Thursday, September 11, 2014

Consultant Melvin Lowe, one-time FCR lobbyist, convicted of conspiracy in unrelated case; prosecutors target Sampson connection

On Tuesday, state Sen. John Sampson, under indictment for embezzlement, obstruction of justice, and witness tampering, won his Democratic primary, tantamount to re-election.

A day later, his former associate Melvin Lowe--a former Forest City Ratner lobbyist--was found guilty of conspiracy, fraud, false tax returns, and more (in a case unrelated to FCR). Federal prosecutors made it very clear that Sampson, though not charged in this case, was part of it, having approved payment of a false invoice.

Among the astounding elements of the case is that Lowe "received more than $2.1 million in consulting income from 2007 to 2012," but wound up filing only three annual returns, reporting less than $25,000 in income each year.

The press release

A press release yesterday from the Department of Justice, U.S. Attorney for the Southern District of New York, Former Consultant To New York Democratic Senate Campaign Committee Found Guilty Of Tax And Fraud Charges, subtitled "Jury Found Melvin Lowe Guilty of Conspiring with New York State Senator John Sampson To Defraud the Democratic Senate Campaign Committee":
Preet Bharara, the United States Attorney for the Southern District of New York, and Shantelle P. Kitchen, the Acting Special Agent in Charge of the New York Office of the Internal Revenue Service – Criminal Investigation (“IRS”), announced that a former consultant to the New York State Democratic Senate Campaign Committee ("DSCC"), MELVIN LOWE, was found guilty today in White Plains federal court of conspiring with New York State Senator John Sampson to defraud the DSCC of $100,000. Lowe was also found guilty of one count of wire fraud arising out of his scheme to defraud the DSCC; three counts of subscribing to false tax returns; three counts of failing to file tax returns; and one count of causing a bank employee to make a false report of a federally insured bank. LOWE was found guilty after a one-week trial before U.S. District Judge Vincent L. Briccetti.
Manhattan U.S. Attorney Preet Bharara stated: "This conviction is another step in restoring the public's trust in New York State politics. As the jury found, Lowe participated in a series of backroom deals in which the bridge of corruption extended between the world of elected officials and their complicit consultants. Consultants, like elected officials, need to be held accountable in order to clean up our political system."
IRS-Criminal Investigation Acting Special Agent in Charge Shantelle P. Kitchen stated: “The public expects that politicians and those who work in the public arena be held to the same standards as they are, especially when it comes to matters of basic citizenship, like paying taxes, and applying for loans. This jury has held Mr. Lowe accountable to these standards.”
According to the Complaint and the Indictment filed in federal court and the evidence presented at trial:
LOWE was retained as a consultant by the DSCC after New York State Senator John Sampson was appointed as the Senate's Democratic Conference Leader following the June 2009 "coup" that temporarily shifted the balance of power in the New York Senate from the Democrats to the Republicans. In early June 2010, Sampson asked LOWE to arrange for a covert payment of $20,000 to Michael Nieves, a Queens-based political operative who had previously worked for former New York State Senator Hiram Monserrate and who had helped engineer the resolution of the Senate coup that had brought Sampson to power. LOWE then arranged for a New Jersey-based political consultant to submit a false invoice to the DSCC for $100,000 in printing services. Sampson approved payment of the invoice and the DSCC sent $100,000 to the New Jersey-based consultant. LOWE instructed the consultant to send $20,000 of the proceeds to Nieves, $75,000 of the proceeds to LOWE's consulting company and to keep $5,000 for himself. The jury heard evidence that LOWE and Senator Sampson had a close relationship of trust that included LOWE giving Sampson an envelope of cash.
LOWE received more than $2.1 million in consulting income from 2007 to 2012. He reported less than $25,000 in income in each of his returns for 2007 through 2009, which he did not file until late 2010. LOWE never filed returns for 2010 through 2012. He never made any payments toward his taxes for the years 2000 through 2012.
LOWE also caused an assistant manager of his bank to make a false statement to his mortgage lender regarding the balance in his checking account. When the mortgage lender sent his bank a Verification of Deposit form to verify LOWE's claim that he had $65,000 in his checking account, LOWE caused the assistant manager to claim that LOWE'S account had a balance of more than $80,000. At that time, the balance in LOWE'S checking account was $2,156.
* * *
LOWE, 53, of Manhattan, was found guilty of one count of conspiracy, which carries a maximum sentence of 20 years in prison; one counts of wire fraud, which carries a maximum sentence of 20 years in prison; three counts of subscribing to false tax returns, each of which carries a maximum sentence of 3 years in prison; three counts of failing to file tax returns, each of which carries a maximum sentence of 1 year in prison; and one count of causing a bank employee to make a false statement in a report and statement of a federally insured bank, which carries a maximum sentence of 30 years in prison. The conspiracy, wire fraud and tax charges each carry a maximum fine of $250,000, while the false statement charge carries a maximum fine of $1 million. The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the Court.
Mr. Bharara praised the outstanding investigative work of the Internal Revenue Service - Criminal Investigation and the investigators from the U.S. Attorney's Office for the Southern District of New York.
This case is being handled by the Office’s White Plains Division. Assistant United States Attorneys Perry A. Carbone and James McMahon are in charge of the prosecution.
(Emphases added)

Some coverage, but not much

Perhaps because the one-week trial was in White Plains, not Manhattan, the trial got pretty much no ongoing coverage.

But the conviction was followed up by a few articles. Crain's, in Democratic operative convicted on all counts, added some specifics:
Mr. Lowe was found guilty of steering the $100,000 to a New Jersey political consulting firm, Cornerstone Management Partners, which then kicked back much of the money to political consulting firms controlled by Mr. Lowe. Even before the crime, Mr. Lowe had been paid hundreds of thousands of dollars by the Democratic Senate Campaign Committee in 2010, which struggled for years to get out of debt caused by that election cycle's profligate spending. Democrats lost a briefly held majority in the Senate that year and are still fighting to regain it.
Twenty-thousand dollars also went to political consultant Michael Nieves, who has not been charged with any wrongdoing. Nor has political operative Elnatan Rudolph, a former Brooklynite who owned Cornerstone Management Partners and who received $5,000.
The Albany Times Union published Sen. Sampson’s political consultant found guilty of fraud, the New York Post published Former Sampson aide guilty of conspiring to defraud Dems, and Capital New York published Former Democratic consultant guilty of corruption.

Updated: I missed the Times article, Ex-Consultant Found Guilty of Fraud Tied to Lawmaker.

Nothing yet from the New York Daily News.

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