It was no surprise when the Soundview Healthcare Network in the Bronx began to liquidate its assets earlier this summer. After all, its founder and chief executive, Pedro Espada Jr., the former Democratic state legislator, had been convicted of stealing hundreds of thousands of dollars from the nonprofit organization, and soon afterward, seemingly a casualty of corrupt management, it stopped accepting patients and started laying off staff.
But when what was left of the network was finally sold off for $600,000, the bulk of the proceeds went to some surprising recipients: Mr. Espada, his family members and companies they controlled.
Now prosecutors are seeking to revoke the bail of Mr. Espada, who has been free pending his sentencing, arguing that the deal represents one final swindle.
It was a stunning new twist in the slow, strange undoing of Mr. Espada, who had sidestepped decades of rumors of corruption to bruise his way to the heights of state government, including staging an audacious power grab that won him a brief stint as majority leader in the State Senate.
Throughout his career, Mr. Espada cast himself as a man of the people, dedicated to providing health care to a poverty-stricken borough, but allegations that he was stealing from the nonprofit followed him for years. In May, after nearly six weeks of testimony and two weeks of deliberation, a jury decided to convict him.
He is still facing charges in federal courts in both Brooklyn and Manhattan, including a trial for tax evasion scheduled for November.
According to the document first filed by prosecutors in Federal District Court in Brooklyn, just weeks after Mr. Espada's conviction the health network — by then perhaps the most scrutinized nonprofit organization in the state — sold its remaining assets for $600,000 to a nonprofit group called the Institute for Family Health. The assets included medical equipment and the rights to its lease in the Bronx.
The deal was organized by one of Mr. Espada's sons, Alejandro, who took over his father's post as chief executive. As a condition of his release on bail, Mr. Espada was barred from any involvement in Soundview's affairs.
Bank records show that one day after Soundview deposited the money from the sale, Alejandro Espada obtained cashier's checks and distributed more than $350,000 to family members, companies that the family controlled and his father's lawyers, according to court documents. Mr. Espada himself received a $40,000 check. (The remaining portion was distributed to Soundview employees.)
Before the sale, all of Soundview's bank accounts were in the red or nearly empty, and the company owed more than $2 million to creditors and about $1 million to the Internal Revenue Service. According to prosecutors, none of those received money from the sale.
Prosecutors with the United States attorney's office in Brooklyn, who have said they will retry him on the counts where the jury was unable to reach a verdict and who are prosecuting the separate case against him in Manhattan, argued that the payments showed Mr. Espada's continued involvement in Soundview and that his bail should be revoked.
"An independent charity divorced from the defendant's influence would not pay a large portion of its remaining assets to the very individual who had just been convicted of stealing from it," Todd D. Kaminsky, an assistant United States attorney, wrote in the court filing.
"Logic dictates that the defendant owes money to Soundview, not the other way around."
When Mr. Espada appeared in June in federal court in Manhattan on the tax evasion charges, he told the judge he could not afford his own lawyer and showed his empty bank accounts as evidence of his poverty.
But prosecutors now charge that he and his family members had emptied their accounts and taken the cash just days before, in a deliberate attempt to block efforts to hold him financially accountable for his crimes.
Mr. Espada's longtime lawyer, Susan R. Necheles, whose firm prosecutors said received $50,000 of the Soundview money, did not return a call for comment.
Mr. Espada's court-appointed lawyer in the tax evasion case, Daniel Hochheiser, said in a written statement: "My client's local, family and community ties here in New York are longstanding and strong. Espada will continue to appear in court for all hearing and trial dates. Bail revocation is not warranted."
The decision on whether Mr. Espada will remain free falls to Judge Frederic Block of Federal District Court in Brooklyn, who is scheduled to rule on the prosecutors' request on Friday.
By MOSI SECRET 20 Sep, 2012
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Source: http://www.nytimes.com/2012/09/20/nyregion/pedro-espada-jr-violated-bail-terms-prosecutors-say.html?partner=rss&emc=rss
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