Sunday, December 27, 2015

The Investigation of Gary Alford and the End of the Silk Road For Russ W. Ulbricht

The Tax Sleuth Who Took Down a Drug Lord

Gary L. Alford was running on
Gary Alford, a special agent with the I.R.S., pored over old blog posts
and chat room logs that led, eventually, to Dread Pirate Roberts

adrenaline when he arrived for work on a Monday in June 2013, at the Drug Enforcement Administration office in the Chelsea neighborhood of Manhattan. A tax investigator, he had spent much of the weekend in the living room of his New Jersey townhouse, scrolling through arcane chat rooms and old blog posts, reading on well after his fiancée had gone to sleep.
It ultimately took Mr. Alford, 38, more than three months to gather enough evidence to prevail upon his colleagues to take his suspect seriously. After he convinced them, though, the man he identified, Ross W. Ulbricht, was arrested and Silk Road shuttered. The night of the arrest, Mr. Alford got an email from one of the other special agents at the center of the case: “Congrats Gary, you were right,” it said.

Ross W. Ulbricht
The laptop computer Gary Alford used during his investigation into
Dread Pirate Roberts. Mr. Alford found many of his leads through Google searches.
Mr. Alford’s experience, and the lag between his discovery and Mr. Ulbricht’s arrest, were largely left out of the documents and proceedings that led to Mr. Ulbricht’s conviction and life sentence this year.

Previous examinations of the Silk Road investigation have generally focused on the role played by special agents with the Federal Bureau of Investigation and the Department of Homeland Security, who infiltrated the website, arrested important deputies and gathered reams of crucial information, but not enough to find Mr. Ulbricht — until Mr. Alford came along.

The other agencies involved in the investigation declined to comment on Mr. Alford’s work, but several people briefed on the investigation, who were not authorized to speak about it publicly, confirmed the basic outlines of Mr. Alford’s story.

Back in the summer of 2013, it was not hard, even for Mr. Alford, to understand why it took him time to win over the others on the case. He had joined the investigation relatively late and was on a team that hadn’t previously found much of value. He also lacked the sophisticated technological experience of colleagues at the F.B.I. On a more personal level, Mr. Alford could come across as overeager.

But Mr. Alford also detected the sort of organizational frictions that have hindered communication between law enforcement agencies in the past. Within the I.R.S., Mr. Alford had heard tales of his agency being ignored and overshadowed by more prominent organizations like the F.B.I. The story that resonated with Mr. Alford most strongly was that of the tax agent Frank J. Wilson, who brought down the gangster Al Capone, but who was forgotten in the movie versions of the investigation, which tended to focus on Eliot Ness, the flashier Bureau of Prohibition agent.

“They don’t write movies about Frank Wilson building the tax case,” Mr. Alford said in an interview at the I.R.S.’s Manhattan headquarters. “That’s just how it is.”

Mr. Alford grew up in the Marlboro public housing projects of Brooklyn in the 1980s, a short, half-black, half-Filipino kid in a tough neighborhood. His father, a math teacher, would cite the power of the subject to teach his son how to prevail over difficulties. “If you get the right answer, the teacher can’t tell you anything,” Mr. Alford remembers his father saying. That attitude led Mr. Alford to study accounting at Baruch College and then to the I.R.S., where his skeptical, lone-wolf approach worked well.

It was Mr. Alford’s supervisors at the I.R.S. who assigned him in February 2013 to a D.E.A. task force working the Silk Road case. The Strike Force, as it was known, had so far had little luck finding meaningful leads. Mr. Alford’s superiors hoped he could bring his youthful energy and doggedness to the project.

Mr. Alford started by chasing down leads on low-level Silk Road vendors selling Bitcoin, but he was too ambitious to keep his attention focused on small-time criminals. Whenever he had a free moment, he would read up on the origins of Silk Road and its nearly mythical leader, Dread Pirate Roberts, who ran the business and espoused his radical free-market ideology on the site’s message boards.

“I’m not high-tech, but I’m like, ‘This isn’t that complicated. This is just some guy behind a computer,’” he recalled saying to himself. “In these technical investigations, people think they are too good to do the stupid old-school stuff. But I’m like, ‘Well, that stuff still works.’ ”

Mr. Alford’s preferred tool was Google. He used the advanced search option to look for material posted within specific date ranges. That brought him, during the last weekend of May 2013, to a chat room posting made just before Silk Road had gone online, in early 2011, by someone with the screen name “altoid.”

“Has anyone seen Silk Road yet?” altoid asked. “It’s kind of like an anonymous”

The early date of the posting suggested that altoid might have inside knowledge about Silk Road.

During the first weekend of June 2013, Mr. Alford went through everything altoid had written, the online equivalent of sifting through trash cans near the scene of a crime. Mr. Alford eventually turned up a message that altoid had apparently deleted — but that had been preserved in the response of another user.

In that post, altoid asked for some programming help and gave his email address: Doing a Google search for Ross Ulbricht, Mr. Alford found a young man from Texas who, just like Dread Pirate Roberts, admired the free-market economist Ludwig von Mises and the libertarian politician Ron Paul — the first of many striking parallels Mr. Alford discovered that weekend.

When Mr. Alford took his findings to his supervisors and failed to generate any interest, he initially assumed that other agents had already found Mr. Ulbricht and ruled him out.

But he continued accumulating evidence, which emboldened Mr. Alford to put Mr. Ulbricht’s name on the D.E.A. database of potential suspects, next to the aliases altoid and Dread Pirate Roberts.

