"Tedisco defends payout to top aide - Assemblyman says he thought of $32,500 used for legal bills as a loan"

By JAMES M. ODATO, Capitol bureau

First published in print: Tuesday, April 28, 2009

ALBANY — Assemblyman James Tedisco defended his controversial decision to use a Republican Assembly Campaign Committee account to pay the legal bills of his top aide, adding that he thought of the payment as a loan.

In an interview Monday, Tedisco said the $32,500 check from the RACC housekeeping account last July helped his chief of staff, William Sherman, in his defense against Democrats trying to use a frivolous lawsuit to bankrupt Republican candidates for Schenectady County Legislature.

He said he has no regrets, even though discovery of the payment last week infuriated many of the 40 other members of the Republican minority.

Tedisco stepped down as minority leader earlier this month amid a paper ballot count in his unsuccessful run to become a U.S. representative from the 20th Congressional District.

"I thought it was the right thing to do," Tedisco said.

"I regret they filed a frivolous lawsuit."

"I don't regret standing up for the Republican Party."

He said it was important to support grass-roots candidates who could become state lawmakers.

Asked why he only agreed to pay Sherman's half of the legal bill and not that of co-defendant Joseph Suhrada, another Republican, Tedisco said, "Bill was part of our conference."

"... It seemed like a conference thing, to stand up for our candidates."

"... They've got to be not afraid of running for office because of frivolous lawsuits."

Suhrada won his 2005 race for the County Legislature; Sherman lost his run.

Suhrada, a longtime supporter of Tedisco, has not returned several phone calls to his candy store in Schenectady.

In 2005, both Republicans were sued by members of the Mallozzi family.

Brothers Robert and John Mallozzi own Villa Italia Pasticceria in Schenectady with their sister, Christine Mallozi-Chiaravalle, who was a Democratic candidate for county office.

The Mallozzis lost their suit against Sherman and Suhrada at the end of 2008.

They had alleged that they were defamed during a hotly contested race decided by a handful of votes.

The race featured mudslinging on both sides: The Democrats portrayed the two Republican men with long Pinocchio noses; GOP ads targeted the Mallozzis, operators of a successful banquet hall in Rotterdam and the popular bakery, as beneficiaries of politically directed economic development grants.

A state judge said that such accusations are permitted in political ads, and held that the two Republicans should receive their legal expenses.

At the time, Sherman estimated the bills would amount to more than $80,000 for the two men.

Earlier, he arranged for RACC to cover his half and attached a note to his law firm, Hiscock & Barclay, saying the payment had to be held in the strictest confidence.

Tedisco said "you have to ask Bill" when asked about the purpose of the note.

Sherman has not returned calls.

Tedisco said his expectation was that Sherman would repay RACC once he collected the legal fees from the plaintiffs.

He could not explain why that has not happened.

Lawyers for the Mallozzis and Sherman would not say, and attempts to reach Robert Mallozzi have been unsuccessful.

Tedisco said he expects that Sherman will have to pay the money back, adding that he didn't run the plan by the rest of the Republican members because he was making an executive decision.

Tedisco said he poured hundreds of thousands of dollars into RACC from his own campaign fund, and into other campaigns without asking members first.

Tedisco said Sherman received an extra $10,000 in pay from RACC funds because of his hard work on political activities.

The legal bill payment and the extra salary were not meant to induce Sherman to stay on as chief of staff after announcing plans to leave for a new job at a charter school company, Tedisco said.

Sherman also received a pay hike for his Assembly post after changing his mind about leaving last summer.

Some GOP members say privately that they were outraged at Tedisco's actions.

The state Board of Elections said the account from which Sherman received his confidential payment should not have been used for legal bills.

Minority Leader Brian Kolb said Sherman's job is unchanged, although he has called for an audit of RACC books.

The minority office did, however, eliminate the job of Dan Bazile, a press officer hired by Tedisco.

Odato can be reached at 454-5083 or jodato@timesunion.com.

"GlobalFoundries puts its chips on the table - Analysts, journalists get a tour of campus as it is, as it will be"

By LARRY RULISON, Business writer, Albany, New York Times Union

First published in print: Friday, May 1, 2009

MALTA — Changes are coming quickly to Luther Forest Technology Campus.

Officials from GlobalFoundries Inc., the company planning a $4.2 billion computer chip factory here, told technology writers and analysts from around the world Thursday they are close to buying the 222 acres for the project and starting ground work.

"We're about to start clearing the site," said Terry Caudell, project manager for what will be known as Fab 2.

GlobalFoundries and Luther Forest Technology Campus Economic Development Corp., which owns 1,414 acres that straddle the towns of Malta and Stillwater, still must finalize their transaction, estimated to cost between $7 million and $8 million.

Although the two parties believe the closing could occur any day now — they have been saying that for two weeks — it's likely to wrap up by next week.

The complexity of the deal, especially the deed and other documentation, is why the closing was not done as of Thursday.

Once completed, GlobalFoundries will send its official commitment letter to the state of New York, and that will make the company eligible for $650 million in cash for the 1.3 million-square-foot building and costs for research and development.

Then GlobalFoundries will name the general contractor for the project, which is expected to be M+W Zander.

Zander, in turn, will award the first contract of the project for initial site clearing, which involves removing trees and roots and moving dirt and sand.

"It will happen pretty fast," said GlobalFoundries spokesman Travis Bullard.

GlobalFoundries invited journalists and analysts who cover the computer chip industry to Malta to meet with company executives and learn about plans for Fab 2, which is expected to reach full-scale production by 2012, supplementing existing manufacturing in Dresden, Germany.

Some came from as far away as London and Israel.

GlobalFoundries Chief Executive Officer Doug Grose was in attendance, along with other top executives.

The event ended with a bus tour of Luther Forest, including the site where Fab 2 will be built.

They also toured Albany NanoTech, where GlobalFoundries does chip research as part of an alliance with IBM Corp.

GlobalFoundries was created two months ago as a spinoff of Advanced Micro Devices Inc. of Sunnyvale, Calif., which first announced plans for the project in June 2006.

AMD has since decided to move to a "fabless" manufacturing model, in which it outsources all of its chip production.

AMD maintained a significant stake, though, in GlobalFoundries in a joint venture with Advanced Technology Investment Co., an investment fund owned by the Emirate of Abu Dhabi.

AMD is GlobalFoundries' first customer, but new clients are being aggressively pursued, officials said.

The Fab 2 site actually has space for up to three factories, or modules, although the company has only committed to one so far.

"We think this is a well-designed campus, and it will serve us well into the future," Caudell said.

Larry Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.

"HEY, DON'T BLAME ME; THE COOKIE JAR WAS THERE BEGGING ME TO PUT MY HAND IN IT ...."

And so ...

"7 lawyers in jobs scandal at risk - Civil Service presses Pataki-era holdovers over their status"

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

First published in print: Friday, May 1, 2009

ALBANY - Seven attorneys at the state Department of Taxation and Finance face losing their jobs amid allegations they and a former commissioner manipulated civil service practices to secure tenured government jobs at the end of the Gov. George Pataki era.

The Times Union has confirmed the attorneys all received letters from the state Department of Civil Service that set a deadline, now extended to May 15, for them to explain why their positions should not be revoked, effectively putting them out of a job.

The attorneys have annual salaries ranging from $71,051 to $127,794, according to 2008 records.

The attorneys were identified in a state inspector general's report released in March that found former acting tax Commissioner Barbara G. Billet had massaged civil service ''exams'' by creating specific criteria so that their background and qualifications would make them the only choice for certain senior attorney jobs.

They schemed to manipulate the hiring criteria at a time when they knew Pataki would not be seeking re-election and their politically appointed ''at-will'' jobs could be eliminated, the report said.

The inspector general's investigation began as a probe of Billet, who slid into a civil service post she had never held after stepping aside as commissioner.

The probe also examined the propriety of a post-retirement job in which Billet had telecommuted from her retirement home in South Carolina while working under an assumed name.

The investigation concluded Billet's conduct may have violated the state Public Officers Law, including a provision that ''no officer or employee of a state agency ... should use or attempt to use his official position to secure unwarranted privileges or exemptions for himself or others.''

The attorneys who recently received ''letters of possible revocation'' are: Christopher O'Brien, Ellen Roesch, Robyn Cotrona, David Demeter, Andrew McEvoy, Marc Strange and Michele Milavec, according to two people briefed on the matter.

David Ernst, a spokesman for the Department of Civil Service, declined to confirm who received the letters and said ''there's been no final action taken.''

''We're still in the process at this point in carrying out the recommendations of the inspector general and the directive from the governor to investigate and take appropriate action,'' Ernst said.

''The Department of Civil Service is concerned only with whether the permanent status was granted in an irregular, illegally or even a fraudulent fashion.''

The inspector general's 10-month investigation found the suspect job-securing practice was not isolated to Billet and her coworkers.

The unscrupulous manipulation of civil service hiring provisions dates back years and may involve dozens of attorneys who fraudulently obtained government jobs that would shield them from firings related to political ties, the report said.

The report also criticized the process by which Billet arranged for her own rehiring to a part-time attorney's position after her ''retirement'' last year.

The unprecedented and secretive arrangement enabled Billet to ''telecommute'' from a home near Hilton Head, S.C., while working under a made-up name so that tax agency workers would not recognize her.

Billet's controversial telecommuting job was publicly exposed last June by the Times Union.

She resigned a month later.

The newspaper's stories showed Billet used the name ''Barbara Clarkstone,'' which was drawn from a combination of her grandmothers' maiden names.

Billet did not work a full year but her pay equaled about $28,000 annually for working two days a week from home.

The inspector general said the telecommuting privilege had never been granted to any other current or former taxation and finance employee.

Billet retired as commissioner in January 2007 and flatly denied that politics played a role in her rehiring, which took effect March 6, 2007.

She worked in various state jobs for more than 20 years and headed the state tax department as acting commissioner for 14 months before retiring from the $155,000-a-year position, a politically appointed job.

Billet collects an annual state pension of $49,349, records show.

Another attorney implicated in the report, Marvis Warren, did not receive a letter of possible revocation.

A person briefed on the matter said Warren had secured her civil service position more than three years ago, which is beyond a deadline for the agency to take any action unless it can be shown the employee engaged in fraud.

Marvis Warren is the wife of former state Assemblyman Glenn Warren, R-Fishkill, who also was executive director of the state Worker's Compensation Board under Pataki.

DeMartino was offered a tenured job at a time when he was counsel to Pataki's appointment's office, but the position was rescinded.

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

"Playing the Albany game for big gain - State pension fund presented a ripe target as calls for change were ignored"

By IRENE JAY LIU, Capitol bureau, Albany, New York Times Union

First published in print: Sunday, May 3, 2009

ALBANY — In a state where corruption and government scandal make daily headlines, the notion that New York's class of powerful political operatives could use undue influence to enrich themselves through government is nothing new.

Over a century ago, state Sen. George Washington Plunkitt, part of the Tammany Hall machine, wrote about the exercise of power for personal gain by noting, "I seen my opportunities and I took 'em."

But in today's investigation of "pay-to-play" corruption at the state pension fund, what makes the schemes allegedly organized by top Democratic operative Hank Morris so unique — and so difficult to detect — was that they aligned two spheres that rarely overlap in Albany: public finance and politics.

But the alleged scheme could have been revealed much sooner if state leaders had heeded the warnings of government watchdogs.

Morris has been charged with conspiring to sell access to billions of taxpayer dollars in exchange for millions of dollars in kickbacks and other payments for political and personal gain in a "pay-to-play" scheme at the pension fund, formally known as the New York State Common Retirement Fund.

Morris was the top political adviser to former state Comptroller Alan Hevesi, who, as the state pension fund's sole trustee, had unfettered control over the investment decisions for the fund.

Morris allegedly set up shop as a placement agent and charged a commission for granting access to Hevesi's office, according to the indictment.

In April, hedge fund manager Barrett Wissman pleaded guilty to felony fraud for his role in a kickback scheme involving Morris.

The hedge fund manager admitted pocketing at least $12 million for helping to direct $100 million in pension dollars to Hunt Financial Ventures and kicking back $600,000 to Morris.

For those who inhabit the Capitol — legislators, staffers, lobbyists and advocates — politics and influence are largely applied toward crafting legislation and regulations.

Until Morris' alleged scheme surfaced, few could have anticipated that the same political influence could be wielded to broker complex financial deals that comprise the $122 billion state pension fund.

For decades, control of the fund "has been the purview of Wall Street investment houses and a handful of white-shoe law firms — all of whom allegedly answered to the SEC," said John Cordo, a prominent Albany lobbyist who worked for years as counsel in the state Senate.

"There wasn't much overlap with Albany's traditional political and lobbying core."

"It seems that several years ago that began to change."

Attorney General Andrew Cuomo, who is leading the pension fund investigation in conjunction with the SEC, told reporters Thursday that the alleged Morris operation is "the worst of both worlds … the worst of the private-sector financial community meeting the worst of the government and political community."

Cuomo said these pay-to-play schemes are a national problem, but that the situation is worse in New York because of the confluence of two factors.

First, New York is one of only three states that have a sole trusteeship, the state comptroller, in charge of the pension fund.

Second, New York allows what Cuomo termed "exorbitant" campaign contribution limits for statewide elected positions — $55,000 per individual or Limited Liability Corporation.

"I believe that (combination) is TNT — it causes an explosion," Cuomo said.

State Comptroller Thomas DiNapoli has voluntarily capped contributions to his campaign at $10,000 per individual or LLC, and has introduced a program bill to enable public financing of the comptroller's race.

He is currently seeking sponsors to carry the bill in the Assembly and Senate.

While Capitol insiders might not have anticipated the hazards of pay-to-play, Arthur Levitt Jr., son of former state Comptroller Arthur Levitt Sr. and the longest-serving chairman of the Securities and Exchange Commission, sounded the alarm over a decade ago.

Addressing a group of pension managers from around the country in 1999, Levitt warned that "certain practices remain closer to the backroom deals and 'honest graft' of Plunkitt and his ward captains, than to the unimpeachable integrity demanded of fiduciaries."

In that speech, Levitt used a baseball metaphor: If pay-to-play controlled the sport, "a baseball team would draft players on how much they have lined the pockets of the team's management."

"A player's batting average, home runs, or earned run average would be a secondary concern — if at all."

"How many games do you think the team would win?"

"And how would the fans react if they knew this was how the team was selected?"

At that meeting, Levitt proposed a series of reforms that would have banned investors doing business with pension funds from making political contributions.

But the idea met with stiff resistance from state officials and was never implemented.

Levitt continues to advocate on the issue since stepping down from the SEC in 2001 and moving to the private sector.

He is now senior adviser to the Carlyle Group, a politically connected private equities firm that has been questioned in the ongoing pension fund investigation.

In October 2007, Levitt told a group of pension fund managers that the SEC should revisit his 1999 proposal, and that firms should voluntarily stop paying finder's fees to nonemployees who deliver pension fund business to them.

In late April, Carlyle was the first firm to voluntarily discontinue use of placement agents in connection with public pension funds.

Both DiNapoli and New York City Comptroller William Thompson have banned the use of placement agents, lobbyists and consultants.

The state, however, missed other opportunities to shed sunlight on vulnerabilities in the system.

From the late 1990s to the early 2000s, the now-defunct New York State Temporary Commission on Lobbying called for an expansion of the definition of "lobbying."

The commission recommended that lobbying be defined as "communicating directly or soliciting others to communicate ... for the purpose of influencing any legislative, administrative or official action to be taken by that official or staff person," which would have extended the definition beyond the realm of legislation and regulations into the business of the pension fund.

In annual reports up until 2003, the commission said the current definition is "too restrictive, and effectively curtails the commission's ability to obtain disclosure of such activities" outside the current definition, including business related to the pension fund.

Like Levitt's reforms, the proposal went nowhere.

When asked why the proposal never moved forward, former Lobbying Commission Director David Grandeau laughed and suggested that part of the reason why it met resistance is because he had been the one making the proposal.

As director of the lobbying commission, Grandeau had drawn the ire of state officials and lobbyists alike for his aggressive tactics and willingness to use the press to expose corruption in the system.

(In 2007, the lobbying commission was merged with the State Ethics Commission into one Public Integrity Commission.)

Extending the lobbying definition might have uncovered the alleged pay-to-play scheme sooner, Grandeau said.

Lobbying firms are required to file information about their clients, expenses, the bills and contracts targeted, and the names of the individual lobbyists doing the work.

If the definition had been expanded, the placement agent fees paid to Morris' employer, Searle & Co., as well as his personal involvement in the deals would have been publicly disclosed.

On Friday, Cuomo announced that he and the SEC were expanding their investigation to include "unregistered and unlicensed middlemen," an area he said highlights "systemic weakness in the system."

Cuomo said that he intends to present the legislature with reform proposals in the future.

But Grandeau said that no rule will be able to fix the problem wholesale.

"Right now as you and I are talking, someone is running a scam," he said.

"People are not going to change."

"There is always going to be corruption in government."

"The best thing you can do is find capable people who are strong, committed investigators and enforcers."

"That's how you stop it," he said.

"With the exception of the attorney general, I don't think anyone else is doing that."

Staff writer Irene Jay Liu can be reached at 454-5081 or iliu@timesunion.com.

"Paterson calls for state spending cap - Would limit annual increases going forward; approval by Legislature could be a tough sell"

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

Last updated: 3:31 p.m., Monday, May 4, 2009

ALBANY — Gov. David Paterson wants to impose a spending cap on the state budget.

"If we limit the appropriations in our upcoming budgets, we will bring a whole new value system to Albany," he said in an afternoon press conference from the Red Room of the Capitol.

"We are going to ask government to live under the same conditions our taxpayers do."

The plan would limit increases to a three-year average of the inflation rate.

Paterson said that if such a cap had been in place over the past five years, savings to the state budget would be $17 billion — almost the size of the deficit that Paterson and lawmakers had to close last month in the 2009-2010 state budget.

This year, the state spending portion of the budget, grew .7 percent, which would be within the proposed guidelines.

Such a cap would have to be approved by the Legislature, and it was unclear if lawmakers — who hate to be the bearers of bad news to their constituents — would even take up such a plan.

Paterson said the discipline lawmakers exhibited in passing this year's budget makes him optimistic that they would approve his cap.

The cap also comes as Paterson, dogged by approval ratings such as today's Marist Poll showing that only 19 percent of New Yorkers think the governor is doing a good or excellent job, is going into full re-election mode looking forward to 2010.

Last week, for example, Paterson announced that he would no longer simply approve laws or measures that cost local governments money.

He's also borrowing a page, to some extent, from one of his allies and one-time gubernatorial aspirant, Nassau County Executive Tom Suozzi, who has led the push for a 4 percent annual cap on school taxes.

That concept of a spending cap has proven popular with voters.

Additionally, Paterson is pushing many proposals at once — similar in style to Attorney General Andrew Cuomo, who has kept up a veritable blizzard of reform initiatives since coming into office.

Cuomo is increasingly cited as the leading potential challenger in a Democratic primary for governor.

Rick Karlin can be reached at (518) 454-5758 or rkarlin@timesunion.com

"Builder pleads guilty to grand larceny"

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

First published in print: Thursday, May 7, 2009

BALLSTON SPA - A Saratoga County custom home builder has pleaded guilty to taking money from customers and using it for purposes other than constructing their homes, law enforcement officials said Wednesday.

James McLagan of Mechanicville pleaded guilty to two counts of felony grand larceny in Saratoga County Court on Tuesday, a court clerk said.

Each count represents multiple victims whose money was stolen during the construction of new homes in the subdivisions of Nielsen's Landing in Saratoga and Washington's Crossing in the Saratoga Springs, prosecutors say.

Authorities charged McLagan last year with bilking clients, including thoroughbred horse trainer H. James Bond, of more than $215,000 in down payments for homes he never built.

Instead of using the money to pay for contractors and supplies, McLagan diverted the money "to other purposes," Saratoga County District Attorney James A. Murphy III said.

McLagan never completed the new homes or they were foreclosed on before the buyers could assume ownership, Murphy said.

He called the convictions a warning to all contractors in New York not to misuse a customer's money.

McLagan, 55, faces jail, probation and restitution when he is sentenced June 30, Murphy said.

McLagan also pleaded guilty Tuesday to two misdemeanor counts of petit larceny stemming from the cases.

Last year, Saratoga Springs Mayor Scott Johnson posted $16,000 bail for McLagan when he was arrested.

Johnson cited his son's friendship with McLagan's sons at the time.

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

"Labor deal said to be holding up Malta chip fab"

By LARRY RULISON, Business writer, Albany, New York Times Union

Last updated: 1:01 p.m., Friday, May 8, 2009

A spokesman for GlobalFoundries Inc. said this morning that the company won't proceed with its $4.2 billion computer chip factory project in Malta until it comes to a labor agreement with construction unions.

GlobalFoundries has been saying for weeks now that its deal to purchase 222 acres at the Luther Forest Technology Campus was just days away as the complex deed and other documents were finalized.

Once the deal closes, the Sunnyvale, Calif.-based company is expected name the general contractor, award the first bid to clear the site, and send a letter to New York state officially accepting $650 million in grant money for the project.

However, company spokesman Travis Bullard said today in Pittsfield, Mass., that while the land deal has been worked out, the real estate closing and the awarding of contracts won't occur until a deal is worked out with the unions.

That means it may be weeks, not days, until the land is acquired and site clearing begins.

