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On the turf of former State Senator Carl Kruger and embattled State Senator John Sampson, U.S. Attorney Loretta Lynch came before a group of concerned citizens with a message: don’t despair, not everyone is corrupt, be you must be active and involved to ensure the best from your elected leaders.

Madison Marine Homecrest Civic Association hosted the event on Thursday, May 16, inviting Lynch to the Carmine Carro Community Center in Marine Park to talk about the recent cases. Lynch’s appearance came amid scandalous headlines involving Sampson who’s at the center of a handful of federal probes, and less than two years after the arrest and resignation of Kruger. Both represented portions of Marine Park.

The entire 40-minute talk by Lynch, which included questions from the audience, is posted above. But, aside from Sheepshead Bites, a slew of other reporters were at the event. Here’s what some of them wrote:

From Newsday:

Don’t “succumb to cynicism and apathy. Don’t give up — stay committed,” said Lynch, who is the chief federal prosecutor for the Eastern District of New York in Brooklyn, which also includes, Queens, Staten Island and Long Island.

“Stay involved . . . Don’t give up.”

… When the audience was asked how many of them believed all politicians are corrupt, nearly everyone in attendance raised a hand.

Lynch told the audience, “We have to take back the system from the people who trampled on it. I don’t own it, you own it.”

From the Brooklyn Eagle:

Lynch took that message a step further when she said that not only should people not give up on the political process, but also that their participation is necessary.

… U.S. Attorney Lynch stated that apathy hurts the democratic process and that – along with wiretaps, undercover officers, and witnesses using recording devices – ordinary citizens who notice inconsistencies often play a big role in bringing corrupt politicians down.

“We are all enforcers,” Lynch said. “We all play a role. People need to get involved. ‘See something, say something’ is not just a slogan for the subway.”

Lynch also cautioned people to be patient in corruption cases and warned that just because somebody’s name is brought into the mix doesn’t necessarily mean they are corrupt.

“There can often be names that come out that should not have come out because, especially early on in an investigation, it’s impossible to determine their involvement and often it just tars their names,” she said.

Political reporters converged on Lynch after the event, asking her about recent allegations from minority lawmakers that the feds, including Lynch, were unfairly targeting elected officials of color. Lynch, herself an African-American who began her career working in civil rights, denied the charges.

From the Eagle:

When Lynch was questioned about whether black politicians are unfairly targeted, she replied, “Not stealing money is not a high standard. We look at the behavior of everyone. Our goal is to protect communities. You deserve integrity regardless of what your background is.”

And from Politicker:

When Lynch was questioned about whether black politicians are unfairly targeted, she replied, “Not stealing money is not a high standard. We look at the behavior of everyone. Our goal is to protect communities. You deserve integrity regardless of what your background is.”

… “No matter what type of case we prosecute, people who may feel targeted are concerned and make all kinds of statements about it,” Ms. Lynch said. “It’s part of the problem of public corruption that it really almost makes everyone look as if they’re involved, even if they’re not. And so you have people get very paranoid and very nervous and feel as if they’re under a microscope … We don’t go around targeting people other than those that we strongly have evidence [against], but I think what happens is, the atmosphere is very toxic, for lack of a better word, and it does affect people and that’s a byproduct of these cases,” she said.

A slew of local elected officials, including Councilman Lew Fidler and Assemblymembers Helene Weinstein and Alan Maisel, spoke before Lynch, and used it as an opportunity to remind attendees that the recent headlines reflect a few “bad apples.” They also touted anti-corruption legislation they’re working on, including disallowing lawmakers from using campaign funds on legal fees, and the ability to strip convicted legislators of their pension.

You can see their remarks here:

Rasputin, the windowless, mausoleum-like restaurant and nightclub at 2670 Coney Island Avenue, has been shuttered and padlocked.

There is a notice taped near the entrance that shows it was closed by city marshals and turned over to the landlord.

It’s unclear if this is related to the criminal case against Michael Levitis, the owner of Rasputin Restaurant. Levitis is alleged to be the ringleader of a fraud scheme, in which a company he controlled – Mission Settlement Agency – preyed on debt-laden victims. The company claimed to reduce a client’s debt to creditors and make payments on their behalf. In reality, prosecutors say, the company collected fees and did little or nothing to help clients, and Levitis used the fees to pay operating expenses at Rasputin, lease two luxury Mercedes and pay off his mother’s credit card bills.

