact that SILVER was benefiting financially from referrals of
patients by Doctor~l to SILVER.

1. On or about July 12, 2005, Doctor?l was informed
by DOE that University?1?s affiliated hospital had been awarded a
State grant in the amount of $250,000 for the Mesothelioma Center
(the ?First $250,000 State Grant?). The First $250,000 State Grant
was for the time period July I, 2005 through June 30, 2006 and was
funded.through.the HCRA~Assembly'Pool. As with other disbursements
from the HCRA?Assembly Pool, DOH did not review the merits of the
grant but simply processed the grantwrelated paperwork, including
the grant contract and vouchers seeking payment against the grant.

m. discussions in
or about April 2006 and again in or about October 2006, Doctorwl wrote
letters to SILVER in which Doctor?l requested an additional $250, 000

in State funding for Doctor?1?s Mesothelioma Center.

n. On or about November 30, 2006, again.by letter

Legislative Initiative Form, SILVER directed that a number of
entities receive distributions from the HCRAwAssembly Pool. Among
the entities to which SILVER directed DOH to allocate funding from
the HCRA?Assembly Pool was the Mesothelioma Center, in the same
amount as the first State grant: $250,000. The accompanying
'Legislative Initiative Form contained language identical to the
Legislative Initiative Form that accompanied the July 2005 letter,
including its reference to the use of funds to support research
related to September 11 and outreach to residents and workers in lower
Manhattan.

o. On or about March 20, 2007, Doctor?1 was
informed by DOE that University?l had been awarded another State
grant in the amount of $250,000 for the Mesothelioma Center (the
?Second $250 000 State Grant?) . The Second $250, 000 State Grant was
for the time period July 1, 2007 through.March 31, 2008 and.also was
funded.through.the HCRA-Assembly'Pool. DOH issued.and.administered
the Second $250,000 State Grant in the same manner as the First
$250,000 State Grant.

p. Despite the alleged connection between the
$500,000 disbursed to the Mesothelioma Center and the events of
September 11, which occurred in SILVER's Assembly district, SILVER
never asked Doctorml how the State funds be had directed to the
Mesothelioma Center actually were used. I have been unable to locate

27

 

 

 

any public announcement or disclosure by SILVER of the State
disbursements to the Mesothelioma Center. As set forth above,
SILVER was not required to disclose disbursements from the
HCRA?Assembly Pool because the fund was, during its existence,
off?budget or budgeted as a lumpmsum appropriation whose ultimate
beneficiaries were not required to be publicly disclosed.

q. After the $500,000 in State funds had been
received, Doctor?l engaged in continued communications with SILVER
about obtaining yet additional State funding for Doctorwl?s
research. SILVER ultimately informed Doctor?1, in sum and
substance, that the program under which'the $500,000 in.State grants
to the Mesothelioma Center had been awarded had ended.9

r. Commencing in or about 2010, Doctor?l began
receiving substantial support for his mesothelioma research from a
foundation associated with another asbestos firm (the ?Other
Asbestos Firm?), which, like Weitz Luxenberg, represented.clients
who suffered from mesothelioma. By the time Doctorwl began to
receive funding from the Other Asbestos Firm, SILVER had directed
no recent State In part because
the Other Asbestos Firm was providing funding for his research,
Doctor?l began referring cases to the Other Asbestos Firm.

. After Doctor?l began to refer cases to the Other
Asbestos Firm, SILVER visited Doctor?l at University?:1. and asked him
?why the number of patient referrals to him had decreased. In
response, Doctor?l informed SILVER, in sum and substance, that he
'had fewer patients who were looking for legal representation, and
that he had been referring patients who sought legal representation
to the Other Asbestos Firm, which was supporting his research.

t. Despite the relationship with the Other
Asbestos Firm, Doctor~l continued to refer cases to SILVER at Weitz
Luxenberg, including after 2010. Doctor?l made these referrals,
in part, to maintain a relationship with SILVER through which
Doctorwl could and did make requests of and receive benefits from
SILVER in his official capacity as Speaker of the Assembly, and SILVER

 

9 Based on information set forth above, I know that statement
to Doctor?l that the program under which the $500,000 was disbursed had ended
coincided with the elimination of the HORA?Assembly Pool and other lump?sum
appropriations in 2007 . Nothing prohibited SILVER after that date from disbursing
itemized appropriations in the form of publicly identifiable member items to the
Mesothelioma Center. Any such member items, however, unlike the appropriations
from the HCRA-Assembly Pool, would have been subject to public disclosure.

