THE "PORK" IN NEW YORK, Thoughts of an older American on Constitutional Government in the USA Options

[Livyjr]

"NYSUT's lesson in politics - Teachers union poised to announce endorsements of 30 state Senate Republicans and 5 Democrats"

By JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

First published in print: Monday, October 20, 2008

New York State United Teachers is preparing to announce today endorsements of 30 state Senate Republican incumbents and five Senate Democrats for re-election in a move that may be helpful to both parties in their clash for control of the upper chamber of the Legislature and harmful to any effort to close a budget deficit through education aid cuts.

The heavily armed NYSUT, with 600,000 members and millions in campaign dollars, on Sunday was still counting votes of its 70-member board regarding the endorsements of Democratic Senators Malcolm Smith, the minority leader; Craig Johnson, William Stachowski, David Valesky and Jeff Klein.

But the trend seemed in favor of supporting their return to office following a positive vote for supporting all 30 Senate GOP incumbents, said Alan Lubin, executive vice president of NYSUT.

Balloting began Wednesday on the GOP slate and Friday on the Democrats.

Voting is to be completed by today.

The union, furious at the Senate GOP for voting in favor of property tax caps aimed at retarding the growth of school budgets, had proposed to remain neutral this year in the Senate races.

That plan was scuttled after Senate Majority Leader Dean Skelos, R-Rockville Centre, promised in a series of public statements recently to block any attempts by the Gov. David Paterson's administration to reduce education aid as a way to shore up a yawning budget deficit.

Paterson has estimated this year's shortfall at $2 billion.

Smith followed up Skelos' pledge of guarding against midyear cuts by announcing that Senate Democrats "are not cutting education funding" and criticized "politician Dean Skelos and the Republican-controlled Senate," saying they are protecting special interests instead of taxpayers.

Lubin said both sides got a chance to discuss their plans for education aid with the union in recent days.

"It was an open door,'' Lubin said.

"We were reaching out both ways."

He said Skelos' stand against reductions to K-12 and higher-education spending convinced the union it was time to revisit its endorsement positions.

Discussions were conducted with Skelos, Smith and individual senators.

The endorsements could prove helpful to the Republicans.

The union already had endorsed Assemblyman Roy McDonald, R-Wilton, who is seeking the seat vacated by state Sen. Joseph L. Bruno, R-Brunswick, because the Assembly never voted on the property tax cap legislation and McDonald didn't support it either, Lubin said.

The union, which has been generous to Assembly Democrats, also is expected to endorse the Democrat seeking McDonald's Assembly seat - Ian McGaughey of Wilton and one other Assembly candidate today, Lubin said.

"It's more backward thinking," said Democrat Mike Russo, who is challenging McDonald in the Senate race.

"I think NYSUT wants to keep the Senate Republicans" in control.

He said the union's backing is valuable because of its size and money.

Sen. Hugh Farley, R-Niskayuna, said the endorsement "is important."

It puts Republicans in the position of being against tax increases, against state employee layoffs, in favor of property tax caps and opposed to midyear education cuts.

"Something's got to give," said E.J. McMahon, executive director of the Manhattan Institute's Empire Center for New York State Policy.

If the state budget deficit exceeds $2 billion, he said, Republicans may have to do some things they don't want to.

Farley said the shortfall should be closed with greater emphasis on Medicaid fraud prevention.

As much as $4 billion could be saved by cracking down more aggressively on the Medicaid abuses, he said.

[Livyjr]

"Jobless fund going broke - State unemployment claims up 25 percent, federal loan looms"

By RICK KARLIN, Capitol bureau, Albany, New York Times Union

First published in print: Wednesday, October 22, 2008

ALBANY — As Wall Street continues to struggle and the overall economy sags, New York's $615 million Unemployment Insurance Trust Fund is on the verge of going broke and is expected to look to Washington for a loan.

With unemployment claims up 25 percent compared with a year ago, when the fund was at $720 million, the coffers could run dry by early next year, officials predict.

At that point, the state will turn to the federal government for a loan to continue payments to the unemployed.

The state unemployment fund is rated as one of five nationwide that are "not solvent,'' which means the reserves are less than three months' worth of payments, according to the National Employment Law Project, a group that follows labor issues.

The others are South Carolina, Indiana, Ohio and Michigan.

The cash-strapped state had to pay the federal government $7 million in interest when the fund needed money in 2006.

And there have been other payments in other troubled times, including the post 9/11 economic slump.

The state avoided interest payments in 2007 when it borrowed $222 million, but interest charges were avoided because the state didn't get a second loan that year and paid off the loan in May, said Leo Rosales, a state Department of Labor spokesman.

"It's something we expect," Rosales said, referring to turning to the federal government for loan to pay benefits.

If the fund runs dry, it doesn't mean people won't get unemployment insurance, he added.

While this wouldn't be the first time New York's unemployment system has been bailed out by Washington, critics believe that chronic under-funding is leading to excess costs over the long-term because the state is exposed to paying interest on the federal loans.

"It's actually a pretty simple problem,'' said Andrew Stettner, deputy director of NELP, who explained that all employers pay into the fund, which is then tapped as needed.

While the unemployment fund hasn't been a major issue with the Legislature in past years, it could be a big topic come January given the looming recession and rising unemployment, which stood at 5.8 percent last month, up from 4.5 percent a year ago.

"I believe we will be revisiting this in the next session,'' said Assemblywoman Susan John, D-Rochester, who last year sponsored a bill that would have increased the amount employers pay and eventually raise the benefit cap to $550 a week and then index it to inflation.

Generally, New York provides up to 26 weeks of unemployment insurance with a cap of $405 a week.

Congress last summer, though, provided for 13-week extension.

Stettner and John believe businesses should pay more unemployment taxes, which are only paid on the first $8,500 of individual earnings and average just over a half percent for all wages.

John noted that New Jersey and Connecticut tax the first $27,700 and $15,000 respectively.

Business interests say they would have to examine how a higher cap would affect them.

And they note that they also pay federal unemployment taxes, which come back in the form of loans as needed.

"They are essentially borrowing their own tax money back,'' said Margaret Moree, director of federal affairs at the state Business Council.

Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com.

[Livyjr]

NEW YORK STATE GOVERNOR DAVID PATERSON CAN SPEW BULL**** WITH THE BEST OF THEM, IT SEEMS ...

"NY gov aide owed almost $300K in taxes, penalties"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:16 p.m., Wednesday, October 22, 2008

ALBANY -- Gov. David Paterson's embattled chief of staff Charles O'Byrne had to pay nearly $300,000 in overdue state and federal taxes, penalties and interest -- almost $100,000 more than previously reported, O'Byrne's tax attorneys said Wednesday.

The lawyers also said O'Byrne sent a last check for $3,600 to tax officials on Tuesday, days after Paterson's office said all the debts were fully paid.

They said the check cut Tuesday was an intentional overpayment mailed as a precaution to duplicate a September payment that hadn't yet been posted to O'Byrne's account.

The lawyers, Henry Berger and Richard Kestenbaum of Manhattan, released no checks or other records that proved a payment was made in September.

The total was higher than the estimate provided since Saturday by Paterson's office because it reflects a final tally with state and federal tax agencies, according to Paterson spokeswoman Risa Heller.

The lawyers also detailed the mental illness O'Byrne has blamed for his failure to file tax returns from 2001 through 2005.

O'Byrne suffered three bouts of clinical depression and received therapy and medication, but is no longer on medication, they said.

The last occurrence was in late 2006, when Paterson was elected lieutenant governor, and weeks into 2007, when O'Byrne was the lieutenant governor's chief of staff making $178,500 a year.

O'Byrne said he informed Paterson of the debt and illness in 2004 and again in 2007.

Paterson has confirmed that account.

On Wednesday, Paterson's office released a statement by Dr. Howard Kremen, who said he treated O'Byrne for major depressive disorder from early 2001 to 2006, and said O'Byrne has been free of depression since 2006.

That conflicts slightly -- by a few weeks -- from the account by the lawyers who said O'Byrne suffered depression into early 2007.

Kestenbaum, one of O'Byrne's lawyers, said O'Byrne suffered an established "nonfiler syndrome" which he said affects high-functioning professionals and leads to failure to meet financial obligations when suffering clinical depression.

Rhondalee Dean-Royce, a spokeswoman for the American Psychiatric Association, said there is no such disorder or syndrome listed in the Diagnostic and Statistical Manual of Mental Disorders, a standard reference.

At the IRS office in California, they see many cases of accountants and attorneys and other professionals not filing their taxes for reasons ranging from they were too busy, to depression, to family tragedy, said Larry Wright, an IRS spokesman.

But he said he hadn't heard of nonfiler syndrome.

O'Byrne's attorneys said he paid $51,303 in back state taxes, $16,711 in penalties and $12,905 in interest.

He also paid $127,018 in federal taxes, $50,836 in penalties and $34,005 in interest on the federal debt.

O'Byrne didn't file the tax debt on his state ethics forms because he didn't think he had to, said Berger.

