From the May 4, 2012 issue of The Chief-Leader

Boodle Brothers Whine and Wheedle on Two Stages 

By RICHARD STEIER

By one of those delightful coincidences of the judicial calendar, Carl Kruger and Pedro Espada figuratively crossed paths again last week, as if to prove that Dean Skelos had already succeeded in creating a 63rd State Senate district, and its boundaries were the Federal Courthouse in Brooklyn to the southwest and its Manhattan counterpart to the northeast.

Two years ago, Mr. Kruger and Mr. Espada were two of the most-powerful men in the upper house of the Legislature, as well as two of the most-disdained by their colleagues on both sides of the aisle. Much of the contempt stemmed from the manner by which they gained their positions of power, first shaking down their fellow Democrats by threatening to join the Republican minority and swing the balance of power back to the GOP unless they were given special consideration, then, in Mr. Espada’s case, actually jumping ship and throwing the Senate into a one-month limbo before his additional demands were met and he sauntered back into the Democratic camp.

While this was transpiring, the State Attorney General at the time, Andrew Cuomo, was examining the manner in which Mr. Espada operated his Soundview HealthCare Network. In April 2010 he filed two civil suits against the Bronx State Senator accusing him of having embezzled $14 million from the network while also paying the employees of a janitorial-services company he owned far less than the minimum wage to handle its cleaning chores.

Pedro’s ‘Victim’ Claim Didn’t Sell

Mr. Espada claimed it was an elaborate retaliation scheme prompted by his role in the Senate coup a year earlier, notwithstanding the reality that neither then nor since has Mr. Cuomo shown much fondness for the Democratic leadership in that body. But the accusations that Pedro ripped off the Federal Government on the pretext of providing services to one of the poorer parts of The Bronx could not be brushed off; in September he was handily defeated for re-election in the Democratic primary. And Federal prosecutors from the U.S. Attorney’s Office for the Eastern District based in Brooklyn began following up on what the State Attorney General’s Office had uncovered. In December 2010 Mr. Espada and his son, Pedro Gautier Espada, were indicted on charges that they had looted $500,000 from Soundview.

A separate, longer-lasting probe was already under way by the U.S. Attorney’s Office for the Southern District in Manhattan that went back at least five years, beginning with Queens Assemblyman and labor leader Brian McLaughlin, who wound up getting 10 years in prison for stealing from virtually every entity he came in contact with. With Mr. McLaughlin’s cooperation being the main reason his sentence wasn’t longer, the probe continued to cut into the depth charts of both houses of the Legislature, until in March 2011 FBI Agents came calling for Mr. Kruger.

His indictment meant that two of the men who once dubbed themselves the “Four Amigos” had separated themselves from their compadres—Hiram Monserrate, who was ejected from the Senate after being convicted on a misdemeanor charge of assaulting his girlfriend, and Ruben Diaz Sr., the supposedly nutty one in the bunch, now distinguished by his ability not to run afoul of the law—as the Boodle Brothers. Their predicament had an added irony to it: while Mr. Espada’s old Senate district in The Bronx and his real home in Westchester County both fall within the Southern District, he was being prosecuted in Brooklyn, while Mr. Kruger, who represented that borough, stood accused in Manhattan.

Kruger Penitent, Espada Defiant

Last December, bowing to the reality that incriminating wiretapped conversations gave him no shot of acquittal, a weeping Mr. Kruger admitted his guilt in a massive bribery scheme and resigned his Senate seat in return for the prospect of a stiff sentence that was still far short of the maximum of 50 years behind bars he would have faced if he had been convicted at trial. And so when he came before U.S. District Judge Jed Rakoff for sentencing April 26, he had advanced to the fourth stage of public-corruption criminality, where Mr. Espada, in whose case summations were being concluded that same day, had not gone beyond Stage 3: unrepentant defiance.

Two days earlier, Mr. Espada sat in U.S. District Judge Frederic Block’s 10th-floor courtroom reading “Black Robes, White Justice” while prosecutor Todd Kaminsky devoted his summation to harpooning him for using Soundview funds to pay for personal expenses, from a 95-cent biscotti at Starbucks to luxury cars.