Labor unions have been demanding project labor agreements be used at the site, because the project is getting state incentive money.

PLAs are pacts between project owners and union and nonunion shops that govern wages and work rules on big construction sites.

"Ex-Health Commissioner Novello charged with theft, fraud"

By ROBERT GAVIN, Staff writer, Albany, New York Times Union

Last updated: 12:43 p.m., Tuesday, May 12, 2009

ALBANY - Former state Health Commissioner Antonia Novello faces up to 12 years in prison on charges she illegally ordered state workers to chauffeur her around on shopping sprees, pick up her dry cleaning and water her plants over a two-year period.

A 20-count criminal indictment unsealed in Albany County Court this morning alleged Novello used her staff employees, including a security assistant, to do "personal services for her."

It also said she filed false information on a state comptroller's office form, failing to list the "chauffeur amount" that benefitted her.

The one-time U.S. surgeon general pleaded not guilty to one count of defrauding the government and three counts of filing a false instrument, both low-level felonies.

She entered the same plea to 16 counts of theft of government services, a misdemeanor.

The indictment listed the amount of money involved as in "excess of $1,000," though she had been alleged to cost taxpayers $50,000.

The typically outspoken Novello, 64, appeared somber as she entered the second-floor courtroom of Judge Stephen Herrick, joined by attorney E. Stewart Jones.

She answered no questions from reporters as she awaited Herrick.

"Are you Antonia Novello?" the judge asked.

"Yes, sir," the former commissioner replied.

"Is that your signature," he later asked after Novello signed a procedural document.

"Yes it is,'" Novello said quietly.

"Yes, your, honor,"

Herrick released Novello without any bail, but not before asking her to surrender her passport.

She exited with Jones to face cameras.

Novello remained silent.

Jones did not.

The high-profile attorney blasted state Inspector General Joseph Fisch's office, which referred the case to Albany County District Attorney David Soares' office.

Jones called her prosecution a "selective process" that should have been handled in civil court.

He said the inspector general's office "discriminatory criminalized, politicized and distorted" the case.

"It never should have reached this point," Jones said.

"(That) one of our nations's great public servants stands here today is a shame."

"And the shame is on the inspector's office for putting her in this position."

He said Novello would have paid back the state had she been asked.

He said she was never given notice and called the case unfair.

He said members of Congress, as well as the Obama and Paterson administrations, have done "far worse" than Novello and not been criminally charged.

"Why is she here?" a visibly irked Jones told reporters.

"She's here because she has a bull's-eye on her back."

"Because politics is a contact sport."

"Because there are people who are vindictive and who have wanted to get her ever since she left the state."

Soares said Novello's status as a once top state and national official was "irrelevant" in his decision making about the prosecution of the case.

Asked about Jones' contention no one ever explained Novello the problem, Soares said, "I think as time goes on and the facts of this case come out, you will see that statement is not necessary correct."

He said it was a similar case to his office's prosecution of former Comptroller Alan Hevesi, who used state employees to chauffeur his wife, "in the sense that there's a misappropriation of state resources."

He bemoaned that state law does not allow a more serious charges for the amount of money involved.

Had Novello taken thousands in paper clips, he noted, she could have been charged with a more serious felony.

The charge of defrauding the government, according to the indictment, alleged Novello used employees under her supervision "for her personal purposes while such state employees were being paid by the state of New York for regular and overtime hours during the time they were directed by the defendant to perform such personal services for her."

Heather Orth, a spokeswoman for Soares, said the allegations mirrors accusations detailed in a January state Inspector General's Office report about of her conduct as commissioner.

In a strongly worded report, Fisch said Novello shamelessly and blatantly exploited and abused her staff by requiring guards to chauffeur her to malls and stores and required staffers to rack up 2,540 hours of overtime at a cost of $50,000 to taxpayers.

Besides ferrying her to Colonie Center and Crossgates Mall, staffers were ordered to water her house plants, buy her groceries, handle her dry cleaning and be "on call" nights, weekends and holidays.

The acts drew the concern of Novello's top deputy, Dennis Whalen, now Gov. David Paterson's director of operations.

He wrote in 2003 that she should not be using staff for non-state services, Fisch found.

In recent weeks, several state officials have testified in front of an Albany County grand jury investigating Novello's conduct during her 1999-to-2006 tenure as commissioner, people familiar with the investigation told the Times Union.

Novello served in the office under Gov. George Pataki following her service as surgeon general under President George H.W. Bush from 1990 to 1993.

She would be the latest of a series of state officials investigated and prosecuted for the way they conducted themselves as a public servant.

Accusations of misuse of state employees and a warped sense of privilege arose frequently during the 64-year-old doctor's run in charge of the state's multibillion-dollar health program.

She was known to spend extravagantly on her large office in the Corning Tower.

According to the inspector general's report, security guards repeatedly transported Novello's mother to the Newark, N.J., airport to catch flights to Puerto Rico.

He noted that Novello failed to fully declare the perks on her tax returns and turned the case over to the Albany County district attorney.

She is employed now as an executive with Disney Children's Hospital in Orlando, Fla.

Capitol Reporter James M. Odato contributed to this report.

"IG: Integrity commission chief leaked confidential information to Spitzer aide - IG recommends removal of Executive Director Herbert Teitelbaum"

By MIKE GOODWIN, Staff writer, Albany, New York Times Union

Last updated: 12:02 p.m., Wednesday, May 13, 2009

ALBANY -- The executive director of the state's Commission on Public Integrity leaked confidential information to the Spitzer administration about the commission's probe of "Travelgate," the Inspector General's office announced in a report about his probe of the ethics panel.

The report issued by Inspector General Joseph Fisch criticizes the integrity commission and calls for the dismissal of Executive Director Herbert Teitelbaum.

It alleges that Teitelbaum illegally disclosed confidential information to Robert Hermann, a cabinet member, when the commission was probing then-Gov. Eliot Spitzer's role in the disclosure of Senate Majority Leader Joseph L. Bruno's travel records.

State law requires commission officials to keep investigations confidential.

Fisch said Hermann and Teitelbaum were both warned, Hermann by another Spitzer official and Teitelbaum by a commission lawyer, not to discuss confidential information about the commission's work, but Teitelbaum continued to leak information.

Among the information Teitelbaum disclosed was that the commission was recommending that Albany County District Attorney David Soares look into possible perjury tied to the probe.

The IG investigation arose out of the chaos of last year's so-called "Travelgate" or "Troopergate" scandal as one state official after another investigated the release by the Spitzer administration of travel records for Bruno.

The IG pursued alleged leaks by Teitelbaum of confidential information through a third party to Spitzer's aides.

"Charges follow scathing report - Ex-health chief Antonia Novello pleads not guilty to using state workers as her personal servants"

By ROBERT GAVIN, Staff writer, Albany, New York Times Union

First published in print: Wednesday, May 13, 2009

Antonia Novello spent seven years as state health commissioner, but now she could face 12 years in state prison for allegedly using state workers as her personal servants.

Novello, who also served as the U.S. surgeon general under President George H. W. Bush, was in court Tuesday to answer criminal charges connected to allegations she ordered her security staff to act as chauffeurs to take her on personal business.

Novello, 64, pleaded not guilty at her arraignment on a 20-count indictment that accuses her of abusing her office from 2004 to 2006, her final years as commissioner.

The usually outspoken Novello appeared somber as she entered the second-floor courtroom of Albany County Judge Stephen Herrick, joined by her defense attorney, E. Stewart Jones of Troy.

She answered no to questions from reporters as she waited for Herrick.

"Are you Antonia Novello?," the judge asked.

"Yes, sir," the former commissioner replied.

"Is that your signature," Herrick later asked after Novello signed a procedural document.

"Yes it is,'" Novello said quietly.

"Yes, your, honor,"

The indictment backs a scathing report state Inspector General Joseph Fisch released in January accusing the former commissioner of repeatedly abusing her authority.

The inspector general had found Novello not only required her workers to rack up 2,547 hours of overtime between 2000 and December 2006, but ordered employees to drive the commissioner - and friends - everywhere from Capital Region shopping outlets to Newark airport in New Jersey.

Among other findings, Fisch's report alleged one employee stated she could not carry out Medicaid fraud investigations because she was too busy with her "duties to the commissioner."

Novello allegedly had employees do her dry cleaning, water plants while she was away and go on shopping runs.

Fisch referred the case to Albany County District Attorney David Soares' office, which brought the case to a grand jury.

The indictment unsealed Tuesday is far vaguer than Fisch's report.

It does not go into details about the nature of the personal missions Novello allegedly ordered her staff to perform for her.

Other than citing the charges Novello faces, Soares would not specifically outline individual instances of Novello's alleged abuse of power when questioned by a reporter at a news conference.

Novello is charged with one count of defrauding the government; three counts of filing a false instrument, both low-level felonies; and 16 counts of theft of services, a misdemeanor.

If convicted she faces as much as 4 to 12 years in state prison.

The indictment only states Novello, who was paid $196,000 annually in Albany, cost the state "excess of $1,000" by ordering the personal work.

The inspector general's report placed the figure at $48,000.

Herrick released Novello without any bail, but not before asking her to surrender her passport.

She exited with Jones to face cameras.

Novello remained silent.

Jones did not.

The high-profile Troy attorney blasted Fisch's office.

Jones called her prosecution a "selective process" that should have been handled in civil court.

He said the inspector general's office "discriminatory criminalized, politicized and distorted" the case.

"It never should have reached this point," Jones said.

He said Novello would have paid back the state had she been asked.

He said she was never given notice and called the case unfair.

"Why is she here?" Jones told reporters.

"She's here because she has a bull's-eye on her back."

"Because politics is a contact sport."

"Because there are people who are vindictive and who have wanted to get her ever since she left the state."

Fisch issued a statement saying, "When investigating allegations of misconduct by a public official, that official's political identity, affiliation, or philosophy, are matters of indifference to my office."

His report had stated that Novello was advised in July 2003:

"When you are not in official travel status, and when you are not acting in your official capacity as the State Health Commissioner, avoid the use of the drivers or state staff."

"Never under any circumstances request or direct that an employee perform a personal (non-state) service for you or conduct personal business on your behalf."

Meanwhile, Soares told reporters Novello's status as a former top state and national official was "irrelevant" in his decision making about the prosecution of the case.

Asked about Jones' contention no one ever explained the problem to Novello, Soares said, "I think as time goes on and the facts of this case come out, you will see that statement is not necessary correct."

He compared the case to his office's prosecution of former Comptroller Alan Hevesi, who used state employees to chauffeur his wife, "in the sense that there's a misappropriation of state resources."

The charge of defrauding the government, according to the indictment, alleged Novello used employees under her supervision "for her personal purposes while such state employees were being paid by the state of New York for regular and overtime hours during the time they were directed by the defendant to perform such personal services for her."

The filing allegation is because failing to list the accurate "chauffeur amount" that benefitted her.

Novello, a surgeon general under President George H.W. Bush from 1990 to 1993, was later chosen by Pataki to be the state's top health official.

She joined the agency in 1999 and left in 2006.

She later became vice president of Women and Children Health and Policy Affairs at Disney Children's Hospital at Florida Hospital, in Orlando, Fla.

Robert Gavin can be reached at 434-2403 or rgavin@timesunion.com

"Ethics panel won't quit - Commission on Public Integrity is in turmoil after inspector general's report, rejection of governor's call to resign"

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

First published in print: Thursday, May 14, 2009

ALBANY - A bizarre power struggle over public integrity in state government erupted Wednesday as the state inspector general accused the Commission on Public Integrity of leaking confidential information, the governor called for commission members to resign and the commission responded with defiance.

It began with Inspector General Joseph Fisch issuing a report sharply critical of the commission and its executive director.

Released in late morning, Fisch's report recommended that CPI Executive Director Herbert Teitelbaum be dismissed for allegedly passing along confidential information to former Gov. Eliot Spitzer's administration about the commission's probe into the 2007 travel records scandal involving Spitzer and then-Senate Majority Leader Joseph L. Bruno.

The inspector general's report accused the panel's commissioners of failing to fulfill their duties by allowing Teitelbaum to violate the public trust.

Wednesday afternoon, Gov. David Paterson responded by agreeing that Teitelbaum should be removed.

In a news conference, Paterson installed a new chairman of the commission, Michael Cherkasky, a former prosecutor who is now a wealthy trial lawyer and security company CEO.

Cherkasky replaces John Feerick, who resigned from the commission in February.

The governor also called for six other gubernatorial appointees on the commission and six legislative appointees to resign so the commission could "start fresh" because of "widespread violation of the public trust."

Senate Majority Leader Malcolm Smith later released a statement that he had "total confidence" in his commission appointee, Richard Emery, and intended to leave him in place.

In turn, through lawyers, the commission and Teitelbaum blasted Fisch, accusing him of ignoring information that conflicted with his assertions.

All said they would not be stepping down.

Concluding a lengthy probe that included 19 witness interviews, Fisch criticized the commission for failing to look into serious charges about Teitelbaum's conduct charges leveled by Albany County District Attorney David Soares.

The report alleges Teitelbaum illegally disclosed confidential information to Robert Hermann, a Spitzer cabinet member, when the commission was probing Spitzer's role in the disclosure of Senate Majority Leader Joseph L. Bruno's travel records and use of state aircraft.

Hermann shared what he found out with Spitzer's lawyers.

Zachary Carter, acting the commission's pro bono attorney, suggested Fisch had, in essence, been duped in an attempt by Spitzer's lawyers to create a distraction Teitelbaum's alleged leaking to turn attention away from misdeeds of the Executive Chamber.

The Commission on Public Integrity has the power to investigate the governor and his staff.

Carter said Spitzer's lawyers moved to protect the governor's staff when Teitelbaum was aggressively pursuing a theory that Spitzer staff coerced former communications director Darren Dopp to sign an untruthful statement to Attorney General Andrew Cuomo, who was also investigating the travel records matter.

He said Fisch's "unfounded conclusions" ignored the commission's reasonable and measured response to allegations about Teitelbaum.

He added that there is no proof Teitelbaum leaked information to Hermann and no finding of fact that information provided the Spitzer administration was indeed confidential.

Moreover, Carter said Teitelbaum "deserves a medal" if he was using Hermann to try to get the Executive Chamber to cooperative with the commission's investigation.

The inspector general's report notes discrepancies in stories told to Fisch's investigators by Teitlebaum and Hermann about the exchange of the "confidential" information.

The two men were close friends and called each other 165 times during just five months of 2007, the inspector general found.

Hermann was a partner in the Teitelbaum, Hiller law firm.

He was appointed by Spitzer to head the Governor's Office of Regulatory Reform and is now employed by Senate Democrats as special counsel.

The report says Hermann passed along information provided to him by Teitelbaum about the high-profile investigation of Spitzer's involvement in the release of travel documents.

When confronted on the leaking, Hermann told inspector general investigators he found out about Teitelbaum's investigation by looking at Teitelbaum's legal pad.

Hermann never mentioned that he'd seen Teitelbaum's notebook to others to whom he relayed confidential material, Fisch said.

State law requires CPI officials to keep investigations confidential.

Fisch said Hermann and Teitelbaum were both warned Hermann by another Spitzer official and Teitelbaum by a commission lawyer not to discuss confidential information about the commission's work.

Among the information Teitelbaum disclosed was that the commission was recommending Soares look into possible perjury by Dopp.

The inspector general looked into Teitelbaum's conduct after Soares wrote letters urging an investigation.

Former CPI Chairman Feerick stood by Teitelbaum in the face of Soares' criticisms.

While Fisch said Teitelbaum and Hermann "betrayed the public," the inspector general said Feerick was too trusting of Teitelbaum.

"I'm saddened that a man like John Feerick and other people with such outstanding reputations failed to exercise their responsibilities as overseers as the primary guardian of public integrity and ethics," Fisch said in an interview.

Soares said the "report speaks for itself."

James DeVita, a lawyer for Teitelbaum, said the commission concluded long ago that the allegations of inappropriate leaking by Teitelbaum were baseless and called Fisch's findings "unjustified and inaccurate aspersions."

James M. Odato can be reached at 454-5083 and jodato@timesunion.com.

Michael Cherkasky

Currently president and CEO of U.S. Investigations Services, the largest supplier of security investigations for the federal government.

Previously served as president and CEO of the insurance broker Marsh & McLennan, where his duties included investigating a damaging kickback scandal.

Also served as president and CEO of Kroll, Inc., an investigations firm that oversaw major reforms at the Los Angeles Police Department; Cherkasky previously worked as chief of the Investigations Division for the New York County District Attorney's Office.

Source: Governor's office

"Ethics panel should go"

By FRED LEBRUN COMMENTARY

Albany, New York Times Union

First published in print: Sunday, May 17, 2009

That the state Commission on Public Integrity should be called upon by Gov. David Paterson to resign for failing to do its job in the notorious Troopergate incident is the sort of rich irony we expect from the political side of our state government.

It's so Albany.

But to have that same hoity commission defy the governor and refuse to step down is quite special.

A spectacle as rare these days as a public hanging.

What brought all this to a head, of course, was state Inspector General Joseph Fisch's brilliant report that tacked commission executive director Herb Teitelbaum's hide to the wall for inappropriate, if not illegal, backdoor communications with Governor Spitzer's staff during the commission's Troopergate investigation.

The commission itself came under criticism for repeatedly failing to scrutinize Teitelbaum's conduct, even after Albany County District Attorney David Soares pointedly accused Teitelbaum.

Fisch, who had quite a spectacular week of successes, made the rare recommendation that Teitelbaum be fired for his conduct.

A few days before, also based on a Fisch report, former state Health Commissioner Antonia Novello was arraigned in Albany County Court on charges of defrauding the state.

One showstopper after another.

It turns out the real, functioning commission on public integrity is the inspector general's office.

Who would have guessed?

Acting on Fisch's report, the governor asked all the sitting commission members to resign and agreed Teitelbaum should be replaced.

At the same time, he filled the vacant position of commission chairman.

Yet now we have a rogue commission of 12, plus the executive director, standing defiant.

Not a smart place to be, smacking of arrogance and insolence as it does.

As the governor observed with admirable restraint, a commission appointment "is not something you own in government."

But make no mistake, this is not a contest of equals, no matter how prestigious the gaggle of lawyers on the commission itself might be, or how above reproach the embattled commission executive director might consider himself.

There is only one governor.

And as weakened as Paterson may be perceived because of his low approval ratings, and as reasonable as he's sounding in dealing with this mess, he's got to be seriously ticked and ready to throttle a few necks.

During a news conference Thursday, he said he was "shocked and surprised" by the commission's reaction, and suggested its members "think it over."

After all, his authority is being challenged.

Clearly, if ever there was a time for Paterson to be forceful, to show he's in charge, this is it.

If he doesn't act quickly and with force, that will be noted too, and the governor can't afford any more of that if he wants to turn public opinion around.

At this late point, it doesn't matter whether commission members and Teitelbaum can rationalize keeping their jobs, or whether they've actually convinced themselves the inspector general's blistering report was unfair.

They've lost the moral high ground they need to do any future work as the commission.

Besides, their lawyerly protestations of exemplary ethical behavior, totally at odds with Fisch's report, are thin wailings in the wind, heavy on screech, light on substance, and frankly, don't cut it.

Who cares whether commission members have fixed-term appointments?

When the governor says step down, you do so graciously.

Or else.

As Paterson mentioned, there is ample precedent for requesting wholesale resignations to give a government or an agency, or in this case a commission, "a fresh start."

The governor asked for and got the resignations of all state agency heads and decision makers when he took over from Eliot Spitzer.

Many were reappointed.

Probably the same would be true for some commission members, notably Richard Emery.

He's the commissioner who spoke out most forcefully but with little success, according to the Fisch report, for a thorough internal investigation of Soares' allegations.

Among the consequences the defiant ones are courting is this: The longer commission members drag it out, the more likely this will get public and personal, with names singled out.

This will become an indelible and embarrassing event for which their lives and careers will be long remembered, right through their obituaries.

There is simply less celebrity in exiting now as an anonymous herd.

Then again, the commission hasn't done the right thing all along, why should it start now?

While the Fisch report on Teitelbaum and Troopergate has devastated any future effectiveness for those currently running the commission, its substance also thoroughly compromises any pending charges brought by the commission in Troopergate.

Fisch shows us it simply wasn't a straight-up investigation.

There were all manner of maneuverings going on, mostly to protect Governor Spitzer.

Former Spitzer communications director Darren Dopp and former State Police Superintendent Preston Felton still have cases pending before the commission.

In the interest of justice and fairness, those charges should be dropped.

If there was real justice, their legal bills ought to be forwarded to Herb Teitelbaum.

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

"Embattled ethics director steps down - Herbert Teitelbaum exits after scathing Inspector General report"

Capitol bureau, Albany, New York Times Union

Last updated: 4:06 p.m., Monday, May 18, 2009

ALBANY — The embattled executive director of the Commission on Public Integrity is resigning less than a week after the release of a harsh report from the state Inspector General found that he unlawfully funneled information about the commission's investigation of the travel records scandal to members of the administration of former Gov. Eliot Spitzer.

Teitelbaum's resignation arrives the same day Gov. David Paterson announced his plans to introduce legislation this week creating a new watchdog group.

News of Teitelbaum's exit from the two-year-old panel came in a release that contained laudatory quotes from the commission's new chairman, Michael G. Cherkasky, who last Wednesday — the day the inspector's report was released — stood next to Paterson as the governor called on Teitelbaum and the rest of the current integrity panel to resign.