But Berger said O'Byrne will amend his form to include the debt.

Under state ethics law, that will avoid any penalty.

O'Byrne, a former Catholic priest who is also a lawyer, said he made the tax payments with loans of $5,000 to $20,000 from his sisters.

He also got loans of $60,000 to $100,000 from friends Jean Kennedy Smith, the sister of Sen. Edward M. Kennedy, and real estate lawyer Brian Krisberg.

The lawyers wouldn't break out the details, but said O'Byrne will pay interest.

O'Byrne's lawyers said no money was accepted from anyone doing business with the state.

The Senate investigations committee is investigating the case.

------

AP Writer Jennifer Peltz contributed to this report from New York City.

[Livyjr]

NEW YORK STATE GOVERNOR DAVID PATERSON CAN SPEW BULL**** WITH THE BEST OF THEM, IT SEEMS ...

"NY gov aide owed almost $300K in taxes, penalties"

By MICHAEL GORMLEY, Associated Press

Last updated: 6:16 p.m., Wednesday, October 22, 2008

ALBANY -- Gov. David Paterson's embattled chief of staff Charles O'Byrne had to pay nearly $300,000 in overdue state and federal taxes, penalties and interest -- almost $100,000 more than previously reported, O'Byrne's tax attorneys said Wednesday.

Kestenbaum, one of O'Byrne's lawyers, said O'Byrne suffered an established "nonfiler syndrome" which he said affects high-functioning professionals and leads to failure to meet financial obligations when suffering clinical depression.

Rhondalee Dean-Royce, a spokeswoman for the American Psychiatric Association, said there is no such disorder or syndrome listed in the Diagnostic and Statistical Manual of Mental Disorders, a standard reference.

At the IRS office in California, they see many cases of accountants and attorneys and other professionals not filing their taxes for reasons ranging from they were too busy, to depression, to family tragedy, said Larry Wright, an IRS spokesman.

But he said he hadn't heard of nonfiler syndrome.

NEW YORK STATE GOVERNOR DAVID PATERSON IS THE WRONG MAN FOR THE JOB ....

DAVID PATERSON REPRESENTS THE CORRUPT STATUS QUO IN NEW YORK STATE, AS THIS O'BYRNE FIASCO MORE THAN AMPLY DEMONSTRATES ....

HE IS TOO TIED IN TO THE CORRUPTION IN NEW YORK STATE TO BE A LEADER FOR A BETTER, NON-CORRUPT FUTURE ...

And so ...

"Top Paterson aide O'Byrne resigns - Senior adviser William Cunningham III to take on post"

By IRENE JAY LIU , RICK KARLIN and JAMES M. ODATO, Capitol bureau, Albany, New York Times Union

Last updated: 6:06 p.m., Friday, October 24, 2008

Charles O'Byrne, top aide to Gov. David Paterson, is departing the administration after having offered to resign throughout the course of the week.

O'Byrne resigned his position as Secretary to the governor, according to administration sources.

O'Byrne and the Paterson administration have been under fire since last weekend, when it was revealed that O'Byrne owed nearly $300,000 in state and federal back taxes, penalties and interest.

He failed to file tax returns from 2001 to 2005, according to documents released Wednesday.

The decision for O'Byrne to resign was mutual between the secretary and governor, according to a state official.

"There was consensus that his departure was in everyones best interest, including his own," said the official.

"This is the toughest decision (Paterson) has had to make so far ... because it was a personal one," said Democratic strategist Hank Sheinkopf, who heard about O'Byrne's departure this afternoon.

"Charles O'Byrne served his governor well and did what was right so the governor wouldn't be hit with this issue any more."

Senate Majority Leader Dean Skelos released a statement commending the decision, yet continuing to question the governors knowledge of O'Byrne's failure to pay taxes.

"Everyone has an obligation to pay their taxes."

"No one likes to do it, but it is the law and when someone does not comply with the law there are consequences."

"By removing his Chief of Staff Charles O'Byrne, Gov. Paterson took appropriate action today to show that no one, even those serving at the highest levels of government, is above the law," said Skelos.

"Despite the Governor's actions today, questions remain about exactly when the Governor knew about O'Byrne's failure to pay his taxes, and why he chose to do nothing about the matter until it became public this week."

O'Byrne will be replaced, at least in the interim, by William Cunningham III, who is senior adviser to the governor and a longtime friend and colleague of his father, Basil Paterson, according to an administration source.

Paterson named Cunningham as senior adviser in April, not long after Paterson ascended to governor in the wake of Eliot Spitzer's resignation over a prostitution scandal.

In the $170,000 position, Cunningham has served as a sounding board to the governor, vetting ideas and strategies.

A graduate of Williams College and Columbia University School of Law, Cunningham is a former assistant U.S. attorney and was a partner in several law firms.

Basil Paterson and Cunningham worked together at the Long Island-based law firm Meyer, Suozzi, English and Klein.

"Ive known the governor for about 15 years," Cunningham told Newsday in April.

"I got to know David through his dad."

"I'd say one of the things David and I have as a common bond is we both love his parents, Basil and Portia."

"Our paths would cross frequently enough that on Inauguration Day (the governor) asked to speak with me and took me aside."

"I met with him the following week."

O'Byrne settled his $211,860 federal debt in May.

He completed payment Tuesday on $80,920 owed the state, three days after he issued a statement that the debt had been paid.

[Livyjr]

"A scheme that stretched across the globe - Fraud cases raise questions about the work of attorneys whose clients later faced criminal charges"

By BRENDAN J. LYONS, Senior writer, Albany, New York Times Union

First published in print: Sunday, October 26, 2008

SARATOGA SPRINGS — The money was supposed to come from overseas: a $100 million deal to finance a ski resort in Utah.

The wealthy investor on the other end of the telephone line listened closely to three men from Saratoga County, including an attorney, who cast themselves as international financiers with access to billions.

The investor, Brent Ferrin, who lives in Park City, Utah, was skeptical.

The men making the pitch were speaking in garbled sentences about Latvian banks, Patriot Act restrictions and shadowy European bank executives who, it would turn out, actually lived in Las Vegas.

But Ferrin played along.

He questioned why the paper work for a major international loan was being handled by a ''personal injury lawyer'' from Saratoga Springs.

The attorney, John M. Hogan Jr., jumped in to defend himself.

''Let me tell you why,'' Hogan said.

''Because I, I am tenacious."

"I don't let go of things when I get my hands onto them."

"I was for, did they say I was an accountant before I was a lawyer?"

"... And did they tell you that ah, I don't like to lose and that I'm a bulldog?"

"That's what people call me.''

Unbeknownst to Hogan and his partners in the deal, Ferrin was recording every word for the FBI.

It wasn't the first time Hogan, 73, a member of a longtime Saratoga Springs law firm, played a role, knowingly or not, in a questionable loan deal, court records show.

But like several upstate New York attorneys who figured in recent federal investigations of real estate and mortgage fraud, Hogan was not charged.

Indeed, a months-long Times Union examination has uncovered instances in which federal authorities investigated the roles of lawyers and other licensed professionals embroiled in schemes involving mortgage or bank fraud, without bringing charges.

It comes as other lawyers and their clients, who have been prosecuted in upstate federal courts, are accusing the Justice Department of being selective in its prosecutions and of failing to pursue potential conspirators due to a mix of whimsical decision-making and limited law enforcement resources.

As the U.S. economy is reeling in the wake of years of sloppy mortgage lending, the government's decision to limit its prosecutions has exposed a gap in law enforcement priorities.

It also highlights a shift in focus by the FBI and Justice Department toward combating terrorism and child pornography.

In June, that issue bubbled up in a federal courtroom in Albany as U.S. District Judge Gary L. Sharpe sentenced two men, Thomas Disonell and Matthew Kupic, to prison for a series of mortgage fraud crimes that could have put them behind bars for much longer than the 24 months they received.

Sharpe reacted strongly as the government sought to credit the men for cooperation that was never used to prosecute anyone else.

''This case caused me to crack an eyebrow,'' Sharpe declared on the bench that day.

''How can they do what they did without the complicity of the lawyers that are involved in the closing?"

"... I'm not oblivious to the fact that the criminal cases filed with the FBI as the investigating agency is almost nil compared to what they were before 9/11."

"I know where their resources are."

"And I'm not attacking that one iota."

"... But I happen to know that the amount of time and energy invested in white-collar fraud in criminal investigations is not what it was prior to 9/11.''

Andrew T. Baxter, acting U.S. attorney for New York's Northern District, while declining to comment on any specific case, said it is not a matter of being selective.

He said that ''attorney-client privilege can make it more difficult to gather evidence.''

''In investigating a fraudulent scheme, a key issue as to every subject is the strength of the evidence of the knowledge of the fraudulent nature of relevant transactions and the criminal intent of those involved,'' Baxter said.

''The fact that a subject of an investigation is a lawyer or licensed professional may affect our ability to prove knowledge and intent.''

