Skip to main content

As prosecutors slam calls for leniency in Yonkers corruption case, the mystery of Ridge Hill persists (why no sanction for biggest beneficiary?)

Responding to pleas for leniency from a former Yonkers official and her political mentor, federal prosecutors fired back yesterday with some powerful responses to arguments made by the guilty, but left a curious gap regarding the issue of who benefited the most, a persistent issue in the investigation, which spared Ridge Hill developer Forest City Ratner.

Prosecutors Jason Halperin and Perry Carbone, in a 46-page memo presaging sentencing Nov. 19, ask U. S. District Judge Colleen McMahon to abide by federal guidelines that would put former Council Member Sandy Annabi in prison for at least 14 years, and Zehy Jereis for at least 11 years.

By contrast, Annabi's lawyer has asked for no prison time, while Jereis's attorney proposed a prison term of 10 to 18 months. (Also see coverage in the Journal News.)

Writes Hezi Aris of the Yonkers Tribune, who points out that the judge had raised questions about the strength of the prosecutors' case:
Bruce Ratner, the Milio family, Capelli Enterprises, Joe Cotter’s operation, even the Yonkers Chamber of Commerce, among so many others will remain to fleece Yonkers for many days forward.
The Ridge Hill story 

"Together, the bipartisan deceitful duo of Yonkers politics now stand guilty of extorting cash payments from developers in exchange for Councilwoman Annabi's vote and of engaging in a long-term conspiracy to sell her vote," the prosecutors wrote, pointing first to a project known as Longfellow and second to Forest City Ratner's Ridge Hill project.

For the latter, the city's largest ever, "Annabi suddenly and shockingly flipped her vote, allowing the project to proceed," prosecutors wrote. "She changed her vote not because she had successfully persuaded the developer to make the critical concessions she had fought for over two years, but because her political patron had secretly negotiated a $60,000 consulting contract with the developer for himself--a position he would treat as the ultimate no-show job."

Actually, Jereis had begun negotiations for that contract, but it had been more murky, with Forest City Ratner leaving the impression he'd be hired, without making any commitment.

The trial, prosecutors argued, "also shined a bright light on the parade of lies" told by the defendants, including to the City Council, to the City, and to those who asked questions:
They knew that had they disclosed before Annabi flipped her vote on Ridge Hill that Jereis had given Annabi hundreds of thousands of dollars and that he now stood to benefit if Ridge Hill was approved, that Annabi's colleagues on the City Council might very likely have called for her to be recused from the vote approving Ridge Hill. Annabi lied to her City Council Colleagues when they asked if she had received anything from Jereis. And Jereis lied to his friends when they asked whether he had received a contract from the Ridge Hill developer.
Dubious defenses

Responding to Annabi's claim, in her pre-sentencing memo, that she was a naive victim of others, prosecutors write that her conduct was "calculating, cunning, and deceitful.... Simply put, the proof at trial showed that Annabi is as naive as a fox."

After the investigation began, prosecutors write, the duo did their best to cover up the evidence.

"Jereis--in a jaw-dropping display of gall--holds himself out as the ultimately family man," they write. "One wonders whether Jereis was thinking of his wife and the staggering public humiliation he must have caused her."

They take on Annabi's defenses:
...But rather than acting as a true champion for the poor, Annabi displayed amazing hypocrisy by placing her own financial interests above those of her disadvantaged constituents, by selling her votes, and cashing them in for a Mercedes Benz, a Rolex watch, a diamond cross necklace, and upgraded plane tickets.
Annabi tells the court that she was too sheltered and pampered... Annabi's claims are nonsense. First, all these alleged shortcomings did not prevent Annabi from climbing the mountain of Yonkers politics... And yet, Annabi never holds herself accountable.
The mystery of the "love defense"

Key to the case was the so-called "love defense," that Jereis had given Annabi nearly $200,000 because he was in love with her.

The "love defense," though it was not accepted by the jury, wasn't slam dunked. As prosecutors note, the Court called the emails "of dubious provenance" and said the jury could conclude "that the emails were fakes" and that Jereis's story "was most likely a fiction as well."

What remains unclear, however, is what Jereis got for his spending on Annabi, since he received far less back from the developers in this case. Was he hoping to cash in later? Or were there other gains, undiscovered?

Calculating the loss--and the gains

The prosecutors write:
the Probation Office opted for the conservative and lenient approach to calculate the loss, using the value of the benefits received by Annabi and Jereis, as opposed to the benefit to the developers. The value of the benefits received by both the Longfellow developer, Milio Management, and the Ridge Hill developer, Forest City Ratner, would be exponentially higher than the amount of the bribes. The Ridge Hill Project cost more than $600 million to build and the developer has indisputably made tens of millions of dollars from the project. And yet, the Probation Office did not use the amount of the developer's profit in its loss calculations... Thus, the benefits to the developers in this case dwarf the value of the payments received by Annabi and Jereis.
Note that there was no bribe in the Ridge Hill case.

More importantly, this passage leaves that lingering question: If the benefits to the developers dwarf the benefits to the guilty, why do the developers get off? (Here's why they weren't prosecuted. Still, it's an argument, as Jereis's lawyer contends, for leniency.)

Who's the victim?

The prosecutors assert:
Defendants Sandy Annabi and Zehy Jereis committed one of the most reprehensible crimes possible in a white collar context. They did not just defraud banks (although Annabi did that too). They did not just cheat on their taxes (although Annabi did that as well). Rather, Annabi and Jereis defrauded an entire city.
...Certainly, Councilwoman Annabi talked a good game, as she did in 2005, when she fulminated against Forest City Ratner for "robbing the city blind"... But these spirited speeches... [were] before her political patron called in his favors on these projects."
A deal with Forest City shows her "calculated behavior," according to the memo:
Forest City Ratner's Scott Cantone testified about how when FCR met with Annabi and Jereis on June 14, 2006--the day before Annabi would stun many in Yonkers by suddenly and without notice issuing the press release announcing her vote flip on Ridge Hill--the conversation focused on how to find a political parachute for Annabi.

Prosecutors want the defendants to pay back $311,624 in Annabi's Yonkers salary, plus $64,071 in legal fees Yonkers paid to defend its officials; and $113,578 for federal litigation expenses, including transcripts and expert fees--and the $20,000 bribe paid by the developers of the Longfellow project.

Of course, if the city of Yonkers is truly the victim, then what does Forest City owe it? One commenter
on the Yonkers Tribune site argues that Ridge Hill will ultimately provide the city with necessary income, but suggests:
whenever there is a bribe paid...and a project like ridge hill gets approval solely based on that bought vote, the developer should be subject to a confiscatory penalty..which would make everyone involved think twice before making a bribe offer particulary the only entity that actually benefits from the vote change
While Annabi can't afford to pay a fine, prosecutors say Jereis should pay a fine from $15,000 to $150,000, given his ownership of apartment buildings worth more than $3.4 million, a total net worth north of $1.7 million, and a 50 percent share in a car wash, convenience store, and gas station in Brooklyn.


Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…