How Sheldon Silver Became a Convicted Felon Thanks to Shady Real Estate Relationships

“I think, considering how he left office, it’s a tarnished legacy,” said Assemblywoman Amy Paulin, a New Rochelle Democrat who testified about the workings of the Assembly for the prosecution at Silver’s trial. “People are going to remember the good he did, but they’re going to remember the conviction, as well. And so you can’t help that everything he did is going to be seen through a different lens.”

“In his own way—there are many Robert Moses analogies here—he understood city-state relationships, the structure of the state legislature,” one of the top brokers in the city told Commercial Observer on condition of anonymity. “And over a period of many years, little by little, [he] morphed that structure in such a way that the state took more and more control of the city.”

If Silver’s fall from power was surprising, perhaps so was his ascent in the first place. Despite the money he was convicted of making, he’s typically described as modest and humble. For one of the state’s most powerful people, his profile was so low that a cadre of political reporters, some of whom had been on the Albany beat for years, were unable to determine whether his wife, Rosa, was in attendance on the first day of his trial—because they didn’t know what she looked like. Asked to describe the 71-year-old Orthodox Jewish politician from Grand Street, the people interviewed for this story essentially thumbed through every synonym for “quiet.”

“He’s kind of a laconic guy,” said Rick Lazio, a former congressman who ran for governor as a Republican and once visited Israel with Silver, who is now a columnist for Commercial Observer and an attorney with Jones Walker. “Not prone to bragging, family-oriented, obviously Orthodox, religious—not who you would associate with sort of a glad-handing, stereotypical politician.”

And yet Silver somehow became the state’s consummate politician, the textbook example of a wheeler and dealer. How did the man with the monotone voice and the long black overcoat become the figure both tenant advocates and real estate developers turned to when they needed something, the man who could hold up major projects on a whim?

“He won!” offered Mel Miller, a former Democratic Assembly speaker who himself was indicted while in office (his subsequent conviction was overturned on appeal). “You gotta win.”

In 1976, that meant winning within his district on the Lower East Side, where Silver was a creature of the Democratic political clubs—and then holding onto the seat, which was relatively easy considering it was safely Democratic, and easier as he became more powerful and brought home more pork.

“Basically, he won the seat in ’76—he had just lost the year before for a shot at the City Council… He just worked his way through. He moved up the committee scale—there was a lot more movement in those years than there appears to be now,” Miller said, noting he himself appointed Silver to a key spot leading the Committee on Codes. “I jumped him in terms of class and in seniority,” Miller said. “He was good—he was very smart.”

In 1990, Miller was indicted for fraud relating not to his public office, but to co-op deals, and eventually convicted. Saul Weprin became speaker, and he, too, saw something in Silver: appointing him to Ways and Means, another seniority leap that surprised people. Mr. Weprin suffered a stroke three years later.

“I think there was a void. I don’t think there were a lot of serious challengers. It just—it happens,” Miller said. “There was really no chem test: Shelly just moved into the spot, I think, without opposition.”

Silver’s personality was markedly different than Miller’s, the former speaker noted, and from prior speaker, Stanley Fink’s—both of whom were, as Miller put it, outspoken. But in the power structure of the Assembly, Silver’s taciturn demeanor proved a benefit.

“With Shelly, it wasn’t so much about personal chemistry and form,” said Kenneth Fisher, a former city councilman and lobbyist with Cozen O’Conner, “as it was about admiration for his ability to dig in his heels, and ignore the noise in the background from advocates and the media and from others—and even the ability to stand up to the governor, and stand up to the Senate Republicans and simply just say ‘no.’”

To understand Silver’s rise, and his hold on power, you have to understand Albany—which can be asking a lot. Despite a large two-house legislature, comprised of members of the Assembly and the Senate from all over a sprawling state, the biggest decisions are made behind closed doors by three men: the Assembly speaker, the Senate leader and the governor.

“Traditionally, there has been a concentration of power in the leadership—three men in a room is not something that was invented by Shelly Silver,” said Susan Lerner, the director of good government group Common Cause. “So he stepped into a situation where there was a tremendous amount of power concentrated, and he was able to use certain aspects and failings of our law to, as I think his predecessors did, to really hold onto and concentrate that power.”

For most of the last few decades, there’s been something of a stalemate: the Assembly has been controlled by Democrats and the Senate by Republicans, which prompted a system apt to deal-making.

“Either house could stick their foot in the wheels, and so it wasn’t ideological as much as institutional that at every opportunity, if you were one of the leaders, you would make trouble—and then government had to go on, and so you would get something in exchange,” Mr. Fisher said. “And if upstate got something, then downstate had to get something.”

Silver carved out a legacy on the education front—he was a fierce advocate of the teachers union—but it seemed so many of the controversial, last-minute votes were on real estate and rent laws. Rent legislation seemed to forever be renewed at the very last minute, just hours before the session would end and the laws would expire, written behind closed doors by the leaders and their staffs, voted on without being read by legislators.

“It’s the way things work in Planet Albany,” said Michael McKee, the treasurer of Tenants PAC, one of the most influential pro-tenant groups. “It’s like the normal rules of physics don’t apply. These guys have been up there so long, they think the way the legislature functions is normal. And unlike Congress and some state legislatures, the members of the New York State Legislature voluntarily turn over their power to the leader.” (Mr. McKee also volunteered a 19-page history of Silver’s relationship to rent regulation entitled, “How the Landlords Weakened Our Rent Laws” which he shared with CO.)

Of course, not everybody sees it the way Mr. McKee does, particularly those who are involved in the real estate business.

“He was able to take a circus of lunatics called the Democrats in the State Assembly, and he wouldn’t give them everything they wanted,” said Adam Leitman Bailey, a real estate attorney with his eponymous firm. “He was able to make them compromise in order to accept a more reasonable slate of issues on rent regulation and tax abatements for builders. The lunatics wanted to go back to socialist and communist Russia, and he would moderate it. He said here: ‘this is all you’re getting and be happy with this, because I can’t get you any more.’ ”

In those negotiations, the traits that might have made Silver a lousy candidate with the general public made him a favorite of his peers.

“From that point of view, Shelly’s obstinacy, his reticence to commit to issues, his very limited public persona, all enhanced his bargaining position—because sooner or later people needed him for something,” Mr. Fisher said.

Silver’s power came from the Democratic conference, the majority of which was from New York City, and for them and their constituents, rent—which somewhat inexplicably is still governed not by city but by state law, long after the city’s fiscal crisis—was a key priority, but was unpopular in the Senate. In the Senate, pro-business and pro-real estate Republicans were forever pushing for renewals of the 421a tax credit, used by developers to build luxury housing, but that was unpopular in the Assembly.

“Rent stabilization became the fulcrum for all other discussions involving real estate,” Mr. Fisher said. “And one of the perversities, also, is putting sunset clauses in this stuff—so that on the one hand it forces the legislature to come together to recognize changes that may be needed by different conditions—on the other hand it also forces both landlords and tenants to go to Albany every couple of years and to beg for renewal and changes, and then they tie it to 421a. It was mutually assured destruction.”

The Senate gets 421a, the Assembly gets rent stabilization, everybody’s happy. Not quite, says Mr. McKee, who argues Silver’s self-proclaimed role as tenant protector was in doubt long before he was convicted of getting kickbacks from Glenwood, one of the city’s biggest landlords, while considering legislation crucial to their business. (A Glenwood spokeswoman declined to comment.)

“Shelly essentially screwed us three times,” said Mr. McKee, referring to three fights over the renewal of rent laws: in 1997, 2003 and 2011. (Rent regulations were next up for renewal in 2015, but because their role in the Silver and Republican State Senate Leader Dean Skelos’ corruption trials was so toxic, they were passed a week late. The 421a tax credit, meanwhile, was extended for six months to give stakeholders more time to work on it, but remains deadlocked.)

Perhaps the most painful moment for tenants was in 1997, when Mr. McKee said that Silver was at first the hero he was supposed to be to tenants—standing up to Senate Leader Joseph Bruno and Gov. George Pataki in the early and public days of the “1997 Great Rent War.” But things changed, Mr. McKee said, behind closed doors, particularly around vacancy decontrol.

“He sold us out in 1997, when he agreed to a staggering array of deregulation amendments,” Mr. McKee said, some of which he believed Silver didn’t understand the impact of, and some of which he believed Silver gave up in exchange for extending the law six years rather than four. “Well, what’s the point of extending them if you’re putting poison pills into the system that are going to destroy the system over time?”

In 2003, Mr. McKee said, it seemed Silver was outmaneuvered by Mr. Bruno, who Mr. McKee said welched on a handshake deal not to make changes to rent laws, passed a bill weakening them and then left Albany at the end of the session—leaving Silver with little choice but to pass it. Silver was often regarded as both a tenant advocate and a great negotiator. Asked on which end he believed Silver failed in 1997 and 2003, Mr. McKee responded: “I think it was both.

In 2013, the Assembly passed legislation that contained big tax breaks for five city developers, including Extell Development Company, builder of the massive, luxury high-rise known as One57 that tenant advocates often point to as a symbol of all that’s wrong with housing in New York. Assembly Housing Chairman Keith Wright was reportedly furious with Silver for asking him to carry the bill and for presenting the legislation to him as a routine matter. (Extell did not respond to requests for comment.)