Still, the Saratoga County case and others like it have exposed a trend in which people accused of federal fraud-related charges turned to attorneys and other professionals who, unwittingly or not, allegedly helped them complete their crimes.

In 2005, a year after Ferrin recorded his telephone conversation with Hogan, two other men on the conference call that day, Philip Rechnitzer of Clifton Park and Ronald Persaud of Saratoga Springs, were indicted by a federal grand jury in Albany.

The indictment accused them of bilking Ferrin and other investors of more than $1.6 million.

Persaud's wife, Indranie, his ex-wife, Esther, and their son, Shawn, a student at Albany Law School, also were indicted.

The charges allege numerous investors lost money while seeking financing for high-end development projects like theme parks, Caribbean resorts and even a Lake George hotel.

The investors have testified in federal court they believed they were dealing with high-powered financiers who had access to billions of dollars in overseas funding, and not a husband-and-wife team from upstate New York who were having financial troubles.

In 2004, at a time when Esther Persaud was claiming to be the managing director of at least three overseas banks, she listed her job as an office manager and stated she had $50 cash on hand when she filed for bankruptcy in Albany.

Ronald Persaud, whom prosecutors have cast as the ringleader, also filed for bankruptcy that year, claiming assets of under $11,000.

It took place at a time when federal prosecutors say he was fabricating official-looking European bank notes purported to be worth billions of dollars and using those, often with local lawyers at his side, to convince investors to give him money to secure multimillion-dollar loans.

Defense attorneys in the case say lawyers were integral in the deals.

As the ongoing trial of Ronald and Esther Persaud opened two weeks ago, their criminal attorneys cast blame on at least five business attorneys, including Hogan.

Their pitch to the jury in Albany is that lawyers approved documents and wire transfers, and handed over the fraudulent bank notes to investors.

The only attorney charged in connection with the scheme was William Tessitore, who lost his law license and pleaded guilty to bank fraud Aug. 11, admitting he looted $624,000 from his escrow accounts.

Prosecutors agree that the presence of attorneys is exactly why many victims fell for the scheme, but they have been silent on whether any of the other attorneys violated any laws.

In their trial briefs and other court filings in the Persaud case, they make clear that ''the subject fraud was advanced through the assistance of attorneys'' and ''attorney accounts were used to receive alleged wire fraud proceeds.''

According to court records in the case, and the testimony of witnesses at Persaud's trial, Hogan played a key role.

He served as a point of contact for duped investors and attended at least one purported ''closing'' for a loan in Zurich, Switzerland, that never took place.

Also, Hogan's law firm helped Ronald and Esther Persaud file for bankruptcy in 2004.

Early that year, Ronald Persaud listed assets of less than $11,000 and his job as a ''mortgage consultant'' while months later he was posing as an overseas banker during conversations with Hogan and investors.

The bankruptcy documents make no mention of Persaud's purported work as an international financier.

''Hogan, by virtue of his law license and his status as a member in good standing of the bar, gave the outward appearance of legitimacy to the fraud conspiracy,'' according to a government memorandum filed in Persaud's case.

Still, court records and an FBI document shared with the Times Union show Hogan wasn't the only attorney who aided — if unwittingly — in the alleged crimes of Rechnitzer and Persaud.

Anthony Ianniello, a well-known real estate lawyer in Clifton Park, handled the closing on a mortgage in which Persaud's wife, Indranie, a $40,000-a-year postal worker, sharply inflated her income on loan documents so her husband could secretly obtain an $890,000 home in Saratoga Springs.

Ianniello also set up a partnership through which Persaud purchased a $135,000 Porsche coupe a year after filing for bankruptcy, and with the proceeds of his alleged crimes, according to the indictment.

There is no indication that Ianniello knew Indranie Persaud was committing mortgage fraud.

Ianniello declined to comment.

But the Porsche deal raised suspicions of authorities.

A state motor vehicle investigator who examined the Porsche transaction, and Ianniello's files, concluded in a government report that ''the unsatisfactory and illogical explanations provided by the attorney, lead him to the conclusion that the Porsche transaction was 'classic money laundering to hide an asset,' '' according to a memo filed in court by the U.S. Attorney's Office.

Ianniello was never charged.

Last year, Ianniello was called in for an interview with the FBI and federal prosecutors.

He appeared alone.

An FBI report detailing Ianniello's responses to questions indicates he gave carefully worded answers about his dealings with the Persauds, for whom he had handled dozens of real estate transactions.

The FBI report indicates Ianniello said he was unaware Ronald Persaud and his wife had laundered money through Ianniello's private attorney escrow accounts.

''He also did not know why money would be transferred from Latvia,'' the FBI report states.

''Ianiello advised that he never dreamed there was a Latvian bank involved."

"... He did not recall his staff telling him about these transfers."

"... He stated that he was busy and preoccupied.''

Both Ianniello and Hogan are listed as witnesses by the government in the ongoing trial of Ronald, Esther and Shawn Persaud in U.S. District Court in Albany.

It's unclear whether they will testify.

During a conference in court Thursday, U.S. District Judge Thomas J. McAvoy asked prosecutors whether Hogan would be able to testify this week.

The judge told the attorneys that based on what has transpired in the courtroom, including new information that Hogan was allegedly a member of the board of directors of at least one of the shell banks controlled by the Persauds in Scandinavia, that Hogan could put himself in legal jeopardy by testifying.

''He's in danger,'' McAvoy told the attorneys, referring to Hogan.

Assistant U.S. Attorney Thomas A. Capezza responded that the government had not offered Hogan an immunity deal.

''We will have backup witnesses in the event something happens with John Hogan,'' Capezza told the judge.

Brendan J. Lyons can be reached at 454-5547 or by e-mail at blyons@timesunion.com.

[Livyjr]

"Fraud cases in region test responsibilities of lawyers - Defendants who say they trusted attorneys raise issue of prosecutorial double standard"

By BRENDAN J. LYONS, Senior writer, Albany, New York Times Union

First published in print: Sunday, October 26, 2008

ALBANY — Nine years ago, Mark Slagen fell into financial troubles after the house he shared with his wife, Ann, burned and left them homeless as their insurance coverage ran short.

Slagen, a former police officer and state Inspector General's Office investigator, said an acquaintance introduced them to a mortgage broker, Anthony Andersen, who pledged to help them refinance their way out of trouble.

Slagen would later regret the introduction, which would lead to his being convicted in a felony mortgage fraud scheme.

He cooperated with the FBI and that effort, according to federal prosecutors, helped force Andersen to plead guilty.

Andersen's corrupt deals relied on the work of other licensed professionals, including at least one attorney, James Blendell of Latham, who records show served as the closing agent for many of Andersen's bad deals.

Like other Capital Region attorneys embroiled in the paperwork of mortgage fraud scandals, Blendell was reported to state disciplinary authorities, but never accused of wrongdoing.

Attorneys for Slagen and other people caught up and convicted in the fraud schemes have accused the Justice Department of selective prosecutions.

It all unfolded in early 2001 when Andersen convinced him to "flip" two real estate properties in Troy and Rensselaer, court records show.

It was a crime that involved falsely inflating the value of the homes so the broker, Andersen, could pocket the profits of a mortgage set up to fail.

It was, according to the FBI, a classic mortgage fraud scheme.

''Slagen's responsibilities would be to appear at the closings and sign some paperwork, and that he would be compensated,'' according to his plea agreement.

Looking back, Slagen, who pleaded guilty to a felony but was sentenced to probation because he cooperated with the FBI, said he felt duped by Andersen and Blendell, who was never implicated in any of the crimes for which Slagen and Andersen both were convicted.

Court records and public documents filed in Rensselaer County indicate Blendell handled numerous real estate closings that were part of Andersen's sprawling mortgage fraud scheme.

Andersen, of Holyoke, Mass., and his wife, Lisa Andersen, both pleaded guilty to fraud-related charges and await sentencing.

Prosecutors did not identify Blendell in court documents by name.

Donald T. Kinsella, Slagen's attorney, questioned why his client was singled out when Blendell and at least seven other so-called ''straw purchasers'' in the case, including a police detective, were not charged.

''For some inexplicable reason, the government chose not to prosecute other individuals who were complicit with Mr. Andersen in the far-ranging scheme in which Mr. Slagen was but a limited participant,'' Kinsella wrote in a memo to the judge prior to his client's sentencing.

''Mr. Slagen has provided information to the New York state authorities in this matter, and we expect that at least one professional will be facing sanctions from New York state authorities.''

Blendell did not respond to requests for comment.

Slagen said he questioned Blendell whether his two property deals were legal.

''I brought in a copy of the Public Officer's Law and put it on his desk,'' Slagen said.

''He said to me this is completely legitimate.''

It isn't the only case in which allegations of a prosecutorial double standard have emerged.

Berne Watkins, a Glenmont businessman, partly blames his former business attorney, Michael Kornstein of Albany, for his conviction on fraud charges related to a massive property deal that involved former Urban League Director Aaron Dare, who is in prison for his role.

Watkins, 71, is scheduled to report to federal prison later this month to begin a 9-month sentence for his guilty plea last year in the $8.5 million real estate scheme.

