Tuesday, November 20, 2012

In Yonkers corruption case, Annabi, Jereis get prison terms; judge expresses skepticism about conspiracy and suggests Forest City's Ridge Hill project "arguably led to a good deal of public good"

A convoluted corruption case reached a charged endpoint yesterday, as former Yonkers Democratic City Council Member Sandy Annabi was sentenced to six years in prison, while her political ally, mentor, and "sugar daddy" benefactor, former Yonkers Republican Chairman Zehy Jereis, was sentenced to four years.

Both sentences were significantly less than prosecutors requested, though far more than the defense attorneys sought.

U.S. District Judge Colleen McMahon, in imposing the sentence from her Lower Manhattan courtroom, stressed the duo's effort to cover up evidence in the case, which involved Annabi's vote flips in 2006 to support Forest City Ratner's giant Ridge Hill retail/residential project and another, unbuilt project known as Longfellow, as well as Annabi's convictions on tax and mortgage fraud counts.

Annabi, who chose not to testify in the trial that began last February, made an emotional presentation to the court yesterday, before breaking down, unable to finish her remarks.

"I see the error of my ways," declared Annabi, reflecting on her acceptance of continuing support from Jereis. "I wish I was not so trusting or naive... I was starting for attention, affection and someone to take care of me and give me guidance."

"There is no exception to corruption for a hard-knock life," McMahon later declared, acknowledging but not excusing Annabi's cloistered upbringing in a rough section of Yonkers. "The sad thing is, there is so much in your record that is inspiring."

"A public official can never, ever be obligated to anyone other than their constituents or conscience," the judge added, saying Annabi had been corrupted by taking Jereis's cash and gifts, even if only two compromised votes were detected.

Beginning in 2002, Jereis provided Annabi with some $194,000, including a $60,000 loan promptly repaid, but ultimately gained at most $35,000 from Annabi's vote flips, including $15,000 from a $60,000-a-year no-show consulting job Forest City essentially gave him as a reward.

(Here's coverage from the New York Times, the Journal News, Daily News, and Post. U.S. Attorney Preet Bharara said in a press release, "Today’s sentencing of Sandy Annabi and Zehy Jereis turns the page on a sordid chapter in the history of the great City of Yonkers."  The Journal News editorialized that Annabi seemed to recognize that the public deserved better from her.)

Appeal hopes

Though the jury agreed that Annabi was willing to change her vote in 2006 at Jereis's behest, even as he sought that job from Forest City, the judge expressed doubt about the prosecution's theory of a "five-year Don Corleone conspiracy" in which Jereis, who'd been steadily bestowing funds on Annabi, finally called in markers.

"The fact that you did nothing for five years makes this case incredibly complicated, in my mind," McMahon said, addressing Annabi. "I have no idea that, as early as 2002, that you had already reached an understanding with Mr. Jereis," she said, but declared that Annabi made herself vulnerable by making a "Faustian bargain" with her mentor.

The judge said she thought the evidence on the other counts was much stronger. (In court, she expressed far more skepticism than in her decision last week refusing to overturn the jury's verdict, in which she had to defer to the jury's selection among competing inferences.)

While McMahon criticized Annabi and Jereis, she left the defendants, who face a March 4 trip to prison, with hope for a partial appeal, opining that there was a "close question as to whether a federal crime was committed" regarding the first two counts, a long-running conspiracy to make corrupt payments and to deprive the city of Yonkers of honest services.

The jury was instructed to conclude that, even if Jereis's payments were motivated in part by friendship--he said he was in love with Annabi, though it was not reciprocated--a mixed motive that included corrupt intentions was no defense.

(McMahon wrote last week that there were alternative explanations for the concealment of payments, including that Jereis was a married man aiming to carry on a long-running dalliance, and Annabi was a tax cheat concealing under-the-table income.)

A Ridge Hill boost

While Forest City Ratner apparently did not have an observer present, as it had during the trial, McMahon tossed the developer a large bone, suggesting there "was no evidence the public fisc of the city of Yonkers suffered any harm" from Annabi's actions and that Ridge Hill "arguably led to a good deal of public good."

