Espada and His Family Siphoned More Than $14 Million Over 5 Years
Espada Packed Board with Family Members and Senate Employees to Rubber Stamp Expenditures
NEW YORK, NY (April 20, 2010) - Attorney General Andrew M. Cuomo today announced his office has filed suit against Senate Majority Leader Pedro Espada Jr. for looting the Bronx based not-for-profit where Espada serves as President and CEO. Nineteen current and former officers and directors of the Comprehensive Community Development Corporation (“Soundview”) are also named in the lawsuit.
The lawsuit alleges Espada diverted Soundview’s charitable assets and used the money for himself, his family, his friends, and his political operation. In the past five years, Espada has siphoned more than $14 million out of Soundview, including an unconditionally guaranteed severance package worth an estimated $9 million which was put into a contract signed in 2005. The Chief Financial Officer and the Soundview Board, which is packed with Espada’s family, friends, and Senate employees, approved the transactions.
The lawsuit, part of Cuomo’s ongoing investigation, seeks to permanently remove Espada and current CFO Kenneth Brennan as officers of Soundview and, similarly, to remove all of Soundview’s directors from the Board.
Soundview was founded by Pedro Espada Jr. with the purpose of providing healthcare to the people of the South Bronx. It is a not-for-profit that receives a vast majority of its funding from the State and Federal Government.
“Taxpayer money was given to this not-for-profit to provide healthcare services to underprivileged patients, but our investigation has found the funds flowed into the pockets of Senator Espada and his supporters,” said Attorney General Andrew Cuomo. “Siphoning money from a charity would be egregious under any circumstances, but the fact that this was orchestrated by the State Senate Majority Leader makes it especially reprehensible. In New York, no one is above the law, and this suit should finally make that clear to Senator Espada.”
Specifically, the complaint filed by the Attorney General alleges that money from Soundview lined the pockets of Espada, his family, his supporters and his campaign.
In terms of Espada, the investigation found:
- Soundview gave Espada a severance package that is currently worth an estimated $9 million. The provision unconditionally guarantees Espada the payment of one year’s gross pay for every year of service. If the clause were triggered, Soundview would be forced into bankruptcy.
- Soundview paid approximately $80,000 in restaurant bills for 650 separate meals for Espada or his supporters. This includes more than 200 meals totaling more than $20,000 from two sushi restaurants that regularly received orders from Espada’s wife and delivered to the Espada home in Mamaroneck.
- Soundview paid for trips for Espada, his wife and his family to such places as Las Vegas, Miami, and Puerto Rico as purported business trips.
- Soundview has provided Espada with what is essentially an unlimited line of credit on a corporate American Express card. From 2006 through mid-2009, Espada charged more than $450,000 in items he later identified as personal.
- Soundview gives Espada 14 weeks of annual leave on the first of each year, before it accrued, and allowed him to convert it to its cash equivalent to pay personal expenses. In this way, Soundview extended Espada more than $75,000 in credit, a violation of the New York State Not-For-Profit Law.
- Espada created a company that offered janitorial services, put his son, Pedro Gautier Espada, in charge of it, and then Gautier rigged the bids to make sure it won the Soundview contract - a contract worth almost $400,000 annually. In 2008, Pedro Gautier earned more than $150,000 from the for-profit company and from Soundview.
In terms of Senator Espada’s improper funding of his political operations, the investigation found:
- More than 150,000 pieces of Espada’s campaign literature at a cost of $100,000 were paid for by or funneled through Soundview.
- Soundview routinely pays for political campaign expenses put on Espada’s American Express card- a practice that continues to this day. In fact, in the month prior to the 2008 primary for New York Senate, Espada amassed tens of thousands of dollars in credit card charges, most were campaign expenses.
- Soundview provides Espada, who resides in Mamaroneck, with a housing allowance of approximately $2500 per month to pay for a Bronx co-op which Espada claimed as his legal residence for purposes of his 2008 Senatorial campaign. The total money spent on this second residence so far exceeds $50,000, and the allowance was provided so that Espada could establish a residence for his campaign at Soundview’s expense.
