Thursday, April 22, 2010

FBI, IRS agents raid Pedro Espada Jr.'s Soundview HealthCare Network one day after corruption charge

Originally Published:Wednesday, April 21st 2010, 9:09 AM
Updated: Wednesday, April 21st 2010, 5:22 PM

Scene at the Soundview HealthCare Network, where FBI and IRS  agents raided the offices of Pedro Espada, Jr.
Schwartz for News
Scene at the Soundview HealthCare Network, where FBI and IRS agents raided the offices of Pedro Espada, Jr.
Senate Majority Leader Pedro Espada was accused of pilfering $14  million from the health clinic.
Dickstein/Times Union
Senate Majority Leader Pedro Espada was accused of pilfering $14 million from the health clinic.

Federal agents swooped in on Pedro Espada Jr.'s health clinic in the Bronx Wednesday, one day after Attorney General Andrew Cuomo accused him of looting $14 million in taxpayer funds meant for the poor.

A team agents from the FBI and IRS, along with investigators from Cuomo's office, began raiding the offices of Soundview HealthCare Network on White Plains Road around 7 a.m.

They used boltcutters to get into two trailers behind the building and began toting out white file boxes, some marked "payroll" and others labeled "timesheets."

After sifting through the materials in a rear parking lot, the agents loaded more than 30 boxes of seized property into a blue Ford Econline minivan.

"We found materials we're going to be seizing," said FBI spokesman James Margolin.

Passing motorists honked in celebration and yelled out "lock him up!" and "it's about time!"

"He's a crook," said patient Muriel Moreno, 48, who said she was appalled that Espada used clinic money to pay for vacations, restaurant bills and campaign expenses - as Cuomo alleged in a civil suit Tuesday.

"These are poor people. He's using us to get away with illegal acts," she said. Confirming a report in Wednesday's Daily News, Cuomo said his investigation is proceeding jointly Brooklyn U.S. Attorney Benton Campbell.

The federal criminal charges they are considering: mail fraud, wire fraud, theft of government funds and conspiracy.

"Fourteen million over four years, nobody's going to argue that's fair," Cuomo said. "This was not the private playground of Mr. Espada. These were public funds," he said.

"These funds were to go to provide for needy people."

In addition, Cuomo's office is looking at a myriad of state criminal charges, including violations of labor and campaign laws and a scheme to boost profits by cheating workers.

Cuomo is also investigating possible tax liability issues and whether Soundview violated not-for-profit corporation laws by engaging in political activity.

Neither Espada nor his lawyer, Susan Necheles, returned calls for comment. His spokesman had no comment.

The normally defiant Espada kept a low profile. He asked Albany leaders to excused for the day to deal with personal business matters and ducked flocking camera crews.

On Tuesday, Espada called the suit "lies and falsehoods" and dismissed it as political payback for the Senate leadership coup he helped launch last summer that briefly put Republicans in control. Cuomo dismissed that.

"I see it as a factual lawsuit," he said. "I think the facts speak for themselves."

Espada's clinic, which opened 30 years ago to serve the indigent, remained open during the eight-hour raid. Few patients were mourning the state Senate Majority Leader's fall.

"He's a bottom-feeder. I'm glad [federal agents] are here, because we need this place clean," said Vernelle Jenkins, 69, a longtime patient who came seeking dental care.

"It's stealing at the expense of the people he should be helping."

Many patients worried about the future the four health clinics they have come to depend on. Fidel Calero, 59, of Norwood, said the clinic gives him diabetes treatments even when he can't cover all the costs.

"No matter what Espada's doing on his own, this place is good for the community," he said. "They treat working class people who have very few health care options. They helped me a lot of times when other clinics probably wouldn't."

In Albany, a number of pols thought Espada should step down as state Senate majority leader.

The post gives him little power but plenty of perks, including a large offices suite in the Capitol and a big staff.

"I think he should voluntarily step down immediately," said state Sen. Neil Breslin (D-Albany). "I think we should be beyond reproach and even though these charges are civil, I think that we are held to a higher standard," Breslin said.

"It's time for him to step aside," said Sen. Martin Golden (R-Brooklyn).

"This hurts the image of the Senate and the state of New York deserve better."

But Senate Democratic Conference Leader John Sampson told the News has has no intention of forcing Espada out over what currently is a civil matter.

"There hasn't been any indictment," Sampson said. "He deserves his day in court like any other person with respect to a civil matter."

In Tuesday's bombshell civil suit, Cuomo charged that Espada used his not-for-profit health centers - which are funded by approximately $12 million a year in government grants - as a "personal piggy bank" to pay for family trips and $80,000 in restaurant bills - including $20,000 in sushi deliveries to his home.

Sources say Espada stuck his health clinic with the tab for $9,480 in JetBlue tickets to San Juan and $20,000 in sports and theater tickets.

"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," Cuomo said.

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