New York State Senator and His Son Charged with Embezzling Funds from Not-for-Profit Bronx Health Care Centers

Earlier today, a federal grand jury in Brooklyn returned an indictment charging Pedro Espada, Jr., a New York State Senator for the 33rd Senatorial District in the Bronx, New York, and his son, Pedro Gautier Espada, with five counts of embezzlement from a nonprofit health care network receiving federal funding, and one count of conspiracy.* The defendants’ initial appearances are scheduled for tomorrow at 2:00 p.m. before United States Chief Magistrate Judge Steven M. Gold at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York.

The charges were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Andrew M. Cuomo, Attorney General for the State of New York; Janice K. Fedarcyk, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office; and Charles R. Pine, Special Agent-in-Charge, Internal Revenue Service-Criminal Investigation, New York.

As detailed in the indictment, from 2005 through 2009, the defendants allegedly abused their positions at Soundview Healthcare Center (Soundview),** a network of health care clinics located in the Bronx, through a number of schemes designed to divert Soundview funds to their personal use and for the benefit of favored family members and friends. Pedro Espada founded Soundview in 1978 as a charitable not-for-profit organization under Section 501(c)(3) of the Internal Revenue Code. Soundview receives more than $1 million per year in federal grant money from the United States Department of Health and Human Services, as well as millions of dollars more in Medicare and Medicaid reimbursements.

The various schemes allegedly executed by the defendants to convert Soundview income and assets include the following:

Pedro Espada caused Soundview to pay charges for his personal expenses on the Soundview corporate American Express card; those charges included: more than $100,000 in personal meals for Pedro Espada and his family members, window treatments for Pedro Espada’s home, and tickets to Broadway shows and sporting events;

Pedro Espada and Pedro Gautier Espada used a for-profit janitorial company known as Community Expansion Development Corporation (CEDC) and controlled by them to divert funds from Soundview and then spent such funds for personal use and political expenses; those expenses included: the rent for Pedro Espada’s campaign headquarters, printing costs for campaign materials, heating and air conditioning work done on Pedro Espada’s home, pony rides and a petting zoo for a family member’s birthday party, and a $49,000 check Pedro Espada attempted to use as a downpayment on a Bentley automobile;

Pedro Espada and Pedro Gautier Espada diverted rental payments owed to Soundview to two different entities—CEDC and another for-profit janitorial company known as Soundview Management Enterprises (SME) and also controlled by them—and thereafter used such funds to pay personal expenses for themselves and family members; and

Pedro Gautier Espada rigged the awarding of a Soundview janitorial services contract by providing false contract requirements to other bidders, thereby ensuring that SME was awarded the contract at an inflated price, thus enriching himself and Pedro Espada.

The total amount allegedly embezzled by the defendants exceeded $500,000.

“The indictment alleges that funds that could and should have been applied to purchase medical equipment and enhance health care services for an historically under-served population were diverted by the defendants for their personal use and to benefit friends and family members,” stated United States Attorney Lynch. “In these difficult economic times, the charged crimes are all the more reprehensible.” Ms. Lynch added that the government’s investigation is continuing.

Attorney General Cuomo stated, “As alleged, Pedro Espada and his son spent years secretly siphoning money from a healthcare clinic in order to fund Espada’s lavish lifestyle. Taxpayer funds meant for the sick and poor were instead used for Broadway shows, fancy meals, and other opulent personal expenses of Senator Espada. Elected officials are supposed to serve the people not themselves, and this indictment should send a strong message: In New York, no one is above the law.”

FBI Assistant Director-in-Charge Fedarcyk stated, “In allegedly using Soundview as their personal piggy bank, Pedro Espada and his son violated the law. Embezzling public funds from a not-for-profit health care service provider was also a gross violation of the public trust. It amounts to a betrayal of Soundview clients, Espada’s constituents, and the greater public.”

IRS Special Agent-in-Charge Pine stated, “The law abiding public expects the government to take allegations of the theft of government funds very seriously, especially when they concern a public official. IRS-Criminal Investigation is proud to bring its financial investigative expertise to this investigation and we will continue to work with our federal and state law enforcement partners to bring this investigation to a complete conclusion.”

If convicted, the defendants face a maximum sentence of 10 years’ imprisonment on each of the embezzlement counts and five years’ imprisonment for conspiracy, as well as a fine of $250,000 on each count of conviction.

The government’s case is being prosecuted by Assistant United States Attorneys Colleen Kavanagh, Ilene Jaroslaw, and Todd Kaminsky, and Special Assistant United States Attorney Mitra Hormozi.

The Defendants:

PEDRO ESPADA, JR.

Age: 57

PEDRO GAUTIER ESPADA

Age: 37

* The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty.

