[image: Spinka defendants and supporters as they cross the street to the federal courthouse in downtown Los Angeles on Dec. 31, 2007. Courthouse photos by Dan Kacvinski]
On Dec. 19, 2007, the U.S. Attorney General's Office filed an indictment <http://losangeles.fbi.gov/dojpressrel/pressrel07/la121907usa.htm> in the U.S. District Court for the Central District of California naming the Chasidic yeshiva and four other Spinka organizations, as well as eight people, in a multimillion dollar tax fraud and money-laundering ring that stretched from Brooklyn to Los Angeles to Israel and elsewhere. Two of those indicted are Rabbi Naftali Tzi Weisz, 59, the Grand Rabbi of Spinka, a Brooklyn-based Chasidic sect, whose yeshiva is in this undistinguished building, and his gabbai (assistant), Moshe Zigelman, 60. Weisz is just one of a number of Grand Rebbes of Spinka, a Chasidic sect <http://en.wikipedia.org/wiki/Spinka_(Hasidic_dynasty)> that [image: yaacov zievald]originated in Romania in the 19th century. He is the great-great-grandson of the founding rabbi, and one of about a dozen Grand Spinka Rebbes who live in Boro Park or Williamsburg, in Brooklyn, or Bnei Brak and Jerusalem in Israel. Four Los Angeles men were among those charged with taking part in the scheme: Yaacov (Yankel) Zeivald, 43, a self-described scribe *(sofer) *from Valley Village *(photo, right)*; Yosef Nachum Naiman, 55, the owner of Shatz Et Naiman, d.b.a. Jerusalem Tours; Alan Jay Friedman, 43, a businessman from Pico-Robertson who sits on the board of the Orthodox Union; and Moshe Lazar, 60, owner of Lazar Diamonds <http://lazardiamonds.net/contact.asp>, a Los Angeles jewelry company. Although many of the details of the case have not yet been revealed -- a trial date is set for Feb. 12, but the defendants' lawyers say it will be postponed at least a year -- what is emerging from the indictment, the search warrant and other documents of public record is a complex money-laundering scheme. According to the documents, people donated money to the Spinka institutions but then received 80 percent to 95 percent of their donations back, yet wrote off the full amount on their taxes. These charges are just the beginning of a much larger case, Daniel J. O'Brien, an assistant U.S. attorney in the major frauds section, based in Los Angeles, said in an interview with The Journal. "There were many other people that contributed in this fashion that would be the subject of government investigations," O'Brien said. While O'Brien said he has documentation that the Spinka institutions took in about $750,000 through the scheme -- then writing receipts for $8.7 million -- in 2007 alone, the assistant U.S. attorney believes the fraud has been going on for decades: "I believe this goes on beyond living memory," possibly for generations. This is certainly not the first time an ultra-Orthodox sect has been accused of attempting to break the laws of the secular government -- aramos, or schemes, were perpetrated over the centuries in the shtetls of Europe. In the last decade, arrests have occurred in religious communities in Brooklyn, Lakewood, N.J., and upstate New York. However, this particular case has shocked Los Angeles' ultra-Orthodox community, not only because Los Angeles had largely been exempt from such cases in the past, but also because some of the city's prominent members have been charged as being at the center of the scheme. As a result, the case has sparked a fierce debate about the type of behavior that is acceptable for observant people and what type of religious community Los Angeles would like to be. But there's also debate about the laws of a *moser*, an informant, because one person who was not charged was the primary source of information for the federal case -- though he allegedly started out as one of the perpetrators. *THE BEGINNING* On June 29, 2004, the U.S. Securities and Exchange Commission filedcivil fraud charges <http://www.sec.gov/litigation/litreleases/lr18774.htm> against Robert A. Kasirer and four executives of Heritage Healthcare of America, which sold $131 million in bonds to 1,800 investors in 36 states from 1996-1999, claiming that the money would be used to fund 10 health care facilities. In October of that year, Kasirer approached the federal government and "expressed a desire to plead guilty to criminal charges arising out of the investigation and agreed to reveal other criminal conduct he and others had committed, with a view that any sentence he might receive would be reduced," according to an affidavit for a search warrant submitted by FBI Special Agent Ryan Heaton on Dec. 18, 2007. Although the search warrant affidavit identifies Kasirer only as "confidential witness (CW-1)" and the recent grand jury indictment refers to a witness named only as RK, the companies in the affidavit attributed to CW-1 and RK are run by Kasirer, and several members of the Los Angeles community, who asked for confidentiality, have confirmed his involvement. In 2004, under federal