NY senator denies wrongdoing, blames Cuomo after feds raid Bronx clinic in fraud probe

NY senator denies wrongdoing after federal raid

NEW YORK — New York Senate Majority Leader Pedro Espada denies any wrongdoing after federal authorities raided a government-funded clinic he runs.

Espada says Attorney General Andrew Cuomo is waging a vendetta against him.

Espada called Wednesday’s raids of New York City’s Bronx clinic “a media circus, a media show.” He said the charges against him were “false and unfounded.”

Cuomo confirmed he and federal prosecutors are looking into Espada’s financial dealings with the clinic, and are pursuing possible criminal charges that could include mail fraud and theft of government funds.

Cuomo filed a civil action Tuesday, accusing Espada of siphoning $14 million from Soundview Healthcare Network.

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

NEW YORK (AP) — Federal authorities on Wednesday carted away campaign posters and cardboard boxes from a government-funded clinic run by the state Senate majority leader a day after New York’s attorney general accused him of siphoning $14 million from it.

Investigators were looking for evidence to support possible money laundering, mail fraud and tax fraud charges against Sen. Pedro Espada Jr., a law enforcement official told The Associated Press on Wednesday. The official spoke on condition of anonymity because the investigation had not been completed.

On Wednesday, Attorney General Andrew Cuomo confirmed that his office is assisting federal prosecutors in Brooklyn in a criminal probe against Espada. His chief of staff, Steven Cohen, said potential charges against the senator could include mail fraud, wire fraud, theft of government funds and conspiracy.

About a dozen FBI and IRS agents and investigators from Cuomo’s office were at the Soundview Healthcare Network in the Bronx, where a canopy above the front door lists Espada as its president and CEO.

Agents 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, taking notes.

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

Officials left the clinic Wednesday afternoon after about eight hours. Federal authorities carted away more than 30 cardboard boxes of files in a van.

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 after he was excused 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 was sealed, Margolin said.

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

The IRS declined to comment Wednesday.

On Tuesday, Cuomo announced a lawsuit accusing Espada and relatives on the clinic’s board of siphoning money for lavish restaurant meals, trips to Las Vegas and Espada’s campaign. Cuomo said Espada diverted the nonprofit clinic’s funding charitable assets to himself, relatives, friends and his political operation.

Cuomo said it was a matter of strategy to first file a civil lawsuit. On Wednesday, he called the senator’s involvement with Soundview a “clear case” of illegality.

“This was not the private playground of Mr. Espada,” Cuomo said.

Espada called the lawsuit a litany of falsehoods. On Tuesday afternoon, he accused the Democratic attorney general of a politically motivated attack, of tapping the phone lines used by him 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 Soundview’s board, which he controls, to give him a guaranteed $9 million severance package that, if ever paid out, would bankrupt the clinic.

That prospect concerned Sen. Ruben Diaz, a Democrat who represents the clinic’s Bronx district.

“Whatever he did, he would have to pay for it … but I want the clinic to continue providing the services,” Diaz said.

In 2004, then-Attorney General Spitzer charged two of Soundview’s vice presidents, Espada’s executive assistant and a clinic director 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, but he and his campaign were later fined $61,000 by the city for campaign-finance violations involving Soundview employees who had been 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 was excused from legislative session for the day but little was done in his absence. Without him, the Senate’s Democratic majority lacked the 32 votes needed to pass any legislation without Republican support and adjourned after less than an hour. With a state budget three weeks overdue and major legislation pending, the session had been expected to last several hours.

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

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