"Mr. Teitelbaum has served the people of New York with honor and diligence during one of the most difficult periods ever faced by a new state agency," Cherkasky said in his statement.

"With the utmost professionalism, he oversaw the Commission's investigation into Troopergate, working tirelessly to make sure all the facts became known to the public and resisting the efforts of many to stonewall his efforts."

"The skills he used in his many years as a successful litigator were invaluable in getting to the heart of this scandal."

" ... While we are saddened to lose Herb, we understand that by this action he has decided to put a stop to what has become a distraction to the Commission's critical work."

In a three-page letter of resignation addressed to Cherkasky, Teitelbaum says he had originally contemplated stepping down after the departure in February of former CPI Chairman John Feerick, but had allowed other commissioners to convince him that the simultaneous loss of the panel's two top officers would be "destabilizing to the Commission and its staff."

Last week, Paterson said that he had been waiting to name the new chair until the Inspector General's report was released.

Also Monday, the governor announced that he would submit legislation later this week to create a new watchdog agency, the Government Ethics Commission, that would be independent and have jurisdiction over State government, lobbying and campaign finance.

"The general perception is that the ethics process in Albany is broken and I believe it is," Paterson said in a news release.

"Ethics chief departing on note of defiance - Spitzer appointee's decision to quit follows critical report, whose allegations he denies"

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

First published in print: Tuesday, May 19, 2009

ALBANY — The executive director of the state's Commission on Public Integrity said Monday that he will resign, an announcement that comes less than a week after a scathing report concluded he had unlawfully funneled information about the panel's high-profile investigation of the travel records scandal to members of former Gov. Eliot Spitzer's administration.

Herbert Teitelbaum's resignation was made public just hours after Gov. David Paterson announced plans to create a new watchdog group that would take over the CPI's duties.

Paterson last week called for Teitelbaum and the rest of the CPI's members to step down in the wake of Inspector General Joseph Fisch's report that found Teitelbaum had "betrayed the public trust."

Teitelbaum, who was appointed by Spitzer, first drew fire last summer when Albany County District Attorney David Soares asked Fisch to investigate whether Teitelbaum had leaked information about the CPI's investigation to Spitzer aides.

The travel records affair centered on whether Spitzer had improperly ordered State Police to release helicopter records for then-Senate Republican Majority Leader Joseph L. Bruno, who had been battling the governor.

Spitzer stepped down amid a prostitution scandal over a year ago, and Bruno left office last summer.

Bruno has since been indicted for alleged influence peddling.

Fisch, who was appointed by Paterson, said he had evidence — including tape-recorded interviews — that Teitelbaum had provided back-channel reports to the Spitzer camp on the CPI's investigation.

Last week, Paterson asked his picks to the CPI to step down, and asked the other state leaders empowered to make picks for the panel to do the same.

So far, neither commissioners nor officials have taken Paterson's lead.

Monday's proposal by Paterson to create a new Government Ethics Commission, which would supersede the CPI, could be a way for the governor to address the problem while sidestepping a potential fight with lawmakers — who could conceivably reappoint some of their CPI members to the new panel.

"The only way out of this mess is to create a new law," said Blair Horner of NYPIRG, a government reform group.

Others stressed that laws and commission structures are only as good as the people behind them.

"It's all going to be dependent upon whoever is in charge of it," said David Grandeau, former director of the Lobbying Commission.

Good-government advocates have long criticized the way the CPI was set up: seven of its 13 members are appointed by the governor, a structure that critics charge concentrates too much power with the executive.

All of those current seven members were Spitzer appointees.

Under Paterson's plan, which is being developed with lawmakers, the Legislature and executive would share power in appointments so that none of the
three branches — Senate, Assembly, governor — could appoint a majority.

The new commission would cover campaign finance issues as well, a notion that some legislators thought was a prudent idea.

"We do need consolidation and uniformity," said Sen. Neil Breslin, D-Delmar.

In his parting letter, Teitelbaum said he had been planning to step down since former CPI Chairman John Feerick announced his retirement in February.

Teitelbaum, whose resignation becomes official next month, also struck a note of defiance, saying he "unequivocally" denies Fisch's charge that he had leaked information to Spitzer's team.

"I think the investigation establishes that there was a basis for him to step down," Fisch said in response.

Fisch is scheduled to testify today before the Senate Government Operations Committee; he said he planned to ask for an expansion of his agency's role.

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

Last week: A report from the inspector general says the executive director of the Commission on Public Integrity leaked confidential information to the Spitzer administration.

Gov. Paterson said the entire CPI should step down.

Monday: Teitelbaum said he will resign; Paterson proposed a new Government Ethics Commission to take over CPI's duties.

Coming: The governor will finalize plans for a new commission, and lawmakers will have to vote on it.

"Skelos is majority leader as GOP reclaims Senate - Two Democrats join Republicans to elect new leader"

By IRENE JAY LIU and RICK KARLIN, Capitol bureau, Albany, New York Times Union

Last updated: 4:06 p.m., Monday, June 8, 2009

ALBANY - Senate Republicans have seized control of the chamber in a leadership coup in which they got two Democrats to join their caucus, a stunning move that could change the nature of electoral politics as well as the end of this year's legislative session.

Dean Skelos was elected majority leaders after Senators Hiram Monserrate, D-Queens, and Pedro Espada, D-Bronx, voted with Republicans to change the leadership of the chamber.

The defections ended Malcolm Smith's six-month tenure as the leader of the senate.

Monserrate and Espada gave the Senate Republicans the 32 votes they need to switch leadership.

The Democrats' hold on the Senate has been shaky since the party won a one-vote majority in November.

Selection of a majority leaders was delayed for weeks as the party cut deals with members to convince them to support Smith.

"Senate act brings on the clowns"

By FRED LEBRUN COMMENTARY, Albany, New York Times Union

First published in print: Sunday, June 14, 2009

What do we do here?

Laugh, cry, ignore them?

For the second time in as many years, New York state's political leadership has become an international laughingstock.

We can't even do a coup d'etat right.

Somebody send the Republican Senate leadership down to a banana republic to get the rest of their training.

Some of us even long for the days of the comparatively easy to understand moral challenges of Client No. 9 and Senator Joe.

After a week of the incredible, which is saying something in Albany, the most galling aspect of the coup to topple Democrat Majority Leader Malcolm Smith is that now nobody's in charge and nothing will get done.

We've gone from incompetence to chaos, which even in Albany can't be masqueraded as progress.

What an utter waste of taxpayer money it is to pay any of these clowns in the Senate, Republican and Democrat, if they can't be grown-ups and forge a working Senate to get the people's business done.

Relying on a couple of ethically challenged legislators in a phony "coalition" to do it for them is insanity, and guarantees instability for the rest of the session.

Now, was the dramatic takeover by the maybe new Majority Leader Dean Skelos' Republican rangers deft politics or insufferable arrogance in violation of the electorate's wishes?

That remains to be seen, but the apparent result can't be ignored.

So get over it, Democrats.

You allowed this to happen.

Sometimes you don't know there's a snake in the woodpile until you get bit.

In this case, it came as no surprise, so who was in charge of the care and feeding of the snakes?

Go kick him in the butt, then swallow the bitter pill, and forge a real coalition.

Rensselaer County Supreme Court Justice George Ceresia expressed the growing general public frustration when he said Thursday he would love to throw restraining orders against Senate leaders in both parties.

That was in response to a request by the Democrats to rule against the Republicans.

Wisely, given the separation of powers issue here, the judge decided to stay out of it.

This mess is for the senators to clean up, since they made it.

Once upon a time, the public got so fed up and angry with the self-serving partisan shenanigans of the New York's state Senate done under the shameless cloak of reform that people stormed into its inner sanction, screamed at senators and staff, spit on them and jostled them.

Actually, that would be last Thursday afternoon.

Whenever you hear reform uttered by any of these people, substitute the word power, which is what they really are after.

Republicans have turned loose potent forces here they can't control.

The public is getting riled at the lack of order, dignity and progress on important issues.

You know, dumb stuff like that.

My gut hunch is the billionaire wrecking machine Tom Golisano may have done it this time, but not in the way Golisano or fellow co-conspirator Dean Skelos had in mind.

This may be the final straw that sees a whole lot of rascals thrown out in a year and a half.

Frankly, I wouldn't give a plug nickel for the political futures of any of the players and participants on either side of the coup because they are fast growing into the gang that gave us our second international laughingstock award.

There are bull's-eyes on a bunch of them already, and deservedly.

The only way Skelos could have remotely justified this violent breach of collegiality and order by taking control as he did was to quickly and authoritatively show the public a better report card than the guy he deposed.

That's simply not going to happen.

It's not even clear at this point that the Republican majority, if it holds, can get out of its own muddle and get anything accomplished, even of an ineffective one-house nature.

Certainly not much can be expected in terms of cooperation with the Democratic Assembly.

So even greater paralysis ensues.

A worse scenario than we just experienced with the Democratic leadership in the Senate, which was hampered by inexperience in the ranks right up to leadership and consequently showed an annoying inability to get up to speed on passing bills.

So where does that leave the public?

Who knows?

I certainly don't.

We'll see another dozen turns of the worm before we can answer that, but odds are slim to none that anything productive will come out of the sulfuric fumes of this mess anytime soon.

As for the governor, this is catastrophic.

Odds were lengthening anyway that David Paterson could rise from the dismal swamp of his non-popularity, low poll numbers that to some extent he doesn't fully deserve.

But now he won't be able to show the ripe fruits of his leadership on any meaningful issues, because there aren't likely to be any.

As for Golisano, I should hope this puts to rest once and for all his value to the state's governmental process, which is nil.

He is good only for throwing expensive wrenches into the machinery.

He is either arrogant or naive to a fault.

In the end it doesn't matter which, because the results are the same.

He's moved his primary residence to Florida.

Perhaps he should take an interest in politics there.

His style seems more appropriate to the Sunshine State.

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

"Analysis: NY Senate coup a tough bet"

By MICHAEL GORMLEY, Associated Press

Last updated: 12:07 a.m., Sunday, June 14, 2009

ALBANY -- In a week of slick parliamentary plotting, name-calling and threats over who controls New York's Senate after a shocking power grab Monday, one of the most perplexing questions remains: Who do you root for in this mess?[

Do you back the "reform coalition?"

They say they want to end Democratic control of state government and halt overspending and overtaxing.

But one of the first acts by the alliance of all 30 Republicans and two dissident Democrats was to adopt a rule that would prohibit the Democratic conference from duplicating the coup that left Democrats slack-jawed, angry and powerless.

As Blair Horner of the New York Public Interest Research Group notes, the coalition and its 32-member majority could accomplish most or all of its policy objectives in floor votes without seizing the leadership posts, the move that shut down the Senate for at least the past week as the end of the scheduled 2009 session nears on June 22.

Maybe you can root for the dissident Democrats?

They made the apparent takeover possible, scoring a Latino victory by taking the top spot in the Senate and creating unheard of bipartisan leadership.

But their elected Senate president, Democratic Sen. Pedro Espada of the Bronx, has outstanding campaign violations, still faces a $60,000 fine, and his pork-barrel grants are being investigated.

The other dissident, Sen. Hiram Monserrate, faces a felony assault charge.

A court had to step in late Thursday to temporarily bar Espada from the line of succession if Gov. David Paterson left office or went out of state, giving the Senate leader power to pardon himself and Monserrate if convicted.

Six months ago, Republicans wanted Monserrate suspended:

"It definitely takes the institution down," Republican Sen. Martin Golden of Brooklyn said then.

"And we don't need that."

How about rooting for the Democratic conference?

They are just getting their feet, managing a diverse conference.

Under embattled Majority Leader Malcolm Smith, they took some steps to change Albany and end gridlock between the GOP-led Senate and Democrat-led Assembly while advancing progressive causes, including diverting nonviolent drug offenders to treatment instead of prison and, potentially, legalizing same-sex marriage.

Yet, hours before Monday's revolt, the Democratic conference, with just a 32-30 edge, announced it would keep 90 percent of $85 million in pork barrel spending for distribution to their districts.

The Democrats' defense?

That's what Republicans did to us for years.

How about the Republicans?

They said they need power because their upstate and suburban districts were shut out by New York City Democrats who control the Senate, Assembly and governor's office.

But in Albany, with great power come great perks.

Republicans, hating the minority status they hadn't experienced for more than four decades, have sought many ways to return to power since they lost the majority in the November elections.

The Senate majority controls legislation, collects leadership stipends, gets more resources and lobbyists' donations for campaigns, and gets bigger offices and more patronage.

Perhaps rank and file Democrats will save themselves?

Black Democratic senators want a black senator and Latinos want to back Espada and Monserrate.

Supporters of a landmark bill to legalize same-sex marriage are making it clear they might join a coalition if it brings the bill to the floor.

And although the coalition appears to be using the bill as bait to draw supporters, the bill might be voted down, creating a big defeat for the years long effort.

Maybe the activists will cut through the power play?

With screaming supporters behind him in Queens, the Rev. Al Sharpton warned Monserrate not to mess with the Democratic conference.

In Albany Thursday, groups closely aligned with the Democratic conference loudly protested the coalition senators in near mob scene rare even for Albany.

They shouted insults at Republicans, Espada and Monserrate, holding signs like "Senate not for sale," though one of the groups stood to lose $200,000 in pork barrel grants for their programs from Democrats.

How about the governor?

Gov. David Paterson played the outraged statesman by repeatedly condemning the "dysfunction and chaos" that wasted a week of session.

Although he says he's not getting involved in Senate affairs, he doesn't accept that the coalition seized power.

He admits, however, that he has no power to affect who runs the house.

It's odd talk for the head of the state Democratic Party.

It also wasn't the way the last governor faced with a Senate power struggle talked.

In 1965, Republican Gov. Nelson Rockefeller stepped in when Democrats and Republicans couldn't agree on a majority leader in a struggle that featured U.S. Sen. Robert Kennedy and New York City Mayor Robert Wagner.

In the end, Rockefeller got some of his fellow Republicans to switch their votes.

"It certainly worked, at least in the short run," said Robert Ward of the Rockefeller Institute of Government.

"They did get back to business ... one lesson from that is that a powerful governor can have some influence in the Legislature."

Today, both sides say the power struggle must be decided before going back to business.

"There are legislators who probably do believe the only way to change the Legislature is topple the leadership," said NYPIRG's Horner.

"But if you put it all together, it's about power."

------

Michael Gormley is the Albany, N.Y., Capitol editor for The Associated Press. He can be reached by e-mail at mgormley(at)ap.org.

"Bold coup upsets Senate - It seemed like a routine day, but a well-planned GOP attack ousts stunned Democrats after a brief stint in power"

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

First published in print: Sunday, June 14, 2009

The overthrow of the state Senate that shocked the Capitol on Monday unfolded with a multitude of people playing critical roles in a drama unparalleled in state history.

The coup was over in short order.

Based on numerous interviews, minutes were like hours for those involved.

Sen. George Maziarz circled Monday, June 8, on his calendar for two important appointments.

He had an anxious feeling waiting for that day.

The Niagara County Republican had been called the end of the prior week by Angelo Aponte, the powerful, micromanaging secretary of the Senate.

Aponte, Democratic leader Malcolm Smith's chief operating officer, asked Maziarz to show up at his office for a meeting at 11 a.m. that Monday.

Maziarz planned to be in the Senate chamber for a session at 3 p.m. to take part in a change of power that had been planned in secret for weeks.

The details were sealed the previous Wednesday, with Maziarz recommending immediate action before word leaked out.

He worried that Aponte had wind of the plot.

It turned out the secretary wanted to discuss the need for civility during chamber debates, noting that Maziarz had gotten a bit personal during budget arguments.

"I shook his hand knowing he had no idea," Maziarz recalled.

He smiled broadly in his office in the Legislative Office Building, much smaller than the one he used his previous 15 years in the Senate, when Republicans held control.

"I knew we were going to catch him off guard."

Sen. Neil Breslin of Bethlehem had Monday scheduling issues, too.

He had accepted fellow Democrat David Valesky's request to switch weeks of duty as chairman of the Senate session.

"I wasn't supposed to be up there," Breslin said later.

Sen. Thomas Libous was on schedule, but he was starting to feel pain.

He upset his cranky back gardening at his home in the Southern Tier.

Known as "Rambo" as a young city councilman in Binghamton who challenged a popular Democratic mayor, Libous had been the choice of Senate Majority Leader Warren Anderson to succeed him in Albany.

In the chamber, Libous' eyes darted to Steve Pigeon and his boss, Rochester billionaire Tom Golisano, seated in the gallery above.

Golisano, who last fall spent $4 million to help Democrats win elections, was an essential partner in the plot.

Libous saw Breslin assume the chairman's post, and thought his luck had taken a hit.

Breslin, a veteran of the chamber and a lawyer for 35 years, took turns officiating with two more junior Democrats.

Either of them presiding, Libous thought, would have made his job easier.

"I'm an observer," Libous said.

"I see who's good on the floor."

"I thought Breslin would have been tougher."

But Libous had been rehearsing and was confident.

He knew he had 32 of 62 votes, including Democrats Pedro Espada and Hiram Monserrate of New York City.

He rose from his Senate seat and asked Breslin for a "privileged resolution" to be voted on at the start of session.

Republican lawyer Adam Richardson delivered the resolution document to Journal Clerk Thomas Testo.

A Republican holdover and state employee since 1976 who is considered excellent at his job, Testo was said to be in his last session -- perhaps involuntarily.

Testo, who had read thousands of resolutions during hundreds of session days, could tell by a glimpse that this one was different.

He took the document as Richardson delivered a copy to Deputy Majority Leader Jeff Klein, an ambitious Bronx Democrat and, as Libous put it, a "worthy adversary."

Klein thought his biggest order of business that day would be the resolution prepared by Aponte identifying the $85 million in member-item grants the senators would hand out in their districts this year -- $77 million for the 32 Democrats, $8 million for the 30 Republicans.

Without looking at Libous' resolution, Breslin directed it be read.

Testo enunciated:

"By senators Libous, Monserrate and Maziarz, providing for the election of Pedro Espada Jr. as temporary president of the Senate and Dean Skelos as vice president pro-tem and majority leader."

As the noise level in the chamber rose, Klein jumped up and asked a halt the proceedings.

Breslin agreed.

Libous argued that he held the floor and would not sit down.

Breslin turned to fellow Albany County Democrat Keith St. John, a lawyer and former Albany Common Council member who ascended to parliamentarian in January when Democrats took over.

Not known for his political savvy, St. John huddled with Breslin and Michael Fallon, the Democrats' top lawyer on the floor and a seasoned legal operative but not considered a wartime consigliere.

Libous demanded a vote to overrule Breslin.

Minutes passed.

When Breslin allowed a vote, every Republican senator, plus Espada and Monserrate, stood to raise their hands.

Klein called for adjournment, Breslin confirmed it and the Democrats fled, not sticking around to see Espada and Sen. Dean Skelos sworn in as the new leaders.

In the huddle, Breslin revealed later, he had asked Fallon and St. John how to get out of the jam.

"I've been a lawyer for 35 years," Breslin said.

"I've been in a courtroom ..."

"You have to react."

Some legal critics say Breslin should have used his gavel to ignore Libous, grant Klein's motion and buy time.

"Ultimately, we can talk and dance," Breslin said.

"Whoever has the majority rules."

Breslin said he did not want to take an illegal route, but Libous caught him off guard.

He said Libous was "devious" in identifying his resolution.

All privileged resolutions are first approved by the majority leader, so he assumed it was vetted.

"I have always assumed that people in the chamber are honorable," Breslin said.

He said he has full faith in Testo, St. John and Fallon, but he believes Libous was a bit underhanded.

Not so, said Libous, Maziarz and a slew of lawyers.

Senate rules did not require prior approval of such a resolution.

"Sen. Breslin just walked into it," said Maziarz.

"There were a lot of unplanned benefits."

He said he wasn't surprised that Breslin let Testo read the resolution.

Last year, Maziarz often filled the president's seat for both Sen. Joseph L. Bruno and Skelos when they were majority leaders.

He said he always let Testo read the resolution immediately.

Together, Libous and Maziarz had sewn up the deal.

It started about two months ago.

Pigeon reached out to Maziarz.

Enough is enough, he said: The Democrats, were making things worse.

Maziarz took the Golisano camp to Libous and then to Skelos, the minority leader.

Pigeon, the Erie County Democratic Committee chairman from 1995 to 2002, knew Espada and Monserrate.

He had gone to the Bronx in December to make sure Espada and other dissident Democrats got behind Smith to secure the Democratic majority.

In the spring, Espada told Pigeon that working under Smith was impossible.

He said Aponte was ordering around committee chairmen, specifically attempting to get Espada to run his Housing Committee with a favorable vote on a bill to control rents in New York City.

On April 28, Maziarz arranged a meeting among Pigeon, Libous, Skelos and himself.

They drove around Albany looking for a place they wouldn't be recognized.

They found Red Square, "a biker bar" Maziarz said.

"I went in, saw people with earrings."

"Headbanger music."

"I went back to the car: 'No one's going to know us here.'"

They hung out for an hour and agreed they would attempt to create a "coalition government" of all the Republicans and as many Democrats who would give them the majority and pledge to improve the Senate.

Republican lawyer Rob Mujica became a central figure.

Mujica, the finance secretary for Skelos, had had his own confrontation with Aponte in the winter.

Aponte wanted Mujica to brief the Senate Democrats on budget issues.

