May 7, 2015

BIG Name Developers and Politicians Steal from New Yorkers_What’s New? They Got Caught

Dean G. Skelos, the Republican majority leader in the State Senate, was a featured guest at a Sept. 19, 2012, luncheon of the Real Estate Board of New York at the organization’s Art Deco office tower in Midtown Manhattan.
He was there to talk to 30 executives about the coming election. At one point, Mr. Skelos spoke privately to Charles C. Dorego, an executive from one of the city’s most prolific residential developers, Glenwood Management.
Not for the first time, Mr. Skelos asked that Glenwood steer some title insurance business to his son, Adam B. Skelos, who worked in the industry. But Mr. Skelos had made it clear, “using explicit language,” according to prosecutors, that he would punish members of the real estate industry who were inadequate in their support.
So Mr. Dorego arranged for Adam Skelos to receive a $20,000 “commission” from a title company, even though he did no work for the money. The payoff is just one of the allegations made in the criminal complaint unsealed on Monday against Senator Skelos and his son, charging them with fraud, extortion and solicitation of bribes. Taken together with the charges filed earlier this year against Sheldon Silver, the former speaker of the State Assembly, the two cases provide a glimpse into the seamier side of politics, power and real estate in New York.


Dean G. Skelos, the State Senate majority leader, returned to the Capitol on Monday night to meet with his Senate Republican colleagues after being arrested in Manhattan that morning.CreditNathaniel Brooks for The New York Times 

Real estate executives have long said that they contribute heavily to state and city legislators’ election campaigns in the hopes of gaining access to those who make policy in a state where tenants hold considerable voting power.
But the criminal cases describe behavior that goes beyond mere campaign donations and lobbying and involve some of the biggest names in real estate, beginning with Glenwood, whose founder is a revered figure in the business.
Rob Speyer, chairman of the Real Estate Board and co-chief executive of Tishman Speyer, which controls Rockefeller Center and the Chrysler Building, has a cameo role in the complaint against the Skeloses. And Steven C. Witkoff, a developer who recently bought the Park Lane Hotel on Central Park South, has a role in the indictment of Mr. Silver, a Manhattan Democrat, according to a person with knowledge of the case.
No charges have been brought against the developers; in fact, their roles in the cases are as the victims of the alleged extortion.

Charles C. Dorego, an executive with Glenwood Management, in 2009.CreditCindy Ord/Getty Images 

But Michael McKee, treasurer of the Tenant Political Action Committee, who has tangled unsuccessfully with the real estate industry in Albany and at City Hall over rent regulations, took a darker view.
“I’m not sure I would call them victims,” Mr. McKee said of the real estate industry. “It seems to me they were beneficiaries. The real estate lobby has a lot of power in Albany in both houses and on both sides of the aisle. Their power comes from their money.”
Traditionally, the Republican-controlled Senate has been viewed as sympathetic to landlords and developers when it comes to state regulations that restrict rent increases for more than one million apartments in New York City. In contrast, the Assembly, which Democrats dominate, has been more supportive of tenants.
But in the end, the real estate industry has been able to win some reductions in rent regulations in the State Legislature and allow for the deregulation of apartments for well more than a decade. The industry has also been able to keep alive a tax abatement for new construction called421-a.


Sheldon Silver, the former speaker of the State Assembly, left United States District Court in Manhattan on April 28 after his arraignment. CreditBryan R. Smith for The New York Times 

Mr. Silver, who had long been viewed as sympathetic to tenants, and Mr. Skelos are both accused by prosecutors of taking actions on these issues to the benefit of their real estate benefactors. (Coincidentally, both rent regulations and the 421-a program will expire this year unless state legislators renew them.)
Founded by Leonard Litwin, who is 100, Glenwood owns 26 apartment towers in Manhattan with 8,700 apartments, including three in Mr. Silver’s district in Lower Manhattan. Many of those buildings enjoy 421-a tax breaks, and many of the apartments are governed by rent regulations.
In recent years, Mr. Litwin has stepped back from the helm at Glenwood, turning the company over to his daughter Carole Litwin Pittelman, who deals with construction issues; Gary Jacob, who handles project financing and leasing, and Mr. Dorego, the company’s general counsel, who was in charge of dealing with lobbyists and parceling out political contributions.
Glenwood is well known in state politics, given that the company has made more than $12 million in political contributions since 2005, according to an analysis by Common Cause New York, which included donations from related companies and individuals. 
Besides the payment for title work that was never performed, Mr. Dorego also arranged for a consulting job for Adam Skelos at an environmental firm in which Glenwood had investment ties, and which eventually paid him a total of $200,000, according to the complaint. Prosecutors say his father used his powerful position to help the firm win a government contract. A lawyer for Glen 
The federal charges against Mr. Silver include accusations that he steered Glenwood and another developer — Mr. Witkoff — to a law firm that gave Mr. Silver hundreds of thousands of dollars in fees.
A colorful character, Mr. Witkoff used to have a standing reservation at Rao’s, a East Harlem restaurant where patrons loved rubbing shoulders with supposed mobsters as much as the red sauce.
Mr. Witkoff did not return calls requesting comment.


The developer Steven C. Witkoff had peripheral roles in the cases against both Sheldon Silver and Bernard Kerik.CreditFrances Roberts for The New York Times 

This was not Mr. Witkoff’s first time on the periphery of a scandal. In 2007, Bernard B. Kerik, the former police commissioner, was indicted on charges of tax fraud, corruption and conspiracy.
 Kerik Best Bud of Mayor Giuliani
At the time he left his police post for private work at the end of 2001, Mr. Kerik was living in a luxury apartment at the Lucerne, a building on East 79th Street that is owned, coincidentally, by Mr. Litwin. The monthly rent, more than $9,000, was paid by Mr. Witkoff, who was not charged with any wrongdoing, but was a witness in the case. Mr. Kerik was charged with failing to report over $100,000 in rental payments by Mr. Witkoff as income. He served three years in prison for tax evasion regarding this and other gifts he did not declare, and for lying to federal officials.
Mr. Speyer shows up as a minor player in the Skelos case. According to prosecutors, Adam Skelos emailed a supervisor at the title company where he worked in January 2011, saying he would soon be having lunch with the president of a major commercial development company, “and he wants to start giving me his work.” The company is identified in the complaint as being the owner of the Chrysler Building, which is controlled by Tishman Speyer.
On Feb. 10, 2011, the younger Mr. Skelos and his father did have lunch with Mr. Speyer at Rockefeller Center, according to records cited by the prosecutors.
A month later, Tishman Speyer emailed Adam Skelos “asking him to produce a title report for a $250 million mortgage of the Chrysler Building complex,” according to the complaint, which did not say how much Mr. Skelos was paid.
In a statement, a spokesman for Tishman Speyer said, “We have been contacted by the U.S. attorney’s office with regard to its investigation and are happy to continue to answer any questions they may have.”
The New York Times

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