Longtime NYS Assembly Speaker Sheldon Silver Surrenders to FBI

NYS Assembly Speaker Sheldon Silver has been an Albany fixture for 2+ decades. He was Speaker back when I was working in the legislature. And he's survived and thrived despite multiple scandals. But this is one scandal too far.

New York state assembly speaker surrenders to FBI http://t.co/pHWUMbR2jg

— TIME.com (@TIME) January 22, 2015

The Manhattan Democrat, who is the longest running Speaker in state history, is being charged with corruption over payments from one law firm (he is of counsel with another firm too).

I've been saying for years that the legislature should stop being a part time gig; they pay full time wages ($79,500, plus perks on position). Yet, they allow members to work elsewhere - like law firms, and can serve up conflicts of interest in no time. Eliminate the outside work, and you eliminate a major source of conflicts of interest.

Silver has stood against those reforms for years, in part because he benefited from the status quo arrangement. According to the NYT:

While it is legal for lawmakers to hold outside jobs, investigators said Mr. Silver failed to list the payments from the firm, Goldberg & Iryami, on his annual financial disclosure filings with the state.

In the past, Mr. Silver has been criticized for his outside law practice, a lucrative career that supplements the $121,000 he earns as speaker.

In 2013, Mr. Silver earned at least $650,000 in legal income, including work for the personal injury law firm, Weitz & Luxenberg, according to his most recent financial disclosure filing.

But what he does to earn that income has long been a mystery in Albany, and Mr. Silver has refused to provide details about his work.

He also managed to survive threats to his speakership when there were multiple sexual harassment/sexual assault cases that his office bungled/fumbled/buried. These include the Michael Boxley matter (who was one of his top staffers), investigations into whether other Assembly members engaged in sexual harassment or inappropriate conduct, including Micah Kellner, Vito Lopez, and secret settlements to silence the scandals. Silver admits that he shouldn't have used public money to fund the Lopez settlement.

The Assembly has paid out hundreds of thousands of dollars in settlements over these and other sexual harassment cases involving members and staffers. That doesn't count the boatload of money spent on legal fees.

Silver's actions in those cases should have been grounds for his caucus to send him packing, but he used divide and conquer to split the caucus from picking a replacement.

But he couldn't outrun federal prosecutor Preet Bharara. He's managed to do more to roll up corruption in Albany than Gov. Cuomo's defanged Moreland Commission. And that's just the tip of the iceberg. I suspect there's lots more to come.

Christie Administration Now Probed on Port Authority Funding of Pulaski Skyway Rehab

Media outlets continue reporting that Gov. Chris Christie and his administration is being investigated for how the Port Authority funded the Pulaski Skyway rehabilitation project.

New Jersey got the Port Authority to shift funds originally meant for the ARC tunnel to go to rebuild the Pulaski Skyway. That happened when Gov. Christie cancelled the ARC project in 2010, and it's a decision I agreed with because NJ Transit could never keep to a capital budget and New York was not contributing to a project that would benefit immensely from the added tunnels, as well as the fact that the project design was flawed with no through-running trains to Sunnyside Yards for maximizing train access into Manhattan during the morning rush hour and additional trains for the PM rush back to New Jersey.

The Pulaski Skyway was one of the first superhighways designed and opened in 1932. It connected Newark to Jersey City across the Hackensack River and Meadowlands, along with providing direct access to the Holland Tunnel. The bridge was determined to need massive rehabilitation, particularly after the collapse of the bridge in Minnesota a few years back.

The rehabilitation project is indeed a worthy and needed project, but New Jersey didn’t want to raise its own taxes or fees to cover it. That would have put Gov. Christie in a tough position had he wanted to run for President. So, it appears that Gov. Christie and his appointees at the Port Authority got the Port Authority to issue a ruling that the Skyway was an access road to the Lincoln Tunnel, which would be a valid use of Port Authority funds. But the reality is that it’s a stretch to call it a Lincoln Tunnel access road since it directly leads to the Holland.

This has consequences for the bond offerings by the Port Authority since it would be a material misrepresentation of what the bond offerings were for.

Now, a complicating factor is that the Port Authority doesn’t answer to Christie alone. It’s a bistate agency and New York Governor Andrew Cuomo would ordinarily need to sign off on the deal through his representatives on the Board.

Bridgegate showed how the system inside the Port Authority has completely broken down and how New York's appointees on the authority were outside the loop for the GWB lane closures. Is it possible they’re outside the loop on the Skyway funding deal?

I consider that possible but highly implausible because all the major news outlets reported on how Port Authority funds were going to be reallocated to do the Pulaski project. That would seemingly implicate Cuomo as well. These issues should have been raised back then and there were questions about how the money was reallocated, though no one appeared to have raised the question about whether the reallocation was legal from a securities offering perspective.

How wouldn’t it implicate Cuomo? If the New Jersey cronies were the ones who ginned up the legal authority to shift the funds, ignoring other counsel, then the prosecutors might be able to isolate the culpability for the deal to Christie and his allies inside the Port Authority.

Frankly, the way Gov. Cuomo has screwed with regional transit and played games with MTA funding, I wouldn't be shocked if both were involved in these actions and that there was a quid pro quo for the Port Authority to spend a similar amount of funds on New York based projects.

Turning the Screws; Prosecutors Looking at Indicting Gov. Christie's Inner Circle

Esquire Magazine is reporting that the federal prosecutor in New Jersey, Paul Fishman, is preparing to indict four of Gov. Chris Christie's inner circle over their actions relating to Bridgegate.
The indictments are pending against Bill Baroni and David Wildstein, who were at the Port Authority, Bridget Kelly and Bill Stepien, who were in the governor's office.

You could see the writing on the wall now for months, but Fishman is actually looking at getting evidence of wrongdoing by Christie himself.

Fishman’s challenge is to nail down specific criminal charges on several fronts -- the diversion of Port Authority money to fund New Jersey road and bridge projects; the four-day rush-hour closures of George Washington Bridge lanes in Ft. Lee; and a web of real-estate deals spun by David Samson, long a Christie crony, when he chaired the PA’s Board of Commissioners as Christie’s appointee. (One such deal, a stalled office-tower development in Hoboken, New Jersey, is central to a claim that Christie’s lieutenant governor told the town’s mayor that the state would withhold Hurricane Sandy relief aid from Hoboken if the mayor didn’t sign off on the development project.)

Whatever Christie says or does -- and whatever potential donors or Jimmy Fallon and his viewers think -- the question that truly matters is whether Fishman’s pursuit leads to the governor himself. Christie’s Port appointees -- not only Samson, but former PA Deputy Executive Director Bill Baroni and his oddball sidekick David Wildstein -- all face near-certain indictment and are being pressed to hand up Christie, as is the governor’s former chief counsel, Charlie McKenna.

Wildstein, portrayed as the mastermind behind Ft. Lee’s traffic problems, has made proffers to Fishman’s investigators -- hoping to trade information to the prosecutor in exchange for gentler legal treatment -- but Fishman has cut no deals with anyone so far, and the looming indictments have encouraged Christie’s PA appointees to sing. “Don’t underestimate what Wildstein has on Christie,” says one source. “And Wildstein and Baroni have both turned on Samson. If Samson doesn't give Fishman Christie, Samson is toast.”

Bridgegate opened a window into the inner workings at the Port Authority and the New Jersey governor's office, and the back-room deals that exceeded the authority of the bistate agency to fund projects outside its scope.

In particular, I'm talking about the Pulaski Skyway reconstruction. It was a much needed project, but Gov. Christie didn't want to use state money (which would have required increasing taxes/fees in the state to cover the empty transportation trust fund). So, his office concocted a rationale for using the former ARC tunnel funds that the Port Authority had set aside to use on the skyway reconstruction.

So, the indictments are all pending, but the question is who will crack first. My bet is still on Bridget Kelly, who was the only one of the four to actually be fired. The rest were "retired" and allowed to resign with full benefits. That would lead to a whole lot of resentment against the Governor.

But there's an additional wrinkle, and that's David Samson, who was also at the Port Authority. Samson is the big fish that would lead to Christie himself. If Samson turn's on Christie, then that would likely lead to indictments against Christie himself.

Of course, it's rather ironic that Fishman is Christie's successor at the federal prosecutor's office, and that Christie used similar actions to indict corrupt politicians while federal prosecutor.

Gov. Christie's Political Problems Just Grew To GWB Traffic Jam Sized Proportions

After months of denying that he or his staff had anything to do with the George Washington Bridge lane closures that caused massive traffic jams in Fort Lee and caused a public safety mess for the city or that the lane closures were politically motivated, new emails and text messages that were sought by The Record reveal that there were, in fact, political motivations involved.

The messages are replete with references and insults to Fort Lee’s mayor, who had failed to endorse Christie for re-election and they chronicle how they tried to reach Port Authority officials in a vain effort to eliminate the paralyzing gridlock that overwhelmed his town of 35,000 which sits in the shadow of the bridge, the world’s busiest.

The documents obtained by The Record raise serious doubts about months of claims by the Christie administration that the September closures of local access lanes to the George Washington Bridge were part of a traffic study initiated solely by the Port Authority. Instead, they show that one of the governor’s top aides was deeply involved in the decision to choke off the borough’s access to the bridge, and they provide the strongest indication yet that it was part of a politically-motivated vendetta—a notion that Christie has publicly denied.

“Time for some traffic problems in Fort Lee,” Bridget Anne Kelly, one of three deputies on Christie’s senior staff, wrote to David Wildstein, a top Christie executive at the Port Authority, on Aug. 13, about three weeks before the closures. Wildstein, the official who ordered the closures and who resigned last month amid the escalating scandal, wrote back: “Got it.”

Other top Christie associates mentioned in or copied on the email chain, all after the top New York appointee at the authority ordered the lanes reopened, include David Samson, the chairman of the agency; Bill Stepien, Christie’s re-election campaign manager and the newly appointed state GOP chairman; and Michael Drewniak, Christie’s spokesman.

Christie has previously said that no one in his staff or campaign was involved in the lane closings, and he has dismissed questions about political retribution by joking that he moved the traffic cones himself.

While Gov. Christie's pal David Wildstein has already been sacked and Bob Baroni, who was Christie's top pick at the Port Authority resigned, the emails reveal that the traffic mess was initiated by those in Christie's inner circle.

This shows just how petty that Christie's staffers were in a race that was never going to be all that close.

Not only do the Governor's political appointees at the Port Authority need to be scrutinized for their actions, but the state needs to hold Gov. Christie accountable for this act of partisan hackery that undermined public safety in Fort Lee - all because the mayor wasn't going to endorse the Governor across party lines.

The governor not only needs to apologize to Fort Lee residents, but he needs to clean house of his staffers who went down this path.

I'm sure that local politicians are looking at whether criminal charges could be filed in relation to interfering with public safety by engaging in a political vendetta against the mayor.

It's possibly actionable under the state's Code of Criminal Justice. Various charges could include violating the Execution of Public Duty under 2C:3-3, Crime of corruption of public resources under 2C:27-12, and Obstructing Highways and Other Public Passages under 2C:33-7.

As with the NJ Transit rail fleet flooding debacle, Gov. Christie has let those involved get off easy. That has stop. He has to hold those involved accountable, and he has to take responsibility himself for these actions. Every day that he lets these staffers stay on in Trenton is another day that this scandal grows.

And I'm saying this as someone who voted for Christie. He personally did well in the Sandy aftermath excluding the NJ Transit rail fleet flooding flap, but this action has parallels to the NJ Transit mess. He's let his underlings/staffers get off without so much as a slap on the wrist for engaging in actions that put state assets at risk (in the NJT instance) and lives at risk (in GWB lane closures).

He's got to fire those involved and allow the AG or federal prosecutors to investigate this fully. You can't engage in a political vendetta like this, where lives can be put at risk - and Fort Lee documented how police, fire and EMS were unable to respond quickly due to the traffic jams that blocked most of the city as a result of the lane closures to the bridge.

Cross posted at LGF.

Gov. Christie Must Fire NJ Transit Officials Over Gross Incompetence Before Hurricane Sandy

I am once again reiterating my call on New Jersey Governor Chris Christie to fire NJ Transit officials, starting with Executive Director Jim Weinstein.

Weinstein appeared before the State Legislature once again and admitted that the agency not only stored rail equipment in Kearny and Hoboken before Hurricane Sandy, but purposefully moved still more equipment into both low-lying areas before Sandy.