- Soundview employees and resources were used in Espada’s campaign effort.
Soundview has also failed to pay hundreds of thousands of dollars in payroll taxes. Despite these problems, Espada’s bills are paid on time. In 2008, despite owing $700,000 in federal payroll taxes, Espada’s credit card charges, including $250,000 in personal expenses, were paid. The investigation found that the directive was to pay Espada and his family before any other vendor or financial obligation.
The fleecing of Soundview and its taxpayer dollars was possible because many of the Board members had personal or financial ties to Espada. State Senate employees serve as Directors of the Board.
- Current Board member Victor Feliciano is Espada’s uncle.
- Current Board member Marzetta Harris is an employee of the New York State Senate.
- Current Board member Monica Harris-Coleman is an employee of the New York State Senate.
- Current Board member Victor Sierra is the boyfriend of Espada’s sister.
- Current Board member Jeanette Torres is the mother of Espada’s grandchild and is also an employee of the New York State Senate.
- Current Board member Lidisbelle Pacheco is the mother of another of Espada’s grandchildren.
- Former Board member Jacqueline Collazo is Espada’s niece.
- Former Board member John Feliciano is Espada’s uncle and was an employee of the New York State Senate while he was on the Board.
- Former Board member Lourdes Rivera was engaged to Espada’s son when she was on the board. They are now married.
- Former Board member Andrew Yong is now employed by the New York State Senate.
The individuals named in today’s suit are:
- Pedro Espada, Jr., President and CEO of Soundview, Bronx NY and Mamaroneck, NY
- Kenneth T. Brennan, Vice President of Finance and CFO, Tarrytown, NY
- Lydia Almeyda, Bronx, NY
- Barbara Braxton, Bronx, NY
- Constance Bruno, Woodridge, NY
- Jacqueline Collazo, Bronx, NY
- Beverly Crosby, New York, NY
- John Feliciano a/k/a Juan Feliciano, address unknown
- Victor Feliciano, Bronx, NY
- Marzetta Harris, Bronx, NY
- Monica Harris-Coleman, New York, NY
- Evette Maduro Pagan, Bronx, NY
- Charlotte McDuffie, Bronx, NY
- Lidisbelle Pacheco, Yonkers, NY
- Lourdes Rivera a/k/a Lourdes Mocete a/k/a Lourdes Espada, Fairfield, CT
- Victor Sierra, address unknown
- Genoveva “Jenny” Torres, Bronx, NY
- Jeanette Torres, Mamaroneck, NY
- Andrew Yong, New York, NY
- Doris Yong, Forest Hills, NY
The lawsuit seeks to:
- Remove Senator Espada and Brennan as officers of Soundview
- Hold Senator Espada and Brennan liable to pay restitution and damages
- Remove all the Director Defendants currently serving on the Board of Soundview
- Declare Senator Espada’s severance package void and unenforceable
- Enjoin any payment by Soundview to Espada pursuant to his employment contract
- Enjoin Senator Espada, Brennan or anyone working with them from using Soundview funds
- Enjoin Senator Espada, Brennan and Director Defendents from serving as officers, directors, trustees, or equivalent positions of Soundview or any other not-for-profit
The civil lawsuit was filed today in the Supreme Court of the State of New York, New York County. The lawsuit alleges violations by Espada of Not-for-Profit Corporation Law (NPCL) Sec. 716 and 717. The lawsuit alleges violations by Brennan of NPCL Sec. 717. The lawsuit alleges violations by the board of NPCL Sec. 717. The lawsuit alleges violations by all defendants of Estate Powers and Trust Law Sec. 8-1.4.
The lawsuit is available at www.ag.ny.gov.
The investigation is ongoing and developing.
This case is being handled by Assistant Attorney General Nathan Reilly and Special Deputy Chief of Staff Mitra Hormozi.
April 20, 2010 7:23 pm
Here’s Senate Majority Leader Pedro Espada Jr.’s full statement.
$20,000 worth of sushi is a lot.