Sheldon Silver's Empire State of Mind
by Brendan O’Connor
On Monday, in Federal District Court in Manhattan, after a five-week trial and three days of jury deliberation, Sheldon Silver, a seventy-one-year-old Democrat from the Lower East Side, was found guilty on seven counts of federal corruption charges. The charges, which included honest services fraud, extortion, and money laundering, stemmed from two quid pro quo schemes in which Silver obtained nearly $4 million in payments for taking official action on behalf of private parties, including luxury developer Glenwood Management. Six of the seven counts each carry up to twenty years in prison. (A sentencing date has not yet been set.) Silver did not testify, and his lawyers did not call any witnesses to speak in his defense, because whether or not Silver took the money was never in dispute — what was in dispute, in this case, was the definition of corruption.
Silver was first elected to the state Assembly in 1976. He rose to the speakership in 1994, becoming one of the so-called “Three Men in a Room” who control New York politics. In 2000, after Silver put down an attempted coup by then-Assemblyman Michael Bragman, a Democrat from Syracuse, the Buffalo News issued a scathing editorial under the headline “The Winner and Still King.” “The Assembly speaker has too much power,” the paper wrote. “He controls everything, from the legislation that can be voted on to how his normally docile members vote on it. He decides what the Assembly will accept in a state budget. He negotiates secretly with the other two leaders to hammer out important, expensive and far-reaching laws. And he ignores the wishes of less-exalted lawmakers.” Assemblyman Bragman was stripped of his job as majority leader and retired the following year. But, while the criminal case that resulted in Silver’s conviction this week was brought against him by Preet Bharara, U.S. Attorney for the Southern District of New York, the speaker’s ouster was really precipitated by one of his partners in crime (so to speak!): Governor Andrew Cuomo.
In July 2013, Governor Cuomo appointed the Commission to Investigate Public Corruption, commonly referred to as the Moreland Commission, to investigate public corruption in the state capital. The commission was to be totally independent: “Anything they want to look at, they can look at — me, the lieutenant governor, the attorney general, the comptroller, any senator, any assemblyman,” Cuomo said in August. But as early as September, the governor’s office was reported to have interfered with the commission’s investigation, blocking a number of subpoenas, including one issued to a media-buying firm whose clients included both the New York State Democratic Party and the governor and another issued to the Real Estate Board of New York, an industry lobbyist group, in an effort to determine how luxury developers had won certain tax breaks. (In April, Capital New York reported that REBNY members and their firms gave $21.7 million in campaign contributions — or ten percent of all the money that entered the campaign finance system — in the last state election cycle.)
New York Gov. Andrew M. Cuomo on the Moreland Commission, then and now. pic.twitter.com/9CDUXdG6gg
— Susanne Craig (@susannecraig) December 1, 2015
Cuomo disbanded the Moreland Commission in March 2014, less than halfway through its intended eighteen-month lifespan (ostensibly as a part of budget negotiations), but not before it released a preliminary report in December. The dismissal of the commission drew the ire of many, but none more so than Bharara, the U.S. Attorney. “If you begin investigations and you begin them with great fanfare,” Bharara said in a radio interview, “you don’t, I think, unceremoniously take them off the table without causing questions to be asked.” In April 2014, just a few weeks after it was disbanded, the commission turned its files over to Bharara’s office. Less than a year later, in January 2015, Silver was arrested.
The government’s seven-count indictment alleged, amongst other things, that, for nearly fifteen years, the former Assembly speaker engaged in a scheme in which he received $700,000 in secret fees from a law firm, Goldberg & Iryami, for tax certiorari business — the legal process by which property owners can challenge the tax assessment on a given piece of real estate — given to the firm by two developers, Glenwood Management and the Witkoff Group, in exchange for Silver’s official acts, such ensuring the renewal of developer-friendly tax breaks. (One of the firm’s partners, Jay Goldberg, was a former aide and counsel to Silver.) “A public official owes a duty of honest and faithful service to the public he serves and to his public employer. When a public official obtains a corrupt payment in exchange for official actions taken or to be taken, the official has breached his duty of honest service,” Judge Valerie Caproni explained in her instructions to the jury before their deliberations. “It is not necessary that the Government prove that Mr. Silver realized any gain from the scheme or that the State of New York and its citizens actually suffered any pecuniary loss. It is sufficient for the Government to prove that the State of New York and its citizens did not receive the honest and faithful services of Mr. Silver.”
In his opening statement, defense attorney Steven Molo did not argue that Silver didn’t take the money: He argued that Silver had to take the money, because that is how things work in Albany. “It’s impossible, absolutely impossible, for a member of the assembly to do his or her job and to go out, make laws, deal with people, do the job that a person in the assembly does, and not have some form of conflict of interest,” Molo said. “That may make you uncomfortable…But that is the system that New York has chosen, and it is not a crime.”
Depending on how you look at it, this is either a fairly remarkable claim to make or a totally mundane one. “The level of cynicism from the defense was kind of extraordinary,” Zephyr Teachout, the Fordham University constitutional-law professor who challenged Cuomo from the left in the last gubernatorial election, told me over the phone. “You see that cynicism in the elite media — just the sense that, even the indictment, nobody was surprised about the underlying facts. They were just surprised that there was gonna be an indictment. Nobody was surprised that Silver was doing stuff like this.” Silver, an Orthodox Jew, is “about as New York as New York gets,” Molo continued in his opening statements. “At one point in time, he actually represented the Statue of Liberty.” In fact, it seems that Silver represented Glenwood Management more than anything else.
Glenwood, founded by Leonard Litwin in 1961, owns twenty-six buildings in Manhattan comprising around eighty-seven hundred residential units. According to Common Cause/NY, Glenwood Management — through a combination of direct contributions and those made through “dozens of individual LLCs that are registered in either Glenwood’s name or at Glenwood’s New Hyde Park address” — gave over $12.8 million to New York State political candidates (including Silver) and committees between 2005 and 2014. And while Glenwood is not accused of any wrongdoing — it’s not the campaign contributions that were illegal — it’s clear that the luxury developer (and its peers) stood to gain from assisting Silver, Cuomo, and Senate Majority Leader Dean Skelos (the other member of the triumvirate facing corruption charges) in their consolidation of power. Namely: the renewal of the 421-a program, which extended tax breaks to builders in exchange for affordable housing, but which anti-gentrification and tenants’-rights activists argue has come to be abused by developers working in the high-end and luxury market. Each time 421-a was renewed, Glenwood sent more of its buildings to Goldberg & Iryami, which meant more so-called referral fees for Silver. “This is not a coincidence, ladies and gentlemen,” the government said in its closing arguments. “Glenwood is rewarding Silver each time they get what they want.”
(“Testimony of prominent real estate players laid bare the connection between landlords’ payoffs to the leader of the assembly and the weakening of our rent protection laws, while publicly Silver claimed to be championing the cause of tenants,” the Metropolitan Council on Housing, a tenants’ rights group, said in a statement provided to The Awl that called the state government “hopelessly corrupt.” “It is time to close the LLC loophole [which allows developers to obscure their political contributions, by donating them through the LLCs associated with the buildings they own], limit the amounts the rich and powerful can pump into election campaigns, establish public financing of elections, and liberalize our election laws to make it easier for grassroots candidates to run for office.”)
Most corruption cases take the form of “really clumsy, stupid, greedy, short-term politicians getting in trouble,” Teachout said. (“Basically, Dean Skelos.”) The Silver case is different, she said, because it’s so sophisticated. “It’s about real estate and gerrymandering. The stuff he was pushing wasn’t higher-level earmarks. This is New York state policy for the last twenty years, or certainly for the last ten years. I just keep thinking about the physical way Manhattan alone — like, what would Manhattan’s skyline look like if Shelly Silver wasn’t working for Glenwood.” (At the very least there would probably be a lot fewer steel and glass condo towers sitting mostly empty.)
“In any bribery case, there’s no body. It’s not a murder. The body is the law, it’s the policy. It’s the law.” In Silver’s case, Teachout said, “a lot of the bodies are buried in taxes. That’s where 421-a comes in. A lot of the other bodies are buried in governmental structure.” She referenced one building in particular, Extell Management’s One57: “The building that wouldn’t exist without 421-a. I think of it as the middle finger on the edge of Central Park, insulting the whole city that’s going through a desperate housing crisis.” (One57 will reportedly cost the city $65.6 million in forgone property tax revenue over ten years.)
The fundamental problem is the private financing model for campaigns. “If you’re in rural, upstate New York, and you want to get elected, unfortunately, in recent years you’re going to Glenwood management. You’re going to downstate luxury developers to get funding,” Teachout said. “You feel like it’s not that important where you stand on 421-a — that’s a city issue, and you need the cash to get elected.”
Silver used his financial and political capital to create a governmental system where a constant, recurring series of manufactured crises — largely through redistricting efforts that have (artificially) created a Republican senate in an overwhelmingly Democratic state — could only be resolved by the Three Men in a Room. Publicly, he, Cuomo, and Skelos could strike whatever pose was politically necessary; privately, deals would be made in the interests of the people who mattered. “It’s such a New York tragedy, because New York is full of bold, loud, aggressive people — except in its politics, where it’s full of quiet, careful, subservient people…That inside game, Silver’s silent era — and Cuomo era — has led to our state physically falling apart, while we have the Tower of Babel being built by luxury developers,” Teachout said. “Many on the Left in New York have accepted the inside game. Like, we can have more power by not criticizing our people who are champions publicly. It’s sort of accepted that we’re gonna be — we’re in the back room, and therefore it’s gonna be okay. And it’s not.”
Photo by Zack Seward