“Pedro Espada’s attitude was, ‘I own Soundview, I built Soundview, I AM Soundview',’’ Mr. Kaminsky told jurors.

Usually there is a sharp divergence between the narrative offered by the prosecutor and the defense lawyer. In this case, however, Mr. Espada’s attorney, Susan Necheles, was not really disputing what Mr. Kaminsky said, instead contending that because Soundview’s board had approved all these expenditures, Mr. Espada was within his rights to, in Mr. Kaminsky’s words, treat the health-care network’s coffers like an ATM.

It wasn’t just that much of this money came from the Federal Government that made the spending of Pedro and his son so outrageous, Mr. Kaminsky said. It was that the organization served primarily poor people, and not all that well: “Patients couldn’t get their dentures,” he noted, “because Soundview couldn’t pay their medical suppliers.” It had only one EKG machine, he continued, and an “antiquated” dental facility. Soundview’s director of human resources, Maria Cruz, he reminded jurors, testified that on at least one occasion Soundview couldn’t meet its payroll. It also had its alarm system disconnected because it couldn’t pay the monthly bill.

“They didn’t have an X-ray machine,” Mr. Kaminsky said. “They had no bone-density machine.”

He pointed to the numerous expenses Mr. Espada claimed were staff-related that were actually personal indulgences, including a birthday gift card for his wife for a spa visit of more than $500. “If you need to lie, it’s clear that you’re up to no good,” Mr. Kaminsky said.

Lobster Dinners, Island Vacations

He pointed to weekend lobster dinners in Westchester written off as business expenses, lavish meals paid for up in Albany at the same time that he was receiving a $160 per-diem for his Senate duties, and a junket to Puerto Rico right after his 2008 election. “This is Soundview taking the Espada family to Puerto Rico on a vacation,” Mr. Kaminsky noted, pointing to the three-bedroom suite the party took “for thousands upon thousands a night.” Not counting airfare, that was $20,000 out of the health-care network’s coffers, he said.

These expenses were being approved, the prosecutor said, because Soundview’s board consisted of family members like Pedro's uncle and his sister’s boyfriend, and other people not sophisticated enough to realize that these expenditures were improper as well as immoral. “Mr. Espada had a board made up of two kinds of people: people who he owned, and people who were not in any position to tell him no,” Mr. Kaminsky said.

In 2005, he noted, Mr. Espada began a process by which a janitorial company operated by Pedro Gautier Espada took over cleaning operations, contending it would cut costs by 35 percent. Any savings that resulted, the prosecutor told jurors, wound up paying for trips to Puerto Rico and tutoring for family members. Board members, he continued, “have no idea that what they’re doing is putting money in a place that he can take it from.”

A Nasty Character

This was occurring at a time when Mr. Espada was paying himself $500,000 a year as Soundview’s CEO, and had secured a severance package of $9 million.

During a break in the proceedings, Mr. Espada shrugged off the prosecutor’s characterizations of his actions as “hate speech.”

Moments later, he spotted Rafael Martinez Alequin, the elderly blogger who four years ago was assaulted by his son Alejandro after he asked some uncomfortable questions about Pedro’s residence and how he was funding his Senate campaign.

“You’re still alive?” Pedro called to the 79-year-old journalist. It may have been rude and crude, but it was also consistent: during his son’s assault of Mr. Alequin, which included breaking his video camera, Pedro had called out, “He’s trying to teach you manners, Papa.”

Plea Spared Him a Hammering

Mr. Kruger’s decision not to go to trial—pleading guilty to taking bribes totaling the same amount that his Bronx counterpart is accused of embezzling—had spared him the character dissection that Mr. Espada endured over the past few weeks. And to hear his skilled lawyer, Ben Brafman, tell it, his crimes, while significant, were an aberration in a career overwhelmingly marked by the performance of “immeasurable good” within his district.

