Councilman Larry B. Seabrook in Lower Manhattan on Tuesday. He is charged in a 13-count federal indictment that detailed a scheme of inflating expenses of nonprofit groups he controlled. Ramin Talaie for The New York TimesCity Councilman Larry B. Seabrook, a fixture in Bronx Democratic politics for more than two decades, was charged on Tuesday in a 13-count federal indictment accusing him of money laundering, extortion and fraud in a series of schemes that included helping a close associate win a contract to install boilers in the new Yankee Stadium and siphoning hundreds of thousands of dollars in city money to himself, friends and family members.
Most of the charges revolve around Mr. Seabrook’s use of Council discretionary funds, known as earmarks, to finance a string of nonprofit groups that city and federal authorities say ultimately did little for the communities they were supposed to aid.
Prosecutors say Mr. Seabrook closely controlled the groups’ budgets and personnel decisions, helping them to win city contracts and using the money to pay more than $500,000 in salaries and consulting fees to his female companion, his brother, two sisters and other family members.
Mr. Seabrook, 58, and others were able to do this, prosecutors contend, in part by repeatedly inflating expense claims to the city on the part of the nonprofit groups, including rent costs. From 2002 to 2009, Mr. Seabrook directed more than $1 million to the groups while never disclosing his close affiliation with them.
The conduct alleged in the indictment ranges from the ambitious to the nearly silly: from extorting payments from a close associate to help win the boiler contract to altering a $7 receipt for a bagel sandwich and diet soda so that Mr. Seabrook was reimbursed $177 for the purchase.
Mr. Seabrook, a former assemblyman and state senator who in November won re-election for his third Council term, is the second councilman charged in recent months with stealing city money through the discretionary process. In July, former Councilman Miguel Martinez, a Democrat who represented Upper Manhattan, pleaded guilty to three felony counts involving the theft of $106,000, some of which was intended for nonprofit organizations. He was sentenced in December to five years in prison.
Mr. Seabrook, who over a 26-year political career has survived scares and scrapes with a variety of investigations and audits, could face considerably more time if he is found guilty on all or some of the charges, most of which carry a maximum sentence of 20 years.
In Federal District Court in Manhattan on Tuesday, Mr. Seabrook, wearing gray suit pants, a matching vest and a white shirt buttoned to the neck with no tie, pleaded “not guilty” in a loud voice before United States Magistrate Judge Henry B. Pitman.
He was released on a $500,000 personal recognizance bond. His lawyer, Murray Richman, told reporters in the courthouse hallway that the councilman’s conduct did not constitute a crime.
“We have no hesitation in saying that we don’t perceive that a crime was committed,” Mr. Richman said, adding, in reference to a check that was issued to reimburse the councilman for what he said were legitimate expenses, “That’s laundering? I question that.”
At a news conference, Preet Bharara, the United States attorney for the Southern District of New York, said that through the use of discretionary funds, Mr. Seabrook “basically operated his own corrupted City Council-funded friends and family plan.”
Rose Gill Hearn, the city’s investigations commissioner, described Mr. Seabrook’s array of fraudulent schemes as “breathtaking.” Even after one of the nonprofit groups was flagged by city auditors for financial impropriety, she said, Mr. Seabrook “found ways to dodge scrutiny and keep the money flowing.”
The allegations are another blow to the embattled City Council, which over the course of a two-year investigation by federal prosecutors and the city’s Department of Investigation has been forced to take several steps to bring more transparency to the way it distributes millions of dollars in discretionary funds each year.
Speaker Christine C. Quinn said in a statement on Tuesday that all of the members of the Council “take the deeply troubling allegations” against Mr. Seabrook “very seriously,” adding that the matter was immediately referred to the body’s Standards and Ethics Committee, which will convene as early as next week.
Mayor Michael R. Bloomberg declined to comment on the specifics of the allegations on Tuesday, saying he had not read them. At the same time he defended the Council and the administration’s efforts to clean up its discretionary financing process.
Four of the 13 counts in the indictment are based on what prosecutors allege was Mr. Seabrook’s successful lobbying effort to help his close associate win the nearly $300,000 subcontract to install two boilers at the new Yankee Stadium and his direct solicitation of $50,000 in payments from the man, much of which Mr. Seabrook then funneled through his political committee.
The associate is not named in the indictment, but is identified only as “the Bronx Boiler Manufacturer.” But several people involved with the matter said it was Arlington Leon Eastmond Jr., whose company A.L. Eastmond & Sons installed the boilers. He won the contract even though his bid was $13,000 higher than the lowest bid. Mr. Bharara described the man as a victim of extortion in the scheme and said he was cooperating with investigators.
The Yankees said in a statement that the team had cooperated fully with the investigation and that the prosecutors had told the ball club that there “is no allegation of wrongdoing on the part of anyone within the Yankees’ organization.”
Outside the courthouse on Tuesday, Mr. Richman characterized the payments made to Mr. Seabrook’s political club by Mr. Eastmond as routine contributions to a political organization.
The remaining counts center on several nonprofit groups closely affiliated with Mr. Seabrook, including the Northeast Bronx Redevelopment Corporation; the Bronx African-American Chamber of Commerce; the New York African-American Legal and Civic Hall of Fame and others that were involved in such programs as job placement and firefighter recruitment.
According to prosecutors, the groups shared office space, frequently operating out of the same building as Mr. Seabrook’s Council district office. All were controlled and run by Mr. Seabrook and a group of his friends, relatives and associates. Among them was his companion, who is not named in the indictment, but whom city and state documents identify as Gloria Jones-Grant.
In June, federal investigators issued subpoenas to landlords who leased space to Mr. Seabrook and several nonprofit groups closely linked to him after an article in The New York Times detailed the inflated rent payments and the use of nonprofit money to pay salary and fees to Mr. Seabrook’s family members. Prosecutors say the groups, under his direction, fraudulently billed the city more than $102,000 from 2004 to 2007 in inflated rent payments and an additional $110,800 in other expenses.
