Former New York State Senator Nick Spano Pleads Guilty To Fraud
Nicholas A. Spano, an influential former state senator from Westchester County, took advantage of an arcane provision in the law to collect roughly $1 million in consulting payments from a politically connected insurance brokerage over 12 years, federal prosecutors said Friday. The prosecutors said the fees given to Mr. Spano, a Republican, were tied to the awarding of state contracts to the brokerage. From Betsy Combier: give him a deal in return for exposing all the judges, Senators, legislators and business people he paid off over the years and their friends.
Noon update: Feds say ex-Sen. Spano peddled influence for consulting fees while in office
Former New York state Sen. Nick Spano of Yonkers collected more than $480,000 in consulting fees from an insurance company that won a lucrative state contract while Spano served in Albany, according to a federal complained unsealed today.
The complaint, released as Spano was arraigned on tax evasion charges in U.S. District Court in White Plains, also alleges that he falsely claimed income from the insurance company as rent for a two-family home he owned on Ridge Avenue in Yonkers.
Spano appeared at 10:45 a.m. before U.S. District Judge Lisa Margaret Smith and pleaded not guilty as a formality to a charge of obstructing and impeding the due administration of the Internal Revenue laws. His lawyer confirmed to The Journal News that he will plead guilty to the tax evasion charge later today.
Spano was ordered held on $100,000 bond, which was co-signed by his brother Leonard Spano.
The former senator is to appear today in the courtroom of U.S. District Judge Cathy Seibel, where he is expected to agree to a plea deal.
U.S. Attorney’s Office spokesman Herbert Hadad said Spano turned himself in to the FBI at 7:30 this morning at its Bloomingdale Road office and then was brought to U.S. District Court in White Plains. Spano entered the courthouse through a side door, avoiding media waiting to capture his arrival.
Spano attorney Richard Levitt confirmed that the longtime Republican power broker who now runs a lucrative lobbying firm, is accused of underreporting his income over eight years. Levitt said Spano will plead guilty.
A person close to the case, who demanded confidentiality because the plea had not yet been entered, says Spano will face a maximum of three years in prison but could get off with no jail time.
The U.S. Attorney’s Office would not comment, but in a press advisory issued Thursday night Hadad said that a “proceeding of interest in a public corruption matter” would take place about 10:30 a.m. before U.S. Magistrate Judge Lisa Margaret Smith.
Levitt confirmed Thursday night that Spano is accused of underreporting his income, $42,000 in federal income taxes and $10,000 in state taxes, from 2000 to 2008. He had no further comment.
“Anything that feeds the stereotyped image of dishonest politics is unfortunate,” said former Yonkers City Councilman John Murtagh, a Republican who lost the city’s mayoral race last year to Nick Spano’s brother, former Assemblyman Michael Spano.
“What we must remind ourselves and the public at times like this is that the majority of those in government are ordinary citizens trying to contribute to the good of their community, their state and the nation,” Murtagh said.
Nick Spano, Mike Spano and several Yonkers public officials did not return calls seeking comment Thursday night.
Mike Spano plans to issue a statement after his brother pleads guilty, said Christina Gilmartin, the mayor's director communication, said this morning.
Workers arriving at Yonkers City Hall this morning did not want to comment on Nick Spano's case.
However, Luis Perelman, director of the the Blue Door Artist Association in Yonkers, said of Nick Spano, "In the past, he has been quite helpful with the organization, helping us get funding for our programs." Perelman was at City Hall taking photos of sculptures and other artwork around City Hall created by the association's artists.
Perelman said he wasn't familiar with Nick Spano's tax issue and couldn't comment on that.
Nick Spano served in the state Senate from 1986 to 2006, when he lost to Andrea Stewart Cousins, a Democrat from Yonkers.
He is currently head of Empire Strategic Planning, a lobbying firm that does business with Albany and Westchester.
His long list of clients includes Yonkers Raceway, City Carting Inc., Struever Fidelco Cappelli in Yonkers and the unions for the Westchester County police and correction officers.
Spano’s apparent fall from grace comes less than a year after his former Senate colleague, Putnam County Republican Vincent Leibell, began a 21-month federal prison sentence after pleading guilty to corruption charges, admitting that he failed to report $43,000 in kickbacks from attorneys and that he asked one lawyer to lie about the scam to a federal grand jury.
Spano’s appearance in federal court comes on the eve of the trial of former Democratic Yonkers City Councilwoman Sandy Annabi and former Yonkers Republican Party leader Zehy Jereis, which is expected to begin Tuesday in federal court in Manhattan.
They are accused of conspiring to sell Annabi’s votes on two development projects in the city, including the controversial $630 million Ridge Hill development.
Staff writer Will David contributed information for this report.
February 10, 2012
Ex-Westchester Senator Admits Tax Obstruction
By WILLIAM K. RASHBAUM and DANNY HAKIM
Nicholas A. Spano, an influential former state senator from Westchester County, took advantage of an arcane provision in the law to collect roughly $1 million in consulting payments from a politically connected insurance brokerage over 12 years, federal prosecutors said Friday.
The prosecutors said the fees given to Mr. Spano, a Republican, were tied to the awarding of state contracts to the brokerage.
The accusations were contained in court papers made public as Mr. Spano pleaded guilty to obstructing the Internal Revenue Service by filing fraudulent tax returns. He admitted that he falsely characterized more than $180,000 of the money that he received from the insurance brokerage through a shell company.
Mr. Spano, who became a lobbyist after nearly three decades as a state senator and assemblyman, was somber during the proceeding in United States District Court in White Plains, standing before Judge Cathy Seibel with his head bowed, wearing a gray suit, a white shirt with his initials embroidered on the cuffs and a light blue tie.
“Today is obviously not a good day for me or my family, but I want to be honest and open about it,” he said in a statement issued through his lawyer. “I did not pay all the income taxes that I should have. For this I am sorry and I take full responsibility.”
Pleading guilty to a single felony tax charge, he faces up to three years in prison. But lawyers on both sides say the sentence will probably be for 12 to 18 months. He will be sentenced on June 12.
Outside the courtroom, he smiled and appeared jovial, making small talk with a group of reporters. He left the courthouse walking side by side with one of his brothers, Leonard, and with his hand on his wife’s shoulder.
As the case came to a close, prosecutors filed court documents that detailed payments made by a small insurance brokerage, referred to as “Insurance Company 1,” beginning in 1993 and continuing until 2008, two years after he left office.
The payments were related to a provision of New York law requiring state agencies to have a broker of record on real estate transactions. Insurance Company 1 was Professional Risk Managers, a small insurer based in Purchase, N.Y., which was awarded a state contract to act as a broker of record. The contract came after Mr. Spano was hired by the firm, prosecutors said.
The complaint said payments were funneled through a company — its name was Spano spelled backward — that court documents said “had no employees or offices and was used almost exclusively to receive money” paid to Mr. Spano by the insurance company. It later changed its name to HVM.
Mr. Spano falsely claimed that some of the money he received from the insurance company was rental payments on a property that he owned in Yonkers. He also failed to report actual rental payments he received from the tenants of the same Yonkers property. Separately, he failed to report a $45,000 commission he received from the sale of a commercial property in White Plains.
It was not clear to what extent Mr. Spano engineered the state contract that was awarded to Professional Risk Managers, which was acquired by the much larger Brown & Brown in 2007.
Brown & Brown did not respond to phone messages seeking comment. It currently receives $6 million a year to act as the broker of record on real estate deals for the state.
Mr. Spano also did not properly disclose his business dealings on his state ethics filings, records show.
In some years, he reported no income at all from the insurance scheme, while in other years, he underreported his income by tens of thousands of dollars. State officials and legal experts said that because Mr. Spano was defeated in 2006, he was unlikely to face any state ethics charges — regulators have limited jurisdiction over lawmakers after they leave office.
The Spano plea deal was only the latest in a cavalcade of legal trouble for Albany politicians in both political parties.
The former Senate majority leader Joseph L. Bruno, an upstate Republican, faces a second federal corruption trial after his 2009 conviction was overturned. Last year, former Senator Carl Kruger, a Brooklyn Democrat, pleaded guilty to federal corruption charges.
Another former senator, Vincent L. Leibell III, a Hudson Valley Republican, was sentenced to 21 months in prison after pleading guilty to obstruction of justice and tax evasion. A former Senate president, Pedro Espada Jr., a Bronx Democrat, is facing a trial on charges that he misappropriated more than half a million dollars in federal money from the nonprofit health care network he operates in the borough.
“It would be great if this were the end of it, but I suspect that’s not the case,” said Russ Haven, legislative counsel for the New York Public Interest Research Group. “You’d think it would be an example, but so far the parade of defendants hasn’t had much of a deterrent effect.”
Nate Schweber contributed reporting.