When Mujica suggested that Skelos was his boss, Aponte fired him, although Mujica continued on the Republican payroll.

Mujica, a graduate of Albany Law School and part of the GOP central staff for years, is of Puerto Rican descent and understands the language and culture of Hispanics Monserrate and Espada.

Mujica, with other Republican lawyers, carefully helped lay out the plan.

Senators Kemp Hannon of Long Island and George Winner of Elmira prepared Libous for any pushback in the chamber.

Pigeon and Golisano assured the dissident Democrats that Golisano's Responsible New York, a political action committee fueled with a fraction of Golisano's immense wealth, would back candidates who support Golisano's vision of reform.

It was at Mujica's house that the final details were put together a week ago, including committee appointments.

The planners ran through 15 scenarios as possible responses, and the Democrats reacted with what was the best-case scenario, Pigeon said, because they were ill-prepared.

"Malcolm was an incompetent leader and he proved it on Monday," Pigeon said.

Mujica's home is on Eagle Street.

It was the war room and Republican operatives and senators and representatives of Golisano and Espada were in and out.

Across the street is the Executive Mansion, where Gov. David Paterson sometimes lays his head.

"We wouldn't have even tried to do it with a strong governor," Pigeon said.

"We wouldn't even had considered it."

Golisano had become frustrated with Paterson as well.

Golisano said the Democratic leadership had failed.

It became clear to him when he sought to get Smith to plan a property tax break in the state budget and got nowhere.

It became clearer after the $132 billion budget was passed with an enhanced income tax on wealthy New Yorkers.

He was angered when he met with Smith and the leader seemed more interested in his BlackBerry than in Golisano's message.

"Libous did a great job," Golisano said, warning there's more to do.

"Success only lasts for a moment -- when you achieve it."

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.

Coup, then chaos

Monday: Coup takes place, flipping control of the Senate to Republicans and two turncoat Democrats.

Tuesday: The Senate chamber is dark.

Both camps meet privately.

Wednesday: The new "coalition government" cancels its proposed first session one of the turncoat Democrats, Hiram Monserrate, asks for time to woo more Democrats.

Thursday: "Coalition government" unlocks Senate doors and conducts a session without 30 Democrats; Monserrate makes a cameo appearance.

Lawsuit by Senate Democrats begins.

Friday: State judge says he'll rule Monday on the legality of the change of control, but wants parties to work it out themselves.

Saturday: Senate Democrats weigh a leadership change within their conference and consider promoting Brooklyn's John Sampson.

"Judge gives Senate opponents until 1 p.m. to resolve issues"

By ROBERT GAVIN, Staff writer, Albany, New York Times Union

Last updated: 10:49 a.m., Monday, June 15, 2009

ALBANY -- Acting state Supreme Court Justice Thomas McNamara has ordered both sides in the war for the state Senate to return to the Capitol and attempt to resolve their differences, or return to his courtroom at 1 p.m.

Meanwhile, Sen. Hiram Monserrate annouced that he was returning to the Democratic conference.

A press conferene is expected later this morning.

Although the judge noted there are "serious and difficult" matters separating Democratic Leader Malcolm Smith and breakaway Democrat Pedro Espada Jr., he said the judiciary has shown a "historical" reluctance to involve itself in legislative affairs.

"I have no problem in providing an answer to the quesiton from a judicial standpoint," McNamara said.

"As a matter of public policy, you guys should work this out."

Democratic attorney Richard Emery -- also a member of the Commission on Public Integrity -- told reporters that a power-sharing agreement seemed to be the only solution absent a ruling from the court.

"It's unprecedented," Emery said of such an arrangement.

"We'll see what develops."

Earlier in the hearing, lawyers for the Senate Republicans offered to introduce DVDs of the June 8 legislative session when the coup that overturned the Senate took place.

Attorney John Ciampoli, representing Espada, said the DVD of the session and a follow-up press conference by Sen. Malcolm Smith "speaks for itself" in showing the session was not over when senators voted on the resolution.

"Why should I care about Sen. Smith's remarks at a press conference?" McNamara replied.

Espada appropriated the role of the Senate's president pro tem a week ago today after the dramatic coup that returned the chamber's 30 Republicans -- joined by Espada and his fellow breakaway Democrat Hiram Monserrate of Queens -- to power after five months of Democratic rule.

As the parties were meeting in court this morning, Espada released a statement acknowledging that Monserrate had informed him he was staying with the Democrats, but emphasized that Monserrate continued to support him as president pro tem.

McNamara heard from both sides on Friday and told them to return to court today to argue their cases.

Moments before entering court this morning, Ciampoli told reporters a large part of his argument was that the dispute should not be handled in a judicial setting.

Asked whether reports that Monserrate is switching sides again would have any effect, Ciampoli would only say, "We have a case to put on."

"NY gov demands action in Senate leadership saga"

By MICHAEL GORMLEY, Associated Press

Last updated: 12:05 p.m., Monday, June 15, 2009

ALBANY -- An official in New York Gov. David Paterson's administration tells The Associated Press that the governor will give the Senate until 1 p.m. to arrive at a power sharing agreement, or he will request a leaders' meeting two hours later to forge an agreement.

The administration official says Paterson will inform a judge of his intention at 1 p.m. if the Senate misses his deadline.

The administration official spoke on condition of anonymity because he isn't authorized to make the directive public.

Paterson is taking the action because he says the Senate needs to convene this last whole week of session to pass important bills.

Legislative leaders don't have to attend a meeting called by the governor.

"Leaders plan to meet: Senate is deadlocked 31-31 - Monserrate returns to Democrats; judge gives both sides until 10 a.m. Tuesday"

By ROBERT GAVIN AND CASEY SEILER, Staff writers, Albany, New York Times Union

Last updated: 4:02 p.m., Monday, June 15, 2009

ALBANY -- The battle for the state Senate entered a new phase this morning after Sen. Hiram Monserrate returned to the Democratic fold, leaving the chamber split 31-31.

"I have always been clear about my loyalty to the Democratic party," Monserrate said at a news conference where he was joined by almost all the members of the Democratic conference -- a week to the day after he joined Sen. Pedro Espada Jr. and the 30-member Republican conference in a shocking coup that ousted the Democrats from power after less than six months in power.

Democratic Leader Malcolm Smith, who is suing Espada in state Supreme Court to take back the title of Senate President Pro Tempore, kicked off the news conference by introducing Brooklyn's John Sampson as the new "conference leader," although the structure and duties of that title remained somewhat undefined.

Monserrate made his return to the conference contingent on a change in conference leadership, which Sampson's elevation apparently satisfies.

But Monserrate failed to answer questions about whether or not he continued to support Espada as president pro tem.

Espada claims he still has Monserrate's backing.

As the news conference was breaking up, acting state Supreme Court Justice Thomas McNamara extended the deadline for both parties in the Senate war, giving them until 10 a.m. Tuesday to work out a power-sharing agreement.

At 2 p.m., Espada met with a group of supporters rallying on the east steps of the Capitol, and insisted that his hold on the post of president pro tem -- which puts him second in line of succession to Gov. David Paterson -- was secure.

"I will go to my grave defending the 32 votes that were cast last Monday," Espada told the press after greeting about 70 of a group that he decribed as constituents.

The group held signs that read, "32 is good for you then 32 is good for me."

Speaking just after the rally outside his office, Espada brushed off the suggestion that any power-sharing arrangement between Democrats and Republicans would result in his being voted out of the powerful post.

Espada is currently the subject of several investigations into his campaign finances and the operation of several nonprofits he's involved in.

"Thirty-two votes can kick me out, 32 votes elected Malcolm Smith," he said.

"With 32 votes you can change anything."

Gov. David Paterson called for a 3 p.m. leaders meeting to explore a solution to the dispute, but the legislators who will need to hammer out an agreement have apparently decided to meet on their own at 4:30 p.m.

A 3 p.m. Senate session that the GOP-led coalition announced after last Thursday's abortive sessions -- where Monserrate showed up, delivered a brief speech and then left -- was also scuttled due to the lack of 32 votes.

The Republicans and Espada did, however, hold a news conference in the chamber in which GOP Leader Dean Skelos insisted that any power-sharing arrangement would first have to acknowledge that last week's actions on the floor were legal and binding.

At a 9:30 a.m. hearing at the state Supreme Court in Albany, McNamara noted there are "serious and difficult" matters separating the opponents, but said the judiciary has shown a "historical reluctance" to involve itself in legislative affairs.

"I have no problem in providing an answer to the quesiton from a judicial standpoint," McNamara said.

"As a matter of public policy, you guys should work this out."

Democratic attorney Richard Emery -- also a member of the Commission on Public Integrity -- told reporters that a power-sharing agreement seemed to be the only solution absent a ruling from the court.

"It's unprecedented," Emery said of such an arrangement.

"We'll see what develops."

In the hearing, lawyers for the Senate Republicans offered to introduce DVDs of the June 8 legislative session when the coup that overturned the Senate took place.

Attorney John Ciampoli, representing Espada, said the DVD of the session and a follow-up press conference by Sen. Malcolm Smith "speaks for itself" in showing the session was not over when senators voted on the resolution.

"Why should I care about Sen. Smith's remarks at a press conference?" McNamara replied.

"NY Gov's plan to resolve Senate stalemate flops"

Associated Press

Last updated: 4:06 p.m., Tuesday, June 16, 2009

ALBANY -- A judge's refusal to settle the power struggle over New York's Senate is leaving the chamber more deeply gridlocked than when the standoff began June 8.

Democrats refuse to appeal, saying they want to negotiate a political solution with Republicans instead.

But Republicans, in a coalition with a dissident Democrat, say the court action dismissed the Democrats' challenge and leaves them in charge.

The coalition refuses to negotiate a power sharing agreement.

They say Democrats can continue to boycott Senate action, but they do it at their own political risk.

Both sides rejected Democratic Gov. David Paterson's offer to mediate a temporary rule by an objective third party so the Senate can act on as many as 40 bills before the end of session June 22.

"Espada claims 2 votes in roles - Dissident Democrat backing Republicans says he can break Senate deadlock; Democrats dispute claim"

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

First published in print: Thursday, June 18, 2009

ALBANY -- The concept of "one man, one vote" is generally accepted as a bedrock tenet of representative democracy.

But in the ongoing battle for the deadlocked state Senate, breakaway Democrat Sen. Pedro Espada Jr. and his Republican allies insist that he's one man with two votes.

Wednesday saw the struggle for control of the chamber devolve into something like trench warfare, in which the major developments on both sides took place largely out of sight.

Wednesday evening brought both parties to the same negotiating table after individual sessions with Gov. David Paterson failed to resolve their differences.

One widely trumpeted exception to the day's news was Espada's claim that his position as the chamber's president pro tempore also makes him acting lieutenant governor.

That additional post, Espada believes, gives him an extra vote in the event of a tie; he's also convinced it grants him the power to turn 31 senators into a 32-member quorum by counting him as both a state senator from the Bronx and as the acting lieutenant governor.

"I didn't invent that; it's in the constitution," Espada told reporters outside a meeting of the rules committee that he was the only Democrat to attend.

If Espada's legal advisers are correct, the senator would be able to pull off something he and the chamber's 30 Republican members have been prevented from doing since the June 8 coup that elevated Espada: pass legislation.

Democrats, not surprisingly, disagreed with Espada's claim.

"That's like Pedro Espada asking to get a vote for every district he supposedly lives in," said Austin Shafran, spokesman for Senate Democrats, referring to the Bronx district attorney's ongoing investigation of Espada's legal residency.

Citing the need to move forward with time-sensitive legislation, Espada told reporters after Wednesday's abortive Senate session that if the impasse continues, he intended to use his quorum powers and his second vote -- perhaps as early as this morning, when the chamber is scheduled to gavel in at 11 a.m.

Senate Republicans are backing up Espada's argument: Asked if he agreed with his coalition partner on the question of his enhanced powers to reach a quorum call, GOP leader Dean Skelos said, "Absolutely."

Sen. Tom Libous, R-Binghamton, agreed. "We're looking for the research to back that up," he said.

Both men were, however, sharing an elevator with Espada when the question was posed.

Asked why he hasn't used this power in any of the four sessions that he and the Republicans have showed up for since the coup, Espada said he wanted to avoid landing the Senate in a protracted legal battle.

"We don't want to end up in court," he said.

The New York Constitution reads, "A majority of each house shall constitute a quorum to do business," which would seem to preclude the ability of any individual member to count twice.

Senate Democrats, who have said they will stay away from the chamber until the GOP-led coalition agrees to a power-sharing deal, have found case law that counters Espada's view.

A case from 1826 called "Court for the Correction of Errors of New York" states, "The Lieutenant-Governor forms no part of a quorum in the Senate."

Espada's gambit has not passed legal muster in other states: In 1966, a court found that in Delaware the lieutenant governor "is not a member of the Senate, and he may not be counted for quorum purposes."

And a 1981 case in Nebraska involving Center Bank versus the Department of Banking and Finance backs up that view.

The lieutenant governor of New York is able to break ties with a vote on procedural matters before the Senate.

But Senate Democrats say a quorum call does not represent a tie vote.

The actual post of lieutenant governor has been vacant since Gov. David Paterson replaced Eliot Spitzer.

Casey Seiler can be reached at 454-5619 or cseiler@timesunion.com. Irene Jay Liu contributed to this report.

"GOP jolts upstate Democrats - Senator with an eye on Congress fails to broker a deal between his party and Republicans"

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

First published in print: Friday, June 19, 2009

ALBANY -- Republican senators took aim at their upstate Democratic counterparts Thursday, contending that what the GOP has termed a "boycott" of the legislative session could result in higher electricity costs for western and northern New York factories.

At the same time, a key upstate Democrat almost joined the Republicans, which would have broken the 11-day-old stalemate.

"If you get paid, you should show up for work."

"It's as simple as that," Republican Leader Dean Skelos said on the Senate floor after noting that, absent any one of the chamber's 31 Democrats showing up to establish a quorum, the "Power for Jobs" subsidized electricity program could expire at the end of the month.

Sen. Darrel Aubertine, one of the upstate Democrats criticized by Skelos, told the Times Union he had come close to brokering a deal between the GOP and the mainstream Democrats in order to pass the power program and other time-sensitive legislation.

"It wasn't the Democratic caucus that held me back," Aubertine said.

"It was more of a misunderstanding, I guess."

Aubertine said he and Republican leader Dean Skelos met at Skelos' condominium early Thursday morning and sketched out a short-term fix to the leadership dispute.

"We had an agreement on power-sharing for the short-term here," Aubertine said.

"The Republicans would control the chamber (on Thursday) and put the agenda out ... and Monday the Democrats would control it."

Aubertine reported the deal to members of the Democratic caucus, and then attended a noontime negotiating session with Skelos and several Democrats, including Conference Leader John Sampson and Pedro Espada Jr., the breakaway Democrat who claims the post of Senate president pro tem.

The deal, Aubertine said, ultimately foundered over the question of Espada's role.

"I think it was a misunderstanding that Pedro Espada would be the (president) pro tem both days," Aubertine said.

Instead, the stalemate continued, with the chamber split 31-31 and Republicans filing into a half-empty Senate to attack the Democrats.

The GOP-led coalition lost its key 32nd vote after Democrat Hiram Monserrate's return to the Democratic fold.

Republicans on Thursday employed what could likely be an emerging tactic by attacking the few upstate Democrats in the Senate, including Aubertine -- and highlighting the concentration of New York City lawmakers in the Democratic camp.

Upstate and suburban areas have long been Republican strongholds, and GOP lawmakers remind voters that they serve as a bulwark against the power and relatively liberal agenda of New York City.

GOP senators bemoaned not only the Democratic boycott but the state budget, which they said favored the five boroughs.

"City bias; everything going to the city," complained Sen. John Bonacic, who represents part of the Hudson Valley.

Places like Saratoga Springs were "stiffed" by Democratic lawmakers, added Sen. Roy McDonald of nearby Wilton, who said the budget should be reopened

McDonald went on to point out that since Democrats took the Senate earlier this year, Saratoga County was excluded from getting a cut of video lottery terminals even though a VLT facility is located in the county.

Other counties, with lower poverty rates, are getting the money.

"Upstate New York has been taken advantage of," McDonald said.

Skelos noted senators planned to discuss the Power for Jobs program, which Aubertine had earlier requested they put on Thursday's list of measures to be discussed.

They also scheduled a bill supported by Syracuse-area Democrat David Valesky to help wineries sell their products at food festivals.

"Those are some of the pieces of legislation that could be acted on today," said Skelos.

Power for Jobs, run through the New York Power Authority, provides low-cost electricity to 570 businesses employing some 330,000 people -- including many upstate manufacturing firms -- at a cost of $115 million.

Sixty-three firms employing 12,500 people in the Capital Region use the subsidy, which is set to expire at the end of this month if the Senate fails to renew it.

There are larger political concerns for Aubertine, who is mulling a run for Congress to fill the expected vacancy of the seat held by U.S. Rep. John McHugh, President Barack Obama's nominee for Secretary of the Army.

Rochester activist Tom Golisano's PAC, Responsible New York, would support Aubertine's candidacy, said Steve Pigeon, the group's director.

"I think he would win," he added.

Golisano and Pigeon helped put together the coalition that engineered the coup.

Aubertine would not rule out joining the GOP on Monday, the scheduled last day of session, for a quorum.

But he said he thinks a resolution will be worked out before that.

Aubertine also said he thought that if he entered his seat in the chamber it would "break the ice," and other Democrats would follow.

"If I had (entered the chamber), I don't think I would have been the only one," said Aubertine, who under the Democrats was appointed chairman of the Senate Energy Committee.

But Sen. Carl Kruger, D-Brooklyn, said he believes Republicans are using scare tactics in their talk about Power for Jobs.

And he believes Aubertine is loyal to the Democratic conference.

"I know Darrel Aubertine is not for sale."

"He's a man of honor and principle," said Kruger, who charged Republicans with trying to pick off "everyone who walks the halls."

Democrats on Thursday also stepped up their criticism of Espada, who is currently facing several investigations and tens of thousands of dollars in fines levied by the state Board of Election, with a flurry press releases.

"I join my fellow colleagues in urging members of the Senate Republican Conference to stand up with the integrity we know you have and remove Pedro Espada Jr. from any role he thinks he has as leader within the Republican Conference," said Democrat Diane Savino of Staten Island.

Also Thursday, the GOP's counsel acknowledged that Espada did not have the power to count twice -- as a senator and "acting lieutenant govenor" -- for the purposed of achieving a quorum.

Democrats had prepared legal documents to secure a restraining order preventing him from doing so, but withdrew the request after the GOP conceded the point.

Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com. Staff writer Irene Jay Liu contributed to this report.

I'LL WAGER THAT NEW YORK STATE HAS THE MOST CORRUIPT, INEPT AND STUPID STATE GOVERNMENT OF ANY STATE IN THE UNION AND EXPECT TO WIN THAT BET HAND'S DOWN ....

And so ...

"Polls: Senate dispute a sign of broken government - Record high percentage sees state headed in wrong direction"

By IRENE JAY LIU, Capitol bureau, Albany, New York Times Union

Last updated: 5:33 p.m., Monday, June 22, 2009

ALBANY -- Two new polls released Monday suggest that the two-week-old battle for the state Senate has taken a toll on voters' opinions about their state government.

A new Siena Research Institute poll finds nearly half of voters -- including a majority of independents and plurality of Republicans -- want to see the state Senate controlled by a coalition of both parties, rather than by Democrats or Republicans alone.

Forty-five percent of Democrats, 48 percent of Republicans and 59 percent of independents want a coalition of both parties controlling the Senate.

A plurality of Democrats, New York City and African American voters opt for Democrats, and a majority or plurality of all other demographic groups says coalition.

In addition to reflecting widespread disdain with the situation in the Senate, the poll also shows marginal increases in support for Attorney General Andrew Cuomo, Gov. David Paterson and gay marriage.

While the individual senators at the heart of the Senate fight remain largely unknown, for those respondents who do have an opinion it is largely unfavorable.

"When it comes to the individual senators publicly most involved (in the Senate dispute), all remain unknown to a majority of voters, and all have more voters saying they have an unfavorable opinion of them than have a favorable opinion," Siena spokesman Steven Greenberg said in a statement.

"Among voters who have paid attention to the Senate fight, the senators' unfavorable ratings are even larger."

"And while a plurality of voters has an unfavorable view of the State Assembly, an overwhelming majority of voters look upon the State Senate unfavorably."

The poll's other highlights:

-- By the largest margin ever, 63 percent to 24 percent, voters say New York is headed in the wrong direction.

In another first, that sentiment reaches across regional, age and political lines.

-- Governor David Paterson's favorability (31 percent favorable, 57 percent unfavorable) and job performance ratings (2 percent excellent, 18 percent good, 39 percent fair, 39 percent poor) rose slightly from his record lows.

-- Attorney General Andrew Cuomo has a 71 percent favorable rating, 17 percent unfavorable, including 62 percent among Republicans.

A plurality of voters, 46 percent, still believes Cuomo should run for governor in 2010.

-- Half (50 percent) of voters support gay marriage, 43 percent oppose it, and 7 percent are undecided.

This Siena survey was conducted last Monday -- the day Hiram Monserrate's return to the Democratic conference left the Senate deadlocked 31-31 -- through Thursday by telephone calls to 626 New York State registered voters.

It has a margin of error of plus or minus 3.9 percentage points.

