By Sabina Mollot
On Monday, one of Albany’s former famed three men in a room, Sheldon Silver, was convicted on corruption charges, for a bribery and kickback scheme that netted him $4 million. Part of the scheme involved the Lower East Side pol using his influence to benefit two real estate developers, in particular Glenwood Management, while at the same time positioning himself as being tenant-friendly. He also directed taxpayer money to a cancer researcher while a doctor there steered patients suffering from asbestos exposure to a law firm that paid Silver referral fees.
However, his failure to sway a jury of his innocence won’t be enough to prompt Albany’s remaining power players to renounce their ways by pushing for campaign finance reform or the closure of the “LLC Loophole.”
Mike McKee, the outspoken treasurer of TenantsPAC, told Town & Village on Tuesday of this gloomy forecast, predicting things will be as they were before, with the onus on tenants to put pressure of their local elected leaders to make meaningful changes. Otherwise, forget it.
“I would hope,” McKee said, “that this would be a wakeup call to the public that something is fundamentally wrong with our system of government, and unless people start holding legislators accountable, the pay-to-play culture is not going to change ever. Why would it change?”
Following the conviction, Governor Cuomo promised some ethics reforms, according to news reports. (His office did not respond to a request for comment.) But when T&V asked McKee if he thought the embarrassment of an Albany ex-kingpin facing jail time might make the governor regret his decision to shut down his commission aimed at rooting out corruption, McKee laughed.
“I don’t think so,” he said. “Andrew Cuomo’s agenda is Andrew Cuomo. He has benefitted more than anyone from the system we have. He got more money from Glenwood than anyone else. When the Moreland Commission started investigating his fundraising, that’s when he shut it down. I really wish it’s going to change but it won’t unless constituents put on the pressure. Every time you see an elected official you have to ask, ‘What are you doing about campaign finance reform and the LLC Loophole and the election system so people can actually run against incumbents?’”
State Senator Brad Hoylman, however, disagreed with McKee, saying the Silver bombshell might be what it takes to get even his own house, where tenant-friendly legislation goes to die, to pass meaningful reforms.
“This is Albany’s Watergate moment,” said Hoylman. “I think this is a seismic event that has the potential to disrupt business as usual in Albany. The issue of outside income is key. The fact that Silver was able to take in $4 million in referral fees is on its face outrageous and is something we should consider ending.”
Hoylman said he’s been pushing for an end to this practice since his first year in office.
“It’s not a coincidence Congress came to this conclusion after Watergate,” he added. “The other key fact in the Silver case is the exploitation by real estate companies of limited liability corporations. The LLC Loophole is the primary vehicle of the real estate industry to hold sway over the legislature.”
The so-called LLC Loophole is a regulation that allows companies to make political donations for every limited liability corporation they run and real estate developers often have LLCs for each property they own.
“I think this is something we learned in the Silver case and I believe this issue is going to pick up steam — even in my house,” said Hoylman. “I think the public is rightfully outraged by what they’ve been hearing from the courthouse in Lower Manhattan.”
Earlier this year, Hoylman authored legislation that would make it a class C felony or a public servant to steer grants towards organizations that benefit their families or people they have business relationships with.
Assembly Member Brian Kavanagh, who’s been pushing to close the LLC Loophole, did not respond to a request for comment on the Silver conviction.
As a result of the conviction, Silver must give up the Assembly seat he’s held onto for four decades. By Tuesday morning, Silver’s official Assembly web page was down. A spokesperson for the Assembly said she’d pass on a request for comment, but admitted she didn’t know who’d be handling Silver-related queries. One of Silver’s trial attorneys, Steven Molo, didn’t respond to a request for comment although he did tell Real Estate Weekly he’d be appealing.
“Weʼre obviously very disappointed and we had hoped the jury would see it our way,ˮ Molo said. “We are sorry that they didn’t but we believe that we’re on strong legal ground.ˮ