** Soundview’s corporate name is Comprehensive Community Development Corporation.

Former New York State Senator and Putnam County Executive-Elect Pleads Guilty in White Plains Federal Court to Obstruction of Justice and Tax Charges

PREET BHARARA, the United States Attorney for the Southern District of New York, JANICE K. FEDARCYK, the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation ("FBI"), and CHARLES R. PINE, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service ("IRS"), Criminal Investigation Division, announced that VINCENT L. LEIBELL, III, pled guilty today in White Plains federal court to obstructing a federal grand jury that was investigating whether he had extorted cash payments from lawyers working in Putnam County and to failing to report on his income tax returns tens of thousands of dollars in cash payments he had received from those lawyers.

Manhattan U.S. Attorney PREET BHARARA said: "This is a sad day for the citizens of Putnam County and a scene that has become all too familiar in New York state. Vincent Leibell betrayed the trust of his constituents and now stands convicted of two federal felonies. Leibell has only himself to blame for the fact that, after 28 years in public office, this conviction will be the capstone to that career. He is the latest in a long line of public officials who have placed themselves above the law and have been brought before the bar of justice in the Southern District of New York. Along with our law enforcement partners, we will fight corruption wherever we find it and prosecute those who abuse the public trust wherever we find them."

FBI Assistant Director-in-Charge JANICE K. FEDARCYK said: "It is inexcusable when public officials abuse the trust that the public has placed in them to make our communities better. Mr. Leibell made it very clear that he did not have the public’s best interest in mind when he repeatedly took part in the activities that led to today’s charges. The FBI remains committed to investigating and bringing to justice all corrupt public officials, whose actions tarnish their offices and undermine public confidence."

IRS Special Agent-in-Charge CHARLES R. PINE stated: "Receiving corrupt payments in the form of cash and then getting others to lie about and cover up the true reasons they were obtaining large sums of cash is a classic technique that tax evaders use to cover up criminal activity. What is truly astonishing is that an elected official who has been in politics for many years, and has known about other elected officials arrested and convicted for financial related crimes, has not learned the lesson that crime does not pay."

According the Information filed in White Plains federal court and statements made during the plea proceeding:

Since April 2010, a federal grand jury sitting in the Southern District of New York, the FBI, and the IRS had been investigating allegations that, as a New York state senator, LEIBELL had unlawfully extorted cash payments from attorneys doing business in Putnam County under color of official right. The investigation focused on whether LEIBELL had demanded and received cash payments from an attorney, described in the Information as Attorney #1, who provided legal services to a Putnam County based not-for-profit organization (the "NFP") that received millions of dollars in New York state senate member item grants that LEIBELL sponsored as a state senator. According to the Information, the investigation focused on whether LEIBELL had threatened to cause the NFP to refuse to pay the invoices ATTORNEY #1 submitted to the NFP for legal services that ATTORNEY #1 had rendered to the NFP unless ATTORNEY #1 agreed to give half of the invoiced amount of money to LEIBELL in cash.

LEIBELL became aware of the investigation in late April 2010 when FBI and IRS agents began approaching, subpoenaing, and interviewing witnesses about the allegations. After LEIBELL learned about the investigation, he began meeting with ATTORNEY #1 to discuss what ATTORNEY #1 should say when approached by federal agents.

On June 6, 2010, at LEIBELL’s request, ATTORNEY #1 met with LEIBELL on a street in Carmel, New York, to discuss the pending federal investigation. During the June 6, 2010 meeting, LEIBELL repeatedly directed ATTORNEY #1 to lie to federal investigators about the cash payments ATTORNEY #1 had previously made to LEIBELL. LEIBELL instructed ATTORNEY #1 to falsely say: (1) that he had never made cash payments to LEIBELL; (2) that when investigators question him about cash withdrawals ATTORNEY #1 made from his bank account to pay LEIBELL, ATTORNEY #1 should falsely say that he withdrew the money to have around in case of a national or family emergency and that he used the money for living expenses, including caring for his elderly mother.

During the meeting, LEIBELL repeatedly urged ATTORNEY #1 to maintain their false denials: "You and I say there was never any cash relationship. Period... Since you and I are in agreement, it didn’t happen... All I know is, as long as you and I are consistent, I’m fine, you’re fine. There was never any cash between you and I, Okay?"

During the plea allocution, LEIBELL also admitted to filing false federal income tax returns with the IRS for the tax years 2003 through 2006. LEIBELL acknowledged that he failed to report at least $43,000 in cash he received during these years from ATTORNEY #1 and ATTORNEY #2, also mentioned in the Information, both of whom did business in or for Putnam County. LEIBELL also acknowledged that he failed to advise the accountant preparing his income tax returns that he had received the cash payments.

