Federal
prosecutors have begun presenting evidence to a grand jury considering a
case against the leader of the New York State Senate, Dean G. Skelos of
Long Island, and his son, according to people with knowledge of the
matter.
Investigators
have served a number of subpoenas in recent weeks, including several to
state senators on Long Island, and federal prosecutors have interviewed
people who have had dealings with Adam Skelos, the Republican senator’s
son.
News of the investigation follows the arrest this year of Assemblyman Sheldon Silver,
a Manhattan Democrat, and his resignation as speaker; any criminal case
against Senator Skelos, the majority leader, would throw the Capitol
into further tumult.
Prosecutors
and the F.B.I. have focused on at least two areas in their
investigation, zeroing in on Adam Skelos’s business dealings, according
to several people with knowledge of the matter.
One
focal point has been Adam Skelos’s hiring by an Arizona company, AbTech
Industries, as well as a storm-water treatment contract that AbTech was
awarded by Nassau County — the senator’s political backyard — even
though the company was not the low bidder. Another area of inquiry has
been a $20,000 payment to Adam Skelos from a title insurance company
that he never worked for.
According
to people familiar with the questions being asked by federal
authorities, investigators are seeking to determine whether Senator
Skelos exerted any influence in matters involving AbTech. They are also
examining whether his son’s hiring as a consultant was part of a scheme
in which the senator, in exchange, would take official action that would
benefit AbTech or another company, Glenwood Management, a politically
influential real estate developer that has had ties to AbTech.
Any
such action could pose a conflict of interest or potentially violate
federal corruption statutes. It is unclear what actions, if any, Senator
Skelos has taken in connection to his son’s business dealings, or how
they relate to state government; neither man has been accused of
wrongdoing.
All
of the people who spoke about the investigation did so on the condition
of anonymity because of the delicate nature of the subject.
The investigation is being conducted by the office of Preet Bharara,
the United States attorney for the Southern District of New York, who
has embarked on an assault against graft and other political misdeeds in
Albany, describing the capital as a “caldron of corruption.” His
critics have accused him of grandstanding, and say his unusually blunt
public condemnations of how business is done in Albany have crossed the line for a federal prosecutor.
Glenwood Management, one of the state’s largest campaign donors, also surfaced in the criminal case
against Mr. Silver, who is accused of steering Glenwood and another
developer to a law firm that gave him a cut of their fees. Glenwood has
not been accused of wrongdoing in the Silver case or in the
investigation involving the Skeloses.
Adam
Skelos, 32, when asked about the investigation during a brief interview
outside his house, said he was surprised to learn he was the focus of a
federal inquiry. “I had no idea that this was even an issue,” he said.
“I got to tell you, this is really unexpected.”
Senator Skelos, 67, and his son did not respond to written questions from The New York Times.
The
inquiry into the senator and his son comes at a chaotic time in Albany.
In January, state government was rocked when Mr. Silver was arrested on
corruption charges brought by Mr. Bharara’s office.
The case against Mr. Silver and the investigation of Mr. Skelos grew in some measure out of the Moreland Commission,
an anticorruption panel that Gov. Andrew M. Cuomo created in 2013. The
governor, a Democrat, abruptly disbanded the panel last year as part of a
budget deal he negotiated in large part with Mr. Skelos and Mr. Silver;
Mr. Bharara’s office then opened a criminal inquiry into the shutdown.
As
with Mr. Silver’s, Mr. Skelos’s outside income as a lawyer has come
under federal scrutiny. In the senator’s case, his law firm, Ruskin
Moscou Faltischek, received a federal grand jury subpoena in 2014. In January,
WNBC-TV
reported that federal investigators were looking into Mr. Skelos’s
outside income, with a focus on his ties to the real estate industry.
The law firm has not been accused of any wrongdoing.
Mr. Bharara’s office and the Federal Bureau of Investigation declined to comment.