28

 

 

in turn used his official position to provide certain benefits to
Doctor?l and his family, including, but not limited to, the
following: 

i. In or about 2008, SILVER helped direct
$25,000 in State funding to a notwfor-profit organization on which
a family member of Doctor?1 served as a member of its Board of
Directors. In or about May 2008, the organization thanked.Doctor~1
and his family member for their help ?obtaining funds from
Silver."

ii. inor'about.M 2011, SILVER.sponsored.and
obtained an official resolution issued by the Legislature honoring
Doctorml, which SILVER presented to Doctor~1 at an event held by a
nationwide cancer organization in Manhattan. During the
presentation? remarks in.his official capacity praising
Doctor?l .

In or about 2012, Doctor?l contacted
SILVER to request that SILVER assist another family member of
Doctoral in finding a job. SILVER helped arrange for Doctor-1?s
family member to be interviewed by a not-for?profit organization (the
?Nonprofit Organization") that reCeived millions of dollars in
member items and capital funding I have learned from
the head of the Nonprofit Organization that when SILVER asked for
help)in securing a job for Doctor?1?s family'member, it was the first
and only time SILVER asked the Nonprofit Organization to consider
hiring anyone. Following referral, Doctor~l?s family
member was hired by the Nonprofit Organization.

Personal Financial
Benefits from His Official Acts fer Doctor?1

38. I have learned the following from the two founding
partners of Weitz Luxenberg (?Partnerdl? and ?Partnerw2?), the
attorneys who lead Weitz Luxenberg?s asbestos practice (the
?Asbestos Attorneys?), and the firm?s Managing Attorney
(collectively, the ?Weitz and.from records
of Weitz Luxenberg:

a. Weitz Sc Luxenberg is a law firm with its primary
offices located.in.Manhattan. The firm specializes in.representing
plaintiffs in mass tort cases, with a particular focus on cases
involving asbestos exposure and.mesothelioma, and it files hundreds
of asbestos exposure and mesothelioma cases in New York each year.

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b. Weitz Luxenberg derives more than 60 percent
of its revenue from asbestos cases, with mesothelioma being among
the most lucrative of those cases because of, among other things,
the disease?s clear causal link with asbestos exposure, pain and
suffering caused by the disease, the availability of funds to
compensate plaintiffs suffering from the disease, and Weitz 
Luxenberg?s expertise.

c. In.or about September 2002, SHELDON the
defendant, was hired by Weitz Luxenberg as ?of counsel? at an annual
salary of $120,000. At the time SILVER joined Weitz Luxenberg,
SILVER had no prior experience with asbestos cases, and he brought
no cases, matters, or clients of any kind with him to the firm.

d. According to Partner?l, Weitz Luxenberg hired
SILVER, and.paid.him $120,000 per year in base compensation? because
of his official position and stature and without the expectation that
SILVER would perform any work on cases or refer any cases to the firm.
Specifically, Partnerwl hoped that Weitz Luxenberg?s association
with SILVER.would.increase the firm's prestige and.perceived.power.
Neither Partnerwl nor Partner-2 knew SILVER well before SILVER joined
Weitz Luxenberg in 2002.

e. As it provided to other non-partner attorneys,
Weitz Luxenberg provided SILVER with the opportunity to obtain
additional income through referral fees. Accordingly, SILVER was
entitled_to receive 33 percent of the firm?s share of any recovery
obtained on behalf of an asbestos?related client whom SILVER referred
to the firm, and up to 50 percent of the firm?s share of any recovery
obtained on behalf of any negligence client whom SILVER referred to
the firm.

f. Soon after SILVER joined Weitz Luxenberg,
SILVER began receiving referrals of asbestos cases from Doctormi,
and he has received numerous referrals of asbestos cases from
Doctor?l since that time.

g. Except for one or two isolated referrals, the
Weitz Luxenberg Attorneys are unaware of any source of
asbestos~related.referrals to than.Doctor?l. Prior to
referring patients Doctor?1.had.not referred any patients
to Weitz Luxenberg.