LEIBELL, who resigned his New York state senate seat effective on December 3, 2010, is scheduled to be sworn in as Putnam County Executive on January 1, 2011.

LEIBELL pled guilty today before Chief U.S. Magistrate Judge GEORGE A. YANTHIS to a two-count Information charging him with actively obstructing a pending Southern District of New York grand jury investigation involving special agents of the FBI and the IRS. The grand jury was investigating allegations of extortion by public officials in Putnam County and LEIBELL’s failure to report all his income. The case was assigned to U.S. District Judge WARREN W. EGINTON and sentencing has been set for March 7, 2011. The maximum sentence of imprisonment for the crimes to which LEIBELL pled guilty today is 13 years.

Mr. BHARARA praised the work of the FBI and the IRS Criminal Investigation Division. He added that the investigation is ongoing.

This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys PERRY A. CARBONE and JASON P.W. HALPERIN are in charge of the prosecution.

Leadership and the Odd Mind

July 20, 2009 (San Dimas, CA) American Heroes Press announced that the co-author of Leadership: Texas Hold ‘em Style, Lieutenant Raymond E. Foster, LAPD (ret.) will be a guest on the internet-based radio program The Odd Mind with host Lesa Trapp on September 3, 2009.

Date: September 3, 2009
Time: 9PM Central
Listen Live:
http://www.blogtalkradio.com/TheOddMind

ABOUT THE PROGRAM
The Odd Mind Show is the voice of the independent author/artist. The host, Lesa Trapp, is also the publisher of The Odd Mind magazine. In an interview of Trapp by Yvonne Mason, Trapp said of the Odd Mind magazine, “"I want a magazine which not only highlights unknown authors and artists, I also want one which can be purchased and taken into a store to use as a guide to by books." Lesa Trapp went onto explain, “These authors have to rely one their own promoting and their own resources to get their work out there to the readers. Many have spent years trying to not only get published but about as many years getting known.” Summed up, the radio program and the magazine put the extraordinary talents of relatively unknown authors and artists into the minds of new audiences.

ABOUT RAYMOND E. FOSTER
Raymond E. Foster was a sworn member of the Los Angeles Police Department for 24 years. He retired in 2003 at the rank of Lieutenant. He holds a bachelor’s from the Union Institute and University in Criminal Justice Management and a Master’s Degree in Public Financial Management from California State University, Fullerton. He has completed his doctoral studies in business research. Raymond is a graduate of the West Point Leadership program and has attended law enforcement, technology and leadership programs such as the National Institute for Justice, Technology Institute, Washington, DC.

Raymond has been a part-time lecturer at California State University, Fullerton and is currently a faculty advisor and chair of the Criminal Justice Program at the Union Institute and University. He has experience teaching upper division courses in law enforcement, public policy, technology and leadership. Raymond is an experienced author who has published numerous articles in a wide range of venues including magazines such as Government Technology, Mobile Government, Airborne Law Enforcement Magazine, and Police One. He has appeared on the History Channel and radio programs in the United States and Europe as subject matter expert in technological applications in law enforcement.

His first book, Police Technology is used in over 100 colleges and universities nationwide. He latest book, Leadership: Texas Hold ‘em Style has been adopted by several universities for course work in leadership; by several civil service organizations and required reading for promotion; and, has been well received in the wider market.

ABOUT THE BOOK
Using poker as analogy for leadership, Captain Andrew Harvey, CPD (ret.), Ed.D. and Lieutenant Raymond E. Foster, LAPD (ret.), MPA found the right mix of practical experience and academic credentials to write a definitive book for leaders. Working together, Harvey and Foster have written Leadership: Texas Hold em Style. Most often leaders find they are given a set of resources people, equipment, funds, experience and a mission. As Foster noted, "You're dealt a certain hand. How you play that hand as a leader determines your success."

More than a book: A fun and entertaining journey through leadership that includes an interactive website to supplement knowledge gained from the book.
Proven and Tested: Not an academic approach to leadership, but rather a road-tested guide that has been developed through 50-years of author experience.
High Impact: Through the use of perspective, reflection, and knowledge, provides information that turns leadership potential into leadership practice.
Ease of Application: Theory is reinforced with real-life experience, which results in accessible and practical tools leaders can put to use immediately.
High Road Approach: Personal character and ethical beliefs are woven into each leadership approach, so leaders do the right thing for the right reasons.
Uses Game of Poker: Rather than a dry approach that is all fact and no flavor, the game of poker is used as a lens through which to view leadership concepts.

CONTACT INFORMATION
Lieutenant Raymond E. Foster, LAPD (ret)
909.599.7530
raymond@hitechcj.com
www.police-writers.com