MANHATTAN (CN) - A federal magistrate overseeing corruption charges against the speaker of the New York state Assembly said Thursday that ordering pretrial supervision of the 70-year-old Sheldon Silver was "overkill."
The brief presentment hearing ended with U.S. Magistrate Judge Frank Maas setting a bond of $200,000 for the 21-year speaker who was arrested the night before on five counts of wire fraud, mail fraud, honest-services mail fraud and extortion.
Prosecutors say Silver has been collecting millions in bribes and kickbacks since 2000, and masking the illicit earnings as legitimate income from his private-law practice.
Two law firms paid Silver more than $6 million since late 2002, according to the complaint, which goes on to identify the law firm of Weitz & Luxenberg as the source of more than $5.3 million in Silver's earnings.
The firm allegedly paid him an annual salary of $120,000, plus $3.9 million in illegal referral fees. Silver earned more than $3 million of that amount "through a corrupt scheme ... whereby Silver obtained referrals of asbestos cases form a doctor ('Doctor-1') by using his official position to secretly direct $500,000 in state funds to Doctor-1's research and provide additional benefits to Doctor-1 and his family," the complaint states.
Prosecutors identify the other law firm that allegedly paid Silver only as the Real Estate Law Firm, adding in the complaint that it is "controlled by an attorney who previously worked as Silver's counsel in the Assembly."
This attorney had the firm pay Silver $700,000 for referring it to real estate developers with business before the state, according the complaint.
Prosecutors say Silver "had no involvement in the work of the Real Estate Law Firm or Weitz & Luxenberg's asbestos practice, and he has never performed any legal work whatsoever for either the Real Estate Law Firm's real estate developer clients or Weitz & Luxenberg's asbestos clients."
"There is probable cause to believe that Silver obtained approximately $4 million in payments characterized as attorney-referral fees solely through the corrupt use of his official position," the complaint continues.
A review of the financial-disclosure forms that Silver filed with the state Legislative Ethics Commission shows that "in no year from 2002 through 2013 did Silver report that he received income from the Real Estate Law Firm or from any other law firm other than Weitz & Luxenberg," the complaint states.
The Assembly's role in regulating New York's real estate industry is significant, and developers prize the valuable government subsidies and tax incentives that the Legislature makes possible, prosecutors note.
An unnamed developer with whom Silver is accused of working, described in the complaint as Developer-1, was "the largest political contributor of any person or entity to state candidates or committees" between 2005 and 2014, according to the complaint.
During that time it allegedly contributed more than $10 million to candidates for state office and state political committees, and more than $200,000 of that amount went to Silver and a political committee he controls, according to the complaint.
That same developer also paid $900,000 to lobbyists, one of which lobbied Silver, the government says.
One of 150 elected to the state Assembly, Silver has served as the Albany-based body's speaker since 1994. He earns $41,500 on top of the base Assembly salary of $79,500 for serving in that capacity, according to the complaint, which notes that he also gets per-diem pay, a car and driver, and travel reimbursement.
Prosecutors note that Silver, first elected to the Assembly in 1976, "took legal action and other steps to prevent the disclosure" of his income's true source when he faced an investigation last year from the Moreland Commission to Investigate Public Corruption.
Gov. Andrew Cuomo appointed that commission on July 2, 2013, according to the complaint.
When the commission subpoenaed information about the outside income that New York lawmakers earn, Silver allegedly derided the action as "a fishing expedition to intimidate legislators" on Feb. 24, 2014.
Robert Ryan, the criminal investigator for the U.S. Attorney's Office in the Southern District of New York, signed the complaint against Silver. AUSA Carrie Cohen appeared for the government at Thursday's presentment.
Silver, who is represented by Joel Cohen of the firm Stroock & Stroock & Lavan, faces travel restrictions as part of the bond decision. He is due in court again on Feb. 23.
At a press conference before Silver's presentment, U.S. Attorney Preet Bharara called it "especially discouraging" that Silver stands acccused not "in a rank-and-file capacity, but as a leader of an entire body."
Legislating transparency for public officials has long been a talking point for Bharara, and the prosecutor said Thursday that the Silver's case shows how this can be a powerful tool in eliminating corruption.
There is a passage in the complaint, Bharara noted, that says Silver had to stop corruptly sending funds through the Health Care Reform Act pool at his sole discretion, without oversight, once New York state passed the Budget Reform Act of 2007.
"More disclosure is necessary," he said. "It makes it a little bit harder for bad people to do bad things."
The prosecutor's prepared statement took shots at the "tremendous personal fortune" Silver acquired during his time as a public servent.
"For many years, New Yorkers have asked the question, 'How could Speaker Silver, one of the most powerful men in all of New York, earn millions of dollars in outside income without deeply compromising his ability to honestly serve his constituents," Bharara said. "Today, we provide the answer: He didn't."
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