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www.nypress.com/19/
http://www.usdoj.gov/usao/nys/pressreleases/December06/gonzalezs2indictmentpr.pdf
By John DeSio
Original Link
http://www.bronxmall.com/norwoodnews/past/090706/news/N60907page1.html
State Senator Charged In Defrauding Non-profit
By ALEX KRATZ If State Senator Efrain Gonzalez is found to have defrauded the West Bronx Neighborhood Association, as a recent indictment alleges, he didn’t have to go very far to do it.
In July, Gonzalez sat down for an interview with the Norwood News in a virtually empty two-room suite on the same floor of his district office on the Grand Concourse. Paintings of him as a stately, younger, slimmer lawmaker adorn the wall along with framed logos of his Dominican cigar company.
The suite, which Gonzalez has a punch code for and referred to as his other office, is the headquarters of the West Bronx Neighborhood Association (WBNA), the same non-profit group Gonzalez stands accused of siphoning money from for his own purposes.
On Aug. 25, Gonzalez, who represents the entire Norwood News readership area, was indicted on federal mail fraud charges. The indictment accuses the veteran Bronx lawmaker of using $37,412 of WBNA’s money for personal expenses, including rent in Monroe, NY, and in the Dominican Republic, Yankees tickets, membership at a Dominican vacation club, clothes and college tuition.
That Friday morning, Gonzalez, 58, surrendered to federal authorities. In the afternoon, he appeared in front of a federal judge at a courthouse in Manhattan, but did not enter a plea. According to his lawyer, Murray Richman, Gonzalez will plead not guilty.
The senator was released on $25,000 bail and told not to leave New York. Gonzalez is scheduled to return to court for a pre-trial conference on Oct. 13.
“I will fight for my constituents like I’m going to fight for this case,” Gonzalez told reporters on the courthouse steps Friday afternoon, adding that he would continue to serve as a state senator.
Richman, Gonzalez’ attorney of 30 years, says the indictment is missing something, most notably a charge saying the senator actually stole money.
“An alleged crime that appeared over a period of six years and this is what they come up with?” Richman said. “What is mail fraud anyway? I’m asking you? Do you see the word ‘larceny’ anywhere?”
In Richman’s opinion, the mail fraud charge smacks of a witch-hunt. “He was a target and they were looking for a charge,” Richman said. “What could be sexier than getting a politician?”
The mail fraud count carries a maximum sentence of 20 years and a fine of $250,000.
The Gonzalez indictment stems from a joint investigation by the U.S. Attorney’s Office, Southern District, and the New York City Department of Investigation (DOI).
“Individuals are elected to public office in order to represent the public’s interests. Instead of using government funds to help the community he represents, this defendant served his own interests while allegedly siphoning government money into his own pockets,” DOI Commisioner Rose Gill Hearn said in a statement.
Heather Tasker, a spokesperson for the U.S. Attorney’s office, said the investigation is ongoing.
Richman said he doesn’t believe federal prosecutors will go to trial with only the one count of mail fraud. He expects superseding charges, or replacement charges, if prosecutors intend to take the case to trial.
The investigation began in August 2004. Gonzalez, his wife and several other Bronx officials were subpoenaed by federal prosecutors who were investigating the senator’s relationship with a handful of non-profits, including WBNA, the National Hispanic Policy Institute and the Institute for Multicultural Communication, Cooperation and Development. Gonzalez helped found all three groups and each employed family members and/or associates of the senator. The state attorney general’s office, which tracks tax records for all state non-profits, said that the National Hispanic Policy Institute is delinquent in filing forms and that the Institute for Multicultural Communication, Cooperation and Development didn’t have to file because it had less than $25,000 in assets.
“I haven’t done anything wrong,” Gonzalez told the Norwood News in September 2004. “Everything is just speculation. Whatever the investigators are looking for will come out in the process.”
A year ago, the Norwood News reported that, despite tax forms indicating that West Bronx had spent $210,000 on “conventions, conferences, and meetings,” Bronx community leaders had never heard of WBNA. On tax documents, WBNA states that its purposes include educational, cultural, youth programs, community issues, family values, environmental issues, voter registration drives and scholarships.
“We shun all publicity,” said a volunteer who answered the phone at WBNA in 2004. “We don’t really say all the things we do. We prefer to remain silent and help people. If the Lord acknowledges us in the afterlife, that’s good enough for us.”
According to public campaign finance records, Gonzalez’ Friends of Senator Gonzalez campaign committee donated $38,800 to WBNA over a four-year period beginning in 1999.
The Albany Times Union reported on Aug. 26 that WBNA received $112,000 over several years from Pathways for Youth, a New York City non-profit. Pathways, in turn, received at least $30,000 from Gonzalez in member items — state funds doled out at the discretion of individual lawmakers. The senator distributes $290,000 to non-profits in member item funds each year, according to the Times Union. For a story in the previous edition of the Norwood News, Gonzalez refused to divulge his member items.
In July of 2005, Pathways for Youth and an affiliate, the Gloria Wise Boys & Girls Club, were cut off from city contracts – which ran into the millions of dollars – after allegations of impropriety stemming from a DOI probe, according to a Daily News article.
