Sheldon Silver’s Conviction Was Overturned. What Does It Mean for Albany Corruption?
The court decision also raises questions about real estate lobbying at the state capitol
By Rebecca Baird-Remba August 3, 2017 9:45 amreprints
Two weeks ago, a panel of federal appeals court judges overturned the corruption conviction of former New York State Assembly Speaker Sheldon Silver, who was found guilty of taking more than $4 million in bribes in exchange for doing political favors.
After four decades of representing the Lower East Side of Manhattan, the 73-year-old Silver was convicted of honest services fraud, extortion and money laundering on Nov. 30, 2015. He was sentenced to 12 years in federal prison in May 2016. His case and subsequent downfall captivated New Yorkers, who watched federal prosecutors take down one of the state’s most powerful men in a trial that epitomized the culture of influence peddling in Albany.
The Second Circuit Court of Appeals based its recent decision on a Supreme Court case involving former Virginia Gov. Bob McDonnell, whose corruption conviction was vacated last year in a landmark decision. In the July 2016 ruling, Chief Justice John Roberts narrowed the definition of what actions politicians must have taken to be prosecuted for corruption. To convict McDonnell, the government had to show he had committed “official acts” in return for receiving $175,000 in loans, gifts and other benefits from a Virginia businessman. McDonnell allegedly let his benefactor throw a luncheon at the governor’s mansion and arranged meetings for him with state officials. The Supreme Court decided that official actions needed to involve formal government actions, like holding a hearing, filing a lawsuit or drafting legislation, rather than political favors like arranging meetings or helping someone secure a job.
The dramatic reversal of Silver’s case raises concerns about whether prosecutors will be able to build strong corruption cases against legislators in the future. Federal prosecution and potential prison time are the strongest deterrents to ethically questionable behavior in Albany and at City Hall.
“I think it’s important that the U.S. Attorney keep the spotlight on,” said William F.B. O’Reilly, a veteran Republican political consultant and partner at communications firm The November Team. “There has to be the omnipresent fear that someone is looking over your shoulder.”
He suggested that state lawmakers, who were shocked by Silver’s conviction, may breathe a sigh of relief knowing that simply trading political favors is unlikely to land them in jail.
“It will largely return Albany to business as usual,” O’Reilly said. “It’s not all a bad thing. Before McDonnell, the law kind of froze Albany in place, where the routine business of doing favors for each other was halted because people were afraid of being yanked into court. People need to be able to do the business of politics, which includes doing favors here and there.”
In the July 13 decision, three appeals court judges wrote that a jury may not have found Silver guilty of corruption under the new standard for “official action” set by the Supreme Court.
“Like the improper instruction in McDonnell, the plain language of the [jury] instruction at Silver’s trial captured lawful conduct, such as arranging meetings or hosting events with constituents,” Judge Jose Cabranes wrote in the ruling.
“We cannot conclude, beyond a reasonable doubt, that a rational jury would have found Silver guilty if it had been properly instructed on the definition of an official act,” he continued.
Silver orchestrated two quid pro quo schemes in which he performed official government acts in exchange for kickbacks and bribes from a cancer researcher and two real estate developers.
In one arrangement, he had Glenwood Management and the Witkoff Group send tax business to a law firm called Goldberg & Iryami, which secretly shared some of its fees with Silver. In return, he pushed for rent regulation and tax abatement legislation that Glenwood wanted and voted through tax-exempt financing for many of its projects.
The speaker also arranged for the State Health Department to award $500,000 in research grants to Columbia University cancer researcher Robert Taub. Taub paid him back by steering dozens of cancer patients with potentially lucrative legal claims to Weitz & Luxenberg, another law firm that shared fees with Silver.
The appeals court writes that these two situations would still compel a jury to convict the former speaker under the McDonnell standard. However, the judges argue that federal prosecutors, led by then-U.S. Attorney Preet Bharara, presented evidence at the month-long trial that can no longer be used as the basis for a corruption charge.
As an example, the court highlighted how prosecutors used a letter that Silver wrote to help Taub’s son get a job at a nonprofit organization. The letter “did not rise to the level of an ‘official act,’ ” the judge wrote. Thus a jury would have been unlikely to find Silver guilty based on the new rules for bribery law.
Nevertheless, federal prosecutors have pledged to retry Silver, who served in the Assembly from 1976 until his resignation in 2015. Joon H. Kim, the acting U.S. Attorney for the Southern District of New York, said in a statement, “Although this decision puts on hold the justice that New Yorkers got upon Silver’s conviction, we look forward to presenting to another jury the evidence of decades-long corruption by one of the most powerful politicians in New York State history.”
Bharara, who was dismissed from his U.S. attorney post by the Trump administration in May, fired back against the court decision on Twitter.
“The evidence was strong,” he tweeted. “The Supreme Court changed the law. I expect Sheldon Silver to be retried and reconvicted.” (Bharara didn’t immediately respond to a request for comment via his assistant.)
Legally, Silver is by no means out of the woods; he may very well be retried and convicted. Consequently, some Albany watchers claim that his initial conviction has had a much bigger impact on politicians’ behavior than the recent decision to throw out the conviction.
The reversal of the case doesn’t mean anyone is getting let off the hook, said Hank Sheinkopf, a Democratic political consultant who’s been advising local and national campaigns for more than 30 years.
“If indicting members of the state assembly is not an indication that corruption is being fought in the state, then I don’t know what to tell people,” Sheinkopf said. “To indicate that this is a failure in the system is wrong. It’s an indication that the system works.”
The long-term effect of overturning Silver’s conviction won’t be clear until he’s retried, said Susan Lerner, who heads the New York branch of corruption watchdog group Common Cause.