Adam
Skelos, who lives blocks from his father in a well-kept neighborhood in
Rockville Centre in Nassau County, is involved in an array of
businesses stretching from Long Island to Albany, according to a review
by The Times. In recent years, he has held positions at title insurance
companies.
But
it is his connection to AbTech Industries, which sells spongelike
filters to remove pollutants from storm water, that brings him in
particular proximity to state and local government.
For
a small business in Arizona, AbTech would seem unlikely to be
associated with Glenwood, which develops rental apartments in New York
City.
Glenwood’s
link to AbTech is buried in the regulatory filings of AbTech’s publicly
traded parent company. In 2011, one of its largest investors was a
company that shared an address on Long Island with Glenwood’s corporate
headquarters.
Two
men with close ties to the real estate company — Charles Dorego, a top
Glenwood executive, and Steven Swarzman, a grandson of Glenwood’s
longtime principal, Leonard Litwin — have signed public records filed by
the company that invested in AbTech’s parent company, Abtech Holdings.
Mr. Swarzman became friends with AbTech’s founder in Arizona, and,
impressed by the environmental sponge, became AbTech’s East Coast
distributor, according to a 2006 article in Newsday.
AbTech’s sponge has met with limited commercial success. In fact, the parent company is not profitable and trades
at roughly 30 cents a share. But AbTech got what appeared to be a big
break in 2013, when it secured a contract worth up to $12 million from
Nassau County for the design, installation and operation of a
storm-water treatment system.
Adam
Skelos introduced officials at the Nassau Department of Public Works to
AbTech, said Mary Studdert, a spokeswoman for the agency. Ms. Studdert
said Mr. Skelos had roughly a dozen meetings and phone calls with a
senior public works official; that person was a member of the committee
that evaluated the proposals for the storm-water project.
The
contract was awarded to AbTech, even though another company submitted a
substantially lower bid. County officials at the time contended that
AbTech would ultimately provide the best value, county documents show.
But
the low bidder, Newport Engineering, seemed mystified by the process.
Nicholas J. DeSantis, the company’s president, said that the Public
Works Department never acknowledged receiving his bid and that he was
not notified that the contract had been awarded.
So
far, AbTech has been paid only a small amount of the potential value of
the contract, according to the county comptroller’s office. In an
unusual arrangement for a local public works project in New York, the
contract calls for AbTech to oversee both design and construction,
requiring Nassau to secure state legislative approval for the contract
to go forward as intended. No lawmaker has sponsored the necessary
legislation, Ms. Studdert said.
The
Nassau County executive, Edward P. Mangano, a Republican who held a
news conference in 2014 to publicize the AbTech contract, did not
respond to questions sent to his spokesman.
AbTech
has not been accused of wrongdoing and did not respond to written
questions from The Times. A lawyer for Glenwood, Alan Levine, declined
to comment.
In
addition to AbTech’s effort to solicit government contracts, a
subsidiary of its parent company has lobbied in Albany on several
matters, including engineering issues, although it is unclear whether
those activities are under federal scrutiny.
Federal
investigators have also focused on a one-time $20,000 signing bonus
paid to Adam Skelos by American Land Services, a title insurance firm,
according to people with knowledge of the matter. Mr. Skelos never went
to work at the company and did not return the money, the people said.
American
Land Services also has at least one indirect link to Glenwood, although
it is not known whether that is under scrutiny by federal authorities.
Property records show that in June 2014, a senior executive at American
Land Services paid $330,000 for an undeveloped South Carolina vacation
property along a golf course on Kiawah Island. The executive, Tom Dwyer,
the company’s chief operating officer, bought the parcel from Mr.
Dorego, the Glenwood executive, who personally financed Mr. Dwyer’s
mortgage.
Neither
Mr. Dwyer nor other executives at American Land Services responded to
requests for comment by phone and email. Mr. Dorego declined to answer
questions, telling a reporter, “I have nothing to say.”