At the same time, though, Mr. Alford realized that he was not being told by the prosecutors about other significant developments in the case — a reminder, to Mr. Alford, of the lower status that the I.R.S. had in the eyes of other agencies. And when Mr. Alford tried to get more resources to track down Mr. Ulbricht, he wasn’t able to get the surveillance and the subpoenas he wanted.

Mr. Alford said the Manhattan federal prosecutor overseeing the investigation, Serrin Turner, seemed to want to find Dread Pirate Roberts more than anyone. But Mr. Alford said that Mr. Turner was working with multiple agencies on the case and did not seem to put much weight in the evidence that Mr. Alford was finding — leading to heated conversations.

“I’m not saying I’m right; we just need to look into this guy fully,” Mr. Alford remembers telling Mr. Turner.

A spokesman for the United States attorney’s office in Manhattan, where Mr. Turner works, declined to comment.

When Mr. Alford visited the main F.B.I. team on the case, later in the summer, it became clear that the team wasn’t aware of Mr. Ulbricht as a suspect — and also had no serious candidates of their own. Mr. Alford mentioned that he had a suspect in San Francisco, but no one followed up.

One of the other agents present for that meeting, who spoke on the condition of anonymity, said that he and the others in the room had little reason to ask for further information from Mr. Alford, given the lack of progress made by the D.E.A. Strike Force to which he was assigned. “No one was taking them seriously,” the agent said. “I obviously wished we had asked more.”

When Mr. Alford went back to the D.E.A. office in Chelsea and complained about the meeting, a fellow I.R.S. agent in the group suggested it was time for Mr. Alford to give it up. “You’ve told them what you know. They didn’t do anything,” the agent told him, according to a person briefed on the conversation. “Forget it.”

Instead, Mr. Alford decided to review his findings again. In early September, he asked a colleague to run another background check on Mr. Ulbricht, in case he had missed something.

The colleague typed in the name and immediately looked up from her computer: “Hey, there is a case on this guy from July.

Agents with Homeland Security had seized a package with nine fake IDs at the Canadian border, addressed to Mr. Ulbricht’s apartment in San Francisco. When the agents visited the apartment in mid-July, Mr. Ulbricht answered the door, and the agents identified him as the face on the IDs, without having any idea of his potential links to Silk Road.

Mr. Alford’s colleague asked him, “Is this stuff interesting to you?”

“You are making my day,” he said.

As she read out the details, the report grew more intriguing. Without the agents mentioning Silk Road, Mr. Ulbricht told them that “hypothetically” anyone could go on a site called Silk Road and buy fake IDs.

Armed with these new findings, Mr. Alford phoned the prosecutor, Mr. Turner. There was a pause in the conversation while Mr. Turner typed Mr. Ulbricht’s address into his own computer. Then Mr. Alford heard a shouted profanity from the other end of the line — the clearest sign of interest he had heard yet, he says.

Mr. Ulbricht’s home address, it turned out, was a few hundred feet from an address that the F.B.I. had turned up in its investigation: a cafe from which Dread Pirate Roberts had signed in to Silk Road.

Mr. Turner arranged a conference call the same day with Mr. Alford and two agents on the case — an F.B.I. agent, Christopher Tarbell, and a Homeland Security agent, Jared Der-Yeghiayan.

Both agents declined to comment for this article, but according to two people briefed on the investigation, the crucial moment in that conference call came when Mr. Alford described some of Mr. Ulbricht’s interactions on message boards for programmers, while using the screen name “Frosty.” Mr. Tarbell stopped Mr. Alford and explained that Frosty was the name of the computer from which Dread Pirate Roberts had been logging in to the Silk Road.

“Oh, that’s interesting,” Mr. Turner deadpanned.

“That’s the guy,” Mr. Tarbell said.

The agreement among the agents on the phone that day allowed Mr. Alford to get his wish to put Mr. Ulbricht under full surveillance. Within days, the agents had established that Dread Pirate Roberts was logging into the Silk Road just moments after Mr. Ulbricht was going online in his apartment.

In New York, Mr. Turner and Mr. Tarbell began writing up the complaint against Mr. Ulbricht. In it, they referred to Mr. Alford as Agent 1.

On Oct. 2, Mr. Tarbell and Mr. Der-Yeghiayan helped apprehend Mr. Ulbricht at a public library in San Francisco. Mr. Alford could not be there because of travel-budget restrictions that applied to him but not other investigators on the team.

After the arrest, though, his role in the case was recognized with a plaque from his superiors featuring a quotation from Sherlock Holmes: “The world is full of obvious things which nobody by chance ever observes.”

Cleaning Up New York State Corruption: Who Is Preet Bharara?

U.S. Attorney Preet Bharara
Preet Bharara: The man behind NY corruption busting
Joseph Spector, Journal Albany Bureau, December 26, 2015

ALBANY - When Andrew Cuomo was running for attorney general in 2006, he vowed to be the “Sheriff of State Street,” where the state Capitol is located.

A decade later, there’s a new sheriff in town: U.S. Attorney Preet Bharara.

In his six years in office, Bharara has won the guilty verdicts of 27 public officials, and none were larger than the convictions in the last month of the former legislative leaders, Assembly Speaker Sheldon Silver and Senate Leader Dean Skelos.


Former N.Y. Assembly Speaker Silver guilty on all counts


Ex-NY Senate leader Skelos, son guilty of extortion

Already, Bharara has carved out a public-corruption record that rivals anyone who has held the distinguished post for the Southern District of New York, which covers parts of New York City and the Hudson Valley.