Also released Monday, a new Quinnipiac University poll finds that respondents think New York's state government is dysfunctional by a margin of 4 to 1 (78 percent to 18 percent).

Asked to lay blame for that disarray, voters distribute their ire pretty much equally between Gov. Paterson (23 percent), Democrats (21 percent) and Republicans (25 percent).

Nevertheless, voters say by almost 2 to 1 (47 percent to 27 percent) that they would vote to re-elect their own state senator in 2010.

The poll suggests that a 3-to-1 margin (66 percent to 22 percent) believes that an independent panel should be in charge of redrawing legislative and Congressional districts after the 2010 census.

From June 16-21, Quinnipiac University surveyed 2,477 New York State registered voters, with a margin of error of plus or minus 2 percentage points.

"Polls: NY Senate fight embarrasses New Yorkers"

By mggwstfon, Associated Press

Last updated: 6:55 p.m., Monday, June 22, 2009

ALBANY -- Two independent polls find New Yorkers are more unhappy than ever with the way things are going at the state Capitol.

A Siena College poll finds 63 percent of New York voters think the state is headed in the wrong direction.

For the first time, that feeling is shared by every political party, region and age group.

The Siena College poll finds more than half of voters find the state Senate power struggle, that has paralyzed the house for two weeks, is an embarrassment.

A Quinnipiac University poll finds 71 percent of voters, one of the highest numbers ever measured in a Quinnipiac University poll, are "somewhat dissatisfied" or "very dissatisfied" with the way things are going.

The poll finds 42 percent of voters are embarrassed by the Senate standoff that continues into Tuesday.

"Democrats, Republicans and independent voters all strongly agree that the Senate fight is bad for New York and making it harder to enact critical legislation," said Siena pollster Steven Greenberg.

"Dysfunctional?" asks Quinnipiac pollster Maurice Carroll.

"That could be the automatic adjective for Albany."

"Maybe we should find a more vivid word."

"Three quarters of New York state voters say their state government doesn't work."

The Siena College poll also found Democratic Gov. David Paterson getting a favorable rating from 31 percent of New Yorkers, while 57 percent still consider him unfavorably.

Those are his best numbers in the Siena poll since February.

Siena surveyed 626 voters from last Monday through Thursday.

The poll has a margin of error of plus or minus 3.9 percentage points.

Quinnipiac surveyed 2,477 voters from June 16 through Sunday.

The poll has a margin of error of plus or minus 2 percentage points.

------

On the Net:

http://www.quinnipiac.edu/polling.xml

http://www.siena.edu/sri

"Seminerio resigns from Assembly - Democrat had been indicted in federal probe"

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

Last updated: 12:53 p.m., Tuesday, June 23, 2009

After almost 31 years in the Assembly, Assemblyman Anthony Seminerio has resigned from the chamber.

He is under indictment for alleged theft of honest services after an investigation by the U.S. Attorney's Office in Manhattan.

The resignation was effective today.

The Queens Democrat delivered his resignation letter to Assembly Speaker Sheldon Silver without explanation, said Silver spokesman Dan Weiller.

Seminerio, 74, has about 47 years of time in the state pension system, including 15 years as a corrections officer.

He had no comment when contacted but said his lawyer may be issuing a statement.

"Espada profits, firm owes - Renegade Senate president's Bronx health care network is $347,000 behind in withholding, other taxes"

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

First published in print: Thursday, June 25, 2009

ALBANY -- A Bronx health care business operated by Sen. Pedro Espada Jr., which receives millions of dollars annually in state support, owes $347,000 in back taxes.

Yet, Espada's organization was able to afford a $460,000 annual salary for the entrepreneurial Democrat as recently as 2007, according to state and federal tax records and interviews.

In fact Espada, the colorful outspoken renegade senator, whose alliance with Senate Republicans and disputed election as Senate president has caused chaos in New York's government, has a history of tax delinquency.

Espada refused to discuss the finances of his Bronx health-care organization with the Times Union.

A tax lien recorded last April says The Comprehensive Community Development Corp., Espada's not-for-profit corporation, which uses the trade name Soundview Healthcare Network, owes the IRS $185,000 for employee income-tax withholding.

The non-profit's chief financial officer, Kenneth Brennan, and general counsel, Alexander Fear, maintain their employer is up to date with all other tax obligations, reflected in numerous other tax liens on file.

But that is not the case, according to state officials.

Leo Rosales, spokesman for the Department of Labor, said the state filed a tax warrant with the Bronx County Supreme Court a year ago for $88,463 owed in unemployment insurance taxes and the sum remains unpaid.

The Espada organization paid nearly $90,000 to clear up four other tax warrants filed for unemployment insurance in recent years, Rosales said.

The State Department of Taxation and Finance also has two unsatisfied tax liens from this year totaling $73,842 for employee state income tax withholding.

Many more liens have been lodged against Soundview and its parent corporation over the years, tax department spokesman Thomas Bergin said.

"They do have a history of this kind of thing," he said.

Brennan, Soundview's CFO, attributed the late payments and liens to tardiness in receiving Medicaid reimbursement from the state for health care services provided by Soundview.

"Like other health care organizations . . . we have cash flow issues," he said.

"Waiting to get paid by Medicaid."

"We don't always pay all of our bills on time because of these cash flow issues."

With total revenue of about $15 million, Comprehensive Community Development Corp., doing business as Soundview HealthNet, provides a "broad range of health services to the medically underserved population in the Bronx and New York City," according to its 2007 IRS filing.

That filing listed founder Pedro Espada, the state senator at the center of this year's Senate overthrow drama, as the chief executive officer.

The 2007 filing said he received no compensation as CEO after receiving $379,500 in compensation as recently as 2006.

Brennan said Soundview's 2007 IRS tax return contained an error in regards to Espada's pay.

It will be revised to show his total compensation at $459,739.

That includes vacation pay from unused time, Brennan said.

Espada's organization received more than $3 million in a grant money from the Department of Health to build a diagnostic and treatment center in the Bronx.

The state contract for the money provides payment from October 2008 to September 2010.

The DOH also pays Comprehensive Community millions of dollars under a contract to dispense health care services.

Last year, the organization received $3.53 million in Medicaid payments.

Wednesday, a DOH spokesperson said state health officials will reevaluate state contracts with Espada's Soundview network, given its tax delinquency, at the advice of the Office of State Comptroller.

Attorney General Andrew Cuomo is looking into whether Espada improperly benefitted in his successful primary election against incumbent Democrat Sen. Efrain Gonzalez last year because Soundview employees and resources were used on the campaign.

More recently, Espada was denied by Senate Democratic Leader Malcolm Smith his request for about $2 million in state earmarks, so-called member items in New York, for non-profit organizations created in the past few months that seemed to have links to Espada's friends and his 31-year-old health care non-profit.

Comprehensive Community Development has about 175 employees and provides care for more than 95,000 patient visits a year.

Espada, who holds the title of president of the Senate as a result of the coup attempt he joined with Republican senators, is possibly first in line to succeed Gov. David Paterson should the governor become unable to serve.

The former chairman of Soundview, John Feliciano Jr., now Espada's $80,000-a-year special assistant in the Senate, referred questions about Soundview's tax debts to the organization's financial officer, Brennan.

In 2002, Espada was criticized for joining Senate Republicans, receiving a larger cut of member item money and trying to direct $745,000 in such discretionary grants of public dollars to Comprehensive Community Development Corp., which was paying him as CEO at that time as well.

The grants were cancelled at the time after a reporter's inquiry because the Senate doesn't allow member items for groups with ties to the sponsoring lawmaker.

James M. Odato can be reached at 454-5083 or jodato@timesunion.com.

"Novello pleads guilty, agrees to pay fine and do community service - Accused of using staff as servants, ex-health commissioner spared prison time"

By ROBERT GAVIN, Staff writer, Albany, New York Times Union

Last updated: 12:57 p.m., Friday, June 26, 2009

Former Health Commissioner Antonia Novello pleaded guilty to a felony and will perform 250 hours of community service and pay a $22,500 fine, ending a case that alleged she used her state staff as free servants.

Novello pleaded guilty to filing a false instrument, but she will get to keep her medical license if she completes the terms of her plea bargain.

Novello also waived her right to appeal the conviction.

She will be sentenced on Aug. 14.

The former U.S. surgeon general specifically pleaded guilty to falsifying the state mileage on Dec. 9, 2006 that stems from travel where a state worker chauffeured her on private business.

"You did this with intent to defraud the state of New York," Albany County Judge Stephen Herrick asked.

Novello paused and then quietly said: "Yes, sir."

If she fails to complete her sentence, Novello faces 1 1/3 to 4 years in prison for the charge she admitted to.

She had faced up to 12 years in prison if convicted of all the charges she face.

Several reporters and photographers filled the halls of the courthouse for Novello's arrival earlier this morning.

Novello was arraigned on a 20-count indictment in May accusing her of abusing her power as commissioner between 2004 and 2006.

The charges from Albany County District Attorney David Soares followed a scathing report from state Inspector General Joseph Fisch that alleged Novello used her state employees as personal servants with tasks that included dry cleaning, watering her plants while she was away and shopping runs.

Among other findings, the IG report found Novello required her workers to rack up 2,547 hours of overtime between 2000 and December 2006.

She also allegedly ordered employees to drive herself and friends everywhere from Albany area shopping outlets to Newark airport.

The report had stated that one staffer said she could not carry out Medicaid fraud investigations because she was too preoccupied serving Novello's "duties" to the commissioner.

Novello was given a conditional discharge under her plea.

As a result, over the next three years she cannot have any additional convictions and must perform 250 hours of community service in the Capital Region, Herrick said.

Outside court, her attorney E. Stewart Jones said there was no question she signed the document.

"That particular charge was not realistically defensible," he said.

"The danger of going to trial on the other counts would have been the still-over prejudicial effect," Jones said.

"This was a necessary plea, an important resolution of this case for Dr. Novello."

"It enables her to continue with her life, with her career."

"To have this hanging over her head for another six months awaiting trial, which carries with it enormous risk for her, was simply unacceptable."

Asked if Novello feels she did, in fact, defraud the state, Jones said, "The plea speaks for itself."

When asked if it was the best plea she could have received, he said, "Without question."

He said she would receive a "certificate of relief" to prevent the felony plea from having any civil consequences.

"This is not the kind of offense that puts a doctor's license in jeopardy," Jones said.

Jones did not back away from his earlier statements that the case should not have been brought.

"I don't believe in the first instance that this is something that warranted criminal prosecution," Jones said, "but obviously once that happened, we had to deal with what is."

"And this was the most realistic outcome and safest outcome for Dr. Novello."

Asked what she would tell the employees who said she forced them to run errands, Jones told reporters, "My personal view of that is that no good deed goes unpunished."

"She treated those employees very well."

"She treated them as though they were family."

"They turned on her."

"Obviously, politics is a dirty business."

"State pulls Espada grant - Comptroller revokes $3M payment to renegade senator's Bronx health network, citing liens, judgments and warrants"

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

First published in print: Saturday, June 27, 2009

ALBANY -- Sen. Pedro Espada Jr.'s Bronx health care company, Soundview Health Network, misstated its chronic tax delinquency history in a contract document provided to the state Department of Health, according to public records reviewed by the Times Union.

The document warns those who sign it that an intentionally false statement may be a crime or lead to cancellation of state funding.

On Friday, the Office of the State Comptroller took the uncommon step of rejecting an award of $3 million proposed by the Department of Health to Soundview because of "questions regarding outstanding liens, judgments and warrants."

A state Vendor Responsibility Questionnaire signed March 27 by Espada, as chief executive officer of Comprehensive Community Development Corp., and notarized by the not-for-profit's general counsel, Alexander M. Fear, answered at least two questions that conflict with state and federal tax lien records and statements of state officials about lingering liens.

Espada checked "no" whether in the past five years there were liens, claims or judgments above $15,000 that remained undischarged or unsatisfied more than 120 days.

He also checked "no" when asked if during the past three years the company had failed to file or pay any tax returns required by federal, state or local tax laws.

State tax officials say the company, which does business as Soundview Health Network, has had several tax liens over the years and has two open claims from this year, totaling $73,842 for employee withholding taxes, and one open warrant from last June for $88,476 for unemployment taxes.

A $185,000 IRS debt filed in April also is open and the company's officials acknowledge they are working with the agency to resolve the lien.

An IRS official said the agency does not comment beyond the public record.

Espada's staff referred questions to Soundview Chief Financial Officer Kenneth Brennan, who did not respond the past two days to inquiries about the questionnaire.

Attorney Fear issued a statement Friday:

"Soundview stands by its interpretation of the questions and its answers."

Fear also released two June 25 letters from the state that show the company paid down debt but still has open warrants because of unpaid interest and penalties.

The letters came on the heels of a Times Union story identifying Espada's organization as failing to pay taxes.

One letter from the Tax Department says the company owes $17,560 in interest and penalties from taxes dating to 2008 and another $1,619 in penalties from tax liabilities from February.

A letter from the Department of Labor shows that the outstanding balance of Soundview's 2008 tax debt with that agency is $3,265.

Claire Pospisil, a health department spokeswoman, said the award from her agency to Espada's company, is "under review" because of the liens.

The money is supposed to pay for a Bronx health clinic for Soundview.

Comptroller Tom DiNapoli's spokesman, Dennis Tompkins, said the health department asked the agency on June 5 to approve the award, and approvals are usually completed in a few days.

Rejections are not common.

Tompkins said a 2002 audit of Soundview found concerns about contract spending and became one reason for a lengthier review.

"Typically, when we have concerns we can work them out without rejection," he said.

The questionnaire required from Espada by DOH also asked whether any key employees had been the subject of an indictment or investigation by a government entity for a civil or criminal violation for any business related conduct.

The answer was "yes."

In a notation, Espada disclosed in 2004 the state attorney general's office announced an indictment of four senior managers at Soundview Health Center on charges of diverting public funds, theft and fraud.

Three others Soundview employees were also indicted.

The answer also notes that two of the four employees were key employees, Sandra Love and Maria Cruz, and that all four senior employees pleaded guilty and were sentenced to community service.

It says the key employees were demoted and are no longer officers of the corporation and that the corporation's bylaws were amended so that any employee who runs for public office is required to take a leave of absence from the corporation.

A spokesman, Steve Mangione, was unable to say if Espada took time off during his election last year.

Love works for Soundview as a clinic site manager now and Cruz is the director of human resources and operations.

Because of the misuse of funds for political activity, the state health department terminated Soundview's $700,000 annual contract in March 2003.

Some of the money, which was supposed to be used for health programs for women, infants and children, had been funneled to pay campaign expenses.

James M. Odato can be reached at 454-5083 or jodato@timesunion.com.

"Rerouted to rail oblivion - Rohr Turboliners, once vital components of an upstate high-speed rail plan, are now forgotten"

By CATHY WOODRUFF, Business writer, Albany, New York Times Union

First published in print: Sunday, July 5, 2009

GLENVILLE -- The only ones catching these trains now are the weeds.

Once among America's speediest, high-powered traveling machines, seven Rohr Turboliners in various states of decay and refurbishment sit idle at rail yards in Glenville and in Delaware.

A decade ago, they were the centerpiece of an ambitious plan to bring high-speed rail service to upstate New York.

Now, in the fading wake of a contentious custody battle between Amtrak and the state Department of Transportation, they are for sale.

Amtrak officials have set no asking price and a spokesman said "any and all options will be considered" for selling the trains individually or in groups.

"Those Rohr Turboliners are sort of an unwanted stepchild," said Bill Vantuono, editor of Railway Age magazine, where an ad seeking buyers for the trains appears this month.

"When they ran properly, they were very nice," he recalled, but "at least in this country, Turbos are a bit exotic."

The Turboliners are called "fixed consist" trains and are not designed for easy addition or removal of cars.

Rather, they are intended to operate consistently as five-car "train sets."

Each Turboliner has a combination locomotive-and-passenger power car at each end and two full-size passenger cars and a café car sandwiched in the middle.

Produced in 1976 by Rohr Industries of California, which was known mainly for its aerospace manufacturing work, they were adapted from a French design.

With their new, compact turbine engines, the rebuilt Turbos were conceived as a diesel-fueled cousin to Amtrak's high-speed electric Acela trains.

They're fast.

When tracks are in good condition, the Turbos can cruise at 125 mph -- and perhaps more.

The dual-locomotive design reduces turnaround time for return trips.

Amtrak ran the trains for decades, and in 1998 teamed up with state DOT on a plan to upgrade tracks and rebuild the train for modern use between Albany and New York City.

The $185 million initiative was touted as a way to cut regular travel time between Rensselaer and Manhattan to two hours, shaving about 20 minutes off the trip.

The plan was heavily dependent, however, on track improvements that would have allowed the trains to travel at their optimum speeds.

The track work never transpired.

By the time the state called off continued rehabilitation of the trains at Super Steel Schenectady in Glenville in April 2005, New York had spent nearly $65 million on the effort and planned to pay $5.5 million more to cover remaining costs for the contractor.

Meanwhile, Amtrak already had carted away the three completely refurbished trains -- complete with New York state seals on the sides of their locomotives -- to its facility in Bear, Del., where they remain today.

New York was left with three trains in various degrees of repair and one that was virtually untouched after being retired by Amtrak and moved to Glenville.

The market for the trains is uncertain.

For Amtrak, a key concern was their mechanical difference from the rest of the railroad's Amfleet equipment.

That meant specialized training for employees who maintained them, a special inventory of spare parts and detailed reference manuals, railroad officials said.

When first introduced in the 1970s, "the Turboliner trains were popular with passengers because of their smooth ride, large windows and sleek, modern appearance," said Amtrak spokesman Clifford Cole.

"They were considered leading-edge train equipment ... when Amtrak was operating an inherited fleet of often tattered old equipment, some of which was manufactured in the 1930s."

The trains were not, however, as welcome in their 21st century reincarnation.

"The Turboliners were capable of sustained high cruising speeds" of over 110 mph, Cole said in a written response to questions about the trains.

"However, their acceleration was relatively slow -- slower than conventional diesel locomotives, which essentially neutralized their high cruising speed capability."

"In practice, they used far more fuel than equivalent diesel-powered trains."

Also, he said, "the Turboliners were expensive to operate in other ways, including their need for frequent repairs."

"For much of their tenure on the NY-Albany run, they were assigned riding technicians to deal with enroute mechanical problems."

"The high temperatures produced by the gas-turbine engines was another liability that occasionally caused fires in the engine rooms of these trains."

Railway Age's Vantuono said that to most of the mechanical shop force in this country, "a turbine is a strange animal."

Phil Davila agreed.

"They require different care than a steam engine or an old diesel locomotive," said Davila, a founding partner of the Seneca Group, a railroad and transit consultancy based in Washington, D.C.

But, he added, "they're very reliable, no matter what Amtrak says."

Davila became familiar with New York Turboliners in the 1990s, when he worked for Turbomeca, a French maker of gas turbines for helicopters.

The company was involved in production of the new Turboliner engines.

He also worked as a consultant on New York's Turboliner program after moving to the Seneca Group.

Davila is a Turboliner fan and still believes they would have been a good addition to Amtrak service in New York.

But with only three of the trains completely rehabilitated and with such limited use of turbine-powered locomotives in the United States, finding buyers is challenging, he said.

Three trains would be about right for an operation that needs two trains in regular operation and one in reserve, he said.

"In this country, it takes the right corridor for them to run," Davila said.

"To find that corridor just for two trains is very hard to do and hard to make the numbers work."

Perhaps an overseas buyer would be more likely, he suggested.

While Rohr made only seven Turboliners, turbo trains are more common in other countries.

"There are some of these trains running in Egypt between Cairo and Alexandria daily," Davila said, and some are in regular use in Iran.

"There's a reason why this design survived," he said.

"From an engineering standpoint, we consider it a shame to bury it and get rid of it."

Cathy Woodruff can be reached at 454-5093 or by e-mail at cwoodruff@timesunion.com.

Turboliner history

Seven Rorh Industries Turboliner trains have traveled a winding route since they went into service on the Empire Corridor in 1976.

1976: Seven gas-turbine "turbo" trains adapted from a French design are produced by Rohr Industries in Chula Vista, Calif.

1976: Amtrak deploys Rohr Turboliner (RTL) trains on New York's Empire Corridor.

1995: Gov. George Pataki ends funding for Maglev development, promises other high-speed rail.

September 1998: New York state and Amtrak say they will collaborate on $185 project to speed the trip between Rensselaer and Manhattan, rehab five turbo trains and add second track between Albany and Schenectady. Super Steel Schenectady named to rebuild first trains.

August 2000: First rebuilt Turboliner unveiled by Pataki at Super Steel plant in Glenville.

February 2001: Turboliner reaches 125 mph in secret night test run.

November 2001: Engineering setbacks, layoffs and financial strains at Super Steel fuel delays.

March 2002: Parts problems and engineering snags extend delays completing first two trains at Super Steel, now tapped to rebuild all seven trains under a $74 million contract.

August 2002: First rebuilt Turboliner delivered to Amtrak's Rensselear shop, passes first test run, according to Department of Transportation.

November 2002: DOT declares first train ready for service, Amtrak seeks more modifications. DOT Commissioner Joseph Boardman accuses Amtrak of dragging its feet.

December 2002: Second rebuilt Turboliner delivered to Amtrak.

January 2003: Amtrak says more testing, training, parts inventories and manuals needed.

March 2003: Super Steel President Scott Mintier complains Amtrak isn't providing engines and transmissions for last trains.

