NY senator among 8 charged in corruption sting

Senator Carl Kruger (D-Brooklyn) talks on a cell phone in the hallway at the Capitol in Albany, N.Y., Thursday, July 9, 2009. (AP Photo/Hans Pennink)

March 10, 2011 3:18:53 PM PST
State Sen. Carl Kruger, and Assemlyman William Boyland are among eight people charged in a federal case involving conspiracy and money laundering.

Kruger is accused of setting up two sham companies one called Olympian Strategic Development to funnel corrupt payments. The feds say the chief bribe broker was powerful lobbyist Richard Lipsky working on behalf of several clients including the liquor industry and health care providers.

Also charged in the conspiracy net, State Assemblyman William Boyland Jr., charged with accepting $177,000 in bribes from the CEO of one health care network.

A senator since 1994, Kruger was the powerful Senate Finance Committee chairman from 2008 to 2010 when Democrats controlled the Senate.

Kruger has now been removed from his lucrative leadership post as the ranking member of the powerful Senate Finance Committee. .

Lipsky was accused of directing about $252,000 in lobbying fees into a bank account used by Kruger between 2007 and 2010 in exchange for the senator giving legislative support to Lipsky & Associates' clients. Among them were beer distributors concerned about pricing and local markets fighting to stop "superstores" from opening in the city.

During a search of Lipsky's home on Monday, agents recovered $102,000 in cash, including $4,000 in "crisp, large denomination bills in his suit pocket," U.S. Attorney Preet Bharara said at a news conference in Manhattan.

"At its core, the complaint describes a broad-based bribery racket reflecting an unholy alliance of politicians, lobbyists and businessmen," Bharara said.

Kruger's attorney had no immediate comment. Boyland did not immediately return a request for comment left with his staff.

Lipsky didn't immediately return a request for comment left on his voicemail.

"Today's arrests again spotlight the failings of New York state government and highlight the urgent need for the Legislature to pass comprehensive ethics reform - now," said Gov. Andrew Cuomo, whose top policy goal is a tougher ethics law.

Bharara said the case against Kruger and Boyland was discouraging, given the negative publicity surrounding his office's recent prosecutions of five other former and current state legislators.

"Every single time we arrest a state senator or assemblyman, it should be a jarring wake-up call," he said. "Instead, it seems that no matter how many times the alarm goes off, Albany just hits the snooze button. When prosecutors charge politicians, it should not feel like a scene from Groundhog Day."

State Republican Chairman Ed Cox said the charges show ethics is a "Democrat problem." He is calling on the Democrats' Senate campaign committee to return the nearly $500,000 Kruger gave to the party last year, calling it "dirty money."

Kruger and the other defendants were to make initial court appearances later Thursday in federal court in Manhattan. If convicted, they face up to 20 years in prison.

A senator since 1994, Kruger was the powerful Senate Finance Committee chairman from 2008 to 2010 when Democrats controlled the Senate.

The complaint alleges that since 2006, Kruger "received a stream of bribes totaling at least $1 million in exchange for taking official action on behalf the bribe payers as opportunities arose." Aside from Lipksy, the alleged bribe payers included a real estate developer and a consulting firm for the health care industry.

The payments were funneled into bank accounts of shell companies set up by a longtime associate of Kruger, Michael Turano, the complaint says. Turano, a Manhattan gynecologist, used some of the money to lease a Bentley and pay the mortgage on a multimillion dollar home in Brooklyn he shares with his mother and brother.

The complaint says wiretaps on Kruger's phone revealed he was unusually close to Turano and his family: The two were in daily contact and "relied on and supported one another." Kruger often went shopping for the family, buying light bulbs, travel snacks and "stockings for the Turano mother," it adds.

The FBI also was listening in on Lipsky's phone. The complaint says agents intercepted a call from Kruger to Lipsky on the morning agents were searching the lobbyist's home.

They "heard no conversation between Lipsky and Kruger, but could overhear Lipsky responding to questions from agents about, among other things, the relationship between Kruger and Mrs. Turano."

After that, Kruger tried to call Lipsky 26 times over the next 90 minutes but go no answer, the complaint says.

The complaint accuses Boyland of taking bribes from a health care executive also linked to Kruger in exchange for asking the speaker of the Assembly to allocate millions of dollars to the executive's hospitals.

Under the arrangement, Boyland had "what amounted to a no-show consulting job" that paid him almost $3,000 a month from December 2003 to November 2008, or about $177,000, Bharara said.

The Boyland family has a long political history representing Brooklyn. Boyland's uncle, Thomas Boyland, represented the district in the Assembly from 1977 to 1982. After he died in office, his brother, William Boyland Sr., was elected to fill the seat.

In 2002, the elder Boyland easily won re-election to an 11th, two-year term, but resigned between the election and the January start of the session to turn the seat over to his son, William Boyland Jr.