Prosecutors have filed to seize approximately 40 bank accounts connected to Levitis, as well as Rasputin Restaurant and two properties he owns in Manhattan Beach. The assets would be used to pay back his victims if Levitis is found guilty.

However, the property on which Rasputin sits is not owned by Levitis. Notices like the one above are often left when a lessee fails to pay his rent and the landlord wins an eviction in court. It’s unclear if that’s the case, or if the landlord was somehow able to wrangle back control of the property amid Levitis’ problems.

The landlord was not available to answer questions as we went to press, but we will update if we hear from them.

Meanwhile, a post on Michael Levitis’ Facebook page that had announced the closure late last week or over the weekend has since disappeared. In reply to comments left on the post, Levitis had credited the closure to “higher powers,” but had not elaborated beyond that point when we stumbled across it.

State Senator John Sampson (center) (Source: nysenate.gov)

The troubles for State Senator John Sampson keep mounting. Sampson, who has been accused of accepting bribes and threatening witnesses who might testify against him, now has state officials wondering where more than $39,000 in taxpayer money earmarked for a Brooklyn charity has gone.

Times Union is reporting that Sampson, who represents parts of Sheepshead Bay, funneled $39,560 to a charity that was supposed to train inner city youths the inner workings of a digital radio station. The radio station, “One Caribbean Radio,” is owned by Edmon Braithwaite and broadcasts to the more than three million Caribbean New Yorkers.

When One Caribbean Radio received the grant, they failed in documenting the spending of the money in question. Officials are accusing Sampson and Braithwaite of investing the money in a Bedford-Stuyvesant liquor store named Good Wine and Spirits.

In his defense, Sampson said he had relinquished his ownership stake in the liquor store earlier in the year and that law enforcement officials weren’t interested in the matter.

Despite this, the State Liquor Authority refused to issue details on the liquor store, telling Times Union that, “disclosure of the information and documents requested would interfere with an ongoing investigation.”

Source: aresauburn via flickr

While it seems that every major American city has its own brand of political corruption, New York’s scandal plagued politicians are marked by the high cost their misdeeds inflict on taxpayers. The New York Post is reporting that the accumulated cost of all the illegal and unethical actions of dirty politicians have cost taxpayers at least $49,710,630.64 since 2006.

The rogues gallery is led by former state Comptroller Alan Hevesi, who cost the state $36 million in pension-fund management fees after taking nearly $1 million in illegal gifts; ex-state Sen. Pedro Espada, who funneled $7 million to himself and family members through a Medicare-funded nonprofit; and Assemblyman Vito Lopez, who cost taxpayers $103,000 in secret settlements after staffers accused him of sexual harassment.

The huge sum of money does not include the $440,000 in bribes that have recently put State Senator John Sampson in hot water. It also doesn’t include money promised by politicians that was never distributed, including $80,000 in discretionary funds given to a dummy company by Councilman Dan Halloran in exchange for a bribe.

The list of crooked pols also includes former State Senator Carl Kruger, who was bribed into funneling $900,000 to certain nonprofits. Kruger is currently serving a prison sentence on federal corruption charges.

Source: 401 (K) via Flickr

Corrupt New York politicians are dominating the news lately, most recently the scandal surrounding State Senator John Sampson. While the alleged crimes of Sampson and Malcolm Smith are serious in size and scope, they aren’t the only local politicians skirting on the edges of the rules, especially when it comes to those governing state campaign finance laws.

A report by the Associated Press cites studies done by the New York Public Interest Research Group (NYPIRG) that have found over 100,000 violations committed by New York politicians since 2011. The violations also include failures by campaign committees to file accurate reports.

Bill Mahoney, a researcher for NYPIRG, stated that his group noted 278 improper corporate donations among other violations.

“Some of them are flagrant violations of the state’s contribution limits. Others are more minor peccadillos that show a complete disregard for the law because they occur in such huge numbers,” the Chronicle reported Mahoney saying.