A week after the indictment came down, Lucia Sanchez opened the locked door of Gonzalez’s district office at 1780 Grand Concourse. She looked apprehensive and said she’d been flooded by calls from reporters. On tax documents from 2003, Sanchez is listed as the only director, officer, trustee or key employee of WBNA (Gonzalez’ brother is also listed in previous filings), though she had no title and received no compensation for her work. On 2004 tax forms, Sanchez, who lived with Gonzalez for a time, and a woman named Kenia Castanos, are listed as secretaries who received no compensation.
Sanchez said she’s employed by Senate Minority Leader David Paterson’s office, but is assigned to Gonzalez’ office. When asked about her relationship with Gonzalez, Sanchez said, “No comment.” A Paterson staffer said the office would look into Sanchez’ employment but didn’t call back to comment.
Several calls to WBNA’s voice mail seeking comment were not returned. No one answered when the Norwood News knocked on their door last Thursday.
Gonzalez’ indictment is just the latest in a series of troubles for Bronx politicians. In 2003, Assemblywoman Gloria Davis stepped down after pleading guilty to bribery. And in 2004, State Senator Guy Velella also pleaded guilty to bribery charges and resigned.
Many of the senator’s Bronx colleagues said they respected Gonzalez and hoped the charges against him weren’t true.
One of the longest serving Hispanic state senators, Gonzalez is up for re-election this fall. He’s running unopposed in the Sept. 12 Democratic primary and faces Conservative Party candidate Ernest Kebreau in the November general election.
http://www.usdoj.gov/usao/nys/pressreleases/December06/gonzalezs2indictmentpr.pdf
Efrain González Jr., a Bronx Democrat, on the Senate floor. He declined to comment on a new indictment, but said he was innocent.
A New York state senator was charged yesterday with stealing more than $400,000 in state money appropriated for charities in his district and using it for personal expenses and luxuries for himself and his family.
The charges against the senator, Efrain González Jr., a Bronx Democrat, were contained in a new indictment announced by the United States attorney in Manhattan and came four months after he was indicted on charges of stealing $37,000 from a nonprofit organization.
Federal prosecutors said Mr. González funneled the money through two nonprofit companies, the West Bronx Neighborhood Association and United Latin American Foundation, which did little if any charitable work. The association’s office, according to prosecutors, was nothing more than a room adjoining Mr. González’s district office in the Bronx.
Federal prosecutors said Mr. González then used the state money — and some $40,000 in federal grants to the same charities — for a variety of personal expenses. Those included financing his private cigar company, paying membership fees in a vacation club in the Dominican Republic, paying rent and renovations for homes used by his wife and mother-in-law, paying college tuition for his daughter, and buying items like Yankees tickets and jewelry.
Moments after his latest indictment was announced in Manhattan, Mr. González was asked for comment on the Senate floor during a break in a special session and replied, “No comment; talk to my lawyer.” Then he added: “I’m innocent. You know, we’ve got to keep moving.”
He is scheduled to be arraigned tomorrow in federal District Court in Manhattan.
Mr. González’s chief of staff, Miguel Ponce, said yesterday that the senator “is looking forward to his day in court.”
At a news conference yesterday announcing the new indictment, Michael J. Garcia, the United States attorney for Manhattan, said the senator’s indictment pointed out the risk of corruption inherent in the Legislature’s practice of setting aside a pot of money for member items, the pet projects of individual lawmakers in their districts. Critics have objected that the budget does not identify the legislator sponsoring each item.
“This was a process that had little transparency in it, and that created risk,” Mr. Garcia said. “What we’re saying today is that that risk played out.”
Mr. Garcia declined to say whether federal prosecutors were investigating other lawmakers for the abuse of member items and whether any other charges were likely, saying only that his office was “obviously very focused on public corruption.”
Rose Gill Hearn, the city’s commissioner of investigation, who joined Mr. Garcia at the news conference, called on lawmakers to police the member item process better.
“The transparency, accountability and integrity of the member item process is an issue that should be analyzed on the state and city level,” Ms. Hearn said.
If convicted, Mr. González, 58, first elected in 1989 and re-elected in November, could be sentenced to 20 years on the most serious charges of “theft of honest services as a state senator” by embezzling member items and conspiracy to commit money laundering.
The Legislature sets aside $200 million a year for member items, federal prosecutors said yesterday. That includes $85 million each in the Senate and Assembly, and $30 million for the governor.
Yesterday’s indictment expands on the earlier one, charging that from October 1999 to January 2005, Mr. González allocated $423,000 in member items to a nonprofit corporation called Pathways for Youth, based in the Bronx, which said its mission was to help young people.
Pathways in turn directed the money to the West Bronx Neighborhood Association, whose stated mission was to promote civic and community affairs, but which in fact, prosecutors contend, served as a personal piggybank for Mr. González and two associates, Neil Berger, the executive director of Pathways, and Lucia Sanchez, a director of the association.
Mr. Garcia said yesterday that while Pathways did perform some legitimate charitable activity, the association and the third charity, United Latin American Foundation, did not perform “any substantial nonprofit work.”
