There's so much to say about the federal criminal complaint just filed against the speaker of the New York State Assembly, Sheldon Silver, a Democrat, that it is hard to know exactly where to start, but here are a few preliminary observations:
1. Part of the case is built on the slim reed of "honest services" fraud, the same statute that prosecutors tried to use against Conrad Black and Jeffrey Skilling but that the Supreme Court rebuffed them on.
2. It's the arbitrary regulatory power of the state over business that creates the opportunity for corruption and that makes one of the best cases for modest government with limited power and limited discretion. From the criminal complaint:
The Legislature, including the Assembly, has a significant role in regulating the real estate industry in the State. In particular, the Legislature regulates the real estate industry by, among other things, passing laws governing real estate taxation, rent, land use, and other matters. In addition to controlling key aspects of land use regulation, the State also sponsors and provides governmental subsidies and tax incentives that have significant financial value to certain participants in the real estate industry.
The same arbitrary and discretionary spending authority seems to apply to the health care portion of the Silver corruption charges as well — the complaint outlines a scheme by which Mr. Silver directed state grant money to a mesothelioma research center led by a doctor. Patients treated by the doctor became asbestos-litigation clients of a law firm that paid Mr. Silver millions of dollars in referral fees.
3. There's an irony in Mr. Silver, an advocate of higher taxes, earning referral fees from a law firm that specialized in getting real estate clients reductions in their property tax assessments. It's hard to improve on the way the New York Times put this in a kind of dry, witty double entendre in a recent editorial about Mr. Silver's income from law firms: "Federal authorities are now asking questions not only about the money he has disclosed but about what he has done to earn the large, undisclosed sums he has received for nearly a decade from Goldberg & Iryami, P.C. The Goldberg firm specializes in challenging tax assessments and seeking tax reductions, which is not known to be Mr. Silver's main area of expertise."
4. Mr. Silver is pals with another Orthodox Jew from the Lower East Side, William Rapfogel, who pleaded guilty last year to stealing from a charity for the poor. Mr. Rapfogel's wife was a top Assembly aide to Mr. Silver. If Mr. Silver turns out to be a crook — and that is a big if, because he's certainly entitled to a presumption of innocence, because he has not been convicted or tried — it's worth trying to understand what, if anything, there is in their subculture that led them down that path.
5. It's amazing how quickly and easily liberal social programs ostensibly intended to help the poor and vulnerable — rent control, tax breaks for building "affordable" housing, grants for research on cancer-ridden asbestos victims — turn into schemes to enrich politicians such as Mr. Silver, who reportedly was paid about $6 million in fees by law firms without doing much or any legal work.
6. The complaint doesn't name the two developers who apparently paid fees to a law firm that then paid Silver, and it is a bit vague on whether they knew that they were buying influence or being shaken down. This seems the weakest part of the government's case: can a politician be arrested for bribe-taking when the person doing the bribing isn't really aware that he is paying a bribe, and where there is no explicit quid pro quo, just a general purchase of goodwill? That's why the charges are honest services and mail fraud, not bribery. It will be an interesting real estate story to try to identify the developers involved. The campaign finance records for the Assembly Democrats show some large contributions from Silverstein Properties, which is involved in development in and around Ground Zero in Lower Manhattan, where the Port Authority, a government agency, plays a substantial role. The state is also involved at Atlantic Yards in Brooklyn, a Forest City Ratner development. Neither firm is named in the complaint nor have they been accused of any wrongdoing.