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h. rI'he Weitz Luxenberg Attorneys did not know how
it came about that Doctor~l began and continued to refer patients
to SILVER. SILVER never told the Weitz Luxenberg Attorneys that
he was going to allocate, or had allocated, any State funding to
Doctor?1?s Nor
did SILVER ever state to the Weitz Luxenberg Attorneys that he had
taken or was taking any action to benefit Doctorwl or his family.

- i. Several years ago, Partner-2 noticed that the
number of asbestos?related.referrals that receiving from
Doctor?1 had decreased. Partner?2 inquired with SILVER, who stated,
in sum and substance, that the Other Asbestos Firm had contributed
money to Doctorwl's research, and that, as a result, Doctor?l had
begun.referring patients tO'thetother Asbestos Firm. SILVER.further
informed Partner?2 that he was confident that Doctor-?l would continue
to refer additional patients to him, although.he did.not explain.the
source of this confidence.

j. Until in.or about 2011, Weitz Luxenberg, and
Partner?l and Earthen?2 personally, contributed only nominal amounts
to mesothelioma research. Neither Weitz 51: Luxenberg, nor the firm' 
attorneys, ever have contributed to Doctor?1?s research.

k. When SILVER received an asbestos referral, he
contacted one of the Asbestos Attorneys to provide the potential
client?s name, phone number, and, in some_cases, a.brief description
of the matter. The firm then contacted the individual named in the
referral by telephone from the firm?s offices in Manhattan to
evaluate the case. Several.of these telephone callS'were interstate
telephone calls. After clients retained Weitz Luxenberg, they
engaged in regular contact with the firm by interstate telephone
calls (with respect to the outuofwstate clients) If the individual
became a client of the firm, SILVER received referral fee credit.

1. SILVER did not evaluate or perform work on
asbestos cases, including clients he referred to Weitz Luxenberg
through Doctor?1, because, among other reasons, he lacked the
knowledge and.experience necessary to evaluate those cases. SILVER
had no known contact with clients in asbestos cases, and he did not
consult with the Weitz Luxenberg Attorneys about asbestos cases,
other than on limited occasions to ask about the status of specific
cases and payouts therefrom.

m. Other than the single matter representing a
legislative employee referenced above, not performed any

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substantive legal work at Weitz Luxenberg, including on those
matters that he refers to the firm.

n. SILVER is given referral fee credit, and
receives referral fees multiple times per year, by check based on
asbestos cases referred to the firm by Doctorwl. SILVER received
his first referral attributable to Doctor~l in or about November
2003. SILVER began receiving referral fees from asbestos cases in
or about February 2005. Records reflect that SILVER has received
and continues to receive referral fees arising from asbestos
referrals, the most recent one of which.I am aware being in or about
November 2014.

o. The dollar amount of asbestos referral fees paid
to Weitz Luxenberg likely is to increase because several
of the asbestos cases referred to SILVER by Doctoral have not yet
been fully resolved.

EFFORTS TO CONCEAL HIS CORRUPT SOURCES
OF OUTSIDE INCOME FROM THE PUBLIC AND THE MORELAND COMMISSION

39. Based on the information set forth above, I
respectfully submit that the representations of SHELDON SILVER, the
defendant, to the public in his Disclosure Forms and in public
statements about the sources of his outside income consistently have
been materially false and misleading in that, among other things,
SILVER failed to disclose that he was receiving income from the Real
'Estate Law Firm; failed to disclose that the vast majority of his
income from Weitz Luxenberg was derived from asbestos cases on which
he performed no legal work and that he received through the use of
his official position rather than.because of any potential client?s
interest in having SILVER represent him or her,- and failed to disclose
that his clients at the Real Estate Law Firm have had and continue
to have business before the State. In addition, SILVER made numerous
affirmative misrepresentations about the nature of his private law
practice and the sources of his outside income as described in greater
detail above.

