Real Estate Developer Says He Had No Idea Silver Was Splitting Legal Fees

Sheldon Silver at the federal courthouse in 2015.

sheldon silver

The Sheldon Silver political corruption trial is heading for a faster conclusion than previously believed. Prosecutors had estimated it would take four weeks to lay out their case against the Lower East Side state assemblyman. Now they’re anticipating winding up testimony today. We’ve been linking daily to news coverage of the trial. Here’s a more detailed take, after a visit to the courtroom for several hours yesterday afternoon.

In court, the defense was less than anxious to publicly indicate whether it would call witnesses to the stand. But as the Times reports, transcripts of a sidebar conversation with the judge suggest Mr. Silver’s lawyers will mount a limited case. Judy Rapfogel, his longtime chief of staff, and Jim Yates, who served as legal counsel when Silver was speaker, were named as potential defense witnesses. Closing arguments are expected early next week, possibly on Monday, before the jury gets the case.

UPDATE 2:52 p.m. The Times reports that the defense will not call any witnesses:

 

The government has accused Silver in two schemes. One involved lucrative legal referrals from a cancer researcher, allegedly in exchange for state grants. The other revolved around fees the assemblyman received from Goldberg & Iryami, a law firm specializing in property tax cases. Yesterday, jurors heard from Steven Witkoff of the Witkoff Group, a firm that owns many buildings throughout New York City. Locally, the company is a partner in the new Public Hotel and residential building now under construction at 215 Chrystie St.

Steven Witkoff.
Steven Witkoff.

Witkoff described a lunch meeting with Silver about a decade ago in which the speaker asked if the Witkoff Group would send some of its legal work to Goldberg & Iryami. “It was an easy favor to do,” the developer explained. “He was one of the most powerful politicians in state politics” and the firm had no desire to alienate Silver. “In the event that I wanted to discuss things with him, or have access to him about things that might be relevant to my business, I wanted to be able to have that,” Witkoff said, “to be able to approach him as needed.”

What he did not know at the time, however, is that Silver was receiving a cut of the legal fees. That revelation didn’t come until years later, Witkoff testified, when he received a phone call from Jay Goldberg, one of the law firm’s two partners. In the summer of 2014, Witkoff said, Goldberg was concerned about an investigation of the fee splitting arrangement. Goldberg suggested that Witkoff knew about the Silver connection all along. Witkoff said he was “incensed and belligerent” at the insinuation. “I said to (Goldberg) that I wasn’t aware of this,” he testified. “In fact, if there was fee-splitting, he had an obligation to tell us…. I was very, very concerned that what I thought had been a favor for someone’s friend was now going to turn into being a misperception that we had done something wrong.”

Silver is charged with honest-services fraud, extortion and money laundering. Prosecutors allege he collected $4 million in illegitimate legal fees. Under the law, prosecutors must prove there was a quid pro quo arrangement. During cross examination by defense attorney Steven Molo, Witkoff acknowledged there was never any explicit favor performed by the speaker. Silver had influence over legislation establishing generous tax breaks for development projects. Defense attorneys, however, have argued during the trial that he was a steadfast advocate for tenants, not for the real estate industry.

Michael Whyland, Sheldon Silver.
Michael Whyland, Sheldon Silver.

Also yesterday, jurors heard recordings of several interviews in which Silver discussed his outside income. In those interviews, he said things like, “My clients are little people who have nothing to do with” issues being weighed in Albany. Prosecutors hope jurors will see the statements as highly misleading, given the revelations about legal fees from major real estate developers. The recordings were introduced during testimony from Michael Whyland, Silver’s former press secretary.

After jurors were dismissed for the day, defense lawyers argued that a more extensive version of one recording should be introduced into evidence. In that tape, Silver mentions that his clients included people with asbestos claims. The U.S. Attorney has argued that the assemblyman concealed his work for those patients. While Judge Valerie Caproni expressed irritation with the defense team’s tactics, she agreed to allow a more complete version of the recording to be played today.

Also with the jury out of the courtroom yesterday, the judge telegraphed how she sees the prosecution’s case. In a tussle over evidence still to be presented, one of the defense attorneys complained that the prosecution is really putting all of Albany on trial and claiming that Silver is guilty by association. Judge Caproni responded:

I think what (the prosecution) suggested was that it (the status quo in Albany) creates an environment where you can have this sort of a quid pro quo relationship… and that’s important for the jury to understand… (But) I don’t think this gives rise to the notion that all of Albany is a cesspool.

Newsday had more on the judge’s perspective yesterday:

The government has yet to present a witness who testified there was an explicit quid pro quo. (Witnesses have) described a more subtle situation in which they tried to keep in Silver’s good graces in hopes of a sympathetic ear. But prosecutors contend they can prove the case with circumstantial evidence — including Silver’s keeping his referral fees secret from developers and the public… “There’s no requirement that people sit down and say, ‘If you pay bribes, I’ll take care of you,’ ” U.S. District Judge Valerie Caproni said Monday outside the presence of the jury. “This whole trial is a circumstantial evidence case,” she added. “They’ve got things that happened. The government is asking the jury to infer what was his state of mind.”

The bulk of testimony today centers on a money laundering charge. Prosecutors contend Silver invested money from the two alleged schemes in a “private investments not available” to most people.