“We brought some additional equipment in there to store during the storm,” Weinstein told members of the Senate Budget Committee during a hearing on the Christie Administration's transportation budget Wednesday morning. At the time, he said, "there was no reason to believe it would flood.”

Weinstein did not say how many rail cars were moved into the vulnerable spot, but that it won’t happen again. More than a quarter of the agency’s rail fleet was damaged during the storm, most at the maintenance facility. “We are informed by the experience,” he said. “We won’t be bringing equipment there in the future in the event we are faced with a similar situation as we were with Sandy.”

NJ Transit Spokesman John Durso, Jr. refused to say how many pieces of equipment were moved into harm’s way, saying "that specific information had not been previously provided due to security-related concerns." Durso has repeatedly cited “security” as a reason not to release details about NJ Transit’s movement of trains during Sandy.

However, he has not explained how security would be breached by making public the number of cars moved to a yard where all the train equipment sits on tracks in clear view to the public.

The flooding at the Meadows Maintenance Complex in Kearny, and at the agency's Hoboken yard - a location that Weinstein acknowledged on Wednesday is close to the Hudson River's waters - damaged 272 passenger cars and 70 locomotives. Weinstein said it amounted to more than $100 million in damage that NJ Transit is hoping will be reimbursed from its insurance and from federal emergency grant dollars.

That was despite all manner of warning from weather forecasters who were predicting dire flooding throughout the New York City metro area - including the Hackensack River, Passaic River, and Hudson River basins. The Kearny yard and Hoboken yard are both squarely in the affected flood zones and yet NJ Transit has repeatedly stated that their experience was that neither yard would fully flood during a storm.

The Hoboken Yard isn't merely close to the Hudson River. It abuts it. The station has been prone to flooding in the past, though not to the extent it was during Sandy. Likewise, the Kearny Yard is surrounded by water. Rivers and waterways can and do flood during severe storms.


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They gambled with money and equipment and lost. More than a third of the rail fleet was flooded and the agency is still scrambling to restore the rail schedule to pre-Sandy levels. The Main and Bergen line is still below its pre-Sandy level, and dozens of railcars and locomotives, including the agency's newest dual mode locomotives are out of service until repairs can be completed. The delay in repairs is exascerbated by the fact that the agency has had problems sourcing replacement parts due to the severity of the flooding to its own facilities, replacement parts in-house, and from the manufacturers.

Christie must fire Weinstein, who has been less than transparent in the agency's failings before, during and after the hurricane hit. Weinstein has tried to bluster his way through all this, claiming that his agency didn't know the areas would flood - but that is a transparent lie to anyone who watched news reports in the 72 hours before Sandy hit. The warnings were there. The worst-case scenarios were already laid out.

And NJ Transit rail operations moved more equipment into the flood zone that everyone was warned to evacuate from.

Even now, they're less than transparent about how many cars remain to be fixed. It took months before the agency put up a site indicating how many cars and locomotives remain to be repaired, and the numbers haven't been updated since.

The agency is touting its ability to get Hoboken back up and running, but it downplays the fact that essential services were not restored for months - like restrooms or a warm waiting area for customers in the heart of winter. It took an outcry. They've managed to restore electrical service to a substation so that electric trains can now run to Hoboken, but the station is still in shambles and the retailers are still displaced due to flood damage.

Massive Corruption Sweep Busts Politicians Trying To Rig Republican NYC Mayor's Race

Earlier this morning, law enforcement carried out  a massive corruption sweep in NY, with multiple arrests of local politicians.

State Sen. Malcolm Smith and city Councilman Dan Halloran were arrested this morning on charges they were plotting to rig this year’s mayoral election through fraud and bribes.

The pols allegedly formed an alliance built on cash payments and fraud to get Smith — one of the state’s top Democrats — placed on the GOP mayoral ballot, sources said.

FBI agents arrested them both at their Queens homes shortly after 6 a.m.

“I have no idea,” Halloran, in handcuffs, told a Post reporter when asked if he knew why he was being arrested.

Others arrested includeBronx Republican Chairman Joseph Savino and Queens GOP Vice Chairman Vincent Tabone, and they are all being accused of trying to rig the mayoral election.

As alleged, Senator Malcolm Smith tried to bribe his way to a shot at Gracie Mansion - Smith drew up the game plan and Councilman Halloran essentially quarterbacked that drive by finding party chairmen who were wide open to receiving bribes. After the string of public corruption scandals that we have brought to light, many may rightly resign themselves to the sad truth that perhaps the most powerful special interest in politics is self-interest. We will continue pursuing and punishing every corrupt official we find, but the public corruption crisis in New York is more than a prosecutor's problem."

The 28-page complaint offers up a bunch of juicy details, but it boils down to money for access:

Council member Halloran was to receive $20,500 while Tabone and Savino received $40,000 in bribes with a promise of $40,000 more.

If Halloran's name sounds familiar, it's because he was a blowhard who alleged that Sanitation workers purposefully slowed down snow removal during the blizzard a few years back. Investigations found no evidence of any kind of slowdown. And the FBI had already been investigating Halloran when they sniffed out the potential bribery for ballot access plan.

Smith's name should sound familiar as well, as he was part of the breakaway Democrats in the State Senate who gave temporary control of the Senate to Republicans in a coup against Democratic leaders. Smith joined a group of independent Senators, earning himself and his staffers a pay raise in the process. Smith's defection also enabled Gov. Andrew Cuomo to maneuver and exploit the divisions in the Senate to advance his own agenda with less opposition - including on matters like the same sex marriage act and the NYS SAFE Act.

Not only does this scandal threaten the disrupt the political balance in the State Senate, but this scandal threatens to upturn the entire Republican campaign for NYC mayor, as key behind-the-scenes officials are involved and it's entirely possible that others could find themselves perp-walked. Tabone has been working for the campaign of John Catsimatidis.

These people are instrumental in getting the campaigns of multiple candidates off the ground and working support for candidates already in the running. It could potentially derail existing campaigns for those who are in the race and indirectly helps those Democrats who are already in the race, including Democrat City Council honcho Christine Quinn.

Expect Tabone and Savino to flip on Smith and Halloran who are the big fish in this particular scandal in exchange for less time behind bars.

Why Corruption Persists

Yesterday, Trenton Mayor Tony Mack and six others were arrested in a corruption bust by federal prosecutors. Today comes word that one of those six was caught on a wiretap describing his actions as "good corruption."

Yes, you read that right.

They didn't think anything of engaging in criminal acts, and considered corruption to be part and parcel of their doing their work.

Joseph “JoJo” Giorgianni called it “good corruption.”

Just two months into Trenton Mayor Tony Mack’s administration, a parking garage development deal emerged in the city. Bribes were offered and accepted. Money changed hands. And the FBI recorded all of the details over a two-year span with the help of two cooperating witnesses, authorities said yesterday.

“One thing about the Mack administration, when I say that, it’s me and Mack, we’re not greedy,” Giorgianni was recorded telling an FBI witness. “We’re corruptible. We want anybody to make a buck.”

Federal authorities arrested Mack, Giorgianni and Mack’s brother Ralphiel Mack yesterday after a corruption probe that has spanned nearly the entire Mack administration. The 31-page criminal complaint charging them with extorting bribes provided extensive detailed conversations regarding $119,000 in cash payments the trio conspired to receive as part of the parking garage deal.

If convicted, Mayor Mack and his brother Ralphiel, who is the Trenton Central High School football coach, face up to 20 years in federal prison, U.S. Attorney Paul Fishman said. Giorgianni, who also charged separately with trafficking prescription pills, faces up to 50 years if convicted of all counts.

This is one of the reasons for the pervasive nature of corruption in New Jersey. Everyone that seems to get involved in politics considers it their right to take a swipe at the public till, despite the fact that it's criminal.

Trenton NJ Mayor Tony Mack, 6 Others Arrested In Federal Corruption Probe

Trenton New Jersey Mayor Tony Mack and six others have been arrested in connection with an ongoing federal corruption probe. The Trenton Democrat has been under investigation for the past several months, and the FBI had previously issued search warrants on the mayor's office, personal residence, and several locations of relatives to Mack.

Joseph "JoJo" Giorgianni, a top campaign contributor, and six others were also taken into custody. Specific charges against the suspects are expected to be outlined by Paul Fishman, the U.S. Attorney for New Jersey, later Monday.

Mack and the others arrested Monday were brought to the FBI office in Hamilton for processing and are scheduled to appear in federal court.

The arrests are the latest development in an ongoing federal investigation into alleged corruption within Mack's administration, which has been marked by accusations of nepotism and reckless spending. In July, FBI agents searched offices in Trenton City Hall a day after raiding the mayor's home. They also searched the home of his brother, Ralpiel Mack, and that of Giorgianni.

Mack's administration has been in turmoil from Day 1, staggering from one crisis to another. A housecleaning of staff at City Hall opened the door for Mack's own appointees, who quickly turned it into a revolving door. Some left over questions about their credentials, others to face criminal charges.

The arrests stem from $119,000 in bribes connected to a parking garage contract.

"The investigation revealed evidence of a conspiracy among the defendants and other to corrupt certain functions of Trenton City government in favor of a purported developer seeking to building a parking garage on City-owned property in exchange for cash payments totaling approximate $119,000, a total of $54,000 that the defendants actually accepted in one way or another and another $65,000 that they anticipated accepting," according to the criminal complaint filed today.

The complaint indicates the FBI had been investigating Mack since September 2010, just a few months after he took office. At least two cooperating witnesses are cited in the complaint and the FBI made extensive use of wire taps on the phones of Mack, Giorgianni and the cooperating witnesses.

The complaint also indicates there's a fourth "co-conspirator" named only as "CC-1" who was a Trenton city employee. That person has not been charged.

Mack was taken into custody at his Berkeley Avenue home in the city around 6:30 a.m., Woodruff said. Further charges in the public corruption are possible against Mayor Mack.

The Harassment Scandal That Threatens To Take Down NYS Democratic Leadership

Over the past couple of weeks, a growing scandal in the New York State Assembly has meant that Assemblyman Vito Lopez lost his chairmanship of the powerful Housing Committee over revelations that he harassed multiple women over a period of years. Assembly Speaker Sheldon Silver stripped Lopez of his chairmanship, but then it was revealed that Silver authorized the payment of a $100k settlement to two women over additional harassment claims.

Then, there's word that NYS Attorney General Eric Schneiderman signed off on the settlements, which used taxpayer funds, despite claims that Schneiderman's office had not given Speaker Silver guidance.

Speaker Silver admits that he and his office screwed up the handling of Lopez's case.

We have a couple of interrelated issues: (1) the criminal/civil liabilities of Lopez for carrying out harassment in his office, which included suggesting to female staffers that they ought to wear more revealing clothes or go braless; (2) Speaker Silver's handling of the cases and not making the issues public; (3) AG Schneiderman's handling of the case from his office.

It's an issue that threatens to overshadow the convention this week. Censure isn't enough, and a more thorough house cleaning needs to occur, including the Speaker himself:

Mr. Silver announced on Aug. 24 that he was censuring Mr. Lopez, 71, after a bipartisan Assembly ethics committee found credible evidence that Mr. Lopez had groped, kissed and verbally harassed two female employees. Mr. Lopez was also stripped of his chairmanship of the Assembly’s housing committee.

Over the next few days, reports emerged that Mr. Silver had signed off on a $135,000 secret settlement of claims against Mr. Lopez brought by two other women, and that the previous claims were not referred to the Assembly’s ethics committee. Mr. Lopez subsequently said he would not seek another term as chairman of the Brooklyn Democratic Party but has refused calls to resign his Assembly seat.

“The only time I ever had a conversation with him was about 10 minutes before I issued the letter stripping him of his chairmanship, and then I had a subsequent conversation with him last week and I asked him to resign,” Mr. Silver said. “He obviously didn’t agree with me, but he didn’t say much. He just indicated that he couldn’t — that he wasn’t going to.”

In statements last week, Mr. Silver, the Legislature’s most powerful Democrat, acknowledged mistakes in his handling of the alleged harassment incidents.

“Ultimately, I’m the speaker and I’m responsible, and clearly mistakes were made,” he said on Monday.

Mr. Silver said he first heard about claims made against Mr. Lopez in January. The first two women who brought claims were represented by a team of lawyers that included Gloria Allred, the prominent Los Angeles attorney. They initially sought $1.2 million.

Mr. Silver said his legal staff acted in good faith, explaining that they were trying to avoid costly litigation and to accede to the wishes of the alleged victims.

“What was demanded was tremendously more than what the case was ultimately settled for,” he said, “and the judgment of settling the case was that we will save the state money on potential liabilities here, in addition to the fact that the assemblyman agreed to pay a sum for his own actions.”

Trying to settle the matter makes sense since the costs of litigation could have been far higher, but the failure to refer the matter to the ethics committee was a massive failure on the Speaker's part.

To have the AG lie and obfuscate about his role in signing off on the deal is unforgivable.

This is hardly the first time that Silver has come under fire for botching the handling of harassment or sex abuse in the Assembly; his own staffer was convicted of sexual assault and his office attempted to cover up the details.

For far too long, the state legislature has operated under the Bear Mountain Compact, which is an unwritten rule that what happens in Albany stays in Albany. It created a permissive attitude where legislators can act as they please and ethics and the law were meant for everyone else, but optional for those who enact the law.

Two separate investigations are underway: one by the state’s Joint Commission on Public Ethics (JCOPE) and another by the Staten Island district attorney who is filling in for the recused Brooklyn prosecutor. Among those allegedly harassed is current NYC City Councilwoman Diana Reyna, who was one of Lopez's staffers.

The JCOPE is hamstrung by the fact that Silver gets to appoint some of its members, and they can limit their investigation rather than going after all the malfeasance involved - meaning that Silver could skate by on his own handling of the growing scandal.

The sad thing is that Silver will win reelection handily (and retain his speakership) and so too will Lopez. While Lopez said that he would not seek reelection past this November, he's going to win handily. Far too many constituents ignore massive problems with the candidates they elect - including criminal behavior. For the legislature to clean up its act, voters have to demand changes. Legislators aren't going to do it to themselves.

Silver's called for Lopez to resign, though Lopez has rebuffed the call thus far. Some Democrats are calling for Lopez to resign immediately, including New York Senator Chuck Schumer (who originally hails from Brooklyn). Those calls need to come hard and fast, and the Assembly Democrats ought to be considering a new speaker but Silver's lasted as long as he has as speaker because he's the consummate professional politicial - dividing and conquering potential alternatives to his speaker's position.

Penn State University Priorities Askew

Penn State, which continues reeling from the Jerry Sandusky sex abuse scandal, has decided that it will no longer play Neil Diamond's Sweet Caroline at football games.

School officials say that the decision has come after a few years of deliberations about the use of the song and suggestive lyrics.

On Monday, it was revealed that Diamond’s “Sweet Caroline” — a Beaver Stadium staple — will not be on the playlist when Penn State opens its season Saturday against Ohio U.

While the school denied the song’s removal had anything to do with the lyrics, “touching me, touching you,” it’s hard to imagine the powers that be at Penn State just decided the song had run its course.

“Sweet Caroline has been brought up in recent years as to whether or not it should remain a part of the playlist,” Greg J. Myford, Penn State’s associate athletic director of business relations & communications, said in a statement. “We hear from fans each year on whether or not we should continue it, given that it happens to be played in so many other professional and collegiate venues and has no real origination here at Penn State.”

It’s nice to see the school has its priorities straight.

The university considered removing the song from regular rotation in recent years? That means that Penn State devoted more attention to the playing of a song that has widespread airplay at sports events around the country - including as a mainstay of Boston Red Sox games - than it did to making sure that Sandusky's alleged sex abuse of minors was properly investigated and handled by law enforcement.

Penn State is more concerned about how it is viewed than in doing the right thing to protect the community.

The song has nothing to do with the scandal, and yet it has everything to do with how poorly school officials have handled the fiasco. It's an innocent bystander hit by the fallout, and the school's excuse rings hollow.

Penn State put more thought into removing the song from a playlist than it ever gave to Sandusky's abuse.

That's a sad state of affairs.

Standard Chartered Agrees To $340 Million Fine From NYS Regulator

Federal and state regulations prohibit certain kinds of conduct by banks. That includes money laundering and dealing with Iran. Standard Chartered violated both ends of that - they not only engaged in money laundering deals with Iran, but lied to regulators and sought to cover up their activities.

Benjamin M. Lawsky, New York Superintendent of Financial Services, claimed that Standard Chartered engaged in $250 billion of money laundering. There was much hand wringing, including from federal regulators who didn't necessarily like the idea of the state regulator jumping on Standard Chartered.

The bank steadfastly refused and rejected the claims.

That is, right up until the moment that the bank agreed to settle the case with New York for a civil fine of $340 million.

In addition to the civil penalty, Lawsky said the bank agreed to an outside monitor for at least two years to check on controls on money-laundering at its New York branch.

Lawsky's aggressive stance heightened his public profile just months after the Department of Financial Services, the agency he heads, was created out of the state's banking and insurance regulators.

Within minutes of the announcement, New York Governor Andrew Cuomo lauded the "effectiveness and leadership" of the new agency.

"New York needed a tough and fair regulator for the banking and insurance industries to protect consumers and investors," Cuomo said.

But Lawsky has also drawn fire by jumping ahead of a two-year probe into Standard Chartered by the U.S. Treasury, the Federal Reserve, the Justice Department, and New York prosecutors.

"It's very unfortunate this wasn't done as a global state and federal settlement," said Ed Wilson, a former senior attorney at the U.S. Treasury Department.

As negotiations with Lawsky progressed last week and this week, the bank held separate talks with other authorities. It had hoped to land a deal on both fronts, but Lawsky's solo announcement Tuesday made clear that had not happened.

Underscoring a continuing divide with Lawsky, the other authorities issued short statements saying they would continue to work together.

"Treasury will continue working with our state and federal partners to hold Standard Chartered accountable for any sanctionable activity that may have occurred," the Treasury Department said.

Lawsky says that the bank agreed that the conduct at issue involved transactions of at least $250 billion, even if the bank claims that it amounted to $14 million.

In his announcement on Tuesday, Lawsky said the bank had "agreed that the conduct at issue involved transactions of at least $250 billion." But he gave no details on what protections the deal gave Standard Chartered.

Standard Chartered believes that it limited its liability further by entering the deal, but what I'd like to know is where all this money is going to go. The money is being collected by the NYS DFS, and that potentially represents a windfall to the state. I'd like to see an accounting of these funds.

At the same time, there's still the potential for the Treasury Department to impose its own penalties against the bank. That could result in a comparable sum but it also highlights that banking and financial regulators have a long way to go before they can claim to have gotten these kinds of transactions to stop.

FBI Investigation of Trenton Mayor Mack Continues

Last week, I noted that the FBI was carrying out searches of Trenton Mayor Tony Mack, a Democrat. Those searches included stops at his home, office, and his brother. At the time, the FBI wasn't saying what they were looking for.

Today, they've announced that they're looking into bribery, fraud, extortion and money laundering charges.

Federal authorities also are investigating vendor contracts with the city, during a time frame that stretches nearly to the day Mack took office, the documents show.

The FBI investigation became public last week when agents conducted raids on Mack’s home and City Hall, among others.

Agents last week also searched the Ewing home of Joseph “JoJo” Giorgianni, who donated nearly $5,000 to Mack’s campaign during the run-up to the 2010 election.

Giorgianni is named in the documents as well, with federal authorities searching for records of any correspondence between him and city officials.

Nearly 30 agents searched City Hall on Thursday and left carrying boxes, milk crates, computers and documents. Officials have not said what the authorities found.

The FBI could not be reached for comment last night, and a spokeswoman for the U.S. Attorney’s Office declined to comment.

Mack is out of town on a vacation and is due back Monday, and a message left on his cell phone last night was not immediately returned. The mayor has not been charged with a crime, and it’s unknown if Mack has hired a lawyer.

City business administrator Sam Hutchinson, who has stepped in as acting mayor in Mack’s absence, could not be reached for comment on the FBI probe last night. “We’re just steering the ship while the captain’s away,” Hutchinson had said earlier yesterday.

The scope of the FBI’s search for evidence is in line with what opponents such as George Dougherty, an attorney representing a former city employee in a whistle-blower lawsuit against Mack, have been alleging since Mack took office.

Mack is currently on vacation for a couple of weeks (he's scheduled to return July 30), and has left the business administrator Sam Hutchinson in charge. Among the issues that critics have had with Mack is that he's replaced a bunch of those business administrators and put his cronies in charge of city operations at a time when the city can ill afford it (as if any city can really afford cronyism).

NYC Cuts New Deal To Redevelop Willets Point With Mets Owners

New York City has cut a new deal to redevelop Willets Point with the Mets ownership group. Willets Point has long been eyed for redevelopment. It's a neighborhood that is largely off the grid - it lacks sewer hookups and is a warren of junkyards and repair shops in the shadow of the gleaming new CitiField. Since construction got underway to build the stadium a few years back, Mayor Bloomberg had looked to get the redevelopment going.

Those efforts had stalled until now.

A new deal between the Bloomberg administration and a group of developers, including the owners of the Mets, will call for the remediation and redevelopment of a 20-acre area of the blighted neighborhood next to Citi Field, adding retail and ultimately new housing in a time frame that extends past an initial proposed 10-year plan, a person familiar with the agreement told The Associated Press.

The person requested anonymity because the person was not authorized to discuss the matter ahead of an announcement.

Under the agreement, the developers, Related Companies and Sterling Equities, would clean up the area and construct a mall on the west side of the ballpark. A 200-room hotel and “two retail strips” are part of the plan for the opposite end of the stadium, the New York Times reported.

Then, no later than 2025, they would start construction on a mixed-use component that would include housing and measure anywhere from 1.3 million square feet up to 4.5 million square feet. The founders of Sterling Equities are Fred Wilpon and Saul Katz, the owners of the Mets.

The redevelopment of the area, currently populated by auto-repair shops and junkyards and lacking infrastructure as basic as sewers, has long been a goal of Mayor Michael Bloomberg’s. In 2007, he announced a 10-year initiative that would bring homes and commercial space to the area.

The new agreement extends past that period, but the person speaking to the AP said that by the original end point of 2017, much would have been done including the vital first step of cleaning the area up and construction of some of the retail spaces.

Sterling Equities is run by Mets owners Fred Wilpon and Saul Katz, both of whom are embroiled in the ongoing fallout of the Bernie Madoff Ponzi scheme that defrauded investors. The Wilpons have been claiming that they were as much victims of the scam as everyone else, but the trustee has targeted funds owned by the Wilpons for reimbursing other victims.

The Mets have had a serious cash crunch for the better part of the past couple of years, and it's limited their ability to field competitive teams. They've also sold off minority ownership shares to investors to help raise funds for operations on and off the field.

So, how is it that the City thinks that Sterling Equities is in a financial position to make any of this happen?

One has to wonder whether they're actually going to be putting up any money of their own and are instead hoping for others to pay the way for them to move ahead on a deal that would benefit them financially in the long run.

Related Companies has deep pockets, and their real estate ventures includes getting another one of Bloomberg's pet redevelopment projects underway - the Hudson Yards. They've got the ability to get this done and they have the experience to build out combined retail and commercial space.

It would be really interesting and insightful to figure out the real working relationship here - and how it is structured.

Sources Reporting Pedro Espada Legal Fees Being Paid By Charity He Fleeced

This is Pedro Espada we're talking about here. Nothing would be beyond him. After all, he's claimed that the FBI and law enforcement were using black magic to secure convictions against him and his son (the jury did find him guilty on four charges that could send him away for up to 40 years, but mistrials were declared on the remaining counts against him and his son).

Sources are indicating that Soundview Healthcare Network is picking up the legal bill for his defense to the tune of up to $1.5 million.

Not only did convicted ex-state Sen. Pedro Espada Jr., treat the Soundview Healthcare Network as his personal piggy bank — he also made the taxpayer-funded clinic pay for his defense team, The Post has learned.

The financially crippled Bronx medical charity that Espada founded — and from which he was convicted this week of stealing nearly $500,000 — has forked over an estimated $1 million to $1.5 million more to pay for the thieving pol’s lawyers, sources told The Post.

“Soundview has been paying for his criminal defense,” a source said of Espada’s fees for his lead defense lawyer, Susan Necheles, and her assistants.

That's at a time when Soundview is turning away more and more of its clients and is finding a cash crunch due to the state and federal government turning off the Medicare spigot.

