Thursday, November 15, 2012

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.
Payback

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.

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