Attorney General Andrew Cuomo just announced the anticipated indictment of outgoing Senate Majority Leader Pedro Espada, Jr. and his son, Pedro G. Espada.

The six-count federal indictment accuses the Bronx lawmaker and his son of stealing more than half a million dollars from the Soundview clinic, which is a federal-funded healthcare not-for-profit.

Those agencies raided the Soundview clinic back on April 21st.

The indictment comes as a result of a joint investigation between the AG’s office and the US Attorney’s Office for the Eastern District of NY, the FBI and the IRS.

The Espadas are facing five counts of embezzlement and one count of conspiracy.

If convicted, they face up to 10 years in prison on each of the embezzlement counts and 5 years for the conspiracy charge, on top of another $250,000 fine for each conviction.

“As alleged, Pedro Espada and his son spent years secretly siphoning money from healthcare clinics in order to fund Espada’s lavish lifestyle,” said Attorney General Cuomo via press release.

“Taxpayer funds meant for the sick and poor were instead used for Broadway shows, fancy meals, and other opulent personal expenses of Pedro Espada.  Elected officials are supposed to serve the people not themselves, and this indictment should send a strong message: In New York, no one is above the law.”

The details of the indictment appear after the jump.

Cuomo has scheduled a 5:30 PM conference call to discuss the indictment.

DETAILS OF THE INDICTMENT

Today’s indictment by a federal grand jury charges that, since 2005,

Espada and his son knowingly and willfully conspired to steal and stole

money from Soundview, a network of health care clinics located in the

Bronx.  This amount reflects monies that Espada and his son spent for

their personal gain but claimed as business expenses.  The Espadas

allegedly diverted funds for their personal use and for the benefit of

family members and friends.

The various schemes allegedly executed by the Espadas include:

●          Pedro Espada caused Soundview to pay charges for his personal

expenses through the Soundview corporate American Express card.  Those

charges included more than $100,000 in personal meals for Pedro Espada

and his family members, window treatments for Pedro Espada’s home, and

tickets to Broadway shows and sporting events.

●          Espada and Gautier used a for-profit janitorial company –

Community Expansion Development Corporation (“CEDC”) – to divert

funds from Soundview and then spent the funds on personal use and

political expenses, including the rent for Espada’s campaign

headquarters, campaign materials, pony rides and a petting zoo for a

family member’s birthday party, and a $49,000 check Espada attempted

to use as a down payment on a Bentley automobile.

●          Espada and Gautier diverted rental payments owed to Soundview to

two different entities – CEDC and another for-profit janitorial

company known as Soundview Management Enterprises and used these funds

to pay personal expenses for themselves and family members.

●          Gautier rigged the awarding of a Soundview janitorial services

contract by providing false contract requirements to other bidders,

ensuring that Soundview Management Enterprises was awarded the contract

at an inflated price, which enriched himself and Pedro Espada.

Soundview was founded by Pedro Espada Jr. with the purpose of providing

healthcare to the people of the South Bronx.  It is a not-for-profit

that receives a vast majority of its funding from the State and Federal

Government.

The investigation is ongoing.  The charges against the defendants are

merely accusations and the defendants are presumed innocent until and

unless proven guilty.

BACKGROUND

In April 2010, Attorney General Cuomo filed a lawsuit filed against

Espada for diverting Soundview’s charitable assets and using the money

for himself, his family, his friends, and his political operation.

Nineteen current and former officers and directors of Soundview were

also named in the lawsuit.  The lawsuit alleged that in the past five

years, Espada siphoned more than $14 million out of Soundview, including

an unconditionally guaranteed severance package worth an estimated $9

million that was put into a contract signed in 2005.  The lawsuit seeks

to permanently remove Espada and current CFO Kenneth Brennan as officers

of Soundview and, similarly, to remove all of Soundview’s directors

from the Board.  The lawsuit also seeks restitution from Espada.

Also in April 2010, Attorney General Cuomo filed a separate lawsuit

against Senator Pedro Espada, Jr. and Gautier, for violating labor laws

by creating a sham job training program that cheated workers and

shortchanged State coffers. The lawsuit alleged that Senator Espada

created a personally owned, for-profit management company, Soundview

Management Enterprises LLC (Espada Management), as a vehicle to siphon

money from Soundview, the Bronx-based not-for-profit where Espada is

founder and CEO.  The money flowed from Soundview to Espada Management,

run by Gautier, by means of a contractual arrangement that called for

Espada Management to supply janitors for the Soundview medical clinics.

These civil investigations into Senator Espada and Soundview are

ongoing.

This case is being prosecuted by Assistant United States Attorneys

Colleen Kavanagh, Ilene Jaroslaw, and Todd Kaminsky, and Special

Assistant United States Attorney Mitra Hormozi.

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