Read entire Espada complaint here...
The Feds are closing in on Senate Majority Leader Pedro Espada Jr. in the wake of a state civil suit accusing him of looting $14 million from his taxpayer-funded health clinic.
State Attorney General Andrew Cuomo charged Espada used his not-for-profit health center as a "personal piggy bank" to pay for family trips and $80,000 in restaurant bills - including $20,000 in sushi.
"Siphoning money from a charity would be egregious under any circumstances, but the fact that this was orchestrated by the state Senate majority leader makes it especially reprehensible," Cuomo said.
A more serious joint criminal investigation by Cuomo and Brooklyn U.S. Attorney Benton Campbell is zeroing in on Espada for wire and mail fraud, sources said, adding that several search warrants have been issued. Prosecutors are even considering a racketeering indictment of the Bronx Democrat, built around the allegations outlined in the civil suit.
Prosecutors say Espada, founder and president of the Bronx's Soundview HealthCare Network, used the organization as a line of credit, running up $450,000 in personal expenses on his corporate credit card and $100,000 in campaign expenses.
He got away with it, the suit alleges, by packing the Soundview board with family members, Senate staffers and other stooges.
The suit seeks repayment and the removal of Espada as Soundview's CEO and president, as well as the ouster of the entire board, which rubber-stamped his expenses.
Espada called the suit "lies and falsehoods" and dismissed it as political payback for the Senate leadership coup he helped launch last summer that briefly put Republicans in control.
Espada cautioned against a rush to judgment and took a personal shot at Cuomo, whose father was once governor.
"I find it disingenuous to demonize my family simply for working for a business that I founded when I was 22 years old," he said. "It is no more inappropriate than working for your daddy as the hatchet man and then aspiring to step on his shoulders to be governor of this great state."
Created in 1978 as a nonprofit health care agency to serve impoverished Bronx patients neglected by the medical system, Soundview operates on $12 million a year in state and federal money.
Cuomo said Espada put his personal finances ahead of those of the medical clinics.
The suit, which names 19 current and former Soundview officers, alleged the following dizzying array of corruption:
- Espada received a severance package worth an estimated $9million - a deal that would bankrupt the nonprofit if the senator collected. Espada would be paid even if he is forced out for wrongdoing.
- Espada charged Soundview $80,000 for 650 restaurant meals - including $20,000 in deliveries from a pair of sushi restaurants near the senator's Westchester home.
- Espada put at least 12 relatives on his payroll, paying them more than $2 million over the past five years.
- Espada's son, Pedro Gautier Espada, rigged bids to ensure a $400,000 janitorial contract at Soundview went to a for-profit company owned by the senator.
- Another of Espada's private companies got $35,000 in 2007 and 2008 for placing appointment "reminder" calls to Soundview patients.
- Espada covered the cost of $100,000 in campaign literature by funneling money through Soundview.
- Soundview paid for a Mercedes-Benz for Espada and the insurance on the car.
The suit also says Espada's main residence is in Mamaroneck, Westchester County, outside his Bronx district. When Espada was gearing up for his 2008 run, he had the Soundview board approve a $2,500 a month pay bump to cover the cost of buying a co-op in the borough, Cuomo charged.
"This is not a corporate abuse. It's a public abuse," Cuomo said.
Espada vowed to retain his position and focus on his job.
He charged that "this game of politics is sabotaging thousands of Bronx Hispanics and African-Americans who rely on Soundview."
Espada also has political trouble. He faces a tough primary challenge this September from community organizer Desiree Pilgrim-Hunter.
In the Bronx, patients leaving the widely admired clinics had little good to say about Espada. "It makes me sad, that someone would do such a thing, when there are so many poor kids and elderly people who need so much," said Adis Kessler, 74.