Is New York the Most Corrupt State in America Now?
New Yorkers will begin 2015 with their governor under a cloud of investigation, the most powerful member of the state legislature being probed for his extra cash, and a congressman resigning for tax evasion.
Like almost every other year in this twilight of American governance, 2014 has oozed with filth. You had the McDonnells of Virginia, both (former Governor) Bob and his wife, Maureen, sentenced in September to what could be a decade in jail for 11 counts of corruption. Before that was the US Supreme Court decision on McCutcheon v. FEC, which allowed the midterms this year to be filled with more shadow money from shadow individuals than the last presidential election. Oh, and aides to Governor Chris Christie in New Jersey shut down highway lanes to get back at a local rival in an incident Americans now affectionately refer to as Bridgegate.
Shit got so bad, even the Veterans Affairs office in DC—an agency that has the non-partisan goal of helping our former soldiers survive after returning home—was afflicted by some shady behavior.
Even so, Transparency International, a global anti-corruption coalition, rated America 17 out of 175 countries this year, only a shade dirtier than Canada, Australia, and a handful of Scandinavian countries.
Maybe they should have spent more time in New York.
Residents of the Empire State will start 2015 with their governor, Andrew Cuomo, under a cloud of federal investigation. The State Assembly Speaker, Sheldon Silver, is now facing a federal probe of his own, and one of New York's best-known congressmen, Staten Island Representative Michael Grimm, announced late Monday that he would resign after pleading guilty to a felony count of tax evasion. As Dick Dadey, the head of Citizens Union Foundation, a nonprofit good governance group, told me, "This year, you had a record number of state officials that either resigned from office or were indicted because of corruption or corruption-related issues."
It seems like everywhere you look, someone in the elected higher offices of New York has been doing something vile, or at least been accused of it. Here's a breakdown of everything you need to know about what might be the shadiest place in the country.
Let's start with the most recent humiliation: Sheldon Silver, the 70-year-old who has held the office of assembly speaker up in Albany since 1994, is being investigated by the feds. Why? Because he controls an office that has tremendous influence over which laws go through the legislature, many of which pertain to enormous real estate tax credits—and according to the New York Times, US attorney Preet Bharara has discovered that Silver (who also works as a lawyer) has received outside, undocumented payments from a rinky-dink law office in Downtown Manhattan, Goldberg & Iryami, P.C. Of course, it just so happens that Goldberg & Iryami's speciality is tax reductions for commercial and residential real estate, meaning a relationship with Silver would be highly beneficial.
The only two lawyers at the firm have contributed extensively to Silver's campaigns in the past, but the US attorney's office says it has evidence that there was a "substantial" amount given to Silver under the table. In this case, the most telling figure may be the sheer discrepancy on the Speaker's 2013 tax returns: While the salary for the gig is only $121,000, the politician raked in an additional $650,000 that year. When pressed on the matter in early December, Silver refused to disclose where the money came from, aside from being "outside legal work" he's done with his private law firm.
When I reached out to John Kaehny, the head of Reinvent Albany, a transparency and accountability group, he responded over email with the subject line, "call today re: Albany cess pool." On the phone, he told me that the scariest part of the Silver situation is how easy it is to pull off. Because by and large, it's protected by law.
"The real scandal is what's legal: Pay-to-play has become a pastime in Albany, with contributions turning into actions," Kaehny said. "In three or four of his speeches over the past two years, US Attorney Preet Bharara has said what's shocking to him is what's legal."
That being said, Kaehny commended the probe into Silver, while making the case that outside income streams are a dime a dozen in the State Capitol. Dadey of Citizens Union agreed.
"Our laws are very weak when it comes to ethical oversight and enforcement, and it allows for this abuse to happen," he told me. "As a result, we have to rely on external forces, like the US attorney's office." (It's worth noting that Bharara currently has his hands full with the hellhole that is the Rikers Island prison complex.)
"Whether this Silver investigation amounts to anything," Dadey continued, "it could provide an opportunity to continue to tighten the laws that govern Albany on outside income."
We can credit much of this to the extraordinary concentration of wealth in New York, which in turn stems in large part from the state's position as a financial and cultural heavyweight. In other words, big business—especially in New York City—demands big payouts from local politicians. Kaehny referenced the gigantic subsidies that go to the film and television industries as one part of an "opaque" system that has gone off the deep end.