People close to him say Bharara has a calm confidence that, over decades in politics and the courtroom, has driven him toward a belief that New York is fertile ground for public corruption.

He has wiretapped lawmakers and their phones, turned their trusted political allies into informants and stepped in when state prosecutors and oversight agencies didn’t.


Why can't Albany clean itself up?

The goal, ultimately, is to change government for the better, he and those who’ve worked with him said.

“There’s a lot of cases that you do, but these two (Silver and Skelos) are ones that hopefully will actually change things in a broader way,” said Richard Zabel, Bharara’s former deputy until June when he left for the private sector. “That’s what Preet is trying to do.”

Bharara’s convictions of Silver and Skelos — two of the three most powerful figures in New York — has led to speculation about his own political future and whether he is targeting the state’s other most powerful leader in New York: Cuomo, the Democratic governor.

Bharara’s office is still believed to be investigating Cuomo and his staff’s role in the demise of — and the potential tampering with — a corruption-busting panel that Cuomo empaneled in 2013 but shuttered a year later.

Bharara earlier this month didn’t let Cuomo off the hook when asked directly whether Cuomo is next on his list. He has criticized Cuomo’s decision to disband the Moreland Commission, but Cuomo has defended the move, saying the commission's work has aided prosecutors' probes and led to new ethics reforms.


Who’s next? Bharara won’t disclose corruption probes

“I’m not going to talk about any investigations that we have open. We have lots of investigations open,” Bharara said on WNYC radio. “I think that people like to talk about what’s going to happen tomorrow.”

But he added: “You shouldn’t read into anything I’m saying one way or the other. And I know people like to do that.”

Capitol shadow

Bharara, 47, a naturalized U.S. citizen who was born in India, has loomed large over the Capitol since he starting digging into corruption soon after he took office in August 2009 — months after he was nominated by President Obama.

A former assistant U.S. attorney in the Southern District between 2000 and 2005, Bharara got his first true taste of politics as chief counsel to U.S. Sen. Charles Schumer, D-NY, over the subsequent four years.

Friends said that experience shaped Bharara’s understanding of the politics and levers of power in New York.

“His prosecutorial background is enhanced because he understands the political process, and he’s not afraid of it,” said Viet Dinh, a close friend and prominent Washington, D.C., lawyer.

With Schumer, Bharara also appears to have picked up his former boss’ skills at trying to gain maximum media impact.

Silver was arrested Jan. 22 — just hours after the Manhattan Democrat was on stage with Cuomo at the governor’s State of the State address near the Capitol.


Speaker Sheldon Silver's corruption arrest stuns Capitol

When Bharara arrested Silver and Skelos, the news conferences were filled with charts that showed their alleged wrongdoing. He ended the Silver briefing with, “Stay tuned” — and he’s used that ominous line repeatedly since.

“He has clearly put the fear of ‘you know what’ in the hearts of all Albany legislators,” said Siena College poll spokesman Steven Greenberg. “And his record is phenomenal.”

Bharara’s office has only lost one corruption case: former Assemblyman William Boyland, D-Brooklyn, was acquitted in 2011, but was ultimately convicted in a separate trial by federal prosecutors in Brooklyn.

After Silver’s arrest, Bharara railed against Albany in a series of interviews, calling it a “cauldron of corruption.” His actions raised eyebrows as to whether Bharara was on a publicity tour, and it soon drew a rebuke from the judge in the Silver case.


Bharara rips Albany's "cauldron of corruption"

“The U.S. Attorney, while castigating politicians in Albany for playing fast and loose with the ethical rules that govern their conduct, strayed so close to the edge of the rules governing his own conduct that Defendant Sheldon Silver has a non-frivolous argument that he fell over the edge to the defendant’s prejudice,” U.S. District Court Judge Valerie Caproni wrote in April.


Judge upholds Sheldon Silver's indictment, but chides Preet Bharara

Since then, Bharara’s interviews have been limited. He spoke to The New York Timesafter the Skelos conviction and did the WNYC radio interview. Through a spokesman, he declined an interview request from Gannett’s Albany Bureau.

Building cases

While his lower Manhattan-based office has taken down terrorists and Wall Street executives, Bharara’s public corruption cases have gained the most statewide interest, fueling talk that he may one day run for elected office. His current office has launched the careers of other future politicians, such as Rudy Guiliani and Thomas Dewey.

But Bharara would have to become more widely known in New York: A Siena poll this month showed 73 percent of voters didn’t know him or have an opinion of him.

Dinh said the question over Bharara’s next career move may be simply between staying in the public sector versus the pull of a lucrative job in the private sector. Bharara has a wife and three children, and with a new president to be elected in 2016, his future as U.S. attorney could be in doubt.

“One of the things people keep asking is how long can he afford to do this, and the answer is how long can his family afford for him to do this?” Dinh said.

Soon after taking office, Bharara’s office began bringing corruption cases.

They started with the Jan. 6, 2010, indictment of Sandy Annabi, the former majority leader of the Yonkers City Council. Two years later, she was sentenced to six years in prison.


Court of Appeals: No new trial for Annabi

As the cases built — including convictions against former Hudson Valley Sens. Nick Spano and Vincent Leibell — his staff began to see common themes.

Top state lawmakers had discretion over millions of dollars of public funds that they could dole out with little public oversight, Zabel explained. So they started to follow the money.

The pots of taxpayer dollars allowed the leaders to wield unmatched power — and the grants that they doled out ultimately was at the heart of the corruption cases against Silver and Skelos.