The report explained why nothing is being to done to enforce violations:

Barbara Bartoletti of the League of Women Voters, whose group has monitored the state Board of Elections for decades, said then Gov. Eliot Spitzer budgeted $1.5 million for board enforcement of election laws in 2009, but it was never used because the agency is controlled by the Republican and Democratic parties. It has no will for enforcement, she said. “Right now it has no investigators.”

The NYPIRG report says that corruption on the state level is “exponentially greater” then the corruption on the city level. Governor Andrew Cuomo cited the report as a clear need to move away from the current system, which allows state officials to police themselves, and is pushing for greater independent enforcement.

The AP report noted that local State Senator Marty Golden was found to be in violation of more minor offenses have “seemingly questionable expenses.” Apparently, on his way to and from Albany, Golden refuels his car using campaign cash in Mahwah and Hackensack, New Jersey, where gas is cheaper. [Corrected: See below, with statement from Golden's office]

Golden, who is for stronger enforcement, defended his actions by stating that he saves 30 cents a gallon by filling in up in New Jersey on his 170 mile trip to Albany.

Correction (May 10 at 11:40 a.m.): Our original post indicated that the NYPIRG report noted “minor offenses” by Golden in spending campaign cash on gas in New Jersey. In fact, that was an observation by the Associated Press, and was listed as a “seemingly questionable expense,” not a violation. Golden spokesperson Ray Riley wrote the following to Sheepshead Bites:

It’s not a violation, nor has it been considered a violation.  If you read the AP article, the author writes: “The AP review of finance records found seemingly questionable expenses..”  which means the AP found them to be questionable, not the New York State Campaign Finance or Board of Elections.

We regret any confusion this may have caused.

John Sampson (center) Source: nysenate.gov

State Senator John Sampson, who is the latest local politician to be embroiled in a serious corruption scandal, is now accused of threatening the witnesses lined up against him, according to a New York Times report.

The accusations now cast upon Sampson are growing in seriousness and scope. In the earliest reports released this week, Sampson was accused of soliciting advice from another New York politician, Queens State Senator Shirley Huntley, on how to arrange accommodations for a businessman seeking to use bribes to help his business at JFK airport.

Now Sampson is being fingered for stealing $400,000 from the sale of foreclosed homes and attempting to thwart the federal inquiry surrounding these crimes.

Federal prosecutors say that Sampson approached a friend in the office of the US Attorney for the Eastern District, asking for a list of all cooperating witnesses so that he could figure out a way to “take them out.”

Sampson used the $400,000 on an unsuccessful bid for the Brooklyn District Attorney’s office in 2005. The Times then described what Sampson did next:

The next year, prosecutors said, he persuaded a prominent real estate developer to give him nearly $200,000 help cover up the thefts. When the developer was arrested on unrelated charges, Mr. Sampson feared his crimes would be uncovered and turned to his friend in the United States attorney’s office.

The developer was not named in court documents, but law enforcement officials with knowledge of the matter identified him as Edul Ahmad, who pleaded guilty to mortgage fraud in 2012. The employee in the United States attorney’s office also was not named. Prosecutors said the person, identified by a law enforcement official as Sam Noel, had been fired after being found with a list of the witnesses’ names that Mr. Sampson had requested.

Loretta Lynch, an attorney for the Eastern District of New York told the Times that this case represented, “one of the most extreme examples of political hubris we have yet seen.”

So far Sampson, who surrendered to federal authorities on Monday, has pleaded not guilty to two counts of embezzlement, five counts of obstruction of justice and two counts of making false statements to the FBI.

Prosecutors have offered Sampson a plea agreement in which he would have to plead guilty to embezzlement and accept a sentence of 37 to 46 months. If Sampson is found guilty at trial, he faces up to 20 years. Sampson has until the end of the month to accept the offer.

Levitis (Source: Facebook)

Rasputin owner and Russian Dolls co-star Michael Levitis pleaded not guilty to charges of wire fraud, mail fraud and conspiracy and was released on $1 million bail after his indictment yesterday. But, more interestingly, Levitis claims he’s a victim of government neglect who had tried to tip off authorities to malfeasance by “rogue employees.” He said he was ignored.

