Log in Subscribe

A few of our stories and columns are now in front of the paywall. We at The Chief-Leader remain committed to independent reporting on labor and civil service. It's been our mission since 1897. You can have a hand in ensuring that our reporting remains relevant in the decades to come. Consider supporting The Chief, which you can do for as little as $2.75 a month.

Corruption So Elemental It Hardly Seemed Dirty (Free Article)

Posted

The morning after the revelation that Eric Schneiderman had been physically abusive to four women he dated led to his swift resignation as State Attorney General, a visit to ex-Assembly Speaker Shelly Silver’s retrial on corruption charges seemed like a return to a gentler, if not necessarily more-innocent, time of alleged wrongdoing by state officials.

Mr. Silver was no stranger to bad behavior in the realm of mistreatment of women, but it was in the role of trying to sweep away the sexual assaults committed by then-Assembly Counsel Michael Boxley and the harassment engaged in by the late Assemblyman Vito Lopez.

But he was back before U.S. District Judge Valerie Caproni May 8 in the Thurgood Marshall Federal Courthouse on charges related to greed rather than lust and/or violence. Having had his November 2015 conviction for using his Assembly position to receive $3.8 million in bribes disguised as referral fees overturned because of a U.S. Supreme Court ruling the following year involving the former Governor of Virginia, he was hoping justice wouldn’t strike twice in the same place.

Political Realities and ‘Get the Jokes Right’

The morning session featured a varied program from two key prosecution witnesses. Joseph Strasburg, the longtime head of the Rent Stabilization Association, offered a master class in the real-estate industry’s dealings with the State Legislature. He was followed to the stand by Jay Arthur Goldberg, a friend from childhood of Mr. Silver’s who had shared with him the proceeds of work he did for two large developers whose tax business was steered to him by the Assembly Speaker.

Mr. Strasburg’s testimony was bracingly illuminating. Mr. Goldberg’s ran more to unapologetic puckishness after he was granted immunity from prosecution for telling about the not-strictly-Kosher financial relationship he had with his old friend. He knew the effect he had on the courtroom: when he returned after the lunch break for a brief cross-examination by Michael Feldberg on behalf of Mr. Silver, he turned to a reporter and, by way of introduction, said, “Get the jokes right.”

The essence of Mr. Silver’s defense, in both his first trial and this one, has been that however unseemly some of his transactions may look, they were all part of the normal way of doing business in Albany. The giant hole in that argument during the first trial concerned his payments from Mr. Goldberg for the tax-certiorari business he sent his way.

Those accounted for roughly $700,000 of the $3.8 million that Federal prosecutors charged the former Assembly Speaker with having sold his office to obtain. The larger portion of the ill-gotten gains had come from the law firm, Weitz & Luxenberg, for which he served “of counsel,” as his share of the money it earned from representing clients who suffered from mesothelioma. Those clients were referred to Mr. Silver by Dr. Robert Taub, who specialized in treating those stricken with the asbestos-related disease, in return for $500,000 in Assembly funds that were sent his way to do research at Columbia University.

If that arrangement seemed like a textbook quid pro quo, Mr. Silver had a defense that would at least give his jury pause: if he thought what he was doing with Mr. Taub was illegal, why had he declared the income Weitz & Luxenberg paid him on his state disclosure forms? He couldn’t, however, make that argument regarding the money he received from Mr. Goldberg, since over the 11 years that he got fees based on his old friend and former staffer’s success in reducing the city’s tax assessments for the two developers, Mr. Silver never listed that money on the disclosure forms.

A Unique Civics Lesson

Mr. Strasburg offered the jurors the kind of civics lesson none would have received in the city’s public schools, and probably not in its colleges, either.

In 2011, he said under questioning by Assistant U.S. Attorney Damian Williams, two of the state’s three centers of power, the governorship and the Assembly, were in Democratic hands. Given the strong “tenant advocacy” lobby in the city, Mr. Strasburg said, for landlord advocates like his group and the Real Estate Board of New York, the task was “to offset it” rather than to make major inroads.

He came to his job after serving as Counsel to then-City Council Speaker Peter Vallone, including the four-year stretch when the Council assumed responsibility for land-use matters that were handled by the Board of Estimate before it was found unconstitutional and ultimately put out of business in a 1989 voter referendum. Mr. Strasburg and Chief of Staff Kevin McCabe served as Mr. Vallone’s kitchen cabinet, giving them key roles in both the political and governmental operations of the city.

The Council Speaker was a moderate Democrat, which was reflected in his role on perhaps the key piece of legislation that moved through the Council during Mr. Strasburg’s final years there: the “Safe Streets, Safe City” bill that used a temporary income-tax surcharge to significantly boost the size of the police force at a time when the murder rate had climbed to a record level.

Then-Mayor David Dinkins liked to describe the initiative as “Cops and Kids” and wanted a good share of the money raised through the surcharge to go to programs for youths that he believed would play a valuable role in reducing the crime rate. The more-pragmatic Mr. Vallone and his advisers, believing they would have a tough time getting a bill giving equal weight to the two initiatives accepted by both tabloid editorial boards and upstate legislators, made sure the home-rule message sent to Albany devoted most of the spending from the proposed surcharge to police hiring.

Real Goal: Status Quo

Talking about the 2011 legislative agenda of his group, which focused on the renewal of the city’s rent laws and extension of the 421-a program under which developers received subsidies in return for devoting a portion of their projects to affordable housing, Mr. Strasburg told the jurors, “Publicly, we were supporting changes that would benefit RSA.” But, he added, “Our endgame really was retention of the status quo.”

He had an added concern that year, he recalled: a schism between his group, which represented landlords of all sizes, and REBNY, which advocated for the larger developers and property-owners. For the latter group, the 421-a legislation was a bigger priority, given that its continuation was needed in some cases to secure bank loans for large construction projects, while the RSA was far more dependent on getting renewal of the rent laws without the adverse changes being sought by tenant advocates.

As a result, Mr. Strasburg said, he was wary of REBNY seeking a separate deal with legislative leaders on 421-a that would undercut his position on rent stabilization. That spring, he testified, he had a private meeting with Leonard Litwin, the head of Glenwood Management—the city’s largest developer—who told him, “We have to make some changes.”

Mr. Strasburg responded to Mr. Litwin, who was then in his late 90s, “You’ve trusted my judgment for 20 years,” adding that he believed that as long as they maintained a united front, they would wind up with extensions of both the real-estate matters under the existing terms.

But, he told the jury, “For the first time in 20-something years, he said he didn’t trust my judgment” on a political matter. And so there were separate discussions the two real-estate groups conducted with legislative leaders, and in the “big ugly” that comprised the deal that ended the legislative session in June, 421-a was renewed intact, but the vacancy-decontrol threshold was raised from $2,000 to $2,500.

Bad for his Clients

What this meant was that where landlords previously were entitled to raise rents above the prescribed levels on apartments renting for $2,000 or more once a tenant moved out, from that point they could not impose major hikes unless the vacated apartment had rented for at least $2,500.

This didn’t matter much to Glenwood, Mr. Strasburg said, because “most of their units rented in excess of $2,500.” For some of the landlords who were RSA members, however, “It was bad.” And from the standpoint of the tenant groups that were generally fighting on behalf of working-class and lower-middle-class renters, he continued, “It made no sense. Those who can best afford high rents were protected,” rather than offering relief to those lower down the rental chain.

When a lawyer for Mr. Silver, Mike Westfal, cross-examined him, Mr. Strasburg offered one more reason why he believed Mr. Litwin’s concern about having the 421-a program renewed was unfounded: that there were other “vested interests” besides the real-estate groups that benefited from its extention, since it “created thousands of jobs for union and non-union workers” and had the affordable-housing component requiring that a certain percentage of units be set aside for tenants of modest incomes.