"We don't know who's getting the tax credits. We don't know who made contributions to whom," he told me. "Who picks the winners and why do they win? We just don't know. It reflects a culture in Albany that has not changed, and is still mired in corruption."
It says a lot about this place that one investigation inevitably leads to another. See, Silver's probe would have never happened if Bharara wasn't already looking into the shady dealings of another politician—in this case, New York's commander-in-chief, Governor Andrew Cuomo.
When Cuomo was elected in 2010, he rode a wave of anti-corruption sentiment, telling voters he would clean up Albany. So he convened the Moreland Commission, an anti-corruption panel with subpoena power that he hoped would shine light onto the shadows of New York State politics. Their slogan? "Restoring Public Trust." But then, all of a sudden, Cuomo nixed the commission this summer, saying its mission was accomplished. And one of the main fields of investigation before the commission at the time of its demise: outside income, like Silver's extra cash.
It is the panel's premature death that is at the center of a federal investigation, especially after it was discovered that the Moreland Commission had begun to set its eyes on Cuomo and his own office. Over a three-month span, a New York Times investigation laundry-listed several instances where Cuomo aides pulled the plug on inquiries that came too close to their boss. These included media firms and real estate moguls, some of whom were major donors to Cuomo's re-election campaign and the State Democratic Party, which Cuomo's office controls.
In true Nixonian fashion, Cuomo's office responded to the Times investigation by saying, "A commission appointed by and staffed by the executive cannot investigate the executive. It is a pure conflict of interest and would not pass the laugh test."
That leads us back to the mother of all industries in New York: real estate. Take, for example, Gary Barnett, the CEO of ExTell Development. A few months before a renewal for a tax break known as a 421a was renewed and signed by Cuomo, Barnett, his family, and a few shell companies associated with him donated hundreds of thousands of dollars to the Governor's campaign and the Democratic Party. Soon enough, his One57 project, a towering 90-story condo in Manhattan, received the tax break, and Barnett saved $35 million.
The Moreland Commission started to look into it, but, of course, the commission was axed before any questions were answered.
It is for this reason, Kaehny argued, that New York City Mayor Bill de Blasio is still unsure about his very own pied-à-terre proposal, which would tax foreign billionaires, oligarchs, and whoever else owns these exorbitantly expensive properties popping up across the real estate market. Right now, city law allows the rich to live here property-tax-free if they don't stick around for the whole year (that is the definition of pied-à-terre: a home away from home). That would change under de Blasio's plan and, as a result, add millions to the city's coffers.
"The United Nations has said New York and London are at the center of global money laundering—all of that laundering leaks into the local and state political systems," Kaehny argued. "De Blasio has said, 'The politics aren't good' for his tax. Well yes, the politics aren't good because real estate controls Albany."
Speaking of dodging taxes, that leads us to our final star in New York sleaze for 2014: Congressman Michael Grimm. The Staten Island Republican made headlines a few months back for threatening to throw a local television reporter off "the fucking balcony" and "break you in half... like a boy." (You can watch video here.) It was revealed later that Grimm was under investigation for filing a false tax return that allegedly hid a million dollars he had made from a Manhattan health-food restaurant.
Somehow, Staten Islanders still re-elected this guy in November, but on Monday, he announced his resignation from Congress, just a week after he pleaded guilty to the charges. Grimm faces up to three years in prison. "This decision is made with a heavy heart, as I have enjoyed a very special relationship and closeness with my constituents, whom I care about deeply," he said in a statement. (Oh, and guess who's thinking of replacing him: Staten Island District Attorney Dan Donovan, the prosecutor who oversaw the grand jury that cleared the cop responsible for Eric Garner's chokehold death in July.)
Making things even more flagrant around here was the veto this week of a Port Authority reform bill by both Governor Cuomo and New Jersey Governor Chris Christie (they run the cross-state Port Authority together). This is the body that was wrapped up in the Bridgegate scandal, and both of these men are under investigation by the United States government, one way or another. That apparently gives them license to team up.
"Will any of this change?" Kaehny asked, repeating my question to him. "There's no indication at all that it will."
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