“It kind of led us to think about what are these areas where politicians in New York seem to be preserving themselves the ability to distribute or get money and grants for their own purposes,” Zabel said.

The conviction of Sen. Thomas Libous, R-Binghamton, in July, centered around himlying to the FBI over getting his son a job at a Westchester County law firm — in part by allegedly promising the law firm work because of his power in Albany.


Libous sentenced to house arrest, $50,000 fine

Wiretaps and more

Another key tactic has been the use of wiretaps and non-prosecutorial agreements with key witnesses, such as top campaign donors to Skelos and Silver.

One Bronx legislator wore a wire for four years as a federal informant. A Queens senator wore a wire while at home with an injury, then pleaded guilty to corruption charges.

In the Skelos case, a wiretap was used in part on the phone of Skelos’ son, Adam, who was also convicted in the case. Tapes were played in court that revealed remarkable exchanges between the father and son over how they planned to use the Long Island Republican’s office to benefit Adam’s private business dealings.


NY FRACKING: Did state come close to saying OK?

“We knew these were hard cases to make and so we were always looking for ways we could either get a wiretap or wire people up, like informants and others, and get people on tape,” Zabel said. “That’s the best evidence for a jury.”

Bharara’s tactics have shaken Albany to its core: No longer can private conversations in the Capitol’s dark halls be considered sacred.

And when lawmakers return next month for a six-month session, Bharara’s shadow will hover over the place.

“Everybody in Albany that I talk to, Democrat and Republican, all the speculation is where does he go next? Is the governor on the target list?” said Assemblyman Bill Nojay, R-Pittsford.

Movie lines

For those who know Bharara, his ascension is not a surprise: He’s not boisterous, yet confident and attentive.

Zabel said he and Bharara would exchange messages at 1 a.m. and talk about cases late into the night. In both the Silver and Skelos cases, Bharara was often in court watching his prosecutors present their arguments.

“Some people call him fearless, but it’s not fearlessness born out of reckless abandon,” Dinh said. “It’s a fearlessness born out of confidence in the process and confidence in the work of his office.”

Schumer called Bharara one of the smartest people who ever worked for him.

“He’s cleaning up Albany and that’s a great thing, and I’m proud of him,” Schumer said during a recent visit to Rochester.

Bharara is a Bruce Springsteen superfan and likes to quote lines from movies. One of his favorites is from Mark Wahlberg, who played a police sergeant in The Departed,saying: “I’m the guy who does his job. You must be the other guy.”

Next steps

Bharara’s convictions have led to a new round of calls for ethics reform at the Capitol, and Bharara himself has joined the chorus of those clamoring for change.

In the WNYC interview Dec. 14, Bharara talked about the entrenchment of long-serving leaders, such as Silver who was the speaker for more than 20 years. He also mentioned the problem of lawmakers having outside income and the difficulty of trying to recoup their pensions after they are convicted; the pensions are protected by the state Constitution.

“He’s going to turn out to be a major historical figure in New York,” Blair Horner, the longtime legislative director for the New York Public Interest Research Group. “He may end up single-handedly changing Albany’s political climate.”

Whether Silver and Skelos, who are planning to appeal, are the capstone to Bharara’s corruption crusade or a precursor to more cases remains to be seen.

Bharara’s “stay tuned” line — which he also used in his first Twitter message Dec. 10 — seems to be both a way to toy with lawmakers and warn them.

As he said on the radio: “The first line of defense against bad conduct is the institution itself. And it seems they are doing a pretty poor job of self policing.”

Joseph Spector:, Twitter: @gannettalbany

Preet Bharara

Age: 47

Family: Wife and three children

Education: Harvard College with an A.B. in Government in 1990; Columbia Law School with a J.D. in 1993.

Experience: Lawyer at Gibson, Dunn & Crutcher, 1993-96; Swidler Berlin Shereff Friedman, 1996-2000; assistant U.S. Attorney in the Southern District of New York, 2000-05; appeared on Time’s “100 Most Influential People in the World” list in 2012; chief counsel to Sen. Charles Schumer, 2005-09; appointed U.S. Attorney, 2009-present.

Key corruption cases

Sandy Annabi: Former majority leader of Yonkers City Council; convicted of bribery, honest services fraud in 2010; sentenced to six years in prison in 2012.

Hiram Monserrate: Former Queens senator; pleaded guilty to mail fraud in 2012; sentenced to two years in prison.

Vincent Leibell: Former Hudson Valley senator; pleaded guilty to obstruction of justice in 2010; 21 months in prison.

Anthony Mangone: Former chief of staff to Sen. Nick Spano; pledged guilty to conspiracy, bribery; sentenced to 18 months in prison this month.

Carl Kruger: Former Brooklyn senator; pleaded guilty in 2011 to honest services fraud; seven years in prison.

Nick Spano: Former Hudson Valley senator; pleaded guilty to obstructing IRS laws in 2012; one year in prison.

Malcolm Smith: Former Senate majority leader from Queens; convicted on wire fraud, bribery in 2015; sentenced to seven years in prison.

Noramie Jasmin: Former Spring Valley mayor in Rockland County; convicted on mail fraud in 2015; sentenced to four years in prison.

Thomas Libous: Former Binghamton-area senator; convicted on false statements to FBI in July; six months house arrest, appeal pending.

Ernest Davis: Mount Vernon mayor; pleaded guilty to failure to file tax returns; one year probation.

Sheldon Silver: Former Assembly speaker; convicted on all seven counts in November; appeal, sentencing pending.

Dean Skelos: Former Senate majority leader; convicted on all eight counts in December; appeal, sentencing pending.

Preet Bharara, U.S. Attorney, Sees Lessons in Albany Corruption Trials

Preet Bharara, the United States attorney whose office recently won the corruption convictions of two of New York’s most powerful legislators, says that Albany’s problems are deep and systemic but that potential solutions are not hard to find: They lie in the nitty-gritty evidence presented at the unprecedented trial.

In his first interview since the verdicts, the most recent of which was delivered on Friday, Mr. Bharara said that the two trials hammered home the fact that the ability of lawmakers to earn outside income, coupled with a lack of transparency, weak disclosure requirements and the concentration of power in the hands of a few, is hugely problematic.

“It would be, I think, irresponsible not to spend some time talking about what those things, what those trials, have taught us, and what those cases may mean for how everyone can get good government,” Mr. Bharara said.

Mr. Bharara declined, as he has previously, to suggest specific reforms or remedies or to say how any such measures would be carried out.

But he said the fact that both convicted lawmakers — Sheldon Silver, the former Assembly speaker, and Dean G. Skelos, the former Senate majority leader — chose to go to trial instead of pleading guilty in a quick hearing allowed for a much more detailed airing of how their crimes were committed.

“All I’m saying is that what we offer in terms of the debate is the facts that were exposed in the cases that we have brought,” Mr. Bharara said.

“I think that people should take a look at what that showed,” he added, referring to the public and others who are seeking meaningful reform of Albany’s dysfunction.

Mr. Bharara noted that the trial of Mr. Silver, in particular, underscored the longstanding nature of his ethical lapses and his crimes, which dated back at least 15 years, and how some lawmakers in Albany allowed them to continue.

“The corruption in the State Legislature in Albany has not been episodic,” Mr. Bharara said. “It’s been systemic, and if nothing else, the trials revealed that there’s a deep culture problem, and a matter-of-factness about how at least these two defendants, who’ve now been found guilty, went about their daily corrupt business with barely a thought about it.”

Mr. Bharara, whose office has won the convictions of about a dozen current and former state legislators in his six-year tenure, said his public corruption investigations were continuing, but he would not discuss them.


New Yorkers Want New Ethics Laws to Clean Up Albany, Poll FindsDEC. 14, 2015

Dean Skelos, Ex-New York Senate Leader, and His Son Are Convicted of CorruptionDEC. 11, 2015

Sheldon Silver, Ex-New York Assembly Speaker, Is Found Guilty on All CountsNOV. 30, 2015

He also declined to discuss what kind of sentence his office would seek for the two former lawmakers, who forfeited their seats upon conviction.Photo

Sheldon Silver, a former speaker of the New York Assembly, leaving federal court in Manhattan last month after being found guilty on all counts in his corruption trial. CreditRobert Stolarik for The New York Times

Mr. Silver, 71, a Manhattan Democrat, was found guilty on Nov. 30 on honest services fraud, extortion and money laundering charges, for schemes through which he obtained nearly $4 million in exchange for using his office to help benefit a cancer researcher and two real estate developers.

Mr. Skelos, 67, a Long Island Republican, and his son, Adam B. Skelos, 33, were found guilty on Friday of bribery, extortion and conspiracy charges, for schemes that exploited the senator’s position to pressure a developer, an environmental technology company and a medical malpractice insurer to provide the son with hundreds of thousands of dollars in consulting fees and a no-show job.

Mr. Bharara took special interest in the two trials, spending many days observing from the rear of the courtrooms with several of his senior aides. In the interview, he recalled one piece of testimony that he had found particularly revelatory — “stunning,” as he put it.

Albany on Trial
In the past decade, the state capital has been rocked by a seemingly endless barrage of scandals and arrests involving officeholders.

Albany Trials Exposed the Power of a Real Estate FirmDEC 18

Corporate Victims Said to Be Shocked (Shocked!) at Dean Skelos’s Request for MoneyDEC 10

Adam Skelos's IncomeDEC 10

Jury Begins Deliberations in Trial of Dean Skelos and His SonDEC 10

Defense Lawyers Point Out ‘Holes’ in Case Against Dean Skelos and SonDEC 9

See More »

State Senator Tony Avella, a Democrat from Queens, testified that as chairman of the Senate Ethics Committee, he had been barred from holding any committee hearings.

“The idea that the chair of the ethics committee has never had the opportunity to mark up a bill, has never had the opportunity to hold a hearing,” Mr. Bharara said, “tells you everything you need to know about the enabling nature of all the people in the State Legislature who may not have been convicted of crimes, but seem not to care that they’re going on. I think that’s indisputable.”

Mr. Bharara, while reiterating he was not advocating any specific reform, said the trial showed how a lack of transparency and no restriction on outside incomes made it easier for lawmakers involved in corrupt deals to carry out their crimes undetected.

“It makes it harder to prosecute the bad apples when every apple is able to be nontransparent about that outside income,” Mr. Bharara said. “I’m trying to suggest that these are things that are really, really worth talking about,” he added.

Mr. Bharara noted that investigators, agents of the Federal Bureau of Investigation and career prosecutors “have been doing their job with abandon” for years.Photo

State Senator Dean G. Skelos and his son, Adam, left the federal courthouse in Manhattan after the verdict this month.CreditAndrew Renneisen for The New York Times

“But that doesn’t solve the problem any more than the curing of one patient solves a plague,” he added, asserting that any solution must also involve the public and politicians.