The crimes centered on the sale of three large rental properties Watkins owned in Albany and Schenectady.

At Watkins' sentencing last summer, his defense attorney questioned why others in the deal were not prosecuted.

Kinsella, without naming Kornstein, noted that the attorney had approved a series of phony promissory notes that served as a basis for the federal charges against Dare and Watkins.

There are no allegations Kornstein knew the notes were phony.

''There were others in the case who could've been prosecuted who weren't: an attorney who drafted the documents, including the phony notes,'' Kinsella told a judge.

''I'm not a real estate attorney, but the first time I saw them, just looking at them, they were, obviously, bogus.''

Kornstein declined to comment.

''I trusted my lawyer and if he knew there was something wrong with the documents he should have told me,'' Watkins said.

''I created no words in any of those things.''

Watkins said that after he pleaded guilty and agreed to cooperate, he met with an assistant U.S. Attorney to talk about Kornstein's role.

''The meeting lasted 10 minutes,'' Watkins said.

''He hardly asked a question.''

[Livyjr]

"Wall Street workers leaving NYC for fresh start - Amid downturn, Wall Streeters leaving NYC for smaller firms in other states, overseas"

By VALERIE BAUMAN, Associated Press

Last updated: 2:55 p.m., Sunday, October 26, 2008

ALBANY -- Bankers and brokers looking to escape the financial meltdown are scrambling to relocate their families, possessions and rarified talent far from Wall Street to places such as Florida, Chicago, Milwaukee, Virginia and Asia.

Travis Lacey left investment bank Jeffries & Co. and Wall Street behind in September to work for Baird in Chicago.

He also left behind the nagging sense of worry that had plagued him since his company had started announcing layoffs earlier in the year.

"Anyone in that environment, you never know what's going to happen," Lacey said.

"There are a lot of good bankers that unfortunately are at the wrong place at the wrong time, especially in New York."

Corporate headhunters say Wall Street's malaise will lead to a permanent talent loss for New York.

It could help small boutique firms become bigger players with employees they would never have been able to lure from the city long-regarded as the world's financial capital.

"We're definitely hiring," said Robert Escobio, chief executive officer of Coral Gables, Fla.-based Southern Trust Securities Inc., a broker-dealer and investment banking firm.

"Right now we have the capital, and right now we're looking to expand."

"And I think that's what a lot of boutiques are looking to do, too."

Escobio said in the past few months, one out of every four or five resumes comes from top Wall Street firms -- compared with about one out of 100 in years past.

Former Wall Streeters also tend to bring clients with larger net worth -- another potential long-term blow to firms trying to recover from the meltdown -- so boutiques and middle market firms stand to reap the profits.

In turn they deliver something that's currently elusive on Wall Street: stability.

Jobs in the financial sector can pay anywhere from $100,000 to well into the seven-figure range depending on location, experience and the size of a firm, said Kimberly Bishop, vice chairman of Slayton Search partners, a Chicago-based headhunting firm.

"There's some talent available to some companies that wasn't available before," she said.

Wall Street workers who are thinking about relocating need to be flexible about income, Bishop said.

Some junior Wall Street workers may be able to get more senior positions in smaller firms, getting comparable or better pay.

But many more will make less while benefiting from a cheaper cost of living outside of New York City.

"They are going to make less, most of them," said Kurt Kraeger, the managing director of the New York Office of Robert Walters headhunting firm.

"Even before this (economic downturn), the same type of positions overseas, let's say, did pay about 20 percent less than you would make here ... the people who go to smaller firms, often times the bonuses are smaller."

New York is the top paying state for personal financial advisers, with an average salary of $131,660, according to the U.S. Bureau of Labor statistics.

Colorado followed, paying an average of $119,590, then Massachusetts, with an average pay of $116,170, according to the 2007 occupational employment survey.

Idaho was the lowest paying state for financial advisers, paying an average of $50,980.

West Virginia, North Dakota, Alaska, Nebraska and Kentucky all follow, paying an average below $60,000 a year for the same job.

Middle market and boutique firms are also appealing because they offer increased job responsibility and freedom, said Peter Kies, a managing director at Robert W. Baird, a Milwaukee-based middle market firm.

"As every round of cuts occurred, we got an increasing flow of resumes," Kies said.

"You can have a Wall Street kind of experience and live in Richmond, Milwaukee or Chicago."

Baird has seen roughly 50 percent more applications from Wall Street than they received last year, he said.

European and Asian banks are also seeing the abundance of workers as an opportunity to strengthen their position in the U.S. market.

"I'm noticing that people are willing to work places that they would have hung up on me if I had suggested it a year ago," Kraeger said of his headhunting work.

More bankers are willing to go to Asia than ever before because it is still viewed as an emerging market, said James Constable, owner of Albany Beck Consulting, an English headhunting firm that places financial workers in jobs from London to Singapore.

"Banks (in New York and London) are not looking to add to their work force in the short term," Constable said in an e-mail interview.

"This means that the volume is down, so instead the banks are opting to hire one senior candidate rather than a number of more junior ones."

So far this month, Albany Beck has received 38 percent more resumes from Wall Street candidates willing to work overseas than they did in October of 2007, Constable said.

New York Comptroller Thomas DiNapoli expects 40,000 Wall Street jobs could be lost by the end of the year.

So far he said 13,200 people have lost jobs in New York's financial sector since a year ago.

While some boutiques and middle market firms were hit hard by the economic downturn, larger banks had bought much more of the toxic mortgage-backed assets at the heart of the meltdown.

While headhunting to link new securities jobs with Wall Street casualties is one of the few growth industries these days, it's not easy, said Robin Judson, managing director of Smiths Hanley Associates LLC, a New York City hiring firm.

The finance job market is flooded with highly qualified executives and bankers, but "there aren't enough jobs to go around," Judson said.

[Livyjr]

NEW YORK DAILY NEWS DAILY POLITICS BLOG

October 27, 2008, 4:56 PM

Rog Murdock said: John Galt -- I saw those articles and I struggle to understand how some lawyers step so far afield.

JOHN GALT RESPONDS: But Roger Murdock ...

If you can't or won't be prosecuted for what you have done, then where is the "stepping far afield"?

The quick answer is that there isn't any "afield" to step into, at all ...

EVERYTHING GOES, Roger Murdock, if you are a lawyer ...

Not you, particularly ...

You operate by your own internal code of justice, which is in tune with mine ...

But your "breathren" have no limits on them, at all ......

That is what stands out to me in those articles - the lawyers never get prosecuted ....

They get paid to aid and assist the scams, but they don't have to ever face the law, unlike their co-conspirators ...

And that is another irony of that article involving Bush-appointee Gary L. Sharpe in the Northern District of New York ...

In what I believe was the first case that he decided after joining the bench in 2005, Judge Sharpe gave the federal stamp of approval to lawyers in Rensselaer County making disbursements on behalf of clients in aid of violating the law in New York State ...

In other words, lawyers serving as "BAG MEN" ....

With that ruling, Judge Sharpe made Rensselaer County a wide-open county in terms of there being no law enforcement with regard to lawyer participation in land fraud and land scams in Rensselaer County ....

And you notice in one of those articles that the land scams were in fact in Rensselaer County ...

Big surprise that, ain't it?

And so ...

http://www.nydailynews.com/blogs/dailypoli...pen-thread.html

[Livyjr]

DAVID PATERSON HAS NO FORESIGHT ...

AS NYS GOVERNOR, HE SHOULD HAVE SEEN THIS COMING A LONG TIME AGO, AND HE SHOULD HAVE TAKEN STERN STEPS THEN TO PREPARE THE STATE FOR TOUGH TIMES AHEAD ....

BUT DAVID PATERSON DOESN'T HAVE "STERN" IN HIM ....

AND NOW, THANKS TO HIS NEGLIGENCE, IT IS A CRISIS ...

HE'S PART OF THE GO-ALONG-TO-GET-ALONG SET IN ALBANY ...

A PART OF THE STATUS QUO ...

DAVID PATERSON IS MISMANAGING NEW YORK INTO A DEEP FINANCIAL HOLE ....

And so ..

"Paterson: New York's fiscal woes are deepening"

By CAROLYN THOMPSON, Associated Press

Last updated: 5:06 p.m., Monday, October 27, 2008

BUFFALO, N.Y. -- New York state's budget hole may be some $300 million deeper than estimated just three weeks ago Gov. David Paterson suggested Monday on the eve of releasing his latest economic forecast.

"You will find that it is a very dismal and unfortunate situation that we are in," warned Paterson, who is pressing the state Legislature for drastic action when it convenes for an emergency special session next month.

During a stop in Buffalo, Paterson said the deficit for the current fiscal year is nearly $1.5 billion.

Preliminary estimates Oct. 3 put the number at $1.2 billion, prompting Paterson to tell New Yorkers then to prepare for fewer services and potentially higher school and property taxes.