April 2003: Rebuilt Turboliner makes first round trip to New York City with paying Amtrak passengers aboard. Arrives back 15 minutes late due to heavy traffic.

June 2003: State comptroller's audit slams DOT for project delays and cost overruns.

December 2003: Amtrak, with three Turbos in hand, acknowledges it wants to withdraw from deal. $140 million in track work is not done, and Amtrak lacks funding to continue.

June 2004: Amtrak sidelines Turboliners indefinitely, citing poor air conditioning, insufficient seating and other issues.

Summer 2004: DOT asks Super Steel to stop work on remaining four trains.

August 2004: DOT sues Amtrak, saying railroad failed to live up to its contract commitments.

September 2004: Amtrak tows three Turboliners to Delaware. DOT's Boardman accuses Amtrak of "stealing" them. (In 2008, Boardman became president of Amtrak.)

May 2005: DOT agrees to pay Super Steel $5.5 million to end the project, in addition to $64.8 already spent for work on six Turboliners.

December 2007: DOT and Amtrak settle lawsuit, agree to split cost of $10 million in track improvements and share proceeds of any sale.

June 2009: Amtrak ad in Railway Age magazine offers seven Rohr Turboliners for sale.

"State worker admits to side job - Ritter accused of running training seminars on government time"

By ROBERT GAVIN, Staff writer, Albany, New York Times Union

First published in print: Saturday, July 4, 2009

ALBANY -- The husband of a commissioner for Gov. David Paterson has pleaded guilty to a felony and agreed to pay more than $19,000 for running private training seminars while supposedly working for the state.

Larry Ritter, 53, of Niskayuna will avoid jail time but receive up to 5 years' probation next month, resolving a case referred to Albany County prosecutors by the state Inspector General's office.

It found Ritter conducted 105 private training programs between June 2003 and December 2007 without permission from the state Office of Temporary and Disability Assistance, where Ritter earned $87,838 a year as an equal employment opportunity officer.

At least 41 times, the IG's office found, Ritter submitted timesheets claiming to be at his state job while doing outside business.

And Ritter reported being sick seven times on timesheets while actually doing the side work, the office said.

Ritter was immediately fired when state Inspector General Joseph Fisch released his findings in a report last August.

His wife, Diana Jones-Ritter, commissioner of the state Office of Mental Retardation and Developmental Disabilities, was unaware of the scheme, the IG's office found.

Fisch's office referred the case to Albany County District Attorney David Soares last August for possible prosecution of fraud, official misconduct and grand larceny.

Ritter pleaded guilty to defrauding the government, a low-level felony, on Wednesday before Judge Thomas Breslin in Albany County Court.

He paid $18,402 in restitution and a $1,000 fine, according to Heather Orth, a spokeswoman for Soares.

He will be sentenced Aug. 26.

Ritter's attorney, William Dreyer, could not be immediately reached.

Last August, the IG report found Ritter was paid at least $18,813 for state work he did not earn.

Ritter worked at his office since 1992.

The report noted Ritter asked for permission to run the training program in 2005, but was denied.

His office informed him the work was "virtually identical" to his own state job, which involved training some 2,300 employees about sexual harassment and diversity.

Ritter's office's deputy counsel, Linda Hunt, told him "if he already has undertaken such outside employment, Mr. Ritter should refrain from engaging in any further compensated outside employment pertaining to . . . diversity training."

The message was copied to Sandra Pettinato, the office's executive deputy commissioner, the report noted.

Witnesses told the IG's office Ritter became "extremely angry when his request for outside employment was not approved because he said he needed the additional income," the report said.

In addition, the report said Ritter became angry when questioned about his side work, telling a special assistant to Commissioner Robert Doar, "I don't need you watching my time," and "I'm warning you, don't watch my time."

The report noted Ritter had already begun the outside work in 2003 as an independent contractor for the private National Coalition Building Institute.

In 2006, he launched his own business, Diversity Solutions, which offers training to local government, schools and private organizations, the report said.

Among other side work, Ritter gave three days of training at Christian Brothers Academy in Colonie in September 2007 for $4,500 while earning state pay.

It included $1,500 and another $3,000 in tuition credit for his son, the report said.

He gave other trainings at Shenendehowa High School in Clifton Park, Center for Community Justice in Albany and the village of Port Chester in Westchester County.

Ritter also had other state employees perform tasks for his side employment on state hours, the report said.

The report found Roxanne Wright, an employee of the Governor's Office of Employee Relations, helped Ritter run programs without state approval.

She resigned from her $85,000-a-year job in June 2008.

Robert Gavin can be reached at 434-2403 or by e-mail at rgavin@timesunion.com

"Payroll put in play at Senate - Comptroller acting to withhold $190,000 due senators in stalemate"

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

First published in print: Friday, July 3, 2009

ALBANY -- No results, no pay.

That's the message in a nutshell from state Comptroller Tom DiNapoli, who said Thursday he was moving to withhold the pay of all 62 members of the Senate.

"As the state's fiscal officer, I have a responsibility to taxpayers to safeguard their interests."

"These are difficult fiscal times."

"The state needs leadership and action.''

''I have instructed my staff to initiate the process to hold senators' pay," DiNapoli said late Thursday.

The Democratic comptroller's action, which could prove to be the most notable development all week in the state Senate standoff, comes after Gov. David Paterson has for more than a week urged such a move.

DiNapoli said he's already gone to state Supreme Court seeking an order that would allow the salaries to be withheld.

Response from fellow Democrats in the Senate was swift.

"We'll see him in court," said Austin Shafran, spokesman for Senate Democratic leader Malcolm A. Smith.

Senate Republicans declined comment.

It wasn't immediately clear if withholding pay -- senators earn $79,500 with many getting additional stipends for extra duties such as heading committees -- would have any impact on the Democrat-Republican 31-31 stalemate.

The deadlock began June 8 when 30 Republicans and two Democrats voted to oust Smith as majority leader and install Republican leader Dean Skelos in his place.

Republicans on that day also named one of the Democrats, Pedro Espada Jr., as president pro tem.

The other, Hiram Monserrate later returned to his party's side, creating the 31-31 stalemate.

With laws extending county sales taxes, subsidized electricity and the New York City school governance issue already expired due to Senate inaction, Paterson has implored lawmakers to put aside their differences, at least for the time it takes to pass a few crucial bills.

This isn't the first time pay for performance has become an issue in the Legislature.

Lawmakers approved a law in 1998 that permitted their pay to be delayed if a state budget was not passed on time.

The governor has used his authority to force the Senate into session, but senators have simply gaveled in and gaveled out without debating or passing any bills for the past week.

Paterson has called them in every day into next week, including July 4.

In addition to withholding salaries, DiNapoli said he has already withheld $560,000 in travel vouchers from senators.

Payroll for the Senate, not counting staff, runs about $190,000 every two weeks, said DiNapoli spokesman Dennis Tompkins.

The comptroller is trying to hold back the paychecks that are due next Wednesday.

As DiNapoli announced his bid to hold up pay, Paterson met for an hour with a bipartisan group of senators in an attempt to hammer out an agreement to get the chamber functioning.

Senators on hand included Democrats Smith, John Sampson and Jeffrey Klein, the GOP's Skelos and renegade Democrat Espada.

They plan to meet again today.

The two sides remained far apart: Republicans want to share power under a long-term agreement that recognizes the June 8 vote while Democrats insist the vote was taken improperly.

But the meeting, which was the first since Tuesday, provided a glimmer of hope following a day makred by more fierce rhetoric.

Bronx Democrat Ruben Diaz Sr., for example, all but dared the governor to send state troopers to his church on Sunday to drag him back to the Capitol.

Diaz, a minister, said Paterson's ordering him to work on the weekend and his attempt to withhold travel vouchers was akin to "slavery."

The governor has the power to compel lawmakers to attend special sessions that he calls.

Also taking aim at Paterson was Long Island Democrat Craig Johnson who said Paterson ''should have been part of the process (earlier)."

"He (Paterson) used his podium to bang the podium more often than for the purpose of reaching a resolution," Johnson said, shortly before the governor called the meeting.

"Everybody is tired of being in Albany," added Bethlehem Democrat Neil Breslin.

Rick Karlin can be reached at (518) 454-5758 or rkarlin@timesunion.com

"Conflicting reasons for Mechanicville official's departure"

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

Last updated: 2:08 p.m., Wednesday, July 8, 2009

MECHANICVILLE -- Another employee of the city's Community Development Agency has left the office amid turmoil.

Amanda Walsh worked her last day as city grants administrator Monday when she was escorted out of City Hall by a police officer.

She worked two years in the $35,000-a-year job, but said in an interview Wednesday that she resigned because she was overwhelmed by work while part-time workers in the office were "falsifying" time sheets.

"They were asking me to do the impossible," Walsh, of Halfmoon, said.

Mayor Anthony Sylvester disputed that, saying he fired Walsh on Monday because he was unhappy with her job performance.

No one was stealing time from the office, and Walsh had trouble working with others, Sylvester said.

"We weren't happy with what was going on," Sylvester said.

Walsh was hired in July 2007 to reorganize and audit the Community Development Agency after it was run for 10 years by city resident William Connors.

Connors left the job after being sentenced to two weekends of jail time for misdemeanor counts of violating state election law.

He admitted tampering with absentee ballot applications during the city's 2005 Conservative and Independence primaries.

Also, the U.S. Department of Housing and Urban Development had cited the office under Connors' leadership for inadequate management of funds, unacceptable allocation of costs, a failure to return interest earned and more.

Connors had earned an annual salary of $55,000.

Walsh was hired at 30 hours a week to close out grants dating back years and clean up the office, but said she soon was swamped by requests from the mayor's office to fill out new grant applications.

The position is filled by the mayor.

Sylvester said he hopes to soon hire a part-time grants writer at $17,500.

"Paterson calls Ravitch an ally on economy - Won't take up duties until legal questions are resolved"

Capitol bureau, Albany, New York Times Union

Last updated: 1:24 p.m., Thursday, July 9, 2009

ALBANY -- Gov. David Paterson introduced Richard Ravitch as New York's new lieutenant governor in a press conference at the Capitol, defending his historic decision as a necessary step toward a resolution of the leadership dispute in the state Senate.

But Paterson also said Ravitch's deep resume in public service and experience helping the past governors deal with the financial downturn of the early 1970s are strong assets in a state facing more than simply a political crisis.

"Time and time again, Richard Ravitch has been called on to serve in moments of crisis or difficulty, and I have asked him to serve again," Paterson said.

Paterson said that Ravitch had signed the oath of office just after 8 p.m. on Wednesday evening, and it was accepted by the Secretary of State Lorraine Cortes-Vasquez at 11 p.m. -- about two hours before a state Supreme Court justice from Nassau County issued a temporary restraining order that prevents Ravitch from assuming any of the duties of the office.

Justice Ute Wolf Lally issued the temporary ruling in anticipation of a hearing Friday on the matter, which pits Paterson against Senate Republicans, who contend the governor does not have the authority to pick a lieutenant governor.

Paterson said his legal team would be arguing in court that the restraining order was rendered moot by the earlier action by the governor's team.

The governor's lawyers also contend that Nassau County was the improper venue in which to bring the case against a state official, actions that are usually taken in Albany County's Supreme Court branch.

"But because there is litigation, we will not in any way bemoan the courts their right to make a determination," said Paterson, noting that Ravitch would not be sworn in at that time.

The governor also said that Ravitch would not preside over the state Senate until the legal questions surrounding the appointment are settled.

Ravitch emphasized that he was not taking the post with the intention of playing a role in the 2010 election.

"I did it totally to help the governor in what I know is his very sincere and serious effort to make sure that the state of New York gets through the enormity of this economic crisis ... in a fashion that does not impose too great a burden on the people of this state," he said.

The post has been vacant since Paterson became governor after Gov. Eliot Spitzer resigned last year.

Paterson announced Ravitch's appointment Wednesday, touting it as a way to end a 31-to-31 split in the Senate.

The Senate has been paralyzed since a June 8 coup by Republicans and two renegade Senate Democrats, Pedro Espada Jr. and Hiram Monserrate.

A week later, Monserrate returned to the Democratic conference, causing the even split.

The governor said that an earlier resolution to the Senate mess would likely have forestalled his action.

"But realizing now that even if they solved the dilemma that the body is so fragile, with senators jumping back from one side to the other -- no tennis balls at Wimbledon move as quickly as some of these senators change their seat on either side of the aisle -- that we basically have no stable Senate," Paterson said.

The governor scoffed at the notion that Ravitch's nomination has set back negotiations for a power-sharing agreement, noting that senators have claimed they were close to a deal for weeks now.

"'Very close to a deal' I interpret as they want to go home," said Paterson, who has called the Senate to daily extraordinary sessions for more than two weeks -- weekends and holidays included.

The court case, Skelos and Espada v. Paterson, Ravitch and Cortes-Vasquez, will be heard at 11 a.m. Friday in Mineola.

"A way out of crisis? - Governor acts to end crisis with lieutenant governor selection some critics say is illegal"

By IRENE JAY LIU , JAMES M. ODATO AND CASEY SEILER, Capitol bureau, Albany, New York Times Union

First published in print: Thursday, July 9, 2009

ALBANY -- Citing a crisis in state government, Gov. David Paterson has tapped businessman and longtime public servant Richard Ravitch to serve a New York's lieutenant governor, a controversial step that effectively halted power-sharing negotiations in the gridlocked Senate.

Paterson's unprecedented move, made in a statewide address just after 5 p.m. Wednesday, is likely to be contested in court.

Republicans in the Senate and Assembly as well as Attorney General Andrew Cuomo have called the action unconstitutional.

On Monday, Cuomo declared that such a move would violate his office's reading of the state Constitution and public officers' law.

Paterson acknowledged the legal controversy during his televised announcement -- the second such address of his governorship.

"Though I seek closure to this crisis, I am aware that I am not the final arbiter of legal issues," Paterson said.

"And should there be any legal action, I just ask that it be done expeditiously."

The lieutenant governor's office has been vacant since Paterson replaced Gov. Eliot Spitzer, who resigned in March 2008.

The position is first in the line of succession if the governor is absent or incapacitated, and presides over the Senate -- both are disputed issues in the month-old Senate stalemate, which marked its one-month anniversary on Wednesday.

Ravitch will join Paterson in a news conference at 11:30 a.m. today at the Capitol.

He is expected to preside at the special session of the Senate at 3 p.m.

Senate Republican Leader Dean Skelos, in a videotaped response, briefly dismissed the governor's move as unconstitutional -- and didn't even mention Ravitch's name -- before moving on to a broad-based attack on what he described as state Democrats' free-spending, high-taxing ways.

"Sadly, once again the governor has put his political career ahead of you, the public," Skelos said.

But the move comes as the governor has seen a slight bump in his record-low approval rating, a shift that has coincided with a more take-charge handling of the Senate dispute.

In recent weeks, Paterson has called the Senate into daily extraordinary sessions, and worked to cut off the flow of paychecks, per diems and member-item dollars.

Wednesday, evening, Senate Democratic leaders praised the governor's move at a press conference.

"Extraordinary times require extraordinary action."

"... The leadership that he has shown in this selection of lieutenant governor is a step in the right direction," said Senate Democratic Leader Malcolm Smith of Queens, who claims that he remains the Senate president pro tempore.

He and Senate Democratic Conference Leader John Sampson of Brooklyn asserted that Paterson's decision settles the constitutional issue of succession, removing a major stumbling block to negotiations.

That was not apparent Wednesday evening, as scheduled negotiations between Republicans and Democrats -- which reportedly made considerable progress on Tuesday -- were cancelled.

Sen. Pedro Espada Jr., the Queens Democrat who has also claimed the post of Senate president pro tempore after the June 8 coup that ousted Democrats from power in the chamber, said Paterson had made no mention of an appointment or a statewide address during Tuesday's meetings with Senate leaders.

The chamber is currently split 31-31, with neither side able to assemble a proper quorum of 32 members.

Espada's position as the Senate's presiding officer and in the line of succession to the governorship has been a major sticking point in power-sharing negotiations.

"We are hopeful to be in session tomorrow," Smith said.

"Our expectation is to pass bills with the new appointee."

Senate Republicans said they intend to comply with a court order to enter the chamber for the 3 p.m. extraordinary session, but will not recognize Ravitch as the Senate president.

Republicans have not ruled out a court challenge to Paterson's appointment; Espada has also threatened to sue.

Ravitch, 76, was most recently the author of a much-lauded report on fiscal and organizational problems afflicting the Metropolitan Transit Authority, which he chaired between 1979 and 1983.

He previously worked on urban development issues, including a stint as a member of President Lyndon Johnson's administration.

He has served in a number of state commissions under governors dating back to the administration of Hugh Carey; he lost a New York City mayoral primary run to David Dinkins in 1989.

Paterson emphasized that Ravitch would leave the post after the 2010 election.

All day Wednesday, a short list of candidates was hotly debated around the state, with leading names including former state Chief Judge Judith Kaye, outgoing Syracuse Mayor Matt Driscoll and Nassau County Executive Tom Suozzi.

The idea that Paterson could fill the vacancy was first suggested two weeks ago by attorney Jeremy Creelan in an op-ed piece in the New York Daily News.

It gained momentum Monday when Democratic Assemblyman Michael Gianaris and government reform advocates touted the notion at a news conference in the Capitol.

They have been joined by legal scholars -- including Columbia Law School's Richard Briffault, a legislative expert, and Evan Davis, who was counsel to former Gov. Mario Cuomo -- to make the case that state public officers' law grants the governor the power to fill vacancies, and that filling the office of lieutenant governor does not conflict with the state Constitution.

Others disagree.

"I think it's probably illegal," said Ben Liebman, a lawyer and professor at Albany Law School.

"You can make a very literal argument that it's constitutional, but if you look at the history and the Constitution itself it's hard to argue that the governor has this power."

Twenty years ago, the state Law Revision Commission examined the issue and reached similar conclusions in three annual reports.

Assemblyman Robin Schimminger, D-Kenmore, said he has studied the issue before he submitted legislation in past years to repair the problem of filling the vacancy by giving the governor the authority through a constitutional amendment.

He said the governor currently has no legal authority to make the pick.

"Using it in this way would be on a wing and a prayer -- but these are unusual times," he said.

But some who have been critical of many of Paterson's recent moves praised this one.

Sen. Carl Kruger, D-Brooklyn, said the choice of Ravitch was proper, and made in the spirit of bipartisanship.

"It's a breath of fresh air," he said.

State editor Casey Seiler can be reached at 454-5619 or cseiler@timesunion.com.

Richard Ravitch

Born in 1933

Former chairman of the Metropolitan Transporation Authority, 1979-1983

Former chairman of the New York State Urban Development Corporation under Gov. Hugh Carey

Former member of the U.S. Commission on Urban Problems, appointed by President Lyndon Johnson

Chairman of HRH Construction Corp., builder of 45,000 units of affordable housing, 1960 to 1977.

Currently runs Ravitch, Rice & Co., a transportation consulting firm in Manhattan.

"EXCLUSIVE: State bet $70M on site - Officials invested funds for tech campus; $10M in loans not yet repaid"

By LARRY RULISON, Business writer, Albany, New York Times Union

First published in print: Thursday, July 9, 2009

MALTA -- New York state provided more than $70 million in grants and loans to the Luther Forest Technology Campus in the six years before it landed its first major tenant, GlobalFoundries.

Of that, $10 million was in loans that haven't been repaid.

State officials approved the money in hopes of attracting a computer chip factory to the 1,414-acre site, a former logging forest that straddles the town of Malta and Stillwater -- and they were rewarded.

Last month, the computer chip manufacturer GlobalFoundries Inc. officially committed to building a $4.2 billion computer "chip fab" at Luther Forest.

The Sunnyvale, Calif., company was lured in part by $1.2 billion in incentives from the state, including $650 million in cash for construction and research.

The state money committed to Luther Forest is above and beyond the money going to GlobalFoundries, which is planning to break ground on the factory, known as Fab 2, on July 24.

"They were looking at other countries," said Paul Sausville, the Malta town supervisor.

"They could just as easily have gone" overseas, he added.

"I don't know whether the $70 million was a bargain or not," Sausville said.

But, "it all happened."

"I'm happy."

Nearly $10 million was provided to Luther Forest as loans through the Empire State Development Corp., the state's economic development arm.

The loans, disbursed between June 2004 and July 2007, each carry five-year terms, according to ESDC spokeswoman Katie Krawczyk.

The first loan, for $5.1 million, was payable on June 28, she said.

But the maturity date has since been extended through 2014.

It's unclear how Luther Forest intends to repay the loans.

The tech park made $7.8 million on the sale of 223 acres to GlobalFoundries last month, and it is expected to reap substantial development fees if other tenants can be lured to the park.

Luther Forest officials weren't available Wednesday for comment.

Another $60 million in grants is being paid to Luther Forest through ESDC and the Dormitory Authority of the State of New York, although not all of the money has been disbursed yet.

Luther Forest, a nonprofit whose official name is the Luther Forest Technology Campus Economic Development Corp., has been using the money to acquire land for the tech park and build infrastructure such as sewer and water lines, roads and electrical transmission equipment.

Between 2006 and 2008, the state Legislature approved more than $33 million in grants for Luther Forest, including a $30.3 million grant announced just last November.

ESDC filings show that the Dormitory Authority has committed $25.8 million to Luther Forest.

