Two Down, One to Go?

When United States Attorney Preet Bharara brought federal charges against then Assembly Speaker Sheldon Silver on Jan. 22, he denounced Albany’s culture of “three men in a room” for taking large amounts of money from real-estate interests such as the luxury developer Glenwood Management. That money, he said, meant that “certain of that developer’s recommendations ultimately are adopted by the Legislature” and that landlords “were surprised by how favorable Silver was to their position, and that Silver could have done more for tenants.”

At that time, the three men in the room were Silver, Gov. Andrew Cuomo, and state Senate Majority Leader Dean Skelos. The day before, during his State of the State address, Cuomo had nicknamed them the Three Amigos, showing an image of them on horseback and wearing sombreros. Bharara made clear that the arrest of Silver was just the beginning. “Stay tuned,” he advised. Skelos was arrested in May on corruption charges that also included taking money from Glenwood.

Silver was convicted on all charges on Nov. 30 after a five-week trial, and Skelos was convicted on Dec. 11. In both trials, the role of Glenwood Management figured prominently. The company and its principal owner, billionaire Leonard Litwin, have been major players in both the Real Estate Board of New York, the developers’ trade group, and the major landlord lobby, the Rent Stabilization Association. Litwin has received over $700 million in tax abatements for his various properties, as well as benefiting from weak rent protections for his residential tenants.

 

Looking for Loopholes

On July 1, 2013, following the convictions of numerous legislators for ethics violations and other crimes, Gov. Cuomo created a Moreland Commission to Investigate Public Corruption, charged with two tasks: pursuing cases of misconduct among public officials, and recommending changes to the state’s election and campaign fund-raising laws. “The people of this state should sleep better tonight knowing that there is a mechanism in place to make sure their government is not only competent, but is also meeting the highest ethical and legal standards,” he said.

Since his initial campaign announcement, Cuomo has repeatedly called for ethics reform. But he has failed to deliver meaningful changes, much like his tough words and hypocritical actions on other “good government” issues such as public financing of elections, open government, and impartial redistricting.

When the Moreland Commission began investigations that seemed to point toward Cuomo himself, his administration tried to divert them, with only limited success. On March 29, 2014, at the end of a 44-minute conference call with reporters describing the budget agreement he had just worked out with Silver and Skelos, Cuomo mentioned that he was shutting down the Moreland Commission, ostensibly because the legislature had agreed to an ethics package—which he described as “85 percent of what I wanted.” 

That bill, however, mostly only addressed legislators’ outside income and reimbursement expenses. It did nothing to close the LLC loophole—in which limited-liability corporations are allowed to contribute to campaigns as if they were separate individuals—or most other aspects of Albany’s corrupt “pay-to-play” culture. It created a system for public financing of elections that applied only to the state comptroller. That was widely seen as a cynical effort to weaken the re-election prospects of the incumbent, Thomas DiNapoli, a Democrat who had criticized Cuomo’s cuts to state workers’ pensions, if he faced a well-funded Republican opponent. DiNapoli opted out, with the blessing of good-government groups such as  Common Cause.

Following the Silver indictment, as calls for genuine reform heated up, Cuomo inserted similarly weak ethics measures into the 2015 state budget, again dealing primary with legislators’ income and disclosure but leaving the LLC loophole open and the role of big money untouched. Few were fooled. “It is hard to see how these changes in the law will have any meaningful effect on public corruption,” Attorney General Eric T. Schneiderman told the New York Times. In the nine months after he shut the Moreland Commission down, Cuomo collected $2 million in contributions from LLCs.

When Cuomo ran for governor in 2010, he called LLCs a “loophole” that should be closed. But while collecting a total of $9 million in LLC contributions during his first term, he changed his tune. “Those aren’t loopholes. Those are the laws that are written,” he said in July 2013.

 

Obstruction of Justice?

When Cuomo disclosed that he was shutting down the Moreland Commission, prosecutor Bharara reacted by seizing the commission’s files and announcing that he was going to continue the investigations and was also going to investigate the circumstances of Cuomo shutting it down.

In July 2014, the Times published an investigatory piece documenting how Cuomo had interfered with the work of the Moreland Commission before he shut it down, including quashing subpoenas directed at his allies. When Cuomo organized a few former commission members to deny that there had been any interference, Bharara responded with a letter warning against witness tampering. “To the extent anyone attempts to influence or tamper with a witness’s recollection of events relevant to our investigation, including the recollection of a commissioner or one of the commission’s employees, we request that you advise our office immediately,” the letter said, “as we must consider whether such actions constitute obstruction of justice or tampering with witnesses that violate federal law.” 

In early August 2014, the Wall Street Journal confirmed that “Mr. Bharara’s probe into the actions of the Cuomo administration with respect to interfering with the commission, dissolving it, and the aftermath of that decision is now a top focus of prosecutors, according to people familiar with the probe.”

Cuomo’s problems have not stopped there. In September, it was widely reported that Bharara is also investigating fraud and illegality related to the “Buffalo Billion” redevelopment plan, financed by the state’s Empire State Development Corporation. The allegations include that bids were rigged to make only Louis P. Ciminelli, a large Cuomo campaign donor, eligible for the contract. Ciminelli and Empire State chair Howard Zemsky, a Buffalo businessman, are believed to be cooperating with the federal investigation.

Silver and Skelos were convicted for, among other things, taking Glenwood and other real-estate money in order to pass tax giveaways and weak rent laws. But Cuomo, the third man in the room, has taken by far the most money for Glenwood’s various LLCs—a total of $1 million given directly to his campaign coffers; another $500,000 to the state Democratic Party, which Cuomo controls; and another $450,000 to his former lobbying group, the Committee to Save New York.

If Bharara was looking to see what impact Cuomo had on the 2015 rent laws, the evidence was there to see on June 26, when the governor signed into law the renewal of rent stabilization without repealing vacancy decontrol or adding any of the stronger protections called for by tenants. The 2015 law made a few minor pro-tenant changes, including slightly raising the vacancy-decontrol threshold. But it left intact vacancy decontrol and the numerous other changes enacted over the past 20 years that have left rent and eviction laws severely compromised.

Cuomo’s role was clear. On Valentine’s Day, busloads of tenants from Met Council and other organizations went to Albany and brought a valentine to the governor’s mansion, saying we would love it if he would help fight for stronger rent laws. When the Assembly under Speaker Heastie passed a strong bill, Cuomo remained silent. In late May, Mayor Bill de Blasio went to Albany and publicly called on Cuomo to “show leadership” in the fight to strengthen rent and eviction laws, and the governor responded with a vindictive personal attack. In the end, the Assembly was forced to accept the law as dictated by Cuomo and the Republican majority in the Senate. 

“It was three men in a room, and apparently two were Republicans and that was the problem,” said state Sen. Liz Krueger (D-Manhattan), a leading champion of tenants in Albany. 

It looks like Glenwood got their money’s worth.