It gets even worse down the road, he said Monday, estimating the gap for 2009-10 will be twice what he thought back in July, when he gave a televised, alarm-sounding address in advance of an earlier round of legislative efforts to close the budget gap.

At that time, the 2009-10 deficit was projected at $6.4 billion.

On Monday, he again ruled no cost-cutting measure out, including layoffs of state employees.

He has asked for $2 billion in spending cuts when the Legislature convenes Nov. 18.

"When you're in that amount of trouble, everything is on the table," he said, "not because you want it to be, but because it's the only way to manage."

"It is a crisis and a crisis means that everyone has to be accountable and everyone has to sacrifice."

Paterson has said he's cut $1.5 billion from the executive branch in the $120 billion state budget and now it's time for lawmakers to bring their proposals to cut spending.

In Rochester Monday, Assembly Speaker Sheldon Silver was asked if there will be cuts in education spending and told reporters, "I don't plan to cut anything."

"I look forward to see what the governor's proposals are, then we will go from there."

Silver acknowledged his proposal for a higher tax on New Yorkers making $1 million or more a year is dead for the session.

The governor and Senate Republican leader Dean Skelos had already said they weren't going to increase taxes, even though the Assembly passed a higher tax on millionaires.

The opposition to a millionaires' tax has strengthened since Wall Street's meltdown, when the number of New Yorkers who would be subject to the increased tax began to shrink.

In Buffalo, Paterson said he doesn't believe it will take much arm-twisting to convince lawmakers of the need to take action to cut the deficit.

"Because of what happened to" Merrill Lynch, AIG, Lehman Bros., Fannie Mae and Freddie Mac, and "because of what happened in terms of the bailout package, I don't think anyone at this point needs a wakeup call," he said.

A spokesman for the state budget office said details about the budget picture to be released Tuesday will help explain the discrepancy between the deficit estimates from earlier this month and now.

------

Associated Press Writer Ben Dobbin in Rochester contributed to this story.

[Livyjr]

"State alleges $13.8M in overbilling - Health plan was billed by surgical centers charging higher rate, probe finds"

By CATHLEEN F. CROWLEY, Staff writer, Albany, New York Times Union

First published in print: Tuesday, October 28, 2008

ALBANY — The health plan that insures state employees was allegedly overbilled to the sum of $13.8 million by ambulatory surgical centers, New York officials announced Monday.

The surgical centers billed the New York State Health Insurance Program the "out-of-network" rate — familiar to anyone who has sustained an injury far from home — but waived the 20 percent out-of-network surcharge the patient was supposed to pay.

The practice essentially allowed the centers to charge the state often considerably higher rates without inflicting any extra cost on the patient.

"This practice is a well-known secret,'' said state Civil Service Commissioner Nancy G. Groenwegen.

It also borders on fraud, said state Insurance Superintendent Eric Dinallo.

The second most egregious violator, according to the state, was the Capital Region Ambulatory Surgery Center, a practice run by orthopedic surgeons at the Bone and Joint Center on Washington Avenue in Albany.

The Ambulatory Surgery Center agreed to reimburse the state $2.2 million and pay $22,250 in fines.

As part of the settlement, the center also joined the health plan as an in-network provider.

Dr. James E. Striker, vice president of Capital Region Orthpaedics Group that owns the center, confirmed the group repaid the money in April, but said the billing was not fraudulent.

He would not elaborate.

NYSHIP provides health benefits for 1.2 million state workers, their families and retired state workers at a cost of about $6 billion annually.

The total members' share is $1 billion.

The billing scheme drove up the plan's costs and was unfair to doctors who played by the rules, Groenwegen said.

By eliminating the out-of-network patient fee, the surgical centers dismantled the incentive for patients to stay in-network.

It also forced NYSHIP to pay a more expensive rate, which could be significantly higher than the rate paid by in-network providers.

For example, investigators found that Capital Region Ambulatory Surgery Center charged $25,115 for a surgery that an in-network provider could only charge $1,272 for, according to the Comptroller's Office.

State officials have been aware of the practice, and began investigating in 2007.

In many cases, the doctors are in-network physicians who own the centers.

Auditors from the Comptroller's Office reviewed bills from the 22 surgical centers across the state that bill the most out-of-network fees.

They found that 17 cents on every dollar was an overcharge.

"A surprising 20 of 22 medical providers inappropriately waived out-of-pockets costs for patients and submitted inflated bills to the state totalling some $14 million," said State Comptroller Thomas P. DiNapoli.

"This is only a small sample of the universe of providers."

"… The abuse could be much more widespread.''

There are about 550 surgical centers in the state, according to the Insurance Department.

With the state's finances in turmoil, state auditors are under pressure to reign in loose dollars.

"There is such a push on, given the budget situation, to find money anywhere,'' said Courtney Burke, director of the New York State Health Policy Research Center at the Rockefeller Institute.

"And health care is a big target."

Health care providers have long been complaining that insurance reimbursement rates do not pay a fair amount.

The state Health Department has acknowledged that the reimbursement rates are out of date and have begun the process of revising Medicaid rates, which are often used as a baseline.

Meanwhile, doctors and hospitals look to maximize their revenue.

Four out of the 20 surgical centers noted in the report have settled with the state, repaying a total of $9 million.

The three other clinics are the Endoscopy Center of Long Island, which repaid $3.1 million; the Digestive Health Center of Huntington, $1.3 million; and Day-Op of North Nassau (Great Neck), $1.2 million.

The Day-Op Center of Long Island in Mineola, repaid $1.2 million but could face more enforcement action because it has not agreed to stop waiving out-of-pocket expenses.

Cathleen F. Crowley can be reached at 454-5348 or ccrowley@timesunion.com.

To read the Comptroller's full report, visit the office's Web site at http://www.osc.state.ny.us/

[Livyjr]

NEW YORK STATE IS AN ENGINE OF FRAUD IN THE PRODUCTION OF ECONOMIC DEVELOPMENT IN THE NATIONAL AND INTERNATIONAL ECONOMY ....

ITS CORRUPTION IS A NEGATIVE FACTOR ...

AND AS THE FISCAL PROFLIGACY OF THE CORRUPT STATE OF NEW YORK CATCHES UP WITH US ON GOVERNOR DAVID PATERSON'S WATCH, WE HAVE ...

"Paterson warns of $47 billion deficit by 2012 - Governor says budget-cutting will take tough bipartisan effort"

By RICK KARLIN, Albany, New York Times Union

Last updated: 12:52 p.m., Tuesday, October 28, 2008

Citing an economic downturn that in some respects hasn't been seen since the Great Depression, Gov. David Paterson said this years budget deficit has ballooned to $1.5 billion for this fiscal year with the gap growing to an eye-popping $12.5 billion next year, and $47 billion over the next four years.

To stanch the flow of red ink, Paterson said that almost all sectors of state government will be hit by budget cuts.

"There is no segment of this budget that will not be cut,'' the governor warned during a press conference from his New York City office.

Alluding to a post-election special emergency budget-cutting session he called for Nov. 18, the Democratic governor stressed that lawmakers on both sides of the aisle will have to work together.

"We have one more week until the election, and thats fine, but after that well have to address (the budget)," said Paterson.

Joining him was Budget Director Laura Anglin, who spoke of the "reverse wealth effect," in which consumer spending is falling due to New Yorkers paper losses in stocks, 401Ks and other investments.

Paterson earlier said the state is bracing for 160,000 job losses, driven by Wall Street's crash, a housing market that is expected to stagnate for another year and the general drop in consumer spending.

Any solution to the state's shortfall won't come from New York alone.

Tomorrow, Paterson is heading to Washington, D.C., to seek federal assistance.

Congress is looking at a national stimulus plan, and Paterson plans to testify on the state's behalf.

His argument: As the nation's financial center, New York has been hit especially hard by the downturn, and its important to help it in order to get the large economy moving again.

The state, Paterson said, "is a vital engine in the production of economic development in our national economy."

"New York is not alone,'' added Anglin, who noted that lawmakers in California lawmakers - one of 27 states recording midyear shortfalls - are also coming back for a special budget-cutting session.

For more information go to the Capitol Confidential blog at http://blogs.timesunion.com/capitol

Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com.

[Livyjr]

"Highway chief ousted over gravel scandal"

By BOB GARDINIER, Staff writer, Albany, New York Times Union

Last updated: 1:33 p.m., Tuesday, October 28, 2008

STEPHENTOWN — Neil Gardner, who has served as the town highway superintendent for more than 20 years, was removed from office for covering up illegal gravel purchases for the town.

The move by the Town Board came after Gardner stood stunned Oct. 17 in Rensselaer County Court as Judge Robert Jacon found him guilty of two dozen felony counts for offering forged documents to cover up illegal gravel purchases.

Gardner's attorney, Thomas Spargo, plans an appeal and could not be immediately reached for comment on his client's removal from office.

Despite the likely appeal and the fact that Gardner, 52, has yet to be sentenced, the town's legal counsel advised elected officials to oust Gardner, town officials said.

Gardner, a Republican first elected in 1985, was asked to turn in his keys to town buildings and surrender his town pickup truck, officials said.