However, Dormitory Authority spokesman Marc Violette provided the Times Union with a document that reveals that the authority has actually committed $39.1 million to Luther Forest, of which $19.5 million has already been disbursed.

That would push the total state funding for Luther Forest well past $80 million.

Luther Forest also has been able to get private loans from The Adirondack Trust Co., headquartered in Saratoga Springs, and the Saratoga County Industrial Development Agency, federal tax records show.

Those private loans totaled nearly $6 million at the end of 2007, according to Luther Forest's tax records from that year, the most recent tax filing available.

Sausville says the chip fab will lead to additional development in the area.

"It's going to stimulate a lot of secondary businesses," he said.

"It's all about jobs, as far as I'm concerned."

Larry Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.

"Renegade Dem flips back in NY Senate"

By MICHAEL GORMLEY, Associated Press

Last updated: 4:46 p.m., Thursday, July 9, 2009

ALBANY -- A dissident Democratic senator is back with his party after helping lead the Republican-dominated coup that shut down New York's Senate for more than a month.

Bronx Sen. Pedro Espada's return gives Democrats a 32-30 majority for the first time since the June 8 coup.

As part of the deal, Espada takes the title of Senate majority leader.

Espada's move comes after Democratic Gov. David Paterson's shocking decision to appoint a lieutenant governor to preside over the Senate, giving his party the upper hand in a chamber that's been divided 31-31.

"It was never about power, but about empowerment," Espada said at a Democratic news conference where he was introduced as the majority leader.

"As Democrats, we have differences of opinion, different concerns," said Sen. Malcolm Smith of Queens, now president of the Senate but no longer majority leader.

"Yet at the end of the day, Democrats always come together."

Then Smith announced the end of the standoff, with Espada at his side:

"Democrats have come together to move the state's business forward."

"The Democrats are back in charge now," said Sen. Jeffrey Klein, a Bronx Democrat and deputy majority leader.

For more than a month, the Senate's paralysis stalled action on mayoral control of New York City's schools, taxing authority in some municipalities and economic development programs.

"Paterson says party hopping tests legality - Governor cites senators trying to make deals; localities lost $100M"

By MICHAEL GORMLEY, Associated Press

First published in print: Saturday, July 11, 2009

ALBANY -- Gov. David Paterson said the Senate's plan to reform its rules should end a growing practice in Albany to use the allure of perks to persuade lawmakers to switch political allegiances.

"It is so blatantly quid pro quo that it borders on the boundaries of illegality," Paterson told The Associated Press on Friday.

"And because no one is saying anything about it, it's becoming acceptable ... it's becoming very dangerous."

Paterson said that Thursday night a senator never associated with "flipping" threatened to jump to another party if Paterson didn't put a specific bill on an agenda.

Paterson said that would have been misfeasance.

"What it means is now there is a new threat in Albany, one that not just the fringe members, but the mainstream is beginning to embrace."

"In my opinion, the likely conclusion to this momentum is anarchy."

The Democrat's concern comes after a monthlong standoff ended in the Senate after two Democrats joined Republicans June 8 for a coup against the Democratic majority.

The leading dissident Democrat, Sen. Pedro Espada of the Bronx, was then elected Senate president by the coalition.

Paterson's recommendation: Anyone who changes sides becomes a freshman in their new conference, losing the many perks and powers of seniority afforded lawmakers in Albany.

On Thursday, Espada returned to the Democratic conference and was named majority leader.

Currently, lawmakers who switch conferences can be offered leadership posts that come with lucrative stipends.

Minority conference lawmakers seeking to join or create a majority would get the larger staffs and offices now provided to majority conference members.

Senate Democrats and Republicans plan to meet next week to discuss reform.

Now that the Senate broke its deadlock, counties and municipalities whose legislation had been stalled for weeks in the state Senate will be able to count on the money from mortgage tax hikes, hotel and motel taxes, sales taxes.

Working until about 2 a.m. Friday, senators passed 135 pieces of legislation that Democratic leaders called "vital to the economic well being of local governments across the state."

The delay in passing this legislation probably caused municipalities to lose more than $100 million in the past week, Paterson said in an interview with Gannett News Service.

Paterson, who has been at odds with lawmakers throughout the standoff, said senators seemed "less than contrite" and offered "almost blank" apologies to state residents for the past month's Senate deadlock.

They should have been saying how sorry they were for inconveniencing the public, alarming heads of governments and causing people to fear for their jobs, he said.

For example, the state's $136.5 million Power for Jobs low-cost power program for businesses expired at the end of June and senators didn't act to extend it until this week.

The companies and non-profit groups that participate in the program provide 300,000 jobs.

Comptroller Thomas DiNapoli noted Friday that taxpayers "didn't ask for this crisis, and they have already paid too high a price."

He said Senate President Pro Tem Malcolm Smith, D-Queens, had certified payroll and his office could begin processing paychecks, vouchers and per diem rates that had been withheld during the stalemate.

The tab for the past month was well over $5 million.

The state is facing a projected deficit of between $500 million and $800 million, Paterson said, and the Senate and Assembly will need to return to Albany to make cuts this year.

The governor said he would be speaking with Senate and Assembly leaders about setting up an agenda for a special session.

An update on the state's economic condition is expected in about 10 days, and a session would take place sometime after that, he said.

IT LOOKS LIKE THE NEW YORK STATE CONSTITUTION IS BEING TOSSED RIGHT OUT THE WINDOW HERE AND INTO THE TRASH CAN BY NEW YORK STATE GOVERNOR DAVID PATERSON ....

RULE BY MAN ....

NOT RULE BY LAW, AT ALL ....

THE DAY OF THE STRONGMAN RETURNS TO NEW YORK ....

And so ....

"Court delays Ravitch hearing - Action on constitutionality of lieutenant governor appointment set for next week"

By FRANK ELTMAN, Associated Press

First published in print: Saturday, July 11, 2009

MINEOLA -- Agreement in Albany over leadership of the state Senate did not end a dispute over whether Gov. David Paterson is constitutionally permitted to appoint a lieutenant governor.

A Friday hearing on the constitutionality of the appointment -- a maneuver by the governor intended to provide a tie-breaking vote in the Senate -- was adjourned until July 15 after petitioners seeking to block Paterson's decision asked for more time.

David Lewis, a Senate attorney for one of the petitioners, says Paterson's appointment of Richard Ravitch is unconstitutional.

"An unelected governor selected a private citizen to become the second highest officer in the state, one heartbeat away from the governor without any input from the people, without any advise and consent from the Senate, without any input from the Senate and Assembly," Lewis said.

Paterson, who never named a lieutenant governor when he ascended to the governor's mansion in March 2008 in the wake of Gov. Eliot Spitzer's sex scandal, announced Wednesday he was appointing Ravitch.

Lawyers for state Sens. Pedro Espada of the Bronx and Dean Skelos of Long Island obtained a restraining order seeking to block Ravitch from taking office, but a judge Thursday voided the order.

Paterson appointed Ravitch to provide a tie-breaking vote in the Senate, which had been deadlocked at 31-31 since shortly after a June 8 overthrow of Democratic leadership.

Espada, who sided with Republicans to stage the coup, rejoined the Democratic conference Thursday, restoring a 32-30 Democratic majority.

Kathleen Sullivan, a lawyer for Paterson and Ravitch, suggested outside court Friday that opposition to Ravitch was no longer pertinent after Espada's return to the Democrats.

"We really don't know what the plaintiffs are still doing bringing this lawsuit after the dramatic developments last night that helped the Senate get back to business," she told reporters.

"The current status is Lt. Gov. Ravitch is in office."

"He's the lieutenant governor."

"Elite get fat pay hikes amid Senate stalemate - Democrats reward key staff with up to $32,000 while hitting GOP"

By IRENE JAY LIU, Capitol bureau, Albany, New York Times Union

First published in print: Sunday, July 12, 2009

ALBANY -- Eleven of the state Senate's highest-paid staffers received raises of up to $32,000 when it appeared likely Democrats would lose control of the chamber during the five-week leadership fight.

The combined increases will cost taxpayers $200,000 annually.

Since the June 8 Senate coup, dozens of staff members from both sides of the aisle have received raises, but the elite group received raises ranging from $10,000 to $32,000 annually, state Comptroller's office records show.

The beneficiaries include top aides to Senate President Pro Tempore Malcolm Smith, D-Queens, and Senate Democratic Conference Leader John Sampson, D-Brooklyn.

Because many of the raises were backdated, staffers are paid the additional cash in a lump sum, said Jennifer Freeman, spokeswoman to state Comptroller Thomas DiNapoli.

As a result, staffers expected fat paychecks of thousands of dollars in backdated raises at the exact time that Sampson was accusing Senate Republicans of stalling legislation in an attempt to seize the spoils of majority leadership.

Early last week -- before the return of breakaway Democrat Pedro Espada Jr. ended the struggle for control of the chamber -- Sampson held a news conference where he charged Espada and Senate Republicans "care about what I call T-triple-P -- that is titles, power, pork and patronage -- more than the New York's economy."

Nevertheless, the past month has been kind to the bank accounts of some Democratic staffers.

One day after the coup, Senate Majority Deputy Secretaries Meredith Henderson and Patricia Rubens each received nearly $23,000 in raises.

Both staffers received an additional raise on June 23, for a total of nearly $32,000 each, backdated to Jan. 1, 2009.

Both staffers are paid $140,382.

Mortimer Lawrence, a top Smith aide and already one of the highest-paid staffers on the Senate payroll, was given a $16,000 raise on June 24 that was backdated to Jan. 2.

His annual salary is now $177,231.

On June 26, Director of Intergovernmental Affairs Indira Noel received a nearly $11,000 raise that bumped her salary to $118,000.

Counsel for Latino and Immigrant Affairs Lourdes Ventura received a nearly $12,000 raise, increasing her annual pay to $131,000.

And Curtis Taylor, who holds the title of special adviser to the majority leader, received a $13,500, taking his annual salary to $135,000.

Lawrence was Smith's chief of staff when the Democrats were in the minority; after the November elections, he became "special counsel to the majority leader."

Taylor, who was the director of minority communications, became "special adviser to the majority leader."

Lawrence and Taylor are members of the Queens-based Greater Allen A.M.E. Cathedral of Greater New York, the church led by the Rev. Floyd Flake, a former congressman and Smith's political mentor.

Lawrence, Noel, Ventura and Taylor were key figures in Smith's staff before Senate Democrats won the majority, but were largely pushed aside of the daily operations of the conference when Smith ascended to become majority leader.

They were moved from the central suite on the third floor of the Capitol to other floors; some were assigned to offices in Harlem; the conference's operations, strategic planning and communications were largely taken over by Senate Secretary Angelo Aponte, Chief Counsel Shelley Mayer, and Press Secretary Austin Shafran.

Two aides to Sampson received pay raises: On June 23, special assistant Celeste Knight received a $22,000 increase, raising her annual salary to over $70,000.

Administrative assistant Shirley Piper received a $10,000 pay raise to $45,000 on July 3.

Both raises were backdated to mid-June, when Sampson was installed as the de-facto leader of the Democratic conference.

Meanwhile, the Senate stalemate made Yonkers Mayor Phil Amicone scramble to make payroll for city workers, and drove New York City Mayor Michael Bloomberg to reveal a hiring freeze hitting an entire class of police academy cadets.

Senate Democrats said the pay hikes were authorized long before the June, and the timing of the raises had nothing to do with the party's tenuous hold on leadership.

"Salary increases for central staff are authorized by the office of the president of the Senate, which was at the time and still is Sen. Malcolm Smith," said Shafran.

"The decision was made well prior to the leadership dispute, but because of the budget crisis and the general fiscal uncertainty of the state, the decision was made to delay the allocation of some of the salary increases."

"One thing had nothing to do with the other," he said.

Staffers in the offices of Republican Sens. Frank Padavan of Queens and Thomas Morahan of Rockland County received salary increases during the coup, but in both cases, the higher rates were a partial reinstatement of significant pay cuts employees took when Republicans transitioned into the minority at the beginning of the year.

"We agreed in advance, 'Let's take the cut to ensure that we can all continue to work for someone we respect,'" said Morahan spokesman Ronald Levine, who received a $6,000 raise to about $46,000.

Levine said the money left over in the staffing budget allowed for partial reinstatement of salary.

The issue of resource allocation was a major reason why Senate Republicans allied themselves with two dissident Democratic senators to oust Smith from leadership.

Under Smith, Republican senators each received $350,000 for staffing -- significantly less than they had received in the majority, but nearly 30 percent more than the $273,000 average that individual Democratic legislators received to staff their offices when they were in the minority.

But at the same time, Democrats slashed the Republicans' central staff.

In 2008, the Senate Democratic minority had a central staff budget of $6.8 million and employed roughly 110 staff members.

Beginning in April, the Republican central staff was allocated around $3.1 million.

Irene Jay Liu can be reached at 454-5081 or iliu@timesunion.com.

Big hikes amid Senate stalemate

Democrats provide salary increases to key workers while their control of the majority was in doubt

Salary

Name, title, office Annual salary before raise % change Salary change

Celeste Knight $70,191.21 $47,820.47 46.78% $22,370.74

Special assistant to John Sampson

Shirley Piper $45,122.90 $35,095.74 28.57% $10,027.17

Administrative assistant to John Sampson

Vincent Thomas $65,177.50 $53,190.05 22.54% $11,987.45

Senior analyst, majority counsel

Christopher Labarge $85,232.36 $75,188.76 13.36% $10,043.59

Senior policy adviser, majority counsel/program

Indira Noel $118,153.77 $107,412.52 10.00% $10,741.25

Director of intergovernmental relations, majority counsel/program

Despina Moraitou $75,787.88 $50,136.62 51.16% $25,651.26

Legislative analyst, majority counsel/program/committee staff

Lourdes Ventura $131,150.69 $119,227.90 10.00% $11,922.79

Counsel for Latino and Immigrant Affairs, majority operations

Meredith Henderson $140,382.43 $107,412.52 30.69% $32,969.91

Deputy Secretary, Majority senior staff

Mortimer Lawrence $177,230.66 $161,118.78 10.00% $16,111.88

Special counsel to the majority leader, majority senior staff

Patricia Rubens $140,382.43 $107,412.52 30.69% $32,969.91

Deputy secretary, majority senior staff

Curtis Taylor $134,695.30 $121,224.94 11.11% $13,470.36

Special adviser to the majority leader, majority senior staff

Total $198,266.31

Source: State Comptroller's Office

"Senate's rules remain murky - Coup sparked a flurry of legal battles, spotlighting a lack of clarity in laws"

By ROBERT GAVIN, Staff writer, Albany, New York Times Union

First published in print: Tuesday, July 14, 2009

ALBANY -- The battle to control the New York state Senate is history.

Now they just need to tell the lawyers.

At least eight different lawsuits were filed in courts from Albany to Long Island over the past five weeks as warring factions in the upper house, joined by Gov. David Paterson and state Comptroller Thomas DiNapoli, launched efforts linked to the impasse.

In the end, Sen. Pedro Espada Jr. of the Bronx rejoined the Democratic leadership, ending a crisis that began with his June 8 coup against Malcolm Smith.

But several questions remain unanswered, prompting some observers to suggest lawmakers address procedural rules and regulations to prevent future mayhem.

"If there was anything we learned from this month, it's that there is a lot of uncertainty," said Patricia Salkin, director of the government law center at Albany Law School.

" ... All in all, these cases point out many gray areas in Senate Rules of Procedure and the lack of precise clarity in the (state) constitution."

The legal battles began inside a Troy courtroom on June 11, when Senate Democrats tried to get state Supreme Court Justice George B. Ceresia to halt the coup that installed Espada as Senate president pro tempore and made Sen. Dean Skelos, a Nassau County Republican, the majority leader.

At the time, Andrew Celli, an attorney representing Majority Leader Malcolm Smith of Queens, argued the coup did not follow a "privileged" resolution.

In addition, he said Smith had been elected to two-year term the prior January and therefore remained leader.

He said no vacancy existed for Republicans to assume control.

The GOP side, in turn, argued that Smith was trying to get a judge to overturn the votes of 32 lawmakers who voted for the coup.

The issue was quickly removed from the legal arena.

Five weeks later, the argument remains fuzzy within the Senate.

The validity of the coup remains an unanswered question, as do other issues that will never see their day in court.

For example, when DiNapoli announced plans to withhold the senators' pay amid the malaise, he sought a court order.

Senate Democrats, in turn, said they would fight.

But once the Senate battle was over, DiNapoli dropped his effort, leaving it unclear whether he had such power legally.

"This is an important question," noted Salkin, "and I would hope (it) could be answered for future clarification."

Another issue was raised when state Sen. Frank Padavan, a Queens Republican, ambled into the chamber for a beverage during a session presided over by Democrats.

The Democrats, contending Padavan's presence meant enough lawmakers were present, started to pass bills.

After the state Assembly declined to accept the legislation back before handing them up to the governor, Democratic Sen. Darrel Aubertine, in turn, sued the lower chamber.

But the senator is now "no longer pursuing the case" because the bills in question have since been passed by the full Senate, according to Aubertine spokesman Drew Mangione.

"The senator is ready to move on," he said.

Travis Proulx, a spokesman for Senate Democrats, acknowledged that questions remain unanswered despite the end of the internal war.

"From a procedural point of view, we worked it out," he said, "but from an historical point of view, it would be interesting to continue."

The most high-profile legal battle still going is the Senate Republicans' challenge to Paterson's appointment last week of Richard Ravitch as lieutenant governor.

That legal process is taking place in Nassau County.

The lawsuit filed by Senate Republicans lawsuit against Senate Secretary Angelo Aponte, whom they accuse of effectively locking up the chamber, remains active, said Skelos spokesman Scott Reif.

It was not expected to continue, according to a person with knowledge of the case.

The lawsuits, if nothing else, set two things in stone: For one, Supreme Court Justice Joseph Teresi found that Paterson had the right to call the Senate into a special session without also calling back the Assembly, rejecting arguments from both Democratic and Republican senators.

It also showed that judges, generally speaking, wanted no part of the legislative fight.

"Again, I urge you in the strongest way I can -- I don't know how else to say it," Acting Supreme Court Justice Thomas McNamara told the lawyers for both sides on June 15.

" ... But you've got to work it out amongst yourself."

Robert Gavin can be reached at 434-2403 or rgavinb@timesunion.com.

At a glance

The Senate war is over.

Is the legal war?

Among the questions answered by the courts:

Supreme Court Justice Joseph Teresi ruled on June 28 that Gov. David Paterson can call senators into the chamber without doing so for the Assembly.

The courts were not going to decide the Senate leadership battle.

Acting Supreme Court Justice Thomas McNamara called it an "improvident intrusion into the inner workings of a coequal branch of government."

Not answered by the courts or Senate:

Was the coup valid?

The courts punted on the issue.

Now that the Senate is under Democratic leadership again, but the still question remains a mystery.

Does Comptroller Thomas DiNapoli have a right to withhold senators' pay?

He withdrew his legal argument once the accord was reached.

"Prominent NY lawyer gets 20 years in $400M fraud"

By TOM HAYS, Associated Press

Last updated: 8:06 p.m., Monday, July 13, 2009

NEW YORK -- A once-prominent Manhattan attorney was sentenced Monday to 20 years in prison for a hatching a massive fraud in a brazen attempt to keep his law firm afloat and bankroll a lavish lifestyle.

Prosecutors had sought 145 years behind bars for Marc Dreier.

But the judge concluded he was "no Mr. Madoff" -- a reference to disgraced financier Bernard Madoff, who last month received a 150-year term.

Dreier, 59, had pleaded guilty to a seven-year, $400 million scheme that, though eclipsed by Madoff's multibillion dollar swindle, was so outlandish prosecutors labeled him "the Houdini of impersonation and false documents."

The defendant apologized before deputy U.S. marshals led him in handcuffs out a side door in a Manhattan courtroom.

"I'm sorry -- deeply sorry -- for the harm and sadness I've caused to so many people," he said.

"I know an apology doesn't fix anything."

"But at this point, all I can do is express my shame and remorse."

Defense attorney Gerald Shargel had argued that between 10 and 12 1/2 years in prison would be fair punishment for a white-collar criminal who clearly "went way off the tracks."

His client, he said, proved his instability by once trying to impersonate a lawyer with a pension fund for Canadian teachers while trying to close a deal on $33 million in fraudulent promissory notes.

"It was crazy for Mr. Dreier to think he could away with this," Shargel said.

"It was perverse stroke of luck that he wasn't caught years earlier."

Prosecutors told U.S. District Judge Jed Rakoff that Dreier should get 145 years -- consecutive maximum sentences on multiple counts -- for sacrificing a "rewarding and productive life as a lawyer" for "a life of fraud" that bilked hedge funds and doomed his Park Avenue law firm.

Rakoff immediately made clear that he thought the government's request was unrealistic, saying, "Are you really asking for 145 years?"

Giving Dreier that amount of time would "demean" the sentence for Madoff, whose fraud spanned decades and victimized thousands of clients, he said.

"Mr. Dreier is not going to get much sympathy from this court, but he is no Mr. Madoff under any analysis."

Before Dreier's arrest late last year, his firm had nearly 250 attorneys and a roster of clients that included retired football star Michael Strahan and former News Corp. publishing executive Judith Regan.

He had spent tens of millions to decorate the firm's offices with works by Picasso and Andy Warhol, and to purchase beachfront homes on both coasts, a Mercedes and an Aston Martin, and an $18.5 million yacht.