surveillance, the informant identified in the transcript as CW-1 resumed activities he admitted to having conducted with the Spinka since 1990, in which "he caused several million dollars in contributions to be mailed to the tax-exempt organizations operating within the umbrella of Spinka," he is quoted in federal documents as having told the FBI. As part of the scam, Weisz and Zigelman allegedly would return 80 to 95 percent of Kasirer's contributions. On Oct. 31, 2007, the SEC issued a final judgment <http://www.lawyersandsettlements.com/settlements/10103/bond-scheme.html> against Kasirer, ordering him to pay $4,991,434. "Kasirer consented to the entry of the final judgment without admitting or denying the allegations contained in the commission's case," according to the SEC enforcement proceedings. In the interim, according to the transcripts, Kasirer began to wear a device to record his interactions for the government. On Dec. 20, 2004, he told Zigelman, the Spinka rebbe's gabbai, that he never intended to pay the SEC. According to the wiretapped transcripts, Kasirer told Zigelman: "The SEC investigation is done. But they want me to pay them a lot of money." "How much?" Zigelman asked. "Possibly one, one and a half," Kasirer said. "Million?" Zigelman asked. Kasirer confirmed the amount and said he had told the SEC he didn't have the money. In the transcript, Kasirer then went on to say that he'd lied to the SEC, and that, in fact he had the money but wanted to hide that fact. "What is SEC?" Zigelman asked. Kasirer explained, and Zigelman replied, "Yes, yes, but you don't have to give it to them." For the next three years, Kasirer recorded conversations with targets of the government investigation, and, using government funds, conducted a dozen monetary transactions with Zigelman, according to transcripts of conversations conducted in English, Hebrew, Yiddish and Hungarian. The government also tapped the phones of Zigelman and Weisz. *CASH OR CHARGE?* For Kasirer, there were two ways the operation worked: At first he reportedly received his "donations" back in cash, and when he became uncomfortable with the large cash amounts floating around, he set up an Israeli account. According to the transcripts, Kasirer's [image: jewish journal cover]money was allegedly refunded to him by various men, all now defendants in the case: Naiman, Zeivald, Friedman and Lazar, all of whom have pleaded not guilty to the charges against them. Among the transactions in the transcripts, for example, was one on Feb. 8, 2007. Kasirer FedEx-ed a check for $20,000 made out to Yeshiva Imrei Yosef to Zigelman. On Feb. 15, 2007, Lazar delivered $18,600 to Kasirer's house. On Feb. 22, 2007, Kasirer got a letter in the mail on a Yeshiva Imrei Yosef Spinka letterhead thanking Kasirer for his $20,000 donation to a tax-exempt organization, saying the "donation" was entirely tax deductible and Kasirer had received no "goods" or "services" in exchange for the contribution. The Spinka Yeshiva charged Kasirer up to 7.5 percent for laundering the money, which was a cause for some dispute, according to the wiretaps. On Dec. 16, 2005, Kasirer told Joseph Roth, an assistant manager atBank Mizrahi <https://www.mizrahi-tefahot.co.il/cgi-bin/bvisapi.dll/Mizrahi/pages/EngHomePage.jsp> -- which is based in Israel but has a branch in Los Angeles -- to set up a new account so he could move money internationally. On Jan. 12, 2006, Tel Aviv lawyer Jacob Kantor -- the only one of those named in the indictment who is still at large -- is reported in the transcripts offering to Kasirer to create documents to incorporate a company called Bedford Holdings & Investments, which would be "held in confidence by the bank and can only be disclosed after a complicated procedure by the Bank of Israel, if there is evidence that the monies resulted from criminal activities, such as drugs -- tax matters are not an issue." Much like Switzerland, Israel has laws that protect investors, and the country does not investigate monetary origins, even on suspicion of tax fraud. "So, we wanted to basically set everything up the same way as it was before," Kasirer told Roth in the affidavit transcripts. Later in the document, he tells Zigelman that Kantor set up a trust in Israel so that nothing would be left in Kasirer's name in order to hide his money from the SEC. Then he'd take a loan from the Los Angeles branch of an unnamed Israeli bank, "so I can use the money here." Later, he says in the affidavit, he would take the money back from Israel and repay the loan here. Mizrahi Bank, which is never named in the affidavit, is under investigation by the federal government, according to Assistant U.S. Attorney O'Brien. "We believe the bank offers this thing as a product to clients in the U.S. -- the bank pitches this as a money-laundering product. I believe there are multiple agents involved," O'Brien said, including Kantor. The government also believes that there are many people like Kasirer, "who occupy the same role as