Mr. González and the president of the United Latin American Foundation, Miguel Castanos, 46, of the Bronx, are charged with conspiring to steal more than $225,000 from that organization.
Danny Hakim contributed reporting.
http://www.usdoj.gov/usao/nys/pressreleases/December06/gonzalezs2indictmentpr.pdf
By JOSEPH GOLDSTEIN,
A Bronx state senator is facing charges that he stole state funds to pay personal expenses that included rent on two residences in the Dominican Republic and the bills from his cigar company.
Federal prosecutors say the senator, Efrain Gonzalez Jr., 58, regularly directed state funds to a Bronx charity and then used the charity as a personal bank. The allegations are expected to put pressure on the Legislature to curb the $170 million it spends annually funding so-called member-items, which are the pet projects of assemblymen and senators.
"Demonstrated by this case is the fact that member-item expenditures present corruption vulnerabilities," the commissioner of the city's Department of Investigation, Rose Gill Hearn, said yesterday at a news conference announcing the charges.
Mr. Gonzalez, a Democrat, is the seventh member of the city's delegation to Albany to be indicted on corruption-related charges in the last three years. In all, nine politicians from the city's 80-member delegation have been charged with crimes in that time.
In the past six months, state prosecutors have charged Assemblywoman Diane Gordon of Brooklyn with accepting bribes and federal prosecutors have charged Assemblyman Brian McLaughlin with racketeering and embezzlement.
Even as Ms. Hearn announced the latest charges against a legislator, she cautioned against jumping to the conclusion that Albany was experiencing a crime wave, as one political observer, Henry Stern of New York Civic, suggested in July when Ms. Gordon was indicted.
She said that there are "dozens and dozens of lawmakers working very hard in Albany."
The "common-denominator" in the latest three such cases was her office's investigative work, she said.
The U.S. Attorney for Manhattan, Michael Garcia, who is prosecuting the case, said, "I am not going to say everyone in this particular branch of government is corrupt."
The charges unsealed yesterday replace an indictment against Mr. Gonzalez unsealed in August charging him with mail fraud by taking money from the Bronx nonprofit, the Pathways for Youth, Inc. The old indictment did not allege that Mr. Gonzalez used his elected office illegally, as the new indictment does.
"As a New York State Senator, Efrain Gonzalez, Jr., the defendant, therefore owed New York State citizens a duty to refrain from abusing the member items process for personal gain," according to the indictment.
An attorney for Mr. Gonzalez, Murray Richman, said, "We assert that we are not guilty and we will confront these allegations in court."
The indictment also charges three other individuals associated with Mr. Gonzalez, including the director of Pathways, Neil Berger, who is accused of writing numerous checks from Pathways' account to an organization that Mr. Gonzalez controlled. The second organization, the West Bronx Neighborhood Association, occupies an adjoining room to Mr. Gonzalez's district office, and served to cover the senator's personal expenses, prosecutors said.
Mr. Gonzalez is accused of spending more than $400,000 of Pathways' money to pay for renovations to his mother in law's Dominican Republic home and rent for his wife's apartment in the Dominican Republic among other expenses, according to the indictment. Between the years 1999 and 2005 he directed $423,000 of state money to Pathways, according to the indictment.
Mr. Garcia also said that $9,000 of state funds went to design and print cigar bands for the New York-based cigar distribution company that Mr. Gonzalez owns. The cigar bands were labeled with politically-themed names such as "Senator" and "Assembly," prosecutors said.
Pathways' stated intent was to improve the welfare of young people and was formerly known as the Boys' Athletic League. The federal government is a large source of its funding.
Mr. Gonzalez is scheduled to be arraigned on the new counts of mail fraud and wire fraud in U.S. District Court in Manhattan on Friday.
When the charges against him were announced, Mr. Gonzalez was in Albany for a special legislative session. First elected in 1989, Mr. Gonzalez has a reputation for his unassuming presence in Albany.
He is currently the chairman of the Senate Democratic Conference. He was born in Puerto Rico and entered politics as a representative of the city's transit worker's union. He is involved with the National Hispanic Caucus of State Legislators, and requested for his August bail order to be changed to allow him to attend various caucus events in five states, Puerto Rico, Ecuador, and Washington D.C.
"He hasn't done anything," the previous senator from Mr. Gonzalez's district, Israel Ruiz, said, referring to Mr. Gonzalez' tenure. "He hasn't improved anything. You don't hear him on any issue. He's not involved in any issue. He could care less. He deserves whatever he gets because he should have known better."
Mr. Ruiz said Mr. Gonzalez had once worked in his Bronx district office in the late 1970s. Mr. Gonzalez won the Senate position in 1989, after Mr. Ruiz was convicted of making false statements on a bank loan application.
http://www.usdoj.gov/usao/nys/pressreleases/December06/gonzalezs2indictmentpr.pdf
Chatting on the phone today with a political friend of mine we, naturally, got on the topic of the latest political indictment. My friend's comment was that he'd never met Senator González, but that "he looks like Jabba the Hutt." I looked him up and well, you be the judge.