This nugget from the New York Times has all you need to know:

Mr. Levitis, who was charged with conspiracy, mail fraud and wire fraud, pleaded not guilty and was released on $1 million bond. His lawyer, Jeffrey Lichtman, said by phone that his client had known about the investigation for several months, had cooperated fully and had tried to provide information to the government about certain employees he believed were responsible for wrongdoing. Mr. Lichtman said his client was ignored.

“The frustrating part about this is we repeatedly attempted to present evidence to the government that there were rogue employees that were working at Mission and were engaging in the sort of fraud that we now see in the indictment,” Mr. Lichtman said.

“We’re prepared to fight it to the end,” he added.

The Times also notes that the investigation into Mission Settlement Agency and Michael Levitis was aided by undercover agents and a cooperating witness who posed as a customer.

As we first reported yesterday, Levitis is alleged to be the ringleader of a fraud scheme, in which a company he controlled – Mission Settlement Agency – preyed on debt-laden victims. The company claimed to reduce a client’s debt to creditors and make payments on their behalf. In reality, prosecutors say, the company collected fees and did little or nothing to help clients, and Levitis used the fees to pay operating expenses at Rasputin Restauraunt, lease two luxury Mercedes and pay off his mother’s credit card bills.

Prosecutors have filed to seize approximately 40 bank accounts connected to Levitis, as well as Rasputin Restaurant and two properties he owns in Manhattan Beach. The assets would be used to pay back his victims if Levitis is found guilty.

Levitis and three other co-conspirators face 20 years in prison for each charge. Two additional employees were charged, pleaded guilty, and are aiding the investigation.

His attorney, Jeffrey Lichtman, has represented high-profile clients including John Gotti, Jr., and rappers The Game and Fat Joe.

Levitis’ home at 1001 Oriental Boulevard. Prosecutors are moving to seize it to repay his alleged victims. (Source: Google Maps)

Prosecutors have filed papers to restrain approximately 40 bank accounts operated by Michael Levitis or those connected to him, and have moved to seize two Manhattan Beach properties in order to preserve funds for victims of his alleged fraud, according to statements by U.S. Attorney Preet Bharara.

The home at 132 Norfolk, also owned by Levitis, which prosecutors are moving to seize. (Source: Google Maps)

According to the indictment, investigators have identified several bank accounts in the name of Levitis, Rasputin, Mission Settlement Agency and alleged co-conspirators which may be turned over to victims of the debt settlement fraud charges revealed this morning. They are also targeting his stake in Rasputin Restaurant, at 2670 Coney Island Avenue.

They also list two properties owned by Levitis – his home at 1001 Oriental Boulevard, and another property at 132 Norfolk Street.

If Levitis is found guilty and ordered to compensate as many as 2,200 victims of fraud through Mission Settlement Agency’s services, the properties will be liquidated to reimburse the victims.

The charges revealed this morning allege that Levitis and three co-conspirators offered debt settlement services, in which they collected fees without doing the services they advertised. Moreover, they are believed to have made false claims about their fees and their track record. And while clients forked over millions of dollars to be paid to their creditors, little if any ever made it that way. Instead, Levitis used it to pay operating expenses at Rasputin, lease two luxury Mercedes, and pay down his mother’s credit card debt.

Aside from the four that were charged this morning, two other Mission sales representatives were also charged: Felix Lemberskiy and Zakhir Shirinov. These two employees have been separately charged and have already pleaded guilty.

Mission Settlement Agency also went by the names Mission Abstract LLC and Alpha Debt Settlement.

View the U.S. Attorney’s remarks on the case, as well as the indictment.

Michael and Marina Levitis (Source: James Edstrom)

Rasputin Restaurant owner and Russian Dolls co-star Michael Levitis, and three others, were charged with fraud this morning, as prosecutors claim they operated a debt settlement company that swindled more than 1,200 people out of a total of millions of dollars

The offices of Mission Settlement Agency at 2713 Coney Island Avenue, (Source: Google Maps)

Levitis, who owns Mission Settlement Agency at 2713 Coney Island Avenue in addition to Rasputin, was charged with mail and wire fraud along with three employees: Denis Kurlyand, its vice president of sales; Boris Shulman, a sales representative; and Manuel Cruz, an employee who assisted with customer solicