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Another Democrat Faces Fraud Charges

Updated, 1:02 p.m. | City Councilman Larry B. Seabrook surrendered to city and federal authorities in Manhattan on Tuesday to face a 13-count indictment accusing him of money laundering, extortion and fraud in a series of schemes that included helping a close associate win a contract to install boilers in the new Yankee Stadium.

The charges also include actions related to Mr. Seabrook’s use of City Council discretionary funds, known as earmarks, to finance a string of nonprofit groups. Prosecutors say Mr. Seabrook, a Bronx Democrat, controlled and used the funds to pay hundreds of thousands of dollars in salary and consulting fees to, among others, his companion and brother and other family members. Mr. Seabrook and others were able to do this, prosecutors contend, by repeatedly inflating expense claims to the city on the part of the nonprofit groups, including rent costs.

Between 2002 and 2009, Mr. Seabrook directed more than one million to the groups while never disclosing his close affiliation to the groups, the indictment states.

The alleged conduct detailed in the 65-page indictment ranges from ambitious to the absurd — from engineering the addition of his associate to the list of bidders on the boiler contract to altering a $7 receipt for a bagel sandwich and diet soda so that he was reimbursed $177 for the purchase.

The Yankees, through a spokeswoman, said that the team cooperated fully with the investigation and that the prosecutors had told the ball club that there “is no allegation of wrongdoing on the part of anyone within the Yankees’ organization.” The spokeswoman, Alice McGillion, said that no one within the Yankees organization had any knowledge of wrongdoing.

Mr. Seabrook’s lawyer, Murray Richman, said he was contacted by prosecutors early Tuesday morning and was asked to surrender his client for arrest. Mr. Richman said he was told that Mr. Seabrook would be charged in a 13-count indictment that included charges of money laundering, larceny and conspiracy.
The lawyer said he had not seen the indictment and did not have enough information to comment about the charges.

“Once I have been able to review the indictment and all of the allegations, I will be able to comment more fully,” Mr. Richman said.

Mr. Seabrook, a three-term Bronx councilman and former state senator, has been under investigation for months in relation to city contracts he helped secure for various Bronx nonprofit organizations with which he was closely affiliated.
A federal grand jury in recent weeks has also been looking at various boiler contracts that Mr. Seabrook helped secure for a Bronx businessman and close associate, according to people familiar with the investigation.

Four of the 13 counts in the indictment are based on what prosecutors allege was Mr. Seabrook’s successful lobbying effort to help his close associate win the nearly $300,000 subcontract to install two boilers at the new Yankee Stadium and his direct solicitation of $50,000 in payments from the man.

The contract was part of a community benefits agreement under which the Yankees agreed to award 25 percent of the construction contracts to qualified Bronx-based businesses, at least half of which would also be qualified minority, women-owned companies.

The associate is not named in the indictment, but is identified only as “the Bronx Boiler Manufacturer.” But several people involved with the matter said it was Leon Eastmond, whose company A. L. Eastmond & Sons, installed the boilers. He won the contract despite the fact that his bid was $13,000 higher than the lowest bid.

The four counts were receiving corrupt payments, extortion, travel and use of interstate facilities to confer illegal benefit on a public servant and money laundering.

The indictment charges that Mr. Seabrook, in his capacity as a councilman, lobbied the Yankees, in part through a consultant hired by the team to serve as a liaison with elected officials and community leaders. He was ultimately able to have Mr. Eastmond’s company added to a list of four bidders for the subcontract that had been prepared by the stadium contractor.

“Seabrook told the Yankees’ representative that the boiler contract should be awarded to the Bronx Boiler Manufacturer, and Seabrook personally toured the Bronx Boiler Manufacturer’s facilities with the Yankees’ representative and an executive of the Bronx Boiler Manufacturer,” the indictment said.

Stanley A. Twardy Jr., a lawyer representing Mr. Eastmond with the firm of Day Pitney said that despite the higher bid, there were no allegations that the contract was improperly awarded.

“Nowhere in the indictment is it alleged that Mr. Eastmond didn’t submit a qualified bid or provide a quality product,” Mr. Twardy said.