Normally, Soundview would tap an insurance policy to cover legal suits by its officials, but the insurance company refused to authorize the coverage because of the claims involved so Soundview officials (including Espada's relatives) took it upon themselves to pony up the funds for his defense. Don't count on any of that money getting reimbursed down the road either.

Friday Night News Dump: South Carolina Lt. Gov. Resigns In Disgrace Over Criminal Charges

It's the latest installment of the Friday Night News Dump. This is where bad news goes to lie under the radar. In this instance, we've got Republican, Lt. Gov. Ken Ard of South Carolina, resigning in disgrace over criminal charges of spending campaign funds on personal expenses and fabricating donations.

He entered guilty pleas shortly after resigning this afternoon.

Apparently as part of a plea deal, Mr. Ard appeared before Judge G. Thomas Cooper of Circuit Court in Columbia, S.C., and pleaded guilty to all seven misdemeanor charges lodged against him. Judge Cooper then sentenced him to five years of probation, a $5,000 fine and 300 hours of community service. He could have faced up to $35,000 in fines and seven years in prison.

The indictment, announced by the state attorney general, Alan Wilson, charged Mr. Ard with what Mr. Wilson said was an effort to create “the false appearance of a groundswell of political support” by reporting $162,500 in “fictitious or bogus campaign contributions.” He also spent campaign donations on personal items, including iPads, clothes, football tickets and family vacations, the indictment said.

This also qualifies as a name that party situation since Ard's party affiliation isn't discussed until deep into the article.

South Carolina Governor Nikki Haley issued a statement saying that Ard and his family are "good people" but the fact is that Ard has been under investigation for some time and that this was probably as good a deal as he could get.

And once again South Carolina politics is embroiled in scandal - prior to Haley, Gov. Mark Sanford got into trouble and admitted violating campaign spending laws and was censured by state legislators after confessing to an extramarital affair with a woman in Argentina (aka, hiking the Appalachian).

News Corp. Faces Expanding Scandal As More Reporters Arrested

News Corporation's The Sun faces a similar mess that sunk News of the World. In fact, the situation is even worse. Five more reporters were arrested for improper payments to police in a widening corruption and hacking scandal:

Four senior journalists from The Sun newspaper have been balied after they were arrested in dawn raids today over allegations of inappropriate payments to police.

In another devastating blow to News International police questioned five men from the paper on suspicion of corruption, aiding and abetting misconduct in a public office and conspiracy.

The five members of Sun staff, all believed to be men aged between 45 and 68, are thought to be deputy editor of the paper Geoff Webster, chief reporter John Kay, picture editor John Edwards, deputy news editor John Sturgis and chief foreign correspondent Nick Parker.

A 39-year-old Ministry of Defence employee and the 36-year-old member of the Armed Forces have also been bailed to a date in May, Scotland Yard said.

One other journalist from the newspaper is still in custody over the probe into inappropriate payments to police and public officials.

Fears that the latest arrests could lead to News International owner Rupert Murdoch closing the title as he did with the News of the World has led to the Australian reassuring staff of his commitment to the title.

The surprise move by police which comes on a day when nearly all Sun staff are out of its offices comes just a fortnight after the paper's former managing editor and three of its most senior journalists were also held and then bailed over corruption allegations.

This is part of an ongoing pattern of business carried out by News Corporation news outlets in the United Kingdom, and the carousel of editors and reporters that has gone between the newspapers shows that the problems are widespread and aren't necessarily limited to just The Sun (and the now defunct News of the World). That's why the investigations continue and arrests continue to be made.

But the real issue is that the culture of News Corporation aided and abetted these kinds of ethical and moral choices that have led to so many arrests.

Rupert Murdoch may be claiming that he's got zero tolerance for this kind of behavior, but his bottom line approach means that as long as his papers sell and he can out-scoop the competition, he'll look the other way. Thus far, he's saying that he wont shutter The Sun, even though the pattern of behavior at the paper is akin to that of News of the World, which he did close.

Pressure is only going to increase on Murdoch to shutter the paper, and will raise the stakes on his newspaper and reporting business even further.

News Corp. Settles With Victims Over Hacking Scandal

Jude Law, one of those who were victims of the hacking scandal, apparently settled with News Corporation for roughly $200,000:

The actor Jude Law received the highest disclosed payout of £130,000 damages plus costs as payments totalling £640,000 were made in 15 cases where the amount of amounts were made public.

The former deputy prime minister, John Prescott, received £40,000, Labour MP Chris Bryant received £30,000; Sadie Frost, Jude Law's former wife, received £50,000; and Gavin Henson, the Welsh rugby international £40,000. However, with damages from the other settlements and costs factored in, lawyers estimated that News International's bill could hit £10m.

That's an appallingly low sum considering what was going on here. It should also be sufficient to get further criminal charges going against all those involved in the scandal, particularly in the way some of the admissions were made.

Then again, the News Corp lawyers did their job too:

NGN made no admission as part of these settlements that directors or senior employees knew about the wrongdoing by NGN or sought to conceal it. However, for the purpose of reaching these settlements only, NGN agreed that the damages to be paid to claimants should be assessed as if this was the case."

They made sure that they limited liability and somehow managed to insulate key executives, made no further admissions, etc., but those admissions already made are pretty damning as it is.

Still, there are compelling reasons for a settlement by both sides. It would have been extremely costly and time consuming to the victims to pursue this in court while the bad press of delaying tactics would have harmed News Corp. Even if you're Jude Law, you don't have infinitely deep pockets to sustain a fight of this kind, despite the possibility of a jackpot verdict. News Corporation had every reason to delay and deny, but after a while that works against the company and they too want to limit the damage and potential of a massive verdict. It just came down to how much the sides were willing to forgo.

For News Corporation, it shows that they'll consider this as a cost of doing business and I wouldn't be surprised to see them engage in similarly disgusting behavior down the road. Heck, some of those involved in the scandal have ended up on their feet; one editor of News of the World landed on his feet at the New York Daily News as its editor-in-chief.