She was echoing arguments made by Journal News columnist Phil Reisman but not grappling with the notion of "opportunity cost"--that the tens of millions of dollars in tax breaks the developer is getting could be deployed another way.

Forest City's concession to Annabi, a "political parachute" in the words of former Forest City official Scott Cantone, was a $10.8 million payment to the city, which even a project supporter called "peanuts." Deal opponents wanted $10 million a year for 30 years.

Forest City was not charged in the case; there was no evidence the developer knew Annabi was obligated to Jereis because of the secret payments, though Forest City had been told all roads to the Councilwoman went through Jereis.

Just before the trial, Forest City Ratner's Governmental Affairs Executive VP, Bruce Bender, left the company. His deputy Cantone left shortly after the trial, in which both testified on behalf of the prosecution, revealing behavior by the developer that was non-criminal but likely represented questionable corporate conduct. The duo now run Bender Cantone Consulting.

Emotional moments

In trial summations, Annabi's then-lawyer told the jury that if they concluded she'd been leading on a sugar daddy, it was wrong, but not criminal. (Prosecutors stressed that evidence, including a plethora of calls on dealmaking day and testimony from an Annabi pal, suggested the relationship was all business.)

Yesterday, Annabi was contrite: the opportunity for service to the community, she said she now recognized, was much more significant than an upgraded plane ticket or pricey jewelry--among the gifts Jereis bestowed, partly thanks to the bribe in the Longfellow project.

Annabi, as indicated in her pre-sentencing memo, said she'd acted as a mother to her younger brothers after her parents went to prison and now serves as a parent to her aging parents. "I accept any punishment you impose," Annabi declared, sorrowfully. "I just wish I could spare my family the pain."

"I can't finish this," she said, sitting down and ripping her prepared remarks in two. From the packed courtroom gallery, divided Hatfields and McCoys style into supporters of each defendant, Annabi's father stood up and asked to address the court. Annabi's lawyer, Edward Sapone, walked back to him and indicated that such an intervention was impermissible.

Jereis, who testified at length during the trial, claiming he was infatuated with Annabi and flatly denying several statements by prosecution witnesses, declined to address the court regarding sentencing.

Though Annabi seemed frail and fragile--and was described by her attorney as having an addiction to Xanax, among other substances--as the three-hour sentencing concluded, she displayed the spitfire personality she brought to Yonkers Council meetings.

She walked over to the counsel table where Jereis sat. "You're going to be a bitch inside," she muttered bitterly to her long-term ally, referring to his fate in prison. (The New York Times reported this as, "In rather pointed and colorful terms, Ms. Annabi offered an opinion of how Mr. Jereis might be treated by fellow inmates.")

Outside, as noted in the video below by the Journal News, she was in a calmer mood.



Prosecutors' case

The hearing began with a presentation by prosecutors. "The real victim here was the city of Yonkers," Assistant U.S. Attorney Jason Halperin declared. Annabi lied on disclosure forms about not getting benefits from Jereis and not living in the Council District she served, thanks to financial assistance from Jereis.

"Nobody knew the city Republican chair had such sway over a Democratic officeholder," he said. "She likely had a disqualifying conflict of interest" regarding Ridge Hill, he added, and thus would not have been allowed to vote on the project.

Annabi, he said, sold her vote for a Rolex watch, a diamond necklace, business-class airline tickets, and a Mercedes-Benz--all of which came, at least indirectly, through Jereis.

While many supporters had written on behalf of Annabi, Halperin said, many more people are tired of corruption. Annabi and Jereis, he said, collaborated on concocting bogus emails professing his love for her. "We submit that the 'love defense,'" Halperin said, "was an insult to the jury's intelligence."

 (A prosecution expert testified that there was evidence of tampering but couldn't be definitive that the emails were fake. McMahon said she believed the emails were created in an effort to cover up the conduct of Annabi and Jereis.)

Assistant U.S. Attorney Perry Carbone argued that Jereis deserved a tough sentence. Jereis, he said, "was a kingmaker in Yonkers politics or, in this case, a queenmaker... What we have here is a somewhat of a de facto public official."

After all, Carbone noted, one of Annabi's aides testified that part of his job was to "keep Mr. Jereis in the loop" regarding city business.