he did in this conspiracy," O'Brien said. But Kasirer was not the creator of this conspiracy, according to the government. His father -- the recently deceased Jacob (Yankel) Kasirer who founded the Bais Yaakov School for Girls on Beverly Boulevard in Los Angeles and is known as a "stalwart" of the Jewish community -- was involved with the scheme. According to the transcripts, when Kasirer was discussing his distress over his earlier money-laundering penalty with Lazar, the diamond dealer said, "It's not something you started." Kasirer replied, "I was really not aware of what he did with my father." In addition, in a taped conversation, the Spinka Rebbe told Kasirer he wanted to meet with his father. "RK's father was engaged in this prior to RK being involved in it," O'Brien said in an interview. "We believe that this has origins much earlier than that -- beyond living memory." [image: indictments image] *CRIME IS NOT SO BAD* "There are a million ways that religious institutions defraud the government," said one Brooklyn accountant who asked that his name be withheld. However, it's not just the Jews, he claimed, "churches do the same thing." Churches and synagogues are exempt from filing tax returns -- although many do -- and the government usually does not audit unless it has probable cause. As a result, this can make fraud easier. In the last decade or so, a number of Chasidic institutions on the East Coast have been charged with such crimes, including the 1997 case against the Skverer Hasidim in Rockland County, N.Y., where four men were found guilty of defrauding the government of millions of dollars in federal Pell Grants. But in the Orthodox community, many defended them, despite the crime, because the money was used to support needy yeshiva students. "Nobody here owns a yacht," a resident reportedly said, and the feeling then -- as with many such institutional fraud cases -- that if the money is used to help the community and not line someone's pockets, it's not so bad. That, in fact, is a pervasive attitude these days in Brooklyn, where the Spinka case raised fewer eyebrows than in Los Angeles, because the attitude is everyone does something. This kind of discussion has been a hot topic on many Internet blogs that discuss the ultra-Orthodox community. "The government are thieves, what gives them the right to take 40 percent to 50 percent of someone's income? Anyone who can save yiddishe gelt from going down that toilet is doing a mitzvah," one contributor wrote on the Vosizneias <http://vosizneias.com/> (Yiddish for "What Is News?") blog. The blog comments, though, seem to be about evenly divided between two camps: On one hand are those castigating the government or the bloggers posting the news for spreading gossip; on the other are those demanding that the community finally put a stop to criminal behavior. One particularly poignant plea came from New York white-collar defense attorney Joel Cohen, in an essay published in 2006 titled, "Jewish Felons: The Problem of Criminality in Observant Communities. <http://theunorthodoxjew.blogspot.com/2006/08/jewish-felons-problem-of-criminality.html>" Cohen described witnessing a disturbing rise in crime among Orthodox and Chasidic Jews. "The problem in the observant community, however, is not merely occasional, nor does it often make headlines. Daily, in metropolises around the country, yarmulka-wearing criminal defendants appear before the bar of justice," he wrote. Some prisons -- especially in New York, Los Angeles and Miami -- have daily minyans, visiting rabbis, kosher food, classes and Shabbat meals, Cohen wrote. "The most common charge is fraud: against businessmen and run-of-the-mill citizens alike, most frequently involving victims outside of the Jewish community, against the government, against insurance carriers, against banking institutions, health care fraud, money-laundering and stock-swindling." Cohen pleads with his fellow Orthodox Jews to denounce the criminal activity: "Only with the open denouncement of wrongdoing from within the particular observant community can the community hope to demonstrate and protect the Torah's commitment to honesty in one's interpersonal dealings as being at least equal to, if not greater than, its commitment to technical observance of mitzvoth," he wrote *DON'T BLAME THE MESSENGER* But the most talked-about aspect of the case -- both among bloggers and at Shabbat tables on both coasts -- has been the involvement of Kasirer. From the start, most here guessed accurately who he was -- an informant who turned state's evidence to save his own skin -- but what they wanted to know was what was he? Was he a *moser* -- an informer, who, according to traditional Jewish law, must be killed for turning against a Jew and is denied access to "the world to come." The Talmud forbids a Jew to inform on another Jew to a secular government, even if that Jew violated both secular and Jewish law. Today, among poskim -- Orthodox rabbinic deciders -- there is a debate <http://www.jlaw.com/Articles/mesiralaw2.html>over whether a Jew may turn in another Jew in a democratic state. Some rabbis say that laws of *moser* do not hold in the United States because they were established to protect Jews from corrupt and anti-Semitic governments that would likely torture and give Jews worse treatment than other prisoners than merited by Jewish law. This is not the case today in a democracy, they say. "These rules apply only to one who informs on another to bandits and so endangers that person's money and life, as these bandits chase after a person's body and money, and thus one may use deadly force to save oneself," it is written in the Aruch Hashulchan, ("Laying the Table," a book about Jewish law written in the late 19th century). But many insist that the laws of *moser* do apply today, and that it is forbidden by Jewish law for one Jew to inform on another to any secular government. Rabbi Ezra Batzri in "Dinnai Mamonut" ("Laws of Money") says informing is prohibited. "All rules of informing are applicable even currently .... Even if they bring all matter to court, it is clear that, through interrogation and the police, government can destroy people, and in many places they do, in fact, destroy people." Some rabbis say you cannot be a *moser*, even in America, except when the person doing the questionable act may be a danger to others -- a child molester, a rapist, a murderer. In those cases, it would be "permitted" to inform the authorities, writes Rabbi Hershel Schacther, a top posek. Which means that in the case of financial wrongdoings, a Jew is not allowed to inform on another Jew. When the Spinka case broke, the Rabbinical Council of California (RCC) <http://www.rccvaad.org/> discussed the informant issue, RCC President Rabbi Meyer May said. But the council decided to let other halachic authorities deal with the question. "There is no way to explain how perfidious what RK did is. He violated the spirit of Jewish law," May said. "Having said that, it doesn't justify what was done on the other side [by the defendants]." Although many were focusing on the *moser* and other justifications like "everybody does it" and "we pay more taxes than everyone else," that is beside the point, May said. The point, he continued, is to own up to any wrongdoings. "Our business is the integrity [of the individual]," he said. "Something which is wrong is wrong." Still, others, like lawyer and blog commentator Cohen, argue that it is precisely such concern about laws like that of *moser* -- which forbid a Jew to turn in another Jew to authorities, and chilul Hashem, desecrating God's name in public, which has created an atmosphere were people are more concerned with protecting their own than following the laws of the U.S. government. "To ignore crime within our ranks does us a great disservice, both because it weakens us as a community and because tolerating it suggests to the outside world that Judaism does not promote a righteous moral compass," Cohen wrote. *BUSINESS AS USUAL * On Monday morning, Dec. 31, the streets of downtown Los Angeles were eerily empty; nearly everyone had left town. But the Roybal Federal Courthouse was open, and by 8:30 a.m. there were enough Chasidic men in the third-floor corridor for a minyan: 11 -- not to mention a few clean-shaven men wearing black yarmulkes -- all waiting for the morning's arraignment hearings <http://www.cacd.uscourts.gov/CACD/PIA.nsf/365e169df704b7568825720d004d579f/094d7d290fa442fd882573be0063e289?OpenDocument> to begin. Grand Spinka Rebbe Weisz didn't converse much with his gabbai Zigelman. The men pored over Hebrew books -- either studying holy texts or reciting psalms -- and intermittently conversed with the lawyers. It would be an hour until the court would open and another until their own hearing would begin. Everyone was anxious for the hearing to start -- not because of the upcoming secular New Year, which the ultra-Orthodox do not celebrate -- but so that they could return to their homes and to their lives in Brooklyn. The seven men had been arrested and jailed on Dec. 19, a Wednesday, and most were released before Shabbat. Weisz and Zeligman had spent another Shabbat in Los Angeles, detained until the arraignment. The Spinka Rebbe attended Rabbi Chaim Boruch Rubin's synagogue in Hancock Park -- which itself isentangled in a legal battle over land use <http://www.jlaw.com/Commentary/zoning9.html> -- and was given the honor of leading services. At this, a few men walked out in protest. "As a parent in the community and as a rabbi in the community, since there were children in the room and since we have an obligation to teach our children right and wrong," one person who left quietly said later. "I have no problem [with the Spinka Rebbe] sitting in the front in his normal [honored] seat," but the man who walked out said he would have preferred "one stage less than normal" to show children "that it's not business as usual." When the court opened for the hearing, most of the defendants and their supporters filed into the first row of the courtroom, except for the clean-shaven Friedman, who sat in the back, a few seats away from Zeivald, who was accompanied by an Israeli translator. A Yiddish translator sat next to the Spinka Rebbe, and only Roth, the Israeli banker, came from the entrance behind a glass partition, clad in green prison outfit. He was the only one not yet released on bail, at the time, because the government said he was believed to pose a flight risk. Roth remains in custody. Finally, their turn arrived. The seven filed up front, each with his separate lawyers. (Famed lawyer Donald Etra, who was originally retained to defend Weisz, was by then no longer on the case). They each declined to have the charges read to them. "How do you plead?" Magistrate Judge Alicia G. Rosenberg asked. One by one, Weisz, Zigelman, Naiman, Zievald, Friedman, Lazar and Roth each said: "Not guilty." By 11 a.m., they filed out of the courtroom. By Shabbat, Jan. 4, the Grand Spinka Rebbe was back in Boro Park to lead his congregation. He's free on $2 million bail <http://chaptzem.blogspot.com/2008/01/spinka-rebbe-court-order-modified-order.html>, allowed to travel for work in New York and New Jersey, and of course, to California, where he and Zigelman, among others, await trial. On Saturday, August 13, 2016 at 1:06:30 PM UTC-5, plainolamerican wrote: > > New York in the Age of Corruption > --- > > > > On Saturday, August 13, 2016 at 12:34:25 PM UTC-5, Perplexed wrote: >> >> >> Very interesting story. The US Attorney referenced (Bharara) is the one >> who is allegedly investigating Hillary and the Clinton Foundation now. I >> must say I was surprised that an Obama appointee brought down the state's >> third most powerful democrat recently. >> >> AUGUST 09, 2016 >> >> >> <http://www.judicialwatch.org/bulletins/new-tammany-hall-new-york-age-corruption/#> >> >> >> [image: AY1a][image: AY1b] >> >> >> *De Blasio, Clinton cronies are carving up the city. Right, developer >> Bruce Ratner * >> >> >> *By Micah Morrison* >> >> >> In New York City, the controversy plagued Atlantic Yards development >> appears to be heading for trouble again. That could create problems for >> Mayor Bill de Blasio and presidential hopeful Hillary Clinton. Allies of >> both Democrats have profited mightily from the project. >> >> >> For over a decade, Atlantic Yards has been at the center of heated >> disputes over power, profit and privilege in New York. Does the site serve >> the needs of the taxpayers who financed its development? Or is it >> primarily a giant boondoggle generating torrents of cash for well-connected >> insiders? >> >> >> The 22-acre, $5 billion Brooklyn site of planned residential, commercial >> and park space is home to the Barclays Center sports arena and sixteen >> high-rise buildings in various stages of development. According to recent >> *news >> reports from Moscow* >> <http://russialist.org/billionaire-tycoon-prokhorov-to-sell-all-russian-assets-russia-prokhorov/>, >> >> Barclays Center owner Mikhail Prokhorov is under Kremlin pressure to sell >> all his Russian assets. Prokhorov’s U.S. holdings could be next. >> Prokhorov’s fall would reverberate from Moscow to New York, where U.S. >> Attorney Preet Bharara is making development deals a centerpiece of a >> sweeping anti-corruption crusade. >> >> >> New Yorkers have been here before. >> >> >> “I seen my opportunities and I took ’em,” the plain-speaking Tammany Hall >> politician George Washington Plunkitt said in 1905. The corrupt Tammany >> political machine dominated New York City politics for a century, its >> chicanery extending into every corner of civic life. Bribes, kickbacks, >> fraud, extortion and graft were the order of the day. Today, New York is >> witnessing the birth of a new Tammany Hall. Plunkitt’s heirs are seeing >> their opportunities and taking them on a colossal scale. >> >> >> The center of the new Tammany is Mayor de Blasio’s City Hall. But de >> Blasio is no Boss Tweed, old Tammany’s criminal genius. De Blasio has >> emerged as more pawn than prince of the city: insecure, in over his head, >> buffeted by moneyed players he cannot seem to resist and presiding over >> accelerating pay-to-play scandals that have cast a pall of political death >> over his administration. >> >> >> Atlantic Yards offers a case study of how the new Tammany system has >> evolved. It’s local: extending from dealmakers to a cadre de Blasio calls >> his “agents of the city” and to Albany’s notorious “three men in a room.” >> It’s international: the deals stretch from New York and Washington to >> Russia and China. And it’s sophisticated, powered by the global economy, >> the influential New York real estate industry, and non-profit entities >> manipulated for personal and political gain. >> >> >> But the central scam of the new Tammany system would not be unfamiliar to >> old Tammany’s Plunkitt: public money for private profit. Plunkitt called it >> “honest graft”—gaming the system to the benefit of the powerful and >> well-connected, with crumbs for the common folk. >> >> >> [image: AY2] >> >> *Atlantic Yards, Brooklyn, NY. Artist’s rendering.