Carl Kruger Enters Plea Deal On Corruption Charges; Will Serve 9-11 Years In Prison

Former State Senator Carl Kruger from Brooklyn has entered a guilty plea in a wide ranging corruption case that will lead him to serve 9-11 years in prison. The Brooklyn Democrat was caught

Kruger and his close friend, Michael Turano, signed plea agreements this afternoon in federal court — Kruger pleaded guilty to four counts and Turano to one. Kruger admitted to performing official favors for clients of lobbyist Richard Lipsky in exchange for cash payments that were funneled through entities controlled by Turano.

According to the agreement, Kruger faces the prison time as well as restitution of between $15,000 and $150,000 for his crimes. He and Turano each agreed to forfeit $450,000 of their ill-gotten gains.

The charges include wire and mail fraud and bribery.

Kruger, Carl and Turano, Michael - Plea Agreements

Kruger was indicted earlier this year, along with Turano and Assemblyman William F. Boyland Jr stemming from dealings with hospital officials and Boyland was accused of having a no-show job. Boyland Jr. was acquitted in a trial last month. Another defendant, David P. Rosen, the former chief executive of the health care organization, MediSys, was convicted in September of conspiring to bribe Mr. Boyland.

SEC Bringing Civil Charges Against Former Fannie Mae and Freddie Mac Officials

The Securities and Exchange Commission has brought a civil fraud suit against six top officials at the lending giants Freddie Mac and Fannie Mae alleging that the officials misled the government and taxpayers about risky subprime mortgages the mortgage giants held during the housing bust.

Those charged include the agencies' two former CEOs, Fannie's Daniel Mudd and Freddie's Richard Syron. They led the companies when the housing bubble burst in late 2006 and 2007. The four other top executives also worked for the companies during that time.

The case was filed in federal court in New York City.

The SEC has entered into agreements with Fannie Mae and Freddie Mac over the scope of the suits and what may be accomplished. It's severing liability from the government-sponsored enterprises (GSEs) and seeking to place liability on the individuals in key decision-making positions:

Fannie Mae and Freddie Mac each entered into a Non-Prosecution Agreement with the Commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability. Each also agreed to cooperate with the Commission's litigation against the former executives. In entering into these Agreements, the Commission considered the unique circumstances presented by the companies' current status, including the financial support provided to the companies by the U.S. Treasury, the role of the Federal Housing Finance Agency as conservator of each company, and the costs that may be imposed on U.S. taxpayers.

Three former Fannie Mae executives - former Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Fannie Mae's Single Family Mortgage business, Thomas A. Lund - were named in the SEC's complaint filed in U.S. District Court for the Southern District of New York.

The SEC also charged three former Freddie Mac executives — former Chairman of the Board and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook, and former Executive Vice President for the Single Family Guarantee business Donald J. Bisenius — in a separate complaint filed in the same court.

"Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, Director of the SEC's Enforcement Division. "These material misstatements occurred during a time of acute investor interest in financial institutions' exposure to subprime loans, and misled the market about the amount of risk on the company's books. All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country's investors."

The SEC is seeking financial penalties, disgorgement of ill-gotten gains with interest, permanent injunctive relief and officer and director bars against Mudd, Dallavecchia, Lund, Syron, Cook, and Bisenius. Both lawsuits allege that the former executives caused the federal mortgage firms to materially misstate their holdings of subprime mortgage loans in periodic and other filings with the Commission, public statements, investor calls, and media interviews. The suit involving the Fannie Mae executives also includes similar allegations regarding Alt-A mortgage loans. The suit against the former Fannie Mae executives alleges they made misleading statements — or aided and abetted others — between December 2006 and August 2008. The former Freddie Mac executives are alleged to have made misleading statements — or aided and abetted others - between March 2007 and August 2008.

The key fact that will be at issue is how these officials misled the public by claiming that their respective companies' exposure to the subprime mortgage mess was far smaller than it actually was.

It was the implosion of the subprime mortgage market that sent a shaky economy into a recession of unprecedented levels.

Corzine Continues Getting Grilled on Capitol Hill

Disgraced former New Jersey Governor Jon Corzine continues to avoid making the big gaffe that might land him in a perjury trap over testimony given on the MF Global debacle, but he's not out of the woods just yet.

Corzine thought he could turn MF Global in to a new and improved Goldman Sachs. He brought in the same kind of attitude and risk-taking that he brought at Sachs. But because MF Global didn't have the size and track record, once those risks (namely the sovereign debt in Europe) became monetized, the company didn't stand a chance and everyone wants to make sure they got their money covered. Forced to pony up additional collateral the company was left scrambling to find someone to buy them out, and it was in that process that the potential buyers found all kinds of discrepancies - most notably the fact that client funds were being used for corporate purposes.

That was the first of many red flags that sent the company into bankruptcy.

And it was Corzine who was pushing to get MF Global more heavily invested in the European sovereign debt, because he thought he could make a bunch more money there than on other less risky propositions. He and his board ignored and side stepped risk managers who pointed out the problems with the strategy.

Yet, CME Chairman Terrance Duffy contradicts Corzine's testimony:


Corzine denies knowing about the transfers of client funds, even as evidence is emerging to the contrary.

CME Group Inc. Executive Chairman Terrence Duffy told a Senate panel Tuesday that Corzine might have known about a transfer of $175 million from customer accounts earlier than that. CME Group operates exchanges on which MF Global traded. It also was responsible for auditing some of MF Global's books.

According to Duffy, an MF Global employee told a CME auditor that "Mr. Corzine was aware" of the transfer. Duffy said he referred the matter to the Justice Department and the Commodity Futures Trading Commission. Both are investigating MF Global's failure and the disappearance of the customer money.

If true, Duffy's accusation would raise the possibility that Corzine misled Congress about when he learned that client money was missing.

The transaction Duffy described wasn't necessarily illegal. Brokers such as MF Global are allowed to borrow from customer accounts temporarily in some circumstances -- to reduce their own risk, for example.

But such cases are a narrow exception. A firm couldn't use customer money to pay trading partners if its speculative trades lost value. Even in cases where borrowing clients' money was legal, the firm would have to replace it with a safe, cash-like investment such as a U.S. Treasury security.

If that can be confirmed, then Corzine's got bigger problems considering he's testified that he didn't know about any transfers and that may lead to obstruction of justice and perjury charges.

And to think that Corzine thought he might get tapped by President Obama to be Treasury Secretary. Obama's probably thanking his lucky stars he didn't make that move.