Annabi's defense

The issue, declared Annabi attorney Sapone, was "what sentence is sufficient but not greater than necessary." He noted that only 34% of corruption sentences surveyed met federal guidelines, with the rest downgraded.

Other corruption cases cited by prosecutors, he noted, showed public officials shaking down friends, creating fake invoices to get public funds, and skimming from nonprofit groups--not taking cash from an ally, as did Annabi. "The $200,000 does not come from an orphanage," he said.

"What is bizarre to me," Sapone said, is that the jury found "there was a meeting of the minds" in 2002 that Annabi would act on Jereis's behalf. After all, nothing happened until June 2006, and the support continued afterward, though Annabi never acted again.

"Mr. Jereis does not look that stupid to me," Sapone declared, suggesting he had other motives.

"This woman did so much good and for some many years before and after," he asserted. "That is what makes her different." He said a psychiatrist's analysis included in his pre-sentencing memo was included not to excuse misconduct but to explain Annabi's behavior.

Jereis's defense

Jereis's attorney, Anthony Siano, stressed that the jury found Jereis received a maximum of $35,000 from corrupt activities for which he was convicted.

The jury, he said, could conclude that a substantial amount of money given to Annabi came from Jereis's personal funds and that "there was a mixed motive here."

The judge speaks

After the attorneys had their say, McMahon challenged prosecutors for saying that citizens who hate corruption are not the sort to write letters supporting a call for tough sentences. "I disagree," she declared. "I believe lots of citizens are fed up with public corruption, and I have not received one letter."

(Then again, the letters supporting the defendants were obviously solicited by their lawyers, and prosecutors, to my knowledge, do not routinely recruit people to write letters condemning corruption.)

McMahon chided Annabi not just for making a deal with Jereis but for failing to pay taxes and obtaining mortgages with phony documentation. "They seriously enhance your criminality," she said, adding that those crimes, along with the Longfellow case, were the factors most important to her sentencing decision. (That implied Ridge Hill was less important.)

"Mr. Jereis," the judge said, addressing him directly, "I won't know what to make of you. Whether you were infatuated with Ms. Annabi or setting it up, you had to have known it was wrong, as it would create in her a sense of obligation."

"You are good to your own," McMahon said of Jereis's support for family, friends, and co-workers, as evinced in a pre-sentencing memo prepared by his lawyer. "Problem is: you define your own very narrowly."

"I am painted by the collateral damage that will be done by imprisoning these two individuals," McMahon said, referring to pre-sentence memos that both defendants have aging parents who rely on them. But public corruption, she said, was a crime that requires deterrence via a jail term.

She agreed that the other cases cited by prosecutors were not like this one, and suggested that the corruption in this case "fortunately, appears to have done no lasting damage."

Sentence details

Rather than require Annabi to pay back her entire Council salary, as prosecutors sought, McMahon limited it to the four months--$13,884--during which the misconduct clearly occurred. The judge noted that Annabi's ongoing failure to disclose gifts from Jereis was a violation of state, not federal law.

Both defendants face heavy financial penalties. As noted by prosecutors:
ANNABI and JEREIS were each sentenced by Judge McMahon to two years of supervised release, and each ordered to forfeit $209,501.99. In addition, ANNABI was ordered to forfeit $1,060,800 [the proceeds of loans gained on false pretenses]. The defendants were also ordered to pay $13,884 in restitution to the City of Yonkers, representing a portion of ANNABI’s salary, and $64,071 to reimburse the City of Yonkers for legal fees. ANNABI was also ordered to pay $164,460.68 to PNC Bank. In addition, ANNABI was ordered to pay $33,000 for the costs of prosecution [on tax counts] to the United States Government.
After McMahon pronounced the sentence, Sapone requested that Annabi be sent to federal prison in nearby Danbury, CT, and asked that she be placed in a drug treatment program.

Siano asked that Jereis be placed in a facility in proximity to his home in Westchester.

Defense attorneys said they'd appeal soon. That prompted skepticism from the prosecution, then McMahon's reciprocal skepticism regarding "the five-year Don Corleone conspiracy."

Finally, as the friends and family stood up, aiming to give succor to the respective defendants, Annabi approached Jereis and pronounced her own sentence.

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