He has yet to be replaced.

The prosecutor on the case, Assistant Attorney General Nancy Snyder, said Gardner faces up to seven years in prison when sentenced in December.

Gardner was found guilty of 12 counts of criminal possession of a forged instrument and 12 counts of offering a forged instrument for filing, both low-level felonies.

In October 2006, state Department of Environmental Conservation investigators took records from offices of the town clerk, Gardner and Russ Freeman of Russ Freeman Excavating, Nassau.

Freeman's firm regularly performed work for the Stephentown Highway Department.

The investigation started after information surfaced that the town was mining gravel from an unpermitted site on the property of Anthony Cormier.

Cormier was building a home and barn on the site and had asked Gardner if the town wanted to buy gravel he needed to get rid of to level his land for construction.

After that allegation surfaced, the town asked Gardner to get Freeman, whose company participated in the mining, to produce load slips verifying the purchases before Cormier could be paid.

The load slips noted the gravel came from a Troy Sand and Gravel mine, not the Cormier property, which led to the felony charges against Gardner and Freeman.

Gardner testified that Freeman handed him an envelope, which he pushed under the door of the town clerk's office.

He said he never looked at the slips and was unaware of the alteration.

Freeman pleaded guilty in town court in October 2007 to second-degree offering a false instrument for filing and was fined $1,000.

He died of cancer in December.

Gardner is free on his own recognizance until sentencing.

Bob Gardinier can be reached at 454-5696 or by e-mail at bgardinier@timesunion.com.

[Livyjr]

"Retirement fund for NY state workers loses 20 pct."

By MICHAEL VIRTANEN, Associated Press

Last updated: 4:36 p.m., Tuesday, October 28, 2008

ALBANY -- New York's public worker pension fund has lost about 20 percent of its value -- almost $31 billion -- since April 1, state Comptroller Thomas DiNapoli reported Tuesday.

Despite the sharp decline in New York State Common Retirement Fund assets, DiNapoli said benefit and employer contribution rates are set through March 2010 and won't be affected.

The fund, with major stakes in the declining stock market, was valued at $154 billion as of March 31, near its historic high.

It had 677,321 active members and 358,109 pensioners and beneficiaries, paying out some $6.8 billion in benefits in the 2007-08 fiscal year.

"Like every investor, the fund has felt the impact of the global credit crisis," DiNapoli said.

"The fund is built to survive fluctuations in the market, even ones as severe as the current downturn."

The fund lost about $30 billion within three years after the Sept. 11, 2001 terrorist attacks in Manhattan, falling to $95.6 billion in 2003 before recouping that lost value over the next two years.

Domestic equities constitute about 37 percent of the portfolio, international equities 17 percent, real estate 6 percent, private equity 8 percent, hedge fund investments 3.5 percent, and fixed-income assets 28.5 percent.

"Equities are the largest component," said Robert Whalen, spokesman for the Comptroller's office.

The investment strategy is long-term, also intended to benefit new workers who won't retire for decades but are looking for market opportunities now, he said.

DiNapoli announced in early September that the average contribution rate for state and local government employers would be 7.4 percent of payroll in 2010, down from 8.5 percent in 2009.

The rate for police and fire departments would fall to 15.1 percent of payroll in 2010 from 15.7 percent in 2009.

The New York State Teachers Retirement Fund saw assets decline to $88.5 billion as of Sept. 30 from $95.8 billion three months earlier, spokeswoman Heidi Brennan said.

The fund has about 400,000 members and beneficiaries.

Its targets are 42 percent domestic equity, 15 percent international equity, 10 percent real estate, 7 percent private equity, 18 percent domestic fixed-income investments, and 8 percent mortgages.

The performance of New York's funds is on a par with other states.

"That seems to be in the range of what a lot of the pension funds are reporting," said Stacey Mazer, senior staff associate of the National Association of State Budget Officers.

She noted a Washington Post report showing similar declines in the public pension funds in Virginia, Maryland and California, like New York with a majority of their funds in stocks.

Keith Brainard, research director for the National Association of State Retirement Administrators, said the benefit of the big pension funds over individual 401K funds is that they pool assets, lower costs, and take more chances than an individual can, spreading risk over a larger group with a range of ages.

Short-term results like those reported Tuesday are less important, he said.

"Over time each asset class has an expected return."

"What these public pension plans do is identify an acceptable level of risk and try to generate an investment return within that acceptable level or risk," Brainard said.

"It's reasonable to expect returns from public equities, of course, that are going to vary widely from one year to next."

[Livyjr]

"Lawyer: 'Scared to death' by FBI - John M. Hogan Jr. tells of his work for clients on trial in fraud scheme case"

By BRENDAN J. LYONS, Senior writer, Albany, New York Times Union

First published in print: Wednesday, October 29, 2008

ALBANY — A Saratoga Springs attorney testified in federal court Tuesday that he was ''scared to death'' and had asked for an immunity-from-prosecution deal when FBI agents confronted him three years ago about his legal work for a group of alleged financial scheme artists.

''I'm still scared today,'' said John M. Hogan Jr., 71, who has a practice on Broadway.

''I just said I would like to get immunity.''

Hogan became a target in the FBI investigation three years ago for work as an attorney for a Saratoga County couple, Ronald and Esther Persaud, who are on trial for charges including wire fraud, conspiracy and bankruptcy fraud.

Hogan was never charged.

But he was called as a government witness Tuesday in the trial of his former clients, who were indicted in 2005 on charges including wire fraud, conspiracy and bankruptcy fraud.

The charges relate to a series of schemes in which investors from around the country paid hundreds of thousands of dollars to secure millions of dollars in funding from overseas banks.

The banks, prosecutors said, were nothing more than paper fronts set up by the Persauds to dupe investors into believing their funding for development projects would be coming.

Before taking the stand Hogan and federal prosecutors struck a limited ''testimonial immunity'' deal that prevents from Hogan from being charged with any crimes related to his testimony, as long it was truthful.

The couple's son, Shawn Persaud, an Albany Law School student, is on trial with his parents.

He is accused of aiding his parents when they used the names of family members and third parties to buy homes and luxury vehicles with the proceeds of their alleged schemes.

Many of the money laundering transactions were funneled through the escrow accounts of attorneys, including Hogan, according to prosecutors.

Hogan, who served as the Persauds' business attorney, admitted during testimony that three alleged victims had wired $275,000 to his personal bank account in September 2004.

Some of the money — $75,000 — was wired to a Latvian bank that had been chartered by Esther Persaud.

Hogan used the remaining funds to pay his mortgage and taxes.

He also used the money to fly his wife and secretary to Switzerland for a three-week stay for business closings related to the alleged scheme.

Hogan also testified about his role helping the Persauds solicit funds from their alleged victims, including serving as the attorney for at least two of the shell banks.

Court records show the wire transfers into Hogan's personal account took place several months after he helped Ronald and Esther Persaud file bankruptcy petitions.

The bankruptcy filings made no mention of the couple's interests in foreign banks, which federal authorities say were set up to lure victims and help launder money.

While the bankruptcy cases were pending, though, Hogan was working for the Persauds and helping them close deals with the investors who prosecutors said were duped out of more than $1.5 million, records show.

Assistant U.S. Attorney Thomas Capezza showed Hogan a document Tuesday from Sweden that listed him as a member of the board of directors of one of the overseas shell banks, United Savings and Loan of Scandinavia.

Hogan said the document, which included a copy of his passport, appeared to have a forgery of his signature.

Under cross-examination from Donald T. Kinsella, who is Ronald Persaud's attorney, Hogan confirmed his secretary had notarized the document.

As Hogan testified, an official with the Appellate Division's Committee on Professional Standards, which disciplines lawyers, sat in the back of the courtroom taking notes.

Hogan has been disciplined by the committee at least four times since 1996 for mishandling client funds, according to records filed as trial exhibits.

[Livyjr]

ALL THE LOOTERS ARE NOW BEGGING FOR HANDOUTS OF OUR FEDERAL TAX DOLLARS ....

GIVE US MONEY NOW ...

WE'LL CLEAN UP OUR ACT TOMARROW ...

And so ...

"Paterson calls on Congress to aid states - Governor presses House committee for second economic stimulus package"

By JENNIFER A. DLOUHY Washington bureau, Albany, New York Times Union

Last updated: 1:06 p.m., Wednesday, October 29, 2008

Gov. David Paterson is in Washington, D.C., today, pressing House members to pass a second economic stimulus package that would "reignite the engine of our economy" by sending billions of federal dollars to New York and other states.

"The great states of this country are facing huge deficits, without the resources to affect them," Paterson said in testimony before the House Ways and Means Committee.

States "need to put our houses in order," Paterson acknowledged, but, at the same time, he said, the problem "needs to be addressed holistically by the federal government investing in the states."

Congress passed and Bush enacted a $168 billion stimulus bill earlier this year, which delivered tax rebate checks to low- and middle-income taxpayers.

[Livyjr]

"Gov. Paterson outlines more budget woes - State deficit now pegged at $47 billion over four years."