* >> >> >> *DEMOCRATIC PARTY TIES* >> >> >> Real estate developer and Democratic Party heavyweight Bruce Ratner is >> the central figure in the battles over Atlantic Yards. Smart, tough and >> tireless, Ratner is a master of honest graft. He has been charged with no >> crimes, but has repeatedly courted controversy with unfulfilled promises of >> public benefits, multi-million-dollar paydays, and links to crooked >> politicians and their enablers. >> >> >> Ratner has close ties to de Blasio and Clinton. Hillary Clinton’s >> presidential campaign headquarters is in a Ratner building in Brooklyn. >> Ratner and de Blasio lobbied hard to bring this year’s Democratic National >> Convention to the Barclays Center. De Blasio was an important early >> supporter of Ratner’s Atlantic Yards bid. A longtime donor to Democrats, >> Ratner backed de Blasio’s mayoral campaign. Ratner figured in the 1996 Bill >> Clinton campaign finance scandal as a guest in the Lincoln Bedroom and at a >> White House “coffee” event. Harold Ickes—the powerful Clinton adviser and >> lobbyist identified by federal prosecutors as “the Svengali” behind the >> campaign-finance scandal—is an influential mentor to de Blasio. >> >> >> The City of New York is Ratner’s biggest tenant, leasing over one million >> square feet of office space, according to federal filings. The federal >> government is his fourth largest tenant. >> >> >> The go-between for de Blasio and Ratner is Jonathan Rosen, a political >> consultant and a central figure in the mayor’s “agents of the city” >> controversy. In May, de Blasio rejected a media request for email >> correspondence between the mayor and Rosen, as well as four others >> associated with his political campaigns. Four of the five now work as >> consultants or lobbyists with business before the city. The fifth, Patrick >> Gaspard, is the U.S. ambassador to South Africa and a former political >> operative at the powerful Service Employees International Union Local >> 1199—the only major union group to back de Blasio’s 2013 mayoral bid. >> >> >> According to published reports, Rosen is under investigation by Bharara >> and Manhattan DA Cy Vance in connection with de Blasio fund raising and the >> mayor’s non-profit organization, Campaign for One New York. Rosen’s firm, >> BerlinRosen, was paid about $700,000 by de Blasio-related entities. Rosen >> also has been on Bruce Ratner’s payroll for years as a spokesman and >> adviser for Atlantic Yards. In 2012, Crain’s New York Business noted that >> Rosen was a “top strategist” for Ratner. >> >> >> De Blasio is fighting disclosure of the activities of the five men, >> advancing the novel claim that they are “agents of the city” whose >> communications with the mayor should be private. Judicial Watch has filed >> Freedom of Information Law requests for the Rosen and Gaspard emails, but >> has been rebuffed in its requests for timely production of the material. >> “We have appealed the decision of the mayor’s office and will take it to >> court if necessary,” said Judicial Watch Director of Litigation Paul >> Orfanedes. “Clearly in this case, the public has a right to know.” >> >> >> [image: AY3a][image: AY3b] >> >> *Former NY Assembly Speaker Sheldon Silver, U.S. Attorney Preet Bharara* >> >> >> *THREE MEN IN A ROOM* >> >> >> Rosen, the strategist for Ratner and de Blasio, also was a top adviser to >> a major figure in the annals of New York corruption: Assembly Speaker >> Sheldon Silver. Silver played a key role in Atlantic Yards. He was one of >> the notorious “three men in a room”—the governor, speaker, and senate >> majority leader—wielding power in Albany. >> >> >> “If you’re one of the three men in a room, and you have all the power and >> you always have and everyone knows it,” U.S. Attorney Bharara said >> following Silver’s arrest on corruption charges, “you don’t tolerate >> dissent because you don’t have to. You don’t allow debate because you don’t >> have to.” >> >> >> In New York, “three men in a room” is a kind of shorthand for corruption >> in the state capital. But in the case of Atlantic Yards and other >> high-dollar dealings of state government, it’s a fact: three men in a room >> exercise complete control over billions of dollars of state funding. >> >> >> The lucrative lever of their power—a cash cow for the new Tammany >> system—is called the Public Authorities Control Board. According to court >> testimony, it has no staff, no offices, and has approved “billions of >> dollars of bond sales.” In a 2006 meeting that lasted just five minutes, >> the PACB approved Ratner’s Atlantic Yards proposal, despite mounting public >> opposition to the project. >> >> >> The price tag: $4 billion. >> >> >> PACB approval opened the door for Ratner to receive taxpayer-backed >> benefits and financing. The benefits included an immediate