40. In addition to concealing his corrupt sources of
outside income from the public, SHELDON SILVER, the defendant, also
took actions to conceal his corrupt sources of outside income from
the Moreland Commission. I have learned the following from my review
of publicly available State government documents and State court
filings and records received by the USAO SDNY from the Moreland
Commission and from members of the Moreland Commission and its staff,

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representatives of the Office of the Governor, and the Weitz 
Luxenberg Attorneys, and from my training, experience, and
participation in the investigation:

a. On or about July 2, 2013, the Governor of the
State appointed the Moreland Commission. According to the
Governor?s public statements announcing the formation of the
Moreland Commission, the MOreland Commission was established ?to
probe systemic corruption and the appearance of such corruption in
state government, political campaigns and elections in New York
State.? The Governor?s press release specifically stated that the
Commission would ?have the power to subpoena and examine witnesses
under oath as well as subpoena any necessary records;" The
commission was scheduled to last approximately 18 months and i3sue
a.?preliminary policy'report? on December 1,.2013 and ?any additional
report(s)? by January 1, 2015.

b. investigation
included outside income earned by members of the Legislature. In
connection with that facet of its investigation, the Moreland
Commission.wrote letters to members of the.Assembly and the Senate,
including SHELDON SILVER, the defendant, requesting, among other
things, ?a description of the services you.provide or have provided
in exchange for compensation,? and ?a list of your clients in any
civil matters.? While some legislators voluntarily complied with
the request, SILVER refused to do so. After SILVER refused to comply
with the letter request, the Moreland Commission subpoenaed Weitz
aihuxenberg, as well as other entities that employed legislators who
had refused to comply with the letter requests, for information about
the non?complying legislators' outside income.

c. The subpoena to Weitz Luxenberg specifically
sought records concerning advised or represented by
Assembly Speaker Sheldon Silver, and a general description of the
services provided by Assembly Speaker Sheldon Silver to such
(Emphasis in original.)

d. After Weitz Luxenberg received the Moreland
Commission subpoena, SILVER caused.the Assembly to file a motion in
New York State Supreme Court to quash the Moreland Commission?s
subpoenas related to Assembly Members? outside income, including the
subpoena to Weitz Luxenberg. This and.other legal actions by the
Assembly to quash the subpoenas were taken at taxpayers? expense.
Weitz &2Luxenberg, after discussions with SILVER, also filed.its own
motion to quash the subpoena. The Moreland Commission filed a

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response asking that the court order the subpoenaed entities,
including Weitz Luxenberg, to produce to the Moreland Commission
the requested documents related to outside income.

e. On or about February 25, 2014, in statements
made at a press conference, SILVER claimed that by subpoenaing
information about legislators' outside income, the Moreland
Commission was ?engaged in a fishing expedition to intimidate
legislators? and had exceeded its mandate and otherwise abused its
power.

f. On or about March 29, 2014, the Governor
announced that, as part of the budget negotiations, he had agreed
to endtheMorelandCommissionq and.in.exchange, the Legislature had

and bribery laws, and to experiment with public financing of
elections in that year? race for State Comptroller. SILVER and his
Assembly staff were key'participants in.these:negotiations and prior
discussions of these issues, including advocating against the
Moreland.Commission?s and.arguing
against limits to legislators? outside incomeaandgrelatedwiisclosure
requirements. At the time of the Governor?s announcement, the
motions to quash the Moreland Commission subpoenas relating to
outside income as described above were pending. No changes were made
with.respect to the ability of legislators to receive outside income
or with.respect to the disclosures required.about the nature of such
outside income. I

g. On or about April 10, 2014, the USAO SDNY
requested and received from the Moreland Commission its files and
documents, including documents related to its investigation of
legislators' outside income. Certain of these documents and leads
contained therein are reflected in this Complaint.

41. On or about April 22, 2014, the New York State
Attorney General, on behalf of the Moreland Commission, filed a
letter in New York State Supreme Court withdrawing the subpoenas
related to outside income and requesting that the pending motions
be dismissed, citing the fact that the Governor had disbanded the
Commission and its staff.

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42 . Based on the evidence set forth above, I respectfully
submit that there is probable cause to believe that SHELDON SILVER,
the defendant, has engaged in and continues to engage in a secret
and corrupt scheme to deprive the citizens of the State of his honest
services, and to extort individuals and entities under color of
official right, and has conspired to do the same, in violation of
Title 18, United States Code, Sections 1341, 1343, 1346, 1349, and
1951.

WHEREFORE, deponent respectfully requests that a warrant
be issued for the arrest of SHELDON SILVER, the defendant, and that
he be imprisoned or bailed, as the case may be.

 
ROBERT W. RYAN 
Criminal Investigator
United States Attorney?s Office
Southern District of New York

Sworn to before me this

lei/day/ef?3anuary, 2015?

 

 

EAAS
. ITEE STATES MAGISTRATE JUDGE
OF NEW YORK

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