By RICK KARLIN, Capitol bureau, Albany, New York Times Union

First published in print: Wednesday, October 29, 2008

New York's budget deficit is expected to mushroom to $47 billion over the next four years, Gov. David Paterson said Tuesday.

That's an eye-popping increase from the $26.2 billion shortfall for the same period that was projected in July.

Similarly, this year's deficit now stands at $1.5 billion, up from earlier predictions of $1.2 billion.

Paterson had said, however, he would like to cut $2 billion when the Legislature returns to Albany on Nov. 18.

He said the $2 billion figure is needed for a cushion.

Paterson also warned of growing problems in the 2009-10 budget, addressing a likely $12.5 billion deficit, which represents cutting 22 percent of a $56.1 billion general fund.

The fund contains tax money raised in the state.

"These are going to be very hard cuts," Paterson said, adding that no sector will go unscathed.

"We are really going to feel the pain."

Paterson is scheduled to appear before a House Ways and Means Committee meeting today to make a case for special federal help for states.

The governor will cite New York's pivotal role as the nation's financial center as a key reason why aid is needed.

In a Tuesday news conference from his New York City office, Paterson said he expects legislators to put politics aside when they return for an emergency economic session on Nov. 18:

"To do this, we'll need the full cooperation of our Legislature."

"We have one more week until the election, and that's fine," he said, adding that election-year "poetry" will have to give way to the harsher "prose" of grappling with the state budget.

On one level, the state's predicament is simple: Wall Street's tumble and the malaise affecting the broader economy have sharply reduced the state's tax coffers.

Echoing a theme he's repeated since early summer, Paterson noted the housing slump is expected to last for 15 months — longer than the similar housing downturn during the Great Depression.

Combine that with a drop in consumer spending that hasn't lasted this long since World War II, and Paterson said the state will likely lose 160,000 jobs in the near future.

As a result, general fund revenues are expected to fall 5.8 percent next year, while spending is projected to grow at 11.9 percent, based on current commitments.

Paterson has his work cut out for him — not only in deciding where to cut, but in convincing lawmakers to go along.

Shortly after the governor's remarks, Senate Republican Majority Leader Dean Skelos reiterated his opposition to cuts in school aid, which he said would amount to "offloading" expenses to local school districts and could raise property taxes.

Senate Republicans, who are fighting to retain their one-seat majority, said earlier this month they wouldn't go along with cutting aid to local school districts, a sum budgeted for $21.4 billion this year.

Education and health care were largely spared during an earlier special session in August that resulted in cuts of $1.2 billion.

As lawmakers suggested they wouldn't cut school aid, a coalition of 90 nonprofit, education and health care groups renewed their call for a tax increase on those earning more than $1 million.

Assembly Democrats called for a so-called "millionaires tax" last summer, although Assembly Speaker Sheldon Silver backed away from the proposal earlier this week — at least as a possible item for the Nov. 18 session.

"We must ensure that the burden of New York's fiscal crisis is not borne exclusively by working families and the middle class," Silver said Tuesday.

"To take money out of the classroom or out of the services children need in their homes without even proposing that the wealthiest New Yorkers pay their fair share in these trying times would be unconscionable," added Geri Palast, executive director of the Campaign for Fiscal Equity, which is closely aligned with the state's powerful education lobby.

Others suggested trimming next year's School Tax Relief (STAR) exemption, and this year dipping into the state's $1 billion-plus Tax Stabilization fund, a "rainy-day" resource intended to settle unplanned deficits at the end of the fiscal year.

"Obviously, it's raining," said Ron Deutsch of New Yorkers for Fiscal Fairness, which is also pushing the millionaires tax.

Tapping the fund is seen as a last resort, said Matt Anderson, a Division of Budget spokesman.

"What we have to focus on right now is reducing spending."

State Budget Director Laura Anglin spoke of the "reverse wealth effect," in which consumer spending is falling due to their paper losses in stocks, 401(k)s and other investments.

The governor's office wasn't the only source of bad news on Tuesday.

Comptroller Thomas DiNapoli announced the state retirement fund has lost 20 percent of its value or about $30 billion since April 1, when it was at $153.9 billion.

He stressed retirement benefits are not in danger, and local governments through 2010 shouldn't be see any change in contributions.

"Like every investor, the fund has felt the impact of the global credit crisis," DiNapoli said.

Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com.

Red ink rising

The economic reversals recent weeks have caused the state Division of the Budget to radically revise its deficit projections:

July:

Current fiscal year (ending March 31, 2009): $1.2 billion

2009-2010 fiscal year: $10 billion

Total deficit by 2012: $26.2 billion

Today:

Current fiscal year (ending March 31, 2009): $1.5 billion

2009-2010 fiscal year: $12.5 billion

Total deficit by 2012: $47 billion

[Livyjr]

"Chip-fab district draws Assembly cash - Parties battle over open seat in 112th district as area awaits AMD project"

By DENNIS YUSKO, Staff writer, Albany, New York Times Union

First published in print: Friday, October 31, 2008

MALTA — Both political parties are pouring small fortunes into the race for the 112th Assembly District, a mostly agricultural area that is the planned home of a $4.6 billion AMD computer-chip factory.

Democrat Ian McGaughey of Wilton and Republican Tony Jordan of Jackson are squaring off in the Republican-dominated district, which hasn't elected a Democrat in memory but may be in play this year because of the political climate.

The seat unexpectedly opened up this summer when Republican Roy McDonald opted to run for state Senate.

Republicans plucked Jordan, a 44-year-old Washington County attorney, to run against McGaughey, a small business owner and Wilton councilman.

In the battle for the open seat, McGaughey, who is predicting a victory, raised a surprising $340,984 by this week and spent most of it.

Jordan had $235,612 and spent $217,595.

McGaughey, 38, received at least $300,000 from the Democratic Assembly Campaign Committee.

The Republican Assembly Campaign Committee gave at least $151,500 to Jordan's candidacy, the state Board of Elections said.

"It's important for us to hold this seat," said Adam Kramer of the Republican committee.

"They are outspending us with New York City special-interest money."

Democrats have contributed big resources because McGaughey is a very competitive candidate, said Assemblyman Ronald Canestrari, of Cohoes, the chairman of the Democratic committee.

"We're very excited about his candidacy and the race he's running," Canestrari said.

The support enabled both candidates to buy TV ads.

Jordan's ads attack his opponent for "misleading" claims, while McGaughey's ads emphasized his independence.

Both candidates stressed fiscal conservatism.

"What New York really has is a spending problem," said Jordan, who supports a tax cap and circuit breaker to control taxes.

This week, he unveiled an economic team that includes Democrats and even Green Party members.

Jordan has criticized McGaughey for saying in a radio spot that he eliminated Wilton property taxes when they were phased out many years ago.

The Democrat ceased running the ad.

McGaughey supports a circuit breaker.

He has promised to visit every community in the district, donate his $79,500 salary to local charities and work across party lines if elected.

"The politics of yesterday need to be put behind us," he said, adding that Jordan ran a "negative" campaign.

"I'm feeling 100 percent confident that I'm going to win this election and I'm thrilled," McGaughey said.

The district consists of all Washington County and parts of Rensselaer and Saratoga counties, including suburban Malta and the Luther Forest Technology Park, where the state has pledged $1.2 billion in incentives to build a new Advanced Micro Devices Inc. chip-fab factory.

Both Jordan and McGaughey said the challenge for the district's new assemblyman will be to balance the project with the residents' desire for open space.

Dennis Yusko can be reached at 454-5353 or by e-mail at dyusko@timesunion.com.

[Livyjr]

SOME MORE GOOD REASONS FOR YOUNG PEOPLE TO GET THE HELL OUT OF THE CORRUPT STATE OF NEW YORK WHILE THEY STILL CAN ...

"Paterson builds base of support"

Albany, New York Tims Union

First published in print: Sunday, November 2, 2008

When the Legislature comes to town for another special session on Nov. 18, Gov. David Paterson wants lawmakers to come up with $2 billion in cuts to the current state budget.

That's a staggering, unprecedented amount to excise in mid-budget.

But the governor made it clear to the Times Union editorial board on Friday that closing the gap on this year's now projected $1.5 billion shortfall because of the collapse of Wall Street, plus extracting another half billion to get a leg up, is only the beginning of a long downward spiral of a fiscal journey for New Yorkers that will take many years.

We're looking at a black hole $47 billion deep over the next 3 1/2 years.

Paterson said that regardless of what we've heard from other government leaders on the subject, nothing is off the table in terms of actions needed to close the deficit.

Not layoffs of the state work force, not deep cuts to sacred cows like Medicaid and education.

Revenues have fallen off the cliff.

Something has to give.

Lots of somethings.

We don't know yet how bad it's going to be even for this year because the drop in fourth quarter taxes on capital gains and Wall Street bonuses, which represent 30 percent of state revenues for the period, remains unknown.

But how can that news be anything but dismal?

Well, almost nothing is off the table.