cash injection >> of $100 million for “new infrastructure” such as “streets and sewers,” >> according to testimony by a state budget official in a lawsuit, and a later >> $511 million sale of tax-free bonds. >> >> >> In a 2006 letter to the three men—Silver, then-Senate Majority Leader >> Joseph Bruno and then-Gov. George Pataki—State Comptroller Alan Hevesi >> warned that the PACB had authorized “nearly $9.5 billion in State-supported >> financing during a less than 30 day period” and was on track to spend >> another $5.6 billion in the days ahead. >> >> >> Of the three men and the state comptroller, only Pataki escaped a >> corruption indictment. Silver and Hevesi went to jail. Bruno was charged >> and later cleared. >> >> >> Silver, the pivotal PACB vote on Atlantic Yards, had a close relationship >> with Ratner. After PACB approval, Ratner contributed $58,000 to a >> Silver-controlled committee and helped raise $1 million for the >> Metropolitan Council on Jewish Poverty, led by a close Silver ally, William >> Rapfogel. Rapfogel was later convicted of stealing more than $7 million >> from the Metropolitan Council. >> >> >> The alliance between Ratner, Rapfogel and Silver was a family affair. >> Rapfogel’s wife was Silver’s chief of staff. Rapfogel’s son was a lawyer >> for Ratner. >> >> >> Ratner crossed paths with other corrupt politicians as well. A Ratner >> lobbyist, Richard Lipsky, pleaded guilty to funneling over $250,000 to a >> powerful state senator from Brooklyn, Carl Kruger, in exchange for >> political favors. And in Yonkers, two political figures were convicted in a >> bribery case involving a changed vote to support a Ratner development, >> Ridge Hill. >> >> >> Ratner and his Forest City companies were not charged with any wrongdoing >> in the cases. Controlling interest in Ridge Hill later was sold to an >> Australian company and Ratner was awarded an $11 million “development fee” >> for the project by the Forest City board of directors >> >> >> *EMINENT DOMAIN, PRIVATE GAIN* >> >> >> In 2009, Ratner won a court battle to use Albany’s eminent domain power >> to seize control of the Atlantic Yards site, promising thousands of good >> jobs and affordable housing units. Ratner’s opponents argued that he was in >> it for the money and that there would be little public benefit—one of the >> standards for an eminent domain seizure—from the project. Civic groups >> protesting the development were steamrolled and homeowners were forced out. >> >> >> Ratner received state-backed financing and $726 million in “special >> government benefits”—your tax dollars at work—to help finance the Barclays >> Center portion of site, according to *an analysis by the city’s >> Independent Budget Office*. >> <http://www.ibo.nyc.ny.us/iboreports/AtlanticYards091009.pdf> >> >> >> <http://www.ibo.nyc.ny.us/iboreports/AtlanticYards091009.pdf> >> >> The benefits included “direct contributions of cash, capital investment >> and property; access to tax-exempt financing; exemptions from property, >> sales, and mortgage taxes, and below market sale” of Metropolitan >> Transportation Authority land, the IBO report said. >> >> >> Despite all that, Barclays looked like a loser for the city. The arena >> would “cost the city nearly $40 million more in spending” than it would >> generate in tax revenues, the report said. >> >> >> In 2010, Ratner began to cash out. He sold a major stake in Barclays and >> the Brooklyn Nets basketball team to the Russian mogul, Prokhorov, for $223 >> million. Last year, he transferred the rest of his share for an additional >> $285 million. >> >> >> [image: AY4] >> >> *Breaking ground at China-controlled “Pacific Park.” Center, Bruce >> Ratner, Bill de Blasio; right, Greenland CEO Zhang Yuliang* >> >> >> *THE CHINA CONNECTION* >> >> >> Meanwhile, China had come calling. >> >> >> In 2014, Ratner sold an ownership stake in Atlantic Yards (excluding the >> Barclays site) for $208 million. The buyer: Shanghai-based Greenland >> Holdings, a company controlled by the Chinese government. >> >> >> In a move of Orwellian audacity, Ratner and his new Chinese partners >> promptly changed the name of the site from Atlantic Yards to Pacific Park. >> Greenland “now reaps the benefit of the subsidies, tax breaks and cheap >> land that Forest City Ratner wangled for the project in the 2000s,” wrote >> Norman Oder, a Brooklyn journalist who chronicles the project on the >> *watchdog >> blog, Atlantic Yards/Pacific Park Report* >> <http://atlanticyardsreport.blogspot.com/2016/08/not-just-logistics-bypassing-brooklyn.html> >> . >> >> >> Among the properties now under the control of China: 664 Pacific Street, >> which is slated to include a new seven-floor New York City public school. >> >> >> At a groundbreaking for a new 298-unit “Pacific Park” building touted by >> the mayor’s office as “100% affordable housing,” de Blasio declared that >> the development “offers the chance to have a huge number of affordable >> units that people in this community