Moments earlier, Assistant U.S. Attorney Williams asked Mr. Strasburg whether he might have been able to avert the unhappy ending by seeking a private meeting with Mr. Silver.

“Probably not,” he replied. “We never supported the Assembly financially.”

That response served as a perfect lead-in for the prosecution calling Mr. Goldberg as its next witness. Because Mr. Litwin got what he wanted despite the fact that Glenwood Management and other REBNY members directed their campaign contributions not towards Assembly Democrats but rather State Senate Republicans, and in fact at that time in 2011 were first enjoying the fruits of the $300,000 they directed to GOP Senate candidates in the final month before the 2010 elections, in which the party regained control of the Senate with a two-vote majority.

An Ungrateful Leader

The extent to which Glenwood in particular loomed over both houses of the Legislature could be seen by the prominent role it played in the trial of former Senate Majority Leader Dean Skelos, with a couple of top executives testifying 30 months ago under a deal allowing them to escape prosecution as they explained their distress upon discovering that Mr. Skelos, rather than being suitably grateful for their help in restoring him to the top perch in the Senate, continued to hold up legislation they sought until they agreed to deals that would benefit his son, Adam. (Both Skeloses were convicted but later exonerated by the same Supreme Court ruling in the case of ex-Virginia Gov. Bob McDonnell, and they will be back for an encore in the Daniel Patrick Moynihan Federal Courthouse next month.)

But while Glenwood wasn’t of much help to Mr. Silver’s conference, it was providing a steady revenue stream to the Speaker through its business relationship with Mr. Goldberg, which he elaborated on with the good humor that a grant of immunity apparently provides.

He knew Mr. Silver, he told the jury, “for over 65 years,” having grown up with him on the Lower East Side. He worked directly for Mr. Silver for a year during the mid-1970s, soon after Shelly was elected to the Assembly, and continued to see him at “state events, funerals, brisses, bar mitzvahs, weddings.”

Asked by Assistant U.S. Attorney Tatiana Martins—who was also part of the prosecution team in the Skelos case—whether he had donated to Mr. Silver’s political campaigns, Mr. Goldberg responded, “I sure did,” his tone suggesting it was a silly thing to ask moments after he had referred to him as a “dear friend and comrade.”

He gave up his part-time work for the Assembly to become a Tax Commissioner at the beginning of Ed Koch’s mayoralty in 1978, and continuing into 1986. That experience was an ideal finishing school for his work as a tax lawyer specializing in gaining reductions on property taxes.

Recurring Revenue Stream

“We get a contingency fee based on our success,” Mr. Goldberg explained to the courtroom. When Ms. Martins, whom he used as a foil in an act that was two parts Alan King, one part Jimmy Breslin and one part Fyvush Finkel, sought to elicit information for the jury by asking whether buildings were assessed yearly or just once in their lifetimes, he replied, “Annually, thank God.”

The assessments, he continued, were based on buildings’ value, factoring in the income they produced and the expense of maintaining them, and estimated that his two-person firm did 1,500 to 2,000 challenges a year. His partner, Dara Iryami, who began working for him in 1992, “does most of the heavy lifting,” Mr. Goldberg said. “Generally, I’m the rainmaker. I’m a schmoozer—I go out and get business.”

Their fees varied by client: as high as 33 percent in some cases, while if, hypothetically, he were asked to challenge the assessment for the Empire State Building, he said he would drop his fee to 10 percent. He charged Glenwood Management 25 percent of what he saved it, and a smaller firm run by Steve Witkoff to which Mr. Silver also provided a referral paid him 15 percent.

It was not until his old friend became Assembly Speaker in 1994 that he asked him for referrals, Mr. Goldberg said. Asked by Ms. Martins whether Mr. Silver, who is a lawyer, had any particular expertise on tax matters, he replied, “None that I’m aware of.”

But that, he continued, wasn’t relevant when he made the request, explaining, “He was a prominent public official… who I thought would know people who would refer business to me.”