The governor said that for now he's ruling out any tax increases.

For two reasons.

One, any increase, even for the wealthy, will likely chase more people out of New York.

He's loathe to do that for the long-term health of the state and because it's his opinion an increase would put New York in a bad position with the feds, whom he's petitioned for help in very specific areas.

From upping Washington's share of the bill for Medicaid by 5 percent to paying for repairs to roads, bridges and wastewater treatment facilities.

"And we won't get through this without federal assistance," he said.

Clearly Governor Patterson came to our newspaper, as he will to many others I'm sure, to sound the alarm, spread the word, prepare the public for what's coming.

And to gain allies for the inevitable wars ahead with the Legislature.

To his great credit, he did a darned good job clanging the cymbal.

He mentioned a recession as a given, and a depression as not a possibility to be ruled out.

Startling concepts for sure.

But he said this crisis gives us a unique opportunity to fundamentally reshape state government, and finally come to grips in the budget process with our historical addiction to over-spending.

We just don't have it to spend.

Nor did he soften the blow on the question of possible state layoffs, either.

"I'm not declaring there will be layoffs."

"That's certainly not a first choice," Paterson said.

But he then went on to say without hesitation that in the past, when the state was as bad off as projections suggest it will be again, there were layoffs, a spike in the homeless on our streets and cuts in school aid during the middle of the year.

In the time he was with us, he covered the waterfront in terms of bad news ahead.

What he pointedly didn't do was attack or goad the Legislature, which would have been an easy target.

"I need the Legislature," he answered when asked if he could accomplish the cuts to the budget unilaterally.

So as a strategy, the governor is remaining serenely non-confrontational with legislators until the election is over, when, as he put it, "the poetry is no longer in motion."

If he were to push them now for suggested cuts, he would get stupid stuff playing to special interests like Senate Majority Leader Dean Skelos' prohibition on any cuts to education aid.

Paterson dismissed the Skelos stance as election rhetoric, not to be taken too seriously.

But, said Paterson, if Skelos takes the same position after Wednesday ...

What the governor learned when he got the legislative leaders together to discuss the budget cuts is that they want to be included from the beginning.

So that's what he's doing, inviting them each to propose cuts.

"But I know in the end, the legislative leaders will have a hard time coming up with them," Paterson said.

He's also aware that the state constitution makes it clear that the governor is responsible for introducing budget cuts, and he will be ready.

And the same applies whether the Senate stays Republican or becomes dominated by Democrats, he added.

Because, either way, what has to be done doesn't change.

"Now is the time to put party differences aside and lead," Paterson noted.

A noble thought, certainly.

But my guess is we are in for a battle royale over these cuts, and Governor Paterson wisely has decided to assure, with visits like ours, he has the public firmly in his corner.

We'll see how that plays out.

Fred LeBrun can be reached at 454-5453 or by e-mail at flebrun@timesunion.com.

[Livyjr]

"More GOP losses in NY would make history"

By DEVLIN BARRETT, Associated Press

Last updated: 12:55 p.m., Sunday, November 2, 2008

WASHINGTON -- To see the future of New York's congressional delegation, you may have to go way back in the history books.

All the way to the 1850's.

Never in the history of the Republican Party -- going back to before the Civil War -- have there been so few members of the GOP representing the Empire State in Congress.

Currently, there are six New York Republicans in the House of Representatives and 23 Democrats.

After the election on Tuesday, the number of Republicans is expected to dwindle further.

With four GOP seats at risk of Democratic takeover, the state could be left with as few as two Republican lawmakers.

The last time the state's representatives in Congress were that lopsided was 1851, when 32 Whigs outnumbered a lonely Democrat and a member of the Free-Soil Party.

It was also the year Moby Dick was published.

Dan Maffei, a Democrat favored to win the seat now held by retiring Republican Rep. James Walsh in the Syracuse area, said the region has kept the same moderate political bent, while the nation's has shifted.

"I don't think it's central New York's view that's changed, I just think the Democratic party has become more moderate and the Republican party has become more extreme," said Maffei, who added there is a potential pitfall.

"I am concerned that the entire Northeast has become very much one party and I do believe in a two-party system, and I think the Republicans have to get their act together or the Democrats will be in danger of playing more to the extreme," he said.

Jeff Koch, a professor of politics at SUNY Geneseo, said the GOP's problem in New York goes beyond a bad economy, an unpopular war, and the end of the Bush administration.

"It's really a phenomenon that's not limited to New York."

"Throughout New England and the mid-Atlantic states, it's been very much trending for the Democrats," said Koch.

"Social issues like abortion, gay marriage, stem cell research, creationism -- in this part of the country, those issues have hurt the Republican party, whereas in other parts of the country, they've helped them."

From the western edge of the state to the south shore of Staten Island, reliably conservative congressional districts are near a tipping point.

Chris Lee, a Republican businessman, is running to succeed retiring Rep. Tom Reynolds, in a district that reaches from the Buffalo suburbs to the outskirts of Rochester.

In the final days before the election, Democrats poured hundreds of thousands of dollars into the race to try to win the seat for Alice Kryzan, an environmental lawyer little-known before her upset victory in the party primary over Jon Powers and Jack Davis.

Democrats have also invested heavily in Eric Massa, who is making his second attempt to unseat Republican Rep. Randy Kuhl in the Southern Tier section of the state.

The driving issue of the race last time was the Iraq war, and Massa leaned heavily on his resume as a retired Navy commander in seeking crossover votes.

Now, with the economy as the top concern, those credentials may not matter as much.

Retired Gen. Wesley Clark, a longtime Massa supporter, said Friday that he thought the U.S. military still matters with voters.

"Even though the Iraq issue's not as prominent as it was, I can tell you once Congress reconvenes in January, the military issue's going to be front and center," said Clark.

The GOP's best chance at taking back a seat is along the state's eastern border, where first-term congresswoman Kirsten Gillibrand is facing a well-funded challenge from former state Republican party chairman Sandy Treadwell.

But even if Republicans win all three of those contests, the party may well end up with a net loss in seats, after the votes are counted in Syracuse and Staten Island.

On Staten Island, New York City Councilman Mike McMahon is favored to win the seat held by retiring Rep. Vito Fossella.

Fossella's seemingly safe seat became imperiled after he was arrested for drunken driving in May, leading to revelations he had fathered a child through an extramarital affair.

[Livyjr]

"Lawyer says he didn't know of accounts use - Attorney testifies about hiding client's Porsche purchase from creditors"

By BRENDAN J. LYONS, Senior writer, Albany, New York Times Union

First published in print: Tuesday, November 4, 2008

ALBANY — A well-known Clifton Park real estate lawyer testified Monday he did not know a family of suspected scam artists had used his escrow accounts to allegedly launder money from an international investment scheme.

Anthony R. Ianniello, 64, testified at the criminal trial in U.S. District Court of his former clients, Ronald and Esther Persaud, and their son, Shawn, an Albany Law School student.

The Persauds were indicted three years ago on charges of bilking numerous investors of more than $1.5 million in an elaborate ''fees for funding'' scheme.

The investors paid hundreds of thousands of dollars to attorneys for the Persauds in hopes of securing financing for major development projects.

The money was funneled through attorney accounts and used by the Persauds to buy a luxury home, sports cars and to finance a lavish lifestyle, the indictment alleges.

Their defense attorneys are blaming, in part, at least three attorneys who were involved in nearly all of the transactions.

Ianniello said that he had done business with the Persauds beginning about seven years ago when the couple, who are divorced but live together, worked in the mortgage business at the height of the sub-prime real estate explosion.

The FBI interviewed Ianniello last year about his work helping Ronald Persaud purchase an $890,000 home in the name of Persaud's current wife, Indranie.

Ianniello said he also allowed Ronald Persaud to conceal his interest in the purchase of a $135,000 Porsche coupe.

Both transactions were illegal, according to the indictment.

The car was purchased outright by Ronald Persaud with a check paid from Ianniello's attorney escrow account.

But the vehicle was then titled to a business partnership of Ianniello's to allow Ronald Persaud to ''lease'' the vehicle from an overseas shell bank in Scandinavia.

That bank was chartered by Esther Persaud and was not a legitimate financial institution, according to the government.

When pressed about the Porsche deal during his testimony, Ianniello said the leasing deal was set up to shield the car from creditors who had obtained financial judgements against Ronald Persaud, who filed for bankruptcy a year before he bought the car.

Donald T. Kinsella, Persaud's attorney, asked Ianniello whether he was familiar with state laws that may make it a crime to conceal assets from creditors.

Ianniello responded that he was not.

''He came to see me about structuring the transaction,'' Ianniello said.

''It was never intended for him to be the owner, just the driver and registrant.''

Ianniello also testified that he never reviewed the financial background of Ronald Persaud's estranged wife, Indranie, when she purchased an $890,000 home in Saratoga Springs in 2004.

Indranie Persaud, a $40,000-a-year postal worker, pleaded guilty two months ago to federal fraud charges in connection with the home purchase and with helping her husband launder money.