The remaining counts in the indictment center on several nonprofit groups closely affiliated with Mr. Seabrook, some of which he financed as both a councilman and a state legislator, though the charges are limited to his time on the Council beginning in 2002. The groups include the Northeast Bronx Redevelopment Corporation; the Bronx African-American Chamber of Commerce; the New York African-American Legal and Civic Hall of Fame and the African-American Civic and Legal Hall of Fame; Leon Eastmond Educational Excellence Program, which prosecutors refer collectively as the “Hall of Fame”; the Mercy Foundation; and the African-American Bronx Unity Day Parade.

According to prosecutors, the groups shared office space, frequently operating out of the same building in which Mr. Seabrook maintained his Council district office. All were controlled and run by Mr. Seabrook and a select group of his friends, relatives and associates, charging documents say, including his companion and former aide. The companion is not named in the documents, but according to numerous city and state documents, she is identified as Gloria Jones-Grant. Ms. Jones-Grant, identified in charging documents as “Associate No. 1,” served at various times as executive director or consultant for nearly all of the groups.

Charging documents say that from 2002 on, the groups paid more than $500,000 to Ms. Jones-Grant, Mr. Seabrook’s brother, two of Mr. Seabrook’s sisters and one nephew. Prosecutors say the groups, under Mr. Seabrook’s direction, fraudulently billed the city more than $102,000 from 2004 to 2007 in inflated rent payments and an additional $110,800 in other expenses.

“In truth and in fact,” the indictment states, “and as Seabrook well knew, these nonprofit organizations were not doing enough legitimate work to justify the funds they were receiving from the council.”

In June, federal investigators issued subpoenas to landlords who leased space to Mr. Seabrook and several nonprofit groups closely linked to him after a report in The New York Times that the groups had billed New York City more than $100,000 in inflated rent payments and had used nonprofit money to pay salary and fees to Mr. Seabrook’s family members.

The Times reported that in at least two cases, Mr. Seabrook rented buildings from landlords at one price and struck side deals with the landlords to share the space, for an additional fee, with a nonprofit organization he founded. The organization, the African-American Bronx Unity Day Parade, then sublet the space at far higher rates to three other nonprofit groups that were run by the councilman’s associates and funded through his Council discretionary funds, city records and interviews showed. Two of the nonprofit groups also billed the city for a building they did not occupy.

From July 2004 through March 2007, the city paid more than $156,900 in rent reimbursements for space that cost the parade organization only $40,000 to rent, The Times found.

The inquiry appeared to be an expansion of an investigation under way by the city’s Department of Investigation and the United States attorney’s office for the Southern District of New York, which have been looking into the spending practices of nonprofit groups that receive money through the City Council and other government agencies. Mr. Seabrook is the second Council member to be charged in the investigation.

In December, Miguel Martinez, a former councilman for Upper Manhattan, was sentenced to five years in prison on three felony counts involving the theft of $106,000, some of which was intended for nonprofit organizations.

After routing $41,000 of the payments from Mr. Eastmond to his political club, Mr. Seabrook converted the money for his own personal expenses by submitting receipts for expenses that he had supposedly made for club business, the indictment said. But the money was in fact spent for his personal expenses, for a trip to Florida, department store gift cards, luggage, books, parking fines and flowers for his sisters.

A number of the receipts were forged or doctored, according to the indictment, including the $7 bagel sandwich chit that he submitted for $177.

The Yankee’s spokeswoman, Ms. McGillion, noted that the boiler contract was “of a type that had been encouraged by the Community Benefits Agreement and was performed satisfactorily.”

She said that when the baseball team learned of the situation, they asked the independent construction monitor they had hired to oversee the project, Edwin H. Stier of Thacher Associates, to look into the matter and he confirmed it.

Speaker Christine C. Quinn said in a statement early on Tuesday afternoon that all of the members of the council “take the deeply troubling allegations” against Mr. Seabrook “very seriously,” adding that the matter was immediately referred to the body’s Standards and Ethics Committee, which will convene as early as next week.

“If Council Member Seabrook’s alleged crimes are proven to be true, they display a galling abuse of the trust and confidence placed in public officials,” the statement said. “I am confident our judicial system will move forward with appropriate action.”


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Added: Feb-10-2010 Occurred On: Feb-10-2010
By: Songun
In:
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Tags: Larry B. Seabrook, crime, fraud, democrat
Location: Manhattan, Montana, United States (load item map)
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