Mr. Silver and the elder Mr. Skelos, as the two Legislative leaders, worked closely with Andrew M. Cuomo, a Democrat who successfully ran for governor in 2010 on a promise to clean up Albany. He has pursued ethics reform numerous times, and achieved only modest results.

And in July 2013 he established a high-powered commission, stacked with a number of state prosecutors, to root out public corruption. However, in a widely criticized decision the governor just nine months later shut down the panel, known as the Moreland Commission.

Earlier this year he said his administration had “proposed every ethics law imaginable” and “you can’t legislate morality and you can’t legislate intelligence.”

But in recent days, after the convictions, Mr. Cuomo has said more reform was, in fact, needed, telling reporters on Sunday that the changes need to be sweeping.

Mr. Bharara, in the interview, also recalled another moment in the trials, when Mr. Silver’s defense lawyer, Steven F. Molo, accused prosecutors of effectively criminalizing conduct that was legal, normal and that allowed “government to function consistent with the way that our founding fathers of the State of New York wanted it to function.”

Mr. Bharara cited the strong response made by one of his prosecutors, Andrew D. Goldstein, who told the jury that such an argument tainted the democratic process by calling corruption “politics as usual.”

The juries “rejected that sorry excuse twice,” Mr. Bharara said.

He also recalled the suggestion, made in court and elsewhere, that prosecutors did not really understand politics.

“One defense lawyer said the prosecutors look at everything through ‘dirty windows,’ ” Mr. Bharara said. “Well, you know what? It turns out it wasn’t the windows that are dirty.”

Sarah Maslin Nir contributed reporting.

Monday, December 21, 2015

Attorney Bernard A. Weintraub Resigns From Practicing Law

Matter of Weintraub
2014 NY Slip Op 06929
Decided on October 14, 2014
Appellate Division, First Department
Per Curiam

Published by New York State Law Reporting Bureau pursuant to
Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication
in the Official Reports.

Decided on October 14, 2014 SUPREME COURT, APPELLATE DIVISION First
Judicial Department
Rolando T. Acosta, Justice Presiding,
Rosalyn H. Richter
Sallie Manzanet-Daniels
Paul G. Feinman
Judith J. Gische, Justices.

[*1]In the Matter of Bernard A. Weintraub (admitted as Bernard Adam
Weintraub), an attorney and counselor-at-law: Departmental Disciplinary
Committee for the First Judicial Department, Petitioner, Bernard A.
Weintraub, Respondent.
Disciplinary proceedings instituted by the Departmental Disciplinary Committee for the
First Judicial Department. Respondent, Bernard A. Weintraub, was admitted to the Bar of
the State of New York at a Term of the Appellate Division of the Supreme Court for the
First Judicial Department on May 2, 1994.
Jorge Dopico, Chief Counsel, Departmental
Disciplinary Committee, New York
(Kevin M. Doyle, of counsel), for petitioner.
Hinshaw & Culbertson LLP
(Hal R. Lieberman, of counsel), for respondent.
Per Curiam

Respondent Bernard A. Weintraub was admitted to the practice of law in the State of
New York by the First Judicial Department on May 2, 1994, under the name Bernard
Adam Weintraub. At all times relevant herein, respondent maintained a registered
business address within the First Department.

The Departmental Disciplinary Committee moves, pursuant to the Rules of the Appellate Division, First Department (22 NYCRR) 603.11, for an order accepting respondent's resignation from the practice of law and striking his name from the roll of attorneys.

Respondent's affidavit of resignation, sworn to on July 3, 2014, complies with section
603.11 in that he states, inter alia: (1) his resignation is submitted freely, voluntarily and
without coercion or duress; and (2) that he is fully aware of the implications of
submitting his resignation (see 22 NYCRR 603.11[a][1]).

Respondent is also aware that he has been the subject of an investigation by the
Disciplinary Committee into allegations he misappropriated client funds 22 NYCRR
603.11[a][2]. Specifically, it was alleged that respondent: (1) jointly represented two
clients at the closing of the sale of their home; (2) held a portion of the sale proceeds in
his escrow account, the disbursement of which was delayed because his clients were
involved in divorce proceedings; (3) during the period of time in which the funds were
held in escrow and without his clients consent, he borrowed' $600,000 "to meet certain
obligations in the face of the economic downturn and [his] consequent inability to borrow
the money from regular institutional sources"; and (4) he provided accountings to counsel for one of his clients which did not reflect his misappropriation of funds from the escrow account. Respondent advised that "he fully described" his misappropriation to his client's counsel subsequent to providing the inaccurate accounting, and promised to restore the funds to his escrow account. When counsel requested disbursement of the proceeds, respondent paid over the funds in full, after certain proper payments and distributions, along with interest for the entire escrow period.

Respondent further acknowledges he could not defend himself on the merits if
disciplinary charges were brought against him (922 NYCRR 603.11[a][3]; Matter of
Riley, 115 AD3d 112 [1st Dept 2014]).

Accordingly, the Committee's motion should be granted to the extent of accepting
respondent's resignation from the practice of law and striking his name from the roll of
attorneys and counselors-at-law in the State of New York, effective nunc pro tunc to July 3, 2014.