In a letter sent to the judge last week that was rife with regret, Dreier said he was engulfed in a "quicksand of spending" that led to desperate measures -- "a massive Ponzi scheme with no apparent way out."

The scheme involved cheated hedge funds, investment funds and several individual investors between 2004 and 2008 by selling them fictitious securities.

The government has said Dreier received as much as $740 million from the sales and that victims lost $400 million.

To carry out the plot, prosecutors say, he supplied fake financial statements for his victims.

"Another Senate mess"

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

First published in print: Monday, July 20, 2009

The civil lawsuit against the state Senate filed by a former staffer who was allegedly spied on by his superior is giving Attorney General Andrew Cuomo something to worry about this summer.

A resolution could be costly.

Next month, depositions will be taken from key persons involved in the wrongful termination suit filed by Jean Pierre, an analyst fired in December 2007 after he got into an argument with his boss, Indira Noel.

Pierre said Noel had used his Social Security number and forged his name to get his college transcripts.

Noel, Senate lawyer Lourdes Ventura and Senate staffer Mortimer Lawrence are expected to give depositions on Aug. 11.

Pierre is also slated to be deposed by Assistant Attorney General Belinda Wagner.

Pierre's lawyer, Paul Dwyer, said the case has been relatively active even before District Attorney David Soares concluded a criminal case against Noel last week in which she took responsibility for her actions.

She pleaded guilty to disorderly conduct after Soares charged her with two misdemeanors.

Her lawyer, E. Stewart Jones Jr., said the plea ended the criminal matter, but said he is not representing her on the civil matter, which falls into Cuomo's domain.

Dwyer said a settlement has been raised, but nothing has come of it.

The AG had no comment.

Pierre has said he wants an outcome that would be many times his $38,000 annual salary.

He is still living in Albany and is without a job, said Dwyer.

He has told the Times Union that before he lost his job, he found out that Noel, a close friend of Gov. David Paterson, had written for his college records.

The University at Buffalo faxed him her request letter, he said.

The letter, stating that his records should be sent to Noel, included a signature of his name and the two Social Security numbers he was assigned, one which he used when he attended college, he said.

The other was a replacement he used with the Senate.

Cuomo pot astounds

Democratic political observers were very impressed at the campaign war chest Cuomo has amassed.

"For Andrew to have $10 million right now is incredible," said one veteran elections lawyer.

But the sum is also startling in comparison to the roughly $5.4 million Paterson has on hand.

The rule of thumb is it is difficult for an AG to raise big money.

But Cuomo also isn't spending much: The potential candidate for governor is keeping more than three-quarters of what he raises, while Paterson has been burning through his funds, spending about two-thirds of what he brings in.

Some political handicappers insist it's too early for the fans to leave the game.

"It's never over 'til it's over -- but that fundraising is a good indicator," one lobbyist said.

James M. Odato can be reached at 454-5083 or by e-mail at jodato@timesunion.com.

"Court puts hold on Ravitch - Judge blocks lieutenant governor appointment; more judicial action possible today"

By FRANK ELTMAN, Associated Press

First published in print: Wednesday, July 22, 2009

MINEOLA -- A judge has issued a restraining order blocking Richard Ravitch from serving as New York Gov. David Paterson's lieutenant governor.

State Supreme Court Justice William LaMarca in Nassau County issued his ruling late Tuesday afternoon.

"The court is convinced that this is the rare case in which a preliminary injunction enjoining an act of the governor of the state is appropriate," LaMarca wrote.

He ordered another court hearing on the issue on Aug. 25.

The judge also denied a request to move the case to the state capital in Albany.

"Were the governor to die, resign, or be removed from office, Mr. Ravitch, if allowed to remain in office, is next in the line of succession," LaMarca wrote.

"For an illegally appointed lieutenant-governor to act as governor of the state would clearly constitute irreparable harm."

"Governor Paterson's appointment of Richard Ravitch as Lieutenant Governor is legally sound and we are confident the appellate courts will ultimately rule in our favor," said the governor's communications director, Peter E. Kauffmann.

He said the governor's office planned go to court today to seek to have the preliminary injunction lifted.

Senate Republican Leader Dean G. Skelos praised the ruling in a statement issued Tuesday evening.

"There clearly is no basis in the constitution or the law that gives any governor the power to appoint a lieutenant governor and the judge's decision to restrain the governor from proceeding with this action was the right decision."

A spokesman said Sen. Malcolm Smith declined to comment.

Calls from The Associated Press to Sen. Pedro Espada Jr. and Democratic Conference Leader Sen. John Sampson were not immediately returned Tuesday evening.

The governor's attorney argued that a provision of the state Public Officers Law allows him to fill some vacant posts until the next election.

Senate attorneys said the state constitution does not allow for the appointment of a lieutenant governor when a vacancy occurs.

LaMarca sided with the Senate.

"Thus, the court must hold that the office of lieutenant-governor is not an 'elective office,'" the judge said.

Paterson appointed Ravitch, a former head of the Metropolitan Transportation Authority, earlier this month as a way of breaking a monthlong leadership deadlock in the state Senate.

Paterson's appointment provided a tie-breaking vote in the Senate, which had been deadlocked at 31-31 since shortly after a June 8 overthrow of Democratic leadership.

In cases of ties in the Senate, a lieutenant governor casts the deciding vote.

Paterson was elected lieutenant governor in 2006, but ascended to the governor's office in March 2008 after Gov. Eliot Spitzer resigned in a sex scandal.

"AMD loses $330M more - Stock declines as second quarter report reflects drop in sales"

By LARRY RULISON, Business writer, Albany, New York Times Union

First published in print: Wednesday, July 22, 2009

MALTA -- Advanced Micro Devices Inc., the only customer of GlobalFoundries Inc., reported a loss of $330 million for the second quarter.

The company lost $1.2 billion in the year-earlier quarter.

The announcement comes just days before GlobalFoundries will break ground on a $4.2 billion computer chip factory in Saratoga County.

AMD, which spun off its manufacturing operations earlier this year to create GlobalFoundries, also reported sales of $1.18 billion, down 13 percent from the same period in 2008.

Analysts had been expecting a larger decline amid the global recession that has hit the semiconductor industry particularly hard, so in some ways the news was positive for AMD.

GlobalFoundries is a joint venture between AMD and the Advanced Technology Investment Co., an investment fund owned by Abu Dhabi, an oil-rich emirate.

The company, which like AMD is headquartered in Sunnyvale, Calif., is holding a groundbreaking ceremony Friday morning for the factory, known as Fab 2.

Three hundred business and political leaders are expected to attend the invitation-only event at the Luther Forest Technology Campus in Malta, including Hector Ruiz, the former chief executive officer of AMD who initially negotiated the company's move to New York with Gov. George Pataki three years ago.

Ruiz is now chairman of GlobalFoundries.

AMD's financial results are important to GlobalFoundries because for the time being, GlobalFoundries is only making AMD-designed chips at AMD's former manufacturing operations in Dresden, Germany.

In order to justify the need for the Malta fab, GlobalFoundries will likely need to attract new customers, something the company says is imminent.

"We're getting a lot of interest from potential customers," said GlobalFoundries spokesman Travis Bullard.

"We expect to announce a new customer very soon and hope to have additional customer announcements by the end of the year."

GlobalFoundries has been clearing a 100-acre site at Luther Forest for Fab 2.

It is expected to take about two years to complete the $800 million building shell, for which New York state is providing $650 million in cash.

The factory is expected to become fully operational by 2012 when it will be processing between 25,000 and 35,000 silicon wafers per month containing advanced computer chips.

Shares (AMD at NYSE) closed at $4.08, down nine cents, and fell another 49 cents to $3.59 in after-hours trading.

Larry Rulison can be reached at 454-5504 or by e-mail at lrulison@timesunion.com.

"Judge upholds Spargo charges - Federal jurist refuses to dismiss attempted bribery, extortion case; will two lawyers testify?"

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

First published in print: Sunday, July 26, 2009

ALBANY -- A judge has upheld the federal criminal charges against former state Supreme Court Justice Thomas J. Spargo, who was indicted in December on charges of attempted bribery and attempted extortion.

U.S. District Court Judge Gary L. Sharpe ruled from the bench in a pre-trial hearing last week that the indictment was sufficient and the case will move forward to trial.

The criminal case is built on allegations that Spargo, now in private practice, had in 2003 attempted to extort $10,000 for his legal defense fund from attorneys, including Bruce Blatchly, an Ulster County lawyer who had about 12 cases pending before Spargo.

The fund was set up to defray Spargo's $140,000 legal bills from a years-long battle with the state Commission on Judicial Conduct.

Spargo, 65, an East Berne attorney, has pleaded not guilty.

He is represented by Troy attorney E. Stewart Jones.

The state judicial conduct panel concluded three years ago Spargo attempted to extort money from Blatchly.

The panel ruled Spargo be removed from the bench and the Court of Appeals later affirmed the decision.

During last week's pre-trial hearing attorneys for the government and defense addressed whether two attorneys close to Spargo, Sanford Rosenblum and Catherine Doyle, an Albany Surrogate's Court judge, will testify at Spargo's trial.

Rosenblum has invoked his Fifth Amendment right against self-incrimination and declined to cooperate with prosecutors.

He did not testify before a grand jury.

Spargo's attorneys want Rosenblum to receive immunity from prosecution so that he will testify at trial.

He has information that could be ''exculpatory'' to Spargo in the case, they said.

Doyle obtained an attorney after being confronted by FBI agents during the investigation of Spargo and later testified in front of the grand jury that indicted him.

She did not invoke a Fifth Amendment right.

Federal prosecutors said Doyle was not a target of their investigation but that they considered her a ''co-conspirator.''

Her role as a witness at a 2003 luncheon where several attorneys were allegedly solicited for Spargo's legal defense fund is at the heart of their interest in Doyle, said M. Kendall Day, a trial attorney with the Justice Department's Public Integrity Section in Washington, D.C.

''Both she and Mr. Rosenblum tell a version of events that is inconsistent with the other evidence,'' Day told the judge.

''What else is she doing at this lunch where they're coming to talk about raising money ...''

Prosecutors believe Doyle's involvement centered on the allegation an attorney solicited for a donation had a case pending before her, according to court records.

Spargo's trial is tentatively set to begin Aug. 24 in U.S. District Court in Albany.

"Feds seek records of Bruno interview - Ex-Senate leader quoted in magazine article as giving 'access' to investment firm"

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

First published in print: Sunday, July 26, 2009

ALBANY -- Federal prosecutors may seek to use a magazine news story as evidence at the trial of former Senate Majority Leader Joseph L. Bruno, who was quoted as saying he gave ''access'' to New York's labor unions at an investment firm where he worked as a consultant.

A subpoena hand-delivered last week by FBI agents to Kris Thompson, a close Bruno aide, seeks records Thompson may have kept in connection with a March 2008 story in New York Magazine by Geoffrey Gray titled ''The Un-Reformed.''

Thompson, who works with Bruno at CMA Consulting Services in Latham, previously was an aide to Bruno in the Senate and routinely had tape-recorded Bruno's news conferences and interviews.

It's unclear why federal authorities waited until this month to request any records Thompson kept in connection with the magazine interviews.

Gray's story was a lengthy feature report that delved into Bruno's tough upbringing, his battles with Gov. Eliot Spitzer and the FBI's criminal probe of his business and political dealings.

In January, a federal grand jury in Albany indicted Bruno on eight felony charges related to alleged theft of honest services in connection with his Senate position and private consulting business.

In the magazine story Bruno recounted being introduced to Wright Investors' Service by an unidentified friend more than a decade ago.

He found the company ''small, neat, clean, pristine,'' according to Gray's report.

Bruno went on to say: ''I provided the entree."

"In that business, the biggest problem is access."

"I provided access,'' Gray quoted Bruno as saying.

The access apparently was given to New York pension fund trustees who went on to place investments with Wright, allegedly at Bruno's urging.

The indictment against Bruno includes allegations he did not fully disclose his dealings to state ethics authorities.

The charges also describe ''schemes'' involving use of his public office to convince labor union pension trustees to steer their money to Wright Investors' Service, a Connecticut firm that paid him nearly $1.4 million from 1994 to 2006.

The magazine article resonated because Bruno was quoted as admitting using his political clout as a bridge to his private consulting income.

His aides responded by attacking the reporting of Gray.

''New York Magazine did a tremendous disservice to its readers and to Senator Bruno by shamefully and purposely taking out of context comments Senator Bruno made several months ago to its reporter that clearly were not intended to appear in print,'' New York state Senate spokesman John McArdle told The New York Times last March.

The magazine stood by its story.

Thompson declined to comment on Saturday.

His attorney, Stephen R. Coffey of Albany, said the subpoena was returnable in early November, when Bruno's trial is scheduled to begin in U.S. District Court in Albany.

Coffey said Bruno's attorneys, William Dreyer and Abbe Lowell, will ''have an interest in'' whether the contents of the magazine article should be admitted at trial.

Coffey declined to say whether Thompson preserved any record of the interviews, which took place over several days last year.

''If he has it I'm not going to say one way or another,'' Coffey said.

''We'll comply with it (subpoena) on the returnable date."

"... Oddly enough for the government he's actually going to assert his rights.''

Bruno's attorneys lodged a complaint with the Justice Department last week questioning the timing of the subpoena and the fact it was served on Thompson at his workplace.

It was served by agents a day after Thompson was quoted in a Daily News story sharply criticizing the federal case against Bruno.

People familiar with the investigation said the timing was coincidental and that there are numerous trial subpoenas being served by the government as the prosecutors line up witnesses and evidence in preparation for the trial.

Federal authorities also served a trial subpoena recently on one of Bruno's children, Catherine Bruno-Hynes.

Lowell, who is based in Washington, D.C., said Bruno's daughter has no information of value for prosecutors and that ''there should be a much greater sensitivity to these repeated confrontations with our client's daughter.''

The subpoena was served a few weeks ago and Bruno-Hynes also was visited by FBI agents earlier in the three-year-plus criminal investigation of her father.

It's unclear whey federal authorities have subpoenaed the daughter.

A person familiar with the case said the subpoena was sent by courier to Bruno-Hynes' attorney, David Gruenberg, who did not respond to a request for comment last week.

Federal prosecutors declined comment on the allegations by Lowell that they were using heavy-handed tactics to intimidate Bruno or his family.

They said they responded to the allegations in a letter to the Justice Department but declined to release a copy.

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

AND AS OUR STATE CONSTITUTION CONTINUES TO BE CUT INTO RIBBONS AND SHREDDED UP HERE IN NEW YORK STATE, WHERE THE CONSTITUTION HAS BECOME AN IMPEDIMENT TO PEOPLE DOING BUSINESS IN THIS STATE ....

WE HAVE ....

"Court: NY's lt gov can perform limited duties"

By JENNIFER PELTZ, Associated Press

Last updated: 7:25 p.m., Thursday, July 30, 2009

NEW YORK -- Richard Ravitch can continue serving as New York's lieutenant governor during a legal dispute over his appointment, but he cannot preside over the state Senate, an appeals court ruled Thursday.

The Appellate Division ruling keeps Ravitch in place at least until the court rules on whether his appointment by Gov. David Paterson was legitimate.

Arguments were set for Aug. 18.

Senate Republicans say Ravitch's appointment was unconstitutional; lawyers for the Democratic governor say the state Public Officers Law allowed Paterson to fill the post until the next election.

With the ruling, "Lt. Gov. Richard Ravitch can continue to serve alongside Governor Paterson to help navigate the state through this historic economic crisis," the governor's office said in a written statement.

A lawyer for Paterson had said the state needed Ravitch's help to contend with its worsening economy.

Senate Republican leader Dean Skelos and Sen. Pedro Espada, a Democrat who joined in challenging the appointment, had argued that Ravitch should be kept from the office at least until the dispute is resolved.

Skelos' lawyer said he was pleased that the ruling keeps Ravitch from exercising the lieutenant governor's power to preside over the Senate and cast tie-breaking votes.

The Senate is not in session, but a special session has been called for next week.

"The court protected the basic rights of Senator Skelos and Senator Espada," Skelos lawyer David Lewis said.

Skelos had no immediate response.

Paterson previously said in a sworn statement that he would keep Ravitch out of the Senate while the case proceeded.

Paterson tapped Ravitch on July 8 to break up a monthlong Senate leadership logjam; it was resolved soon after his appointment.

The lieutenant governor's post had been vacant since March 2008, when Paterson became chief executive after Gov. Eliot Spitzer resigned in a prostitution scandal.

Ravitch, a private-sector executive, has counseled New York governors through crises going back to the 1970s.

"We say there is irreparable harm to the state if Lieutenant Governor Ravitch is prevented from serving while the state is in a financial crisis," Paterson lawyer Kathleen M. Sullivan said during a hearing earlier Thursday in Brooklyn.

A state budget report Thursday said New York faces a $2.1 billion deficit this fiscal year and a four-year shortfall that is $13 billion greater than was forecast in April.

But Senate Republicans said Ravitch shouldn't be in the post even temporarily.

Besides having the power to break Senate ties, the lieutenant governor fills in when the governor is out of state or unable to discharge his duties.

"We don't substitute someone else into the line of succession because there's a fight" over Senate leadership, Lewis said at the hearing.

If Paterson wants Ravitch's advice, the governor can appoint him to another position, Lewis said.

"State pays almost $50M on fund managers as pension fund loses $1 billion"

By MICHAEL VIRTANEN, Associated Press

First published in print: Monday, August 10, 2009

ALBANY -- New York recently paid almost $50 million to private stock managers to actively invest part of the state's massive public pension fund, and they lost more than $1 billion -- a worse performance than stocks that were essentially untouched.

And those were in good, or at least transitional, times.

Those figures from 2007 to 2008 don't include last year, when Wall Street's meltdown forced investment losses almost across the board that added up to a 26 percent hit on the fund, one of the largest in the nation.

Final figures are due in a month, and preliminary data show international stocks on which the fund pays management fees leading the decline at about 45 percent, followed by domestic stocks at almost 38 percent, about one-quarter of those actively managed at a cost to the state.

"Obviously, you pay these guys to hopefully beat the benchmarks," said Dennis Tompkins, spokesman for the state comptroller's office.

The fund changes managers, rotating some out based on performance, and is going through that process now, he said.

Fees for private managers, who try to beat stock index returns, are negotiable and often comprise a small fraction of the principal plus a percentage of profit.

The New York State Common Retirement Fund had finished 2007 to 2008 with assets of almost $156 billion after retiree payouts.

That resulted from fixed income, real estate, securities, and private equity investments still generating returns and followed a few years of large stock gains.

Between 2008 and 2009, only fixed-income investments were in the black, up 4.35 percent.

Over longer terms, returns for stocks that were managed were slightly higher than those for passive stocks over five years and slightly lower over 10 years.

Comptroller Thomas DiNapoli, the sole trustee, has established an internal study of the asset mix, with a report expected by year's end.

"We're pretty confident in the kind of diversification we have," said Robert Whalen, spokesman for DiNapoli.

"It's in the difficult years you have to remind people of the good times."

"Through thick and thin, this is the model that's going to serve us best."

"That's what we've seen historically."

The system is based loosely on an 8 percent overall return on investment with state and municipal pension contributions at 11 percent of payroll, Tompkins said.

Simply investing in low-risk bonds won't achieve that.

Also, higher returns for several years had lowered contributions to about 7.5 percent of payroll, decreasing actual costs to local governments and the state.

"We've gone out and done some risk assessments and made significant returns above that 8 percent target," Tompkins said, noting they have outperformed several other pension funds.

The basic principle for public officials making investments is prudence to achieve objectives of safety, liquidity and return, according to the Government Finance Officers Association.

Large public and private funds have diverse portfolios and rely on outside advice, said Jeffrey Esser, association executive director.

"We're in the middle of what some would call the great recession, and if you want to take a snapshot look at anything right now, a lot of financial things don't look too good, though they look better than they did six months ago," Esser said.

There are different investment theories, including one that passive investing with index stocks will produce better returns over a certain period than active management, he said.

Billionaire Warren Buffet has a well-publicized 2007 bet that a particular index will outperform actively managed funds the subsequent 10 years.

From 2007 to 2008, the fund's total domestic stocks, about 38 percent of assets, lost 6.4 percent overall to $58.1 billion.

The actively managed piece lost 9.2 percent to $13.4 billion.

International equities were 17 percent of assets and returned 0.55 percent, ending at $26.1 billion that year, with $92.4 million in fees paid to 17 managers.

The five-year return on managed domestic stocks was 12.3 percent, above the 11.97 percent for the total domestic portfolio; it was 4.14 percent over 10 years, below the 4.43 percent overall.

International equities' return was 22.42 percent over five years and 7.64 percent over 10 years.

From 2006 to 2007, under then-Comptroller Alan Hevesi, the domestic equities portfolio gained 10.6 percent to $64.9 billion.

The actively managed piece rose less -- 9.4 percent to almost $16.1 billion -- with $47.8 million paid to 44 private managers.

That year, the fund paid $71 million in management fees to 14 companies on international equity holdings, which returned 19.8 percent overall.

DiNapoli said earlier this year that benefits to roughly 350,000 retirees are secure, but state and local governments will have to pay more starting in 2011 to compensate for the diminished returns.

The rate will rise from about 7.5 percent of payroll to roughly 11 percent.

Actual rates will be announced in September.

They are based on five-year investment return averages, meaning last year's big loss will affect contributions for the next five years.