Law enforcement official: Feds raid NY senate leader’s clinic, pursuing possible fraud charges

AP source: Fraud case possible against NY senator

NEW YORK — Federal authorities have raided a government-funded clinic run by the New York Senate majority leader, and a law enforcement official tells The Associated Press that the government is looking for evidence to support possible fraud and money laundering charges.

The official spoke on the condition of anonymity because the investigation had not been completed.

The official says that authorities are building a case that could result in mail fraud, money laundering and tax fraud charges against Pedro Espada.

About a dozen investigators took away boxes of materials and Espada campaign posters from the Soundview Healthcare Network in the Bronx Wednesday.

Espada officials haven’t responded to requests for comment.

Associated Press writer Tom Hays contributed to this report.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Federal authorities raided a government-funded clinic run by the state Senate’s majority leader, one day after New York’s attorney general accused him of siphoning $14 million from it.

About a dozen FBI and IRS agents and investigators from the attorney general’s office appeared Wednesday at the Soundview Healthcare Network in the Bronx, where a big canopy above the front door lists Sen. Pedro Espada Jr. as its president and CEO.

Some agents went into the clinic’s offices. Others used bolt cutters to open an 8-foot-tall, 25-foot-long storage container behind the building and removed Espada campaign posters and other items. They also stacked boxes on the grass, and agents wearing blue or green gloves leafed through the contents and wrote notes.

One box was marked, “Payroll 205.” Another said “Timesheets 205-206.”

Espada spokesman Steve Mangione didn’t immediately respond to requests for comment left on his cell phone and through e-mail. A Senate official said Espada was headed from Albany to the clinic on Wednesday morning. He has been excused from session for the day.

FBI spokesman James Margolin called it a criminal investigation but would not say who, if anyone, was the target. A search warrant affidavit specified the probable cause, but it was sealed comment on it, Margolin said.

“We’ve found material that we’re going to be seizing,” Margolin said.

He declined to comment when asked whether it was legal to have campaign posters on the grounds of the clinic.

Margolin said clinic workers were cooperating with investigators. He would not say whether any other locations would be searched.

On Tuesday, Attorney General Andrew Cuomo announced a lawsuit accusing Espada of siphoning money used for lavish restaurant meals, trips to Las Vegas and Espada’s campaign.

Espada called it a litany of falsehoods. On Tuesday afternoon, he accused the Democratic attorney general of a politically motivated attack. He also accused Cuomo of tapping the phone lines used by himself and his relatives and of taking a “steamroller approach” against political enemies, a reference to the term disgraced and former Gov. Eliot Spitzer once used for himself.

The clinic remained open during Wednesday’s raid.

Solsire Bobet said she uses the clinic frequently and was there with two toddlers to get test results.

“I know who he is,” she said of Espada. “I know he is responsible for this place.”

Outside, a huge sign in the grass bears a picture of Espada surrounded by smiling children and a list of clinic services.

In the civil suit, Cuomo also accused Espada of getting the Soundview Board of Directors which he controls to give him a guaranteed $9 million severance package which, if was paid out, would bankrupt the clinic.

Cuomo had said a criminal investigation is under way and that charges against Espada could come soon. He said it was a matter of “legal strategy” to take the route of a civil lawsuit on Tuesday, but told reporters “stay tuned.”

In 2004, then-Attorney General Eliot Spitzer charged two of Soundview’s vice presidents, Espada’s executive assistant and the former director of Women Infants and Children’s Services with grand larceny and scheming to defraud. Two of them were accused of filing false reports, a concern Cuomo raised in his civil lawsuit on Tuesday.

Espada was not charged in that case. He and his campaign were later fined $61,000 by the city for campaign-finance violations involving Soundview employees who were reimbursed for their contributions.

Cuomo’s lawsuit broaches the use of clinic money for campaign contributions, but a state Board of Elections spokesman said the allegations appear to center on tax law — with potential federal law enforcement jurisdiction — more than state election law.

Espada’s absence for the day in Albany left Democrats without a majority or enough votes to pass any bills and pointed to the political element of the Espada investigation. Democrats have a 32-30 majority and need 32 votes to pass a bill.

Espada was a leader of a Republican-backed coup last summer that Espada claims is motivating Cuomo’s lawsuit. Espada later rejoined the Democrats and received the majority leader title.

Although Espada is eligible for the large stipend of the majority leader and added staff and resources, he doesn’t have the power of a traditional majority leader and is not considered a top leader of the conference.

Associated Press writers Tom Hays in New York and Michael Gormley in Albany, N.Y., contributed to this report.