All concur.
Order filed. [October 14, 2014]
Acosta, J.P., Richter, Manzanet-Daniels, Feinman, and Gische, JJ.
Respondent's name stricken from the roll of attorneys and counselors-at-law in the State of New York, nunc pro tunc to July 3, 2014. Opinion Per Curiam. All con

Thursday, December 17, 2015

Marcello Trebitsch, Sheldon Silver's Son-in-Law, Going To Jail For $6 Million Ponzi Scheme

Marcello Trebitsch, who is the son-in-law of Sheldon Silver, leaves Manhattan Federal Court on Wednesday, December 16, 2015. He was sentenced to two years in prison for stealing $6 million 

from investors.

Sheldon Silver’s son-in-law will spend 2 

years in prison for $6M Ponzi scheme

Updated: Wednesday, December 16, 2015, 5:50 PM

Sheldon Silver's Ponzi scheming son-in-law will spend two years in prison for pocketing some $6 million from unsuspecting investors, a Manhattan federal judge ruled Wednesday.

Marcello Trebitsch, who is hitched to disgraced ex-Assembly speaker Silver's daughter Michelle, pleaded guilty in July 2015 to one count of securities fraud related to the seven-year-long scam.

The fraudster's sentencing comes just two weeks after a federal jury convicted Silver of seven corruption counts. A source previously told the Daily News Silver and Trebitsch's arrests were not connected.

Trebitsch promised Allese Capital investors 14-to-16% returns with little risk. He fudged financial statements to make the investments look profitable. In reality, he was hoarding the money for himself and paying back other investors.

He admitted to the scheme when he pleaded guilty, telling the court: "I'm sorry for what I've done and I apologize to the court and my family."

"As Marcello Trebitsch admitted in court today, he ran a multimillion-dollar Ponzi scheme, defrauding investors who put their faith in him," Manhattan U.S. Attorney Preet Bharara said after Trebitsch's plea. "He returned their faith with deceit and self-dealing, lying about his trading losses and using investor money on himself."

Sheldon Silver's son-in-law pleads guilty in fraud case, admitting he received $7M in Ponzi scheme


Monday, July 13, 2015, 5:38 PM

Sheldon Silver's son-in-law copped a plea in Manhattan Federal Court Monday, admitting that for years he defrauded investors of millions of dollars in a Ponzi scheme.

Marcello Trebitsch, 37, pleaded guilty to securities fraud before Judge Vernon Broderick, saying that from 2007 to 2014, he received $7 million from investors, for which he promised high returns with low risk.

"I also gave them false account statements," leading investors to believe that was what they were getting, Trebitsch said in court.

Federal prosecutors said Trebitsch, who is married to the former Assembly Speaker's daughter Michelle, promised investors to Allese Capital a 16% return and then doctored financial statements to reflect profit, while in reality Trebitsch was using the remainder of the funds for his own personal benefit and to pay back other investors.

"I'm sorry for what I've done and I apologize to the court and my family," Trebitsch said.

Trebitsch faces up to 20 years behind bars if convicted at trial. The plea deal calls for Trebitsch to serve between 51 to 63 months, but Broderick reminded him that the final decision on his punishment would be his.

"Their prediction could be wrong," Broderick warned. By pleading guilty, Trebitsch waived his right to appeal Broderick's sentencing decision.

"At sentencing, we are hopeful the Court will treat him leniently once the full background of this case is explained in our sentencing memorandum," said Trebitsch's lawyer, Benjamin Brafman.

Under the terms of the deal, Trebitsch must also pay $5,905,949 in forfeiture and restitution. He’ll be sentenced Nov. 2.

Sunday, December 6, 2015

US Supreme Court Orders the Center For Medical Progress To Release Names of Supporters and Donors

re-posted from

   David Daleiden   

Supreme Court Weighing In on Planned Parenthood Videos

December 5, 2015
Jack Martinez, Raw Story
Posted with permission from Newsweek

The Supreme Court just dealt a blow to the Center for Medical Progress, a California-based anti-abortion group that released a series of videos in which Planned Parenthood employees appear to discuss the sale of fetal tissue.

David Daleiden, the pro-life auteur behind the videos, asked Justice Anthony Kennedy to block an order from a district judge to hand over the names of his organization’s supporters and donors. Kennedy denied the request, and Daleiden will have to provide the information to a California district court.

The National Abortion Federation has sued the Center for Medical Progress on the grounds that Daleiden’s allies infiltrated its meetings by lying about their identities; in the videos, CMP members posed as Planned Parenthood employees. Although the content of the videos shocked and offended many politicians, prompting a national outcry, the countercharge that the whole thing was a sting operation to discredit Planned Parenthood has gained momentum among pro-abortion activists and politicians.

“It’s time to end this shell game.... The key issue here is the disclosure of the identities of CMP's supporters,” said California District Judge William Orrick, according to a report in the Los Angeles Times.

Orrick wants Daleiden to release the names in order to find out who was given confidential information about the National Abortion Federation, and has dismissed the argument that First Amendment "freedom of association" rights protects the CMP supporters, who may have been privy to illegal dealings as Daleiden went undercover to expose the health care provider's practices.

Daleiden’s attorneys have argued that releasing the names would put supporters at risk of “retaliation.”

The action on the lawsuit comes in the wake of a mass shooting at a Planned Parenthood clinic in Colorado Springs that left three dead on the Friday after Thanksgiving.

