NEW YORK (Legal Newsline) - Sheldon Silver used his immense power as Speaker of the New York State Assembly to reap millions of dollars in bribes from Weitz & Luxenberg, one of the most prominent asbestos law firms in the country, a prosecutor told jurors at the opening of Silver’s retrial on federal corruption trials.
Sitting next to his lawyer and wearing a pair of earphones to amplify the proceedings, his familiar tousled hair flecked with gray, Silver smiled at the jury but showed little other emotion as Assistant U.S. Attorney Damian Williams described how Silver schemed to get a share of the “extremely lucrative” business of representing clients with mesothelioma, a fatal cancer that can be caused by asbestos. He is accused of steering $500,000 in state grants and other favors to a mesothelioma doctor in exchange for turning over the names of potential clients to Weitz & Luxenberg for $60,000 apiece.
The law firm, which dominates the specialized New York City court for asbestos cases known as NYCAL, “didn’t hire Sheldon Silver because he was a talented lawyer, or because they expected him to do any legal work at all,” Williams told jurors. “He used his law license as a cover to accept bribes.”
Silver also is accused of accepting $700,000 in fees from a real estate law firm after he steered business the firm’s way from two developers who benefited from his activities at the statehouse, prosecutors say.
Silver was convicted of mail fraud and extortion in 2015 but the Second Circuit Court of Appeals reversed in 2016 after the U.S. Supreme Court, in another official corruption case, significantly narrowed the definition of an “official act” involved in a quid pro quo bribery scheme. In its decision, the Second Circuit said U.S. District Judge Valerie Caproni hadn’t made an error in the Silver trial, but her jury instructions were too loose in light of the subsequent Supreme Court decision.
Judge Caproni is hearing Silver’s retrial in a fourth-floor courtroom in downtown New York. She rejected Silver’s motion to dismiss the charges in March, and expressed some impatience with his attorney, Michael Feldberg in a pretrial conference this morning. At one point she rejected Feldberg’s attempt to keep evidence of Silver’s political power away from the jury.
“My recollection is Mr. Silver is the Grand Poohbah, and if he wants something to get done, they do it,” she said before the jury entered the room, characterizing his role as the most powerful figure in the New York legislature.
Prosecutors say Weitz & Luxenberg hired Silver for $120,000 a year despite his having no clients and no prior experience representing asbestos plaintiffs, because as Speaker he controlled the flow of legislation through the statehouse as well as key committee assignments. The law firm, in a statement to Legal Newsline, said its payments to Silver “were compensation for business he referred in his ‘of counsel’ role at the firm,” and therefore not illegal. In the 2015 indictment that led to Silver’s conviction, and which is being used in the retrial, the government calls the referral fees “illegal payments.”
Silver wasn’t satisfied with his salary, prosecutors say, and began referring mesothelioma patients he learned about from Dr. Robert Taub, who ran a cancer clinic affiliated with Columbia University.
Shortly after cashing his first referral fee of $130,000 in 2005, Silver arranged for Taub’s clinic to receive a $250,000 grant from a state healthcare fund Silver controlled. He issued another $250,000 grant the following year, prosecutors say, then halted them after the state legislature required all such grants to be disclosed to the public. To convince the jury Silver had the guilty state of mind necessary for a criminal conviction, Williams told jurors Silver never publicized his grants to a cancer clinic even though many of his constituents in downtown New York were worried about coming down with cancer from inhaling asbestos-laced dust from the collapse of the World Trade Towers.
Feldberg, in his opening remarks, said Silver disclosed “every penny” of his outside income and can’t be convicted for helping his constituents. Referral fees are legal, Feldberg said, and the government can’t prove any quid pro quo occurred because the people he allegedly helped with official favors weren’t the ones who paid him fees.
The criminal trial will delve deeply into the economics of the asbestos litigation business, in which law firms like Weitz & Luxenberg compete fiercely for the 3,000 or so new mesothelioma diagnoses each year. Every case can generate settlements of $600,000 to millions of dollars and plaintiff lawyers typically collect a third of that plus expenses. Silver allegedly was paid more than $3 million for turning over the names and contact information of 50 mesothelioma patients.
Silver also is accused of depriving taxpayers of “honest services,” a crime the Supreme Court held is restricted to cases of bribery and kickbacks in a 2010 decision involving former Enron Chairman Jeffrey Skilling. Prosecutors must prove that the payments to Silver fall within that definition, therefore, as well as proving that he performed specific official acts in exchange for the illegal payments. That is to comply with the Supreme Court’s 2016 decision overturning the conviction of former Virginia governor Robert McDonnell. In that decision the court said the illegal behavior must go beyond arranging meetings or even urging lawmakers to pass legislation.
In his opening remarks, federal prosecutor Williams said the evidence will show Silver performed several official acts, from issuing grants from a fund he controlled to sponsoring a legislative commendation for Taub, in exchange for names he could turn into valuable referral fees.