can live in.” >> >> >> The New York Daily News reported that rent for most of the units, which >> would be offered through a lottery, would run between $2,500 and $3,500 a >> month. “Only in New York,” the paper wryly noted, “could you win an >> ‘affordable housing’ lottery and still wind up paying almost $3,500 in >> rent.” >> >> >> *VISAS FOR SALE* >> >> >> Ratner and his Chinese partners have raised hundreds of millions of >> dollars through the controversial EB-5 U.S. visa program. Under EB-5, a >> foreigner putting up $500,000 becomes eligible for a green card to live in >> the U.S. The purpose of the program is job creation. Each investment of >> $500,000 in a so-called “targeted employment area,” according to government >> estimates, creates ten full-time jobs. >> >> >> Sales of EB-5 green cards in China were brisk. >> >> >> “Project developers have raised some $577 million at below-market >> interest rates,” noted Atlantic Yards watchdog Norman Oder. China “is >> profiting by marketing a scarce U.S. public resource—green card slots under >> the EB-5 program—to its own citizens.” >> >> >> Ratner and his Russian partner Prokhorov are also in the EB-5 business on >> Long Island, where they control the rebuilding of Nassau Coliseum—another >> project mired in Tammany-style controversies. “$90 million in low-interest >> [EB-5] loans,” Oder reports, are “expected from immigrant investors more >> concerned with green cards than any financial return.” >> >> >> A report by the Government Accountability Office warned that the EB-5 >> program created “unique fraud and national security risks.” Sales of the >> visa have tripled in recent years, creating “additional opportunities for >> fraud,” the report noted. Sources of funds for the visas could come through >> the “drug trade, human trafficking, or other criminal activities.” >> >> >> And those ten-jobs-per-green-card the program is supposed to create? >> Reporting of economic benefits of the program “is not valid and reliable,” >> the GAO warned, “because it may overstate or understate results.” >> >> >> Ratner did not respond to a Judicial Watch request for comment about his >> financial positions in Atlantic Yards, his relationship with political >> figures charged in corruption probes, Rosen, Prokhorov, Greenland Holdings >> and the EB-5 program. >> >> >> *BHARARA IN THE CROSSHAIRS* >> >> >> Ratner’s promises of public benefits from the Atlantic Yards project—the >> basis for much of the city, state and federal bounty bestowed on him—have >> gone mostly unfulfilled. There are few good jobs at Atlantic Yards. “Jobs >> were overpromised at the start and since then have been oversold,” said >> blogger Oder. >> >> >> Affordable housing has not materialized. “There’s a huge disconnect >> between current construction and the promises de Blasio and Forest City >> have long made for affordable units,” Oder said. “Two ‘100% affordable’ >> buildings are skewed to middle-income households, with more than 60% of the >> apartments going to households earning six figures.” >> >> >> But Bruce Ratner has done okay. His company is worth $10 billion. His >> personal net worth has been estimated at $400 million. After leveraging >> more than $1 billion in taxpayer assistance, he walked away from >> responsibility for Atlantic Yards, transferring control to a Russian mogul >> and the Chinese government. >> >> >> Ratner’s friend and tenant Hillary Clinton appears to be on her way to >> the presidency, so she has done okay too. Knowing her will be helpful when >> all those federal office space leases come up. Bill de Blasio has done okay >> too. As mayor, he presides over an $82 billion budget: plenty of money to >> be made there in office leases and a favorable City Hall attitude to new >> development projects. De Blasio’s agents of the city have reaped millions >> in consulting contracts from organizations eager to do business with the >> city. The real estate business is doing great—profits are up, big time. >> >> >> Public money, private profit, promises unkept: in that sense, the old >> Tammany system is not much different from the new one. It took reformers >> decades to crush old Tammany. In April, in a sharp warning to de Blasio and >> Governor Andrew Cuomo, U.S. Attorney Bharara *told Common Cause New York >> * <https://www.youtube.com/watch?v=nWwP3aihOe8>that he would “keep >> looking hard at corruption,” not just in the legislative branch, but in the >> “executive branch too, both in city and in state government.” >> >> >> He’d better look fast. U.S. Attorneys serve at the pleasure of the >> president and Bharara has made powerful enemies. When the new president >> takes office in January, the number one wish of the new Tammany Hall will >> be to get rid of the troublesome reformer. >> >> >> *Micah Morrison is chief investigative reporter for the watchdog group >> Judicial Watch.* >> >> >> -- -- Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. 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