Friday, December 4, 2015

Judicial Watch Wins a Lawsuit Halting Race-based "Native Hawaiian Only" Election in Hawaii

Tom Fitton

Judicial Watch Scores Supreme Court Win

How about a little good news? Your Judicial Watch, on behalf of a group of patriotic Americans, scored a major victory for the U.S. Constitution and national unity before the United States Supreme Court. This week, we convinced the Supreme Court to issue an injunction halting a race-based "Native Hawaiian-only" election in Hawaii. In August, Judicial Watch filed a federal lawsuit on behalf of the five Hawaiian residents and one Texas resident of Hawaiian descent who opposed the discriminatory election process (Keli'i Akina, et al. v. The State of Hawaii, et al. (No. 1:15-cv-00322)).

The Supreme Court victory is remarkable. The JW statement issued to the press puts it all together:
"The Supreme Court today issued an injunction that put a hard stop to the race-based, separatist election in Hawaii that violated the 'fundamental constitutional rights' of our American citizen clients. Today's ruling is a historic setback to the State of Hawaii and the Obama administration, which misused public monies to push a racially discriminatory election. President Obama and Hawaiian political leaders should be called to account for their cynical support of a race-based election that violated numerous civil rights laws and the U.S. Constitution. Our clients are brave patriots who took a public stand on behalf of the rule of law. The High Court agreed our clients had an indisputable right to this relief and it is wonderful to see their faith in our Constitution vindicated by today's Supreme Court ruling. In addition, Judicial Watch's hundreds of thousands of supporters deserve thanks for providing the voluntary support that allowed our team of hard-working attorneys to stop this corrupt and dangerous election. Kudos also to the Grassroot Institute of Hawaii, a Hawaii-based think tank, that gave invaluable assistance to our efforts."

After we filed our lawsuit over the issue in August, we quickly asked the court for apreliminary injunction
 to stop the vote that had been scheduled for November 2015. Our lawyers argued that our clients would be denied the right to vote either because of their race or their political views - in direct violation of the U.S. Constitution and the Voting Rights Act of 1965. Hawaii's Act 195 authorizes the Native Hawaiian Roll Commission (NHRC) to create a list of "Native Hawaiians" who would be eligible to elect delegates to a planned constitutional convention, which would then prepare "governance documents" for a separate Native Hawaiian entity.

The lower court denied our injunction, so we took it upstairs to the appellate court. We filed an
 Urgent Motion for Injunction with the U.S. Court of Appeals for the Ninth Circuit. We lost again. Undeterred and confident in our legal arguments, the JW team immediately thereafter filed an emergency application on November 23 to the Honorable Justice Anthony Kennedy, Associate Justice of the United States Supreme Court who oversees the Ninth Circuit. Last Friday, shortly after Judicial Watch replied to Hawaii's opposition, Justice Kennedy issued anorder temporarily enjoining the election pending review by the entire Supreme Court. That was a sweet victory. But this week, the Supreme Court (voting 5-4) granted our request. The December 2, ruling reads:

The application for injunction pending appellate review presented to Justice Kennedy and by him referred to the Court is granted. Respondents are enjoined from counting the ballots cast in, and certifying the winners of, the election described in the application, pending final disposition of the appeal by the United States Court of Appeals for the Ninth Circuit. Justice Ginsburg, Justice Breyer, Justice Sotomayor, and Justice Kagan would deny the application.

Under federal law, the Supreme Court only issues emergency injunctions when the circumstances presented are "critical and exigent" and the legal rights at issue are "indisputably clear." Accordingly, this Supreme Court decision sends a strong message for the lower courts.

The aborted election, which was being conducted by mail-in ballots, was to have ended in November but the voting deadline was recently extended to
 midnight Monday, December 21. The election was made possible by a grant by the State of Hawaii of $2.6 million in public funds.

The war isn't over, but this is a significant success for the rule of law. Here, it's important to point out that the Obama administration
 supported the race-based election in this litigation despite the fact that the State of Hawaii limits eligible voters in the election to those who have at least one drop of Native Hawaiian blood. Go back in history, and you will find that this "one drop of blood" rule is like other laws last seen in the racist Jim Crow era: "It also has an unfortunate resonance in American history. See, e.g., Loving v. Virginia, 388 U.S. 1, 5 n. 4 (1967) (discussing Virginia statute holding that '[e]very person in whom there is ascertainable any Negro blood shall be deemed and taken to be a colored person')."

Imagine if this "one drop of blood" rule had resulted in a new "tribe" that had as its goal "independence" for Hawaii. The precedent could lead to Muslims asserting sovereignty, Hispanics, Scottish-Americans - you get the picture. This case was not only about the rights of our few clients, it was about the future of our nation.

That we were able to stop this potential calamity for our nation the day after Thanksgiving is providential.

And our legal team requires special recognition, especially as they had to work over Thanksgiving! Robert Popper, director of Judicial Watch's Election Integrity Project, is Judicial Watch's
 lead attorney on the lawsuit and lead counsel for all plaintiffs. Mr. Popper was formerly deputy chief of the Voting Section of the Civil Rights Division of the Justice Department. Michael Lilly of the Honolulu law firm Ning, Lilly & Jones, a former Attorney General for Hawaii, is serving as Judicial Watch's local counsel for the plaintiffs. H. Christopher Coates is also an attorney for the plaintiffs. Coates is an expert voting rights attorney who most recently served as Chief of the Voting Section of the Civil Rights Division of the Justice Department under President Barack Obama. William S. Consovoy and J. Michael Connolly of Consovoy McCarthy Park PLLC just joined as counsel as the litigation went before the Supreme Court.

The fight isn't over, and the litigation will continue in the lower courts. But the corrupted election won't take place any time soon, and I wouldn't bet, based on this week's extraordinary Supreme Court action, that it will ever take place.