Sometime after that, he said, Mr. Silver, using a shortened version of Mr. Goldberg’s Hebrew name, Yakov, said, “Yak, I think I’m going to be able to refer Glenwood Management.”

When he got referrals, Mr. Goldberg said, he customarily shared some of the profits with those who provided them. He was less certain about the protocol in this instance, he said, because “I had given referral fees before, but never to the Speaker of the Assembly.”

‘Is This Alright, Shelly?’

For this reason, he told the jurors, “I said, ‘Is this alright, Shelly?' ”

Mr. Goldberg said Mr. Silver replied, “Of course, Yak, I’m a lawyer.”

And, he said, “I relied upon him because I knew him to be an honorable man,” which was the same characterization Mayor de Blasio offered after Mr. Silver was first indicted more than three years ago.

Ms. Martins, as if trying to clear up whether financial need led Mr. Goldberg to enter into this dubious partnership, asked about his business at the time.

“Was I earning a decent living?” he replied. “Thank God.”

He soon got a call from a lobbyist for the developer with ties to Mr. Silver, Brian Meara, who told him “I should be expecting a call from Glenwood Management,” Mr. Goldberg said. In response to questions from Ms. Martins, he said he didn’t have to submit a resume or make a pitch to get the business to appeal assessments for a couple of buildings, even though Glenwood at the time was using the far-larger firm of Stroock, Stroock and Lavan to do such challenges.

“Because of our excellent work, we were able to get many, many more,” Mr. Goldberg said, often at Stroock’s expense, although the Silver connection undoubtedly helped him increase his business with Glenwood. By 2014, he said, he was doing the challenges for 25 of the firm’s properties.

Out of his 25-percent referral fees from Glenwood, which over the period from 2009 to 2011 netted him checks for more than $106,000, he gave Mr. Silver a 25-percent share.

Ms. Martins asked whether he gave referral fees to other lawyers who steered business to him.

“Yes,” Mr. Goldberg replied.

A Key Distinction

“Were any of them public officials?” she asked.

“No.”

When she asked what Mr. Silver had done to earn the assessment reductions for which over the years Mr. Goldberg estimated he gave him $700,000 in fees, he replied, “He was kind enough to refer me the matter.”

Asked what work other than the referrals Mr. Silver did for the $114,567 check he sent the Assembly Speaker for Glenwood business covering 2011 and 2012, Mr. Goldberg replied, “None.”

“Did Sheldon Silver mention referral fees on the phone?” Ms. Martins asked.

“Zero,” Mr. Goldberg replied. “He also never called and asked for them.”

“Did he ever call and ask you to stop sending them?” the prosecutor said.

“No.”

Around the time of that payment, a rumor traveled through Albany that legislators were going to be required to list all outside income starting in 2012, leading Mr. Goldberg to notify both Glenwood and Witkoff in his letters about their business relationship that by signing them they were consenting to Mr. Silver receiving a portion of the fees. He recalled getting a call from Charles Dorego, a top Glenwood executive who figured prominently in the Skelos trial, in which Mr. Goldberg said he was told “they would rather have a standard agreement without the mention of Mr. Silver’s name,” which Mr. Dorego said should instead be included in a side letter mentioning his involvement.

Shock, Shock and Ire

“It didn’t matter to me, as long as I conformed to the ethics rules,” Mr. Goldberg said. He said Mr. Witkoff never signed the retainer agreement, but continued to employ his services, even after one of his executives in June 2014 called and “engaged in a tirade about how terrible I am” for not notifying them that he was sharing his fees with Mr. Silver.

Somewhere around that time, Mr. Goldberg testified, he asked Mr. Silver if he could make a referral for him to the Extell Group, and his old friend replied, “Not now.”

Ms. Martins asked if he knew the reason for that response.

“No idea, and I didn’t ask him,” Mr. Goldberg said.


We depend on the support of readers like you to help keep our publication strong and independent. Join us.

Comments

No comments on this item Please log in to comment by clicking here