Speaker Sheldon Silver's corruption arrest stuns Capitol

ALBANY – The Capitol was rocked again by scandal as Assembly Speaker Sheldon Silver, one of the most powerful leaders in New York, was arrested Thursday on federal corruption charges that alleged he was involved in a multimillion-dollar kickback scheme for more than a decade.

Just as the legislative session was slated to start in earnest, Silver's arrest in Manhattan on a five-count complaint put state business on hold, and it led to questions about how the Legislature would function under the cloud of Silver's arrest.

"I'm shocked," Assemblywoman Barbara Lifton, D-Ithaca, said in the halls of the Capitol. Most Democratic colleagues rallied around Silver; Republicans called for his ouster.

Federal prosecutors charged that Silver, 70, the speaker since 1994, was in a scheme since at least 2000 to defraud the public and use his power to obtain at least $6 million in income from two outside law firms. Prosecutors said about $4 million of that came in kickbacks from real estate developers and referrals in asbestos cases in New York City. Silver was taken into custody shortly before 8 a.m. In the afternoon, he was released on $200,000 bail. Amid a swarm of reporters, Silver said, "I am confident that when all the issues are aired I will be vindicated."

U.S. Attorney Preet Bharara alleged that Silver, D-Manhattan, used New York's porous ethics laws to become wealthy. The FBI froze $3.8 million of Silver's savings from six banks in eight accounts. He could face more than 20 years in prison on each count if convicted.

"Over his decades in office, Speaker Silver has amassed titanic political power, but as alleged during that same time, Silver also amassed a tremendous personal fortune to the abuse of that political power," Bharara said.

Silver's arrest was the highest-profile case since Gov. Eliot Spitzer resigned in 2008, and it again sent shock waves through a Capitol that has seen nearly 40 lawmakers caught in scandal since 2000. It also raised new questions about a corruption-busting panel that Gov. Andrew Cuomo, who has vowed to clean up Albany, shut last year as it was looking into Silver's outside income and a dozen or more other cases.

Silver has had the longest tenure of any leader at the Capitol, and his ability to negotiate on behalf of his Assembly colleagues earned him their loyalty. But he can be formidable: When a leadership coup failed in 2000, his foes were punished by losing committee posts.

The 35-page complaint alleged Silver received payments from the law firms but didn't do any legal work. It said Silver got at least $5.3 million from personal-injury law firm Weitz & Luxenberg in Manhattan since late 2002. The complaint also alleged Silver "took legal action and other steps to prevent the disclosure of such information" as part of the Moreland Commission probe that Cuomo ended in March.

Bharara said he has picked up the Moreland Commission's cases but was investigating Silver before the panel's work started.

"Politicians are supposed to be on the people's payroll, not on secret retainer to wealthy special interests they do favors for," he said. "These charges in our view go to the very core of what ails Albany: lack of transparency, lack of accountability and lack of principle joined with an overabundance of greed, cronyism and self dealing."

Silver's attorneys dismissed the charges.

"We're disappointed that the prosecutors have chosen to proceed with these meritless criminal charges," Silver's attorneys Joel Cohen and Steven Molo said. "That said, Mr. Silver looks forward to responding to them — in court — and ultimately his full exoneration."

Silver's arrest came a day after Cuomo held his State of the State address and released his proposed $142 billion budget for the state. The state's fiscal year starts April 1, and Silver is one of the "three men in a room" who negotiate legislation and spending with the Senate president and governor. Cuomo said in a Daily News editorial board meeting Thursday that Silver's arrest was "a bad reflection on government" but would not say whether Silver should resign.

Assembly Democrats canceled session Thursday and huddled privately. They emerged and said they would support Silver, that he's innocent until proven guilty.

"People are concerned. They're concerned for the speaker, they're concerned for the institution," said Majority Leader Joseph Morelle, D-Irondequoit, Monroe County. "Having said that, there's a strong belief — we believe in the Constitution, we believe in the presumption of innocence, we believe in the speaker who for 20 years has done such incredible things on behalf of the people of the state."​

Silver wouldn't have to resign as speaker over the charges. Lawmakers need to be convicted of a felony to be forced to resign from office. They are considered part-time officials and thus can earn outside income.

Morelle may be considered by colleagues for the top post if Silver leaves. Other New York City Democratic lawmakers, who dominate the conference, also would be in the running. Some Republicans, and a few Democratic lawmakers, called for Silver to step down as speaker.

"His resignation as speaker is in the best interest of the Assembly, of the state, and the best way for us to conduct the business that we are elected to do," said Assembly Minority Leader Brian Kolb, R-Canandaigua, Ontario County.

Assemblywoman Sandy Galef, D-Ossining, said she's confident the chamber will continue to function well despite Silver's arrest.

"We have talented people in leadership positions, committee chairmanships and so on, and we've all been involved in the past," Galef said. "So it's not any different. We will be totally involved."

The New York Times reported Dec. 29 that federal authorities were investigating income Silver may have received from a law firm, Goldberg & Iryami, which specializes in real estate tax reductions for properties in New York City. The income hasn't been listed on Silver's annual financial disclosure forms.

The firm is not named in the complaint but it shows that Silver earned nearly $700,000 from a real estate firm in referral fees since 2002. The complaint also alleges Silver had an arrangement with a doctor who was an expert in asbestos-related diseases, getting the doctor state grants in exchange for referring cases to Weitz & Luxenberg. Last year, Silver reported on disclosure forms earning $650,000 to $750,000 in 2013 as counsel at Weitz & Luxenberg.

Silver has faced questions about his leadership, including sexual-harassment cases involving lawmakers under his watch. But he has survived as speaker through each controversy.

Since the Moreland Commission ended, Bharara has been investigating the unfinished cases that had looked at lawmakers' outside incomes and campaign-finance reports. Bharara also is believed to be investigating the role of Cuomo's office in the panel's work and disbanding. Bharara said his work isn't done.

"We will keep at it because the men and women of the FBI and of my office still subscribe to the quaint view that no one is above the law — no matter who you are, who you know or how much money you have," Bharara said. "And so our unfinished fight against public corruption continues. You should stay tuned."

JSPECTOR@Gannett.com www.twitter.com/gannettalbany

Albany Bureau staff writer Jon Campbell contributed to this report.