Judge Rakoff felt compelled to interject, “It is part of the job of an elected public official to be sensitive to his constituents’ needs. It’s not as if these were acts he had no obligation to undertake.”

Mr. Brafman acknowledged Mr. Kruger “has compromised and destroyed his career...He hangs his head in shame.”

But Assistant U.S. Attorney Michael Bosworth cut through the sentimental musings about a fallen, tragic figure, noting that Mr. Kruger “year after year accepted hundreds of thousands in bribes.” Referring to his co-defendant and “intimate” friend, Michael Turano, for whose family Mr. Brafman said Mr. Kruger provided all the ill-gotten proceeds, Mr. Bosworth said, “They weren’t paupers. They didn’t need it. They lived in a million-dollar waterfront mansion in Brooklyn.”

Where Greed Meets Love

When Judge Rakoff asked whether he believed Mr. Kruger acted out of “greed or ungovernable emotions,” the prosecutor replied, “Both.”

To counter Mr. Brafman’s argument that Mr. Kruger under his plea deal was facing more time than other legislators convicted of similar crimes had received, including his co-conspirator, the late Tony Seminerio, Mr. Bosworth pointed out that where Mr. Seminerio was just “a functioning Assemblyman,” Mr. Kruger “was the chair of the Senate Finance Committee, where he controlled the purse-strings of New York State’s budget.”

As to his expressions of contrition, Mr. Bosworth said, “He got caught. Of course he’s experiencing shame now.”

After Mr. Kruger apologized to both his fellow legislators and his constituents, he said, “I have no one but myself to blame, and that reality will haunt me for the rest of my life.”

Judge Rakoff said the good work he had done entitled him to some mercy, accounting for his sentencing him to at least two years less than was called for under Federal guidelines, but that there were limits, given that he “entered into extensive, long-lasting substantial bribery schemes that were frankly like daggers at the heart of honest government.”

A Debatable Characterization

Earlier, Mr. Brafman had described Mr. Kruger as unique among the criminals he has defended based on the qualities he had seen in him over their 30-year acquaintanceship. While he had engaged in shakedowns, he contended, his client was not “a mean-spirited tough guy who was demanding, demanding, demanding.”

Mr. Brafman did not mention that a key element of his past dealings with Mr. Kruger was successfully defending him back in the early 1980s against criminal charges of shaking down a couple of Brooklyn developers who needed permit approvals for 51 homes they wanted to build. Mr. Kruger, who at the time was Chairman of Community Planning Board 18 and already developing a reputation for being a vicious political in-fighter, allegedly demanded a bribe of $100,000 to ensure that their plan didn’t encounter opposition, saying, “I can’t help you, but I can spoil it for you.”

It is widely believed that his political connections helped him beat the rap then. This puts a crimp in the tale told by his attorney that this was a good public servant gone bad late in his career, in addition to raising questions as to whether there were other liberties taken with the law over the years that escaped detection.

By the same token, Mr. Espada is not a newcomer to the criminal-justice system, having been acquitted of previous criminal charges about Soundview’s operation even while some subordinates were not as fortunate.

And yet when they collaborated on their political shakedown shortly after the 2008 election by threatening to jump to the Republican side of the aisle unless they were given power positions in the new but slender Democratic majority, they were accommodated. Any notion that Senate Democrats were uniquely cynical was banished when Senate Republicans led by the past and future Majority Leader, Mr. Skelos, reached a similar accommodation with Mr. Espada and Mr. Monserrate six months later.

Ex-Colleagues Should Cringe

Everyone concerned knew they were elevating people who even by legislative standards were slimy operators, yet the desperation to preserve or regain power was so strong that they were willing to make these Faustian bargains.

Just before handing down Mr. Kruger’s sentence, Judge Rakoff said that in violating his oath of office, “he strikes a blow against every principle on which democracy is founded.”

Those Senators, more than a few of them admirable public servants, who knew full well what Mr. Espada and Mr. Kruger were and nonetheless assented to giving them positions that increased their opportunities for betraying the public, also did their share to chip away at those principles.