“If he’s found guilty on the retrial, as the prosecutors expect, then I think it makes it even clearer that this conduct is not only unacceptable but illegal,” she explained. “The conduct was truly shocking. And I don’t think anyone can defend it. We believe [it’s] another misguided interpretation of the law by the U.S. Supreme Court.”
Despite the recent legal reversal, watching prosecutors take down the most powerful man in Albany has had a lasting effect on politicians’ behavior.
“There have been dozens of people in Albany indicted [and] convicted,” said Susan del Percio, a Republican political strategist who heads her eponymous communications firm and once advised Gov. Andrew Cuomo. “But someone at Shelly Silver’s level, the fact that he couldn’t make it go away” certainly made lawmakers more cautious.
“It wasn’t like he was exonerated for his crimes,” she continued. “It’s not like they said he’s overturned because he didn’t do it.”
The new ruling also revived a debate about what the city and state should do to combat political corruption, which has ballooned in recent decades along with the rise of large and hard-to-trace campaign contributions from limited liability corporations (LLCs).
New York’s campaign finance law has a gaping loophole that allows LLCs to contribute up to $60,800 a year to any statewide candidate, just like individuals. Corporations, meanwhile, are limited to $5,000 a year in total political donations. LLCs can be registered to ambiguous shell companies rather than individuals or identifiable firms. The legal setup allows one group to make multiple LLCs and contribute the maximum to a candidate from each of the corporations.
“If you own LLCs, there are no limits for you,” said Larry Norden, the deputy director of the Democracy Program at the Brennan Center for Justice. “There are people who have given millions of dollars to candidates through LLCs. I think that contributes to the culture of corruption when you have that kind of money sloshing around.”
Capping LLC contributions and empowering the state Board of Elections to effectively enforce campaign finance laws would go a long way toward preventing shady financial activity, Norden explained.
Legislators should also be forced to disclose where they’re earning income outside their salaries and identify their clients in outside businesses, he argued. The state could even limit how much cash lawmakers can earn from side work.
“I think there needs to be a campaign finance and ethics overhaul up in Albany,” he said, “and more basically just a change to the way the legislature operates so that average citizens have more of a voice in the entire process. When things are done behind closed doors and you have a lot of dark money through various conduits going to legislators, it’s going to result in things that are bad and not in the public interest.”
Technically, New York’s state senators and assembly members are part-time legislators, which allows them to work other jobs on the side. The practice often creates situations like Silver’s, in which lawmakers receive bribes in their nongovernment jobs in exchange for taking legislative action.
Since 2003, 33 state legislators have left office due to criminal or ethical issues, and five have departed for those kinds of reasons in the last two years, according to political watchdog group Citizens Union.
New ethics legislation has long been floated as the answer to Albany’s graft problem. But last month marked the end of another legislative session where lawmakers failed to deal with several ethics proposals. Those bills include measures to close the LLC loophole, restore independent oversight to state-backed contracting and economic development projects and restrict contributions to political parties’ “housekeeping accounts,” which aren’t closely monitored by the state but are supposed to be used exclusively for operations.
However, ethics legislation won’t do much to prevent criminal activity unless there is a fundamental shift in incentives for state politicians and in the way the legislature operates, O’Reilly argued.
“New laws aren’t going to stop corruption in the heart of man,” he said. “It’s ethics that does that. What’s happened is that the cultural ethic in Albany has deteriorated over the last several decades. There is an absence of nobility, of right and wrong. That doesn’t come from the law: It comes from individuals.”
Many observers say that Albany’s culture needs to be dramatically reformed because legal enforcement alone will not root out corruption and unethical behavior.
“The fact that Silver’s conviction is reversed has nothing to do with that culture,” said attorney Lawrence Mandelker, a partner at Kantor Davidoff who specializes in election and campaign finance law. He argued that politicians’ behavior will shift “when someone doesn’t get elected because of an ethical cloud over his or her head. When the voters demonstrate it’s important to them, it will change.”
An aggressive prosecutor helps keep the heat on ethics violators. But it’s not a long-term solution to the legislature’s recurring issues with fraud and malfeasance, Mandelker noted.
Even Bharara, who built a crusading public image by going after corrupt New York politicians (and investigating Cuomo), acknowledged that prosecutors are only one piece of the enforcement puzzle.
“Prosecutors alone are not going to solve the problems,” he told The New Yorker in a May 2016 profile. “I can say that when you have an overabundance of outside income for legislators, when you have an overconcentration of power in the hands of a few people and when you have a lack of transparency about how decisions are made and who makes them—that it is our job to point that out.”
Although Albany has scuttled ethics reform time and time again, legislators did take a small step toward punishing crooked activity early this year. In January, the state legislature approved a bill to revoke pensions from public officials who have been convicted of a felony “related to his or her duties.”
The proposal, which will go before voters across the state on the ballot this fall, will help serve as a deterrent to corruption and hold officials accountable to the public for unscrupulous behavior, said del Percio, who co-founded a now-defunct communications firm with O’Reilly.
Term limits would also go a long way toward curbing double-dealing in the capitol, O’Reilly suggested.
“People are up there 30, 40 years, and what happens is they develop cozy relationships,” he added.
Ultimately, the lack of reform, Silver’s conviction being overturned and the revolving door of criminal cases involving state legislators have further deepened the public’s distrust for Albany.
“The public alternates between wanting to storm the capitol with pitchforks and wanting to throw up their hands,” O’Reilly said. “When you see Silver walking, you think, ‘What the hell? This is a guy who made millions off his position.’ And it’s disheartening to anyone who thinks change can come to New York.”