This article was published by The McAlvany Intelligence Advisor on Wednesday, December 2, 2015:
Preet Bharara’s resume is impressive. Born in India and raised in Eatontown, New Jersey, he graduated from Ranney School, an independent, highly-regarded college preparatory school, in 1986 as valedictorian of his class. From there he went to Harvard College, graduating magna com laude (with great honor) four years later. He received his J.D. (juris doctor) in 1993 from Columbia Law School where he served on the Columbia Law Review.
After a stint as Sen. Chuck Schumer’s chief counsel, he served as an assistant U.S. Attorney in Manhattan for five years, successfully prosecuting bosses of the Gambino and Columbo crime families.
When he was nominated for U.S. Attorney for the Southern District of New York by President Obama in 2009, he breezed through Senate confirmation with no dissents.
Since that time he has scored impressive victories, prosecuting successfully more than 100 Wall Street executives and traders, including Raj Rajaratnam, who was convicted on 14 counts of insider trading. He successfully prosecuted others as well, getting 85 straight convictions before losing one.
He went after the country’s three largest banks – Citibank, JPMorgan Chase, and Bank of America – obtaining settlements totaling nearly $10 billion from them for selling risky loans and helping Bernie Madoff hide his Ponzi scheme from regulators.
And so, when the Moreland Commission was terminated in a flurry of controversy in 2014 by New York Governor Andrew Cuomo, Bharara took over. One of the leads the commission was following was a subpoena issued on Sheldon Silver, then the Speaker of the New York State Assembly, in an attempt to find out what kind of work he did for two law firms that paid him more than $4 million while he was speaker. The commission, and then Bharara, wanted to know if there was any conflict of interest, whether Silver was using his position as Speaker to generate referral fees from them in collusion with their clients.
The investigation ended badly for Silver as two cases of undue influence, honest-services fraud, extortion, and money-laundering were presented to a jury last month. Silver was charged with seven counts and the jury returned a verdict of guilty on all seven on Monday.
The two plots exposed during his trial spelled his downfall. While serving as Speaker, Silver directed $500,000 of taxpayer monies, through grants, to oncologist Robert Taub, who was doing cancer research. Taub, in turn, sent patients needing legal services to Silver’s law firm, Weitz & Luxenberg, PC. In return, W&L sent Silver millions in referral fees.
In the other one, Silver negotiated state tax breaks to a real estate developer (a major donor to Silver), which then used another law firm, Goldberg & Iryami PC for its own personal needs. G&I paid Silver referral fees in the quid-pro-quo deal.
Together Silver received $4 million in fees for those referrals.
Silver’s resume is far less impressive. Receiving a BA degree from Yeshiva University in 1965 and a J.D. from Brooklyn Law School in 1968, he went to work for Weitz & Luxenberg, a personal-injury law firm. He was first elected to the New York State Assembly in 1976 and began to build a politician’s career based on power, influence, intimidation, and fraud.
In 1994 he was elected Speaker and was repeatedly reelected until his arrest in January. He resigned the position, keeping his seat. He lost that automatically on Monday following his conviction.
So powerful was Silver that when Michael Bragman, the Assembly’s majority leader, tried to oust him, Silver stripped him of not only his position but forced him to resign his seat as well. The Buffalo Times commented at the time:
The problem – which also exists in the State Senate – can be boiled down to a single overarching issue: The Assembly speaker has too much power. 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.
Silver’s most prized position was that of being “one of the three men in the room” – a triumvirate which directed legislation, budgets, and votes in both houses. The three included Silver, Dean Skelos (majority leader of the state senate), and Governor Andrew Cuomo.
Ironically, it was Cuomo who set in motion the investigation that led to Silver’s conviction, and might just lead to his own. Running for office in 2010 on a platform promising reform and exposure of corruption, Cuomo set up the Moreland Commission to Investigate Public Corruption in 2013. Its aim was to investigate politicians and political organizations in New York for violations of state laws regulating elections, campaigns, and political fundraising.
When the commission began to uncover connections to Cuomo, he terminated it in 2014, claiming that his commission wasn’t allowed to investigate himself or his administration. His response to critics who saw what he was doing to protect his own interests is classic:
The Moreland Commission was my commission. It’s my commission. My subpoena power, my Moreland Commission. I can appoint it, I can disband it. I appoint you. I can un-appoint you tomorrow.
With another successful prosecution under his belt, Bharara is no doubt looking for another target. He must feel like a mosquito at a nudist camp: With all this opportunity, he must scarcely know where to begin.
He might begin by looking at Silver’s replacement as Speaker. Not surprisingly, the politician who took Silver’s position when he was arrested back in January, Carl Heastie (pronounced Hasty), found himself right at home in Albany’s sea of political corruption. It was learned in April that Heastie, in defiance of a judge’s order, failed to sell the home he inherited from his mother when she went to jail for stealing the money she used to pay for it. Helene Heastie embezzled nearly $200,000 from a non-profit and Carl was ordered to sell it and return the funds. Instead Carl sold his mother’s home and kept the money (and the profit, some $200,000) for himself, using those funds to buy the home in which he now lives.
Bharara is afloat on a veritable sea of opportunity.
Wall Street Journal: Sheldon Silver Conviction Shakes Albany
New York Post: What Silver’s guilty verdict means for the State Assembly
New York Post: Sheldon Silver found guilty on all counts in corruption trial
New York Post: Behind Sheldon Silver’s dramatic fall from grace
New York Post: Shelly Silver’s conviction is an indictment of Albany’s entire political culture
Wall Street Journal: Sheldon Silver Conviction Shakes Albany
Definition of honest-services fraud
Background on the Moreland Commission
New York Daily News: Assembly Speaker Carl Heastie denies benefitting from money embezzled by his mom
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