“On any certain area, he had a lot of power—whether it was real estate or anything else, because we trusted him to do what we thought was in the best interest of the conference. That’s what it was all built on—it was built on a trust that he was going to be trying to get the best deal for that group as a whole,” Ms. Paulin, the New Rochelle Democrat, said. Her district doesn’t have many tenants, but she knew it was an issue that was important to her fellow Democrats from the city. “I just always felt like he must be doing the right thing, and of course everything that came out in the trial makes you feel suspicious he didn’t. As a member, you felt the same disappointment the people felt—maybe more.”

He held that power with an iron fist: when Michael Bragman, the majority leader of the Assembly out of Syracuse, attempted a coup in 2000, Silver shut it down—and stripped him of his powers, essentially running him out of the Assembly.

Silver’s power over real estate wasn’t limited to rent and tax legislation. He was a key figure in getting approval for projects, or killing them, particularly those that needed approval by the Public Authorities Control Board—like Mayor Michael Bloomberg’s dream of a stadium on the West Side of Manhattan, and his plans to revitalize Penn Station by developing the Farley Post Office into Moynihan Station. The governor, the Assembly speaker, and the Senate leader each appoint a board member: in the cases of the stadium and Moynihan Station in 2006, Silver’s member voted no.

Silver’s corruption conviction leaves people to wonder, Mr. Bailey said, why he knocked down those projects—and if it’s because he wasn’t getting some money through them.

“No one will ever know the answer to that,” Mr. Bailey said. “But because of everything that happened, he probably wasn’t getting the money he was supposed to be getting.”

Mr. Fisher said he believed Silver was “channeling his members” on those issues.

“In the absence of a reason to shove it on them, he basically was willing to take the heat for them—and that’s one of the things that members have said to me that they really appreciated about him,” Mr. Fisher said. “He was the lightning rod in most cases and not them.”

He kept a chunk of Lower East Side, known as Seward Park, vacant for decades—resisting the call for affordable housing there in the Ed Koch era. It was eventually sent out to bid for the mixed-use project now known as Essex Crossing. Developers were required to team up with a nonprofit for the project; among the teams that applied was the duo of Forest City Ratner and the Met Council, headed by Silver’s good friend, William Rapfogel, who is also the husband of his longtime chief of staff, Judy Rapfogel. The Rapfogels’ son worked for Ratner. William Rapfogel was arrested—and was later convicted of stealing from his own charity—during the bidding process, which was won by L+M Development Partners.

“When we got involved, Silver was not very involved in this,” Ron Moelis, chief executive officer of L+M Development Partners, which is building Essex Crossing, said. “I’ve actually never spoken to Sheldon Silver in my life—which is amazing, given the number of projects I’ve been involved in.”

Mr. Silver also wielded considerable sway over judicial appointments—many have noted the recently retired Chief Judge Jonathan Lippman was his childhood friend. That, too, had an impact on real estate, since so many cases go to court, Mr. Bailey said. “Many real estate deals or disputes rise or fall based on the judge’s decisions, and he had tremendous power over those judges.”

On a more local level, The New York Times wrote recently about the prominent role he played in blocking the relocation of a methadone clinic to his district. Some of that was just good politicking, Mr. Fisher said.

“He cares about the people who elected him—so he worked those Grand Street projects really hard. Nobody had to give him a campaign contribution to get him opposed to a methadone clinic,” Mr. Fisher said. “And then he learned to work the new residents in the Financial District hard. He learned to work the Chinese community. And because he was the speaker, he was able to allocate himself a sufficient staff to be able to manage it.”

That speaks to Silver’s complicated legacy in his district—the only piece of New York where he did have to appeal to everyday voters, not just Assembly Democrats. Even those outside his power apparatus, like Jeanne Wilcke, the president of the Downtown Independent Democratic Club, say Silver’s legacy there is mixed. Some people refuse to believe he could have been crooked, she said, despite the conviction. Others say he did some good things, but they are disappointed in how it all ended.

“There’s also the acknowledgment that you lost a heavyweight who, when you really needed him to do good stuff, could get it done for Downtown Manhattan,” Ms. Wilcke said.

So while the speaker’s position has gone to the Bronx, filled by Carl Heastie, Silver’s conviction leaves a significant power void in Lower Manhattan, which Ms. Wilcke called “the center of the universe.”

And some are just glad it is over.

“I even heard that on Grand Street—where Silver lives and there are people who will support him to the end of the Earth, that there was actually a very quiet undercurrent of people who were breathing that sigh of relief,” she said, “who were coming out from under the mattress, finally. Because this has been decades.”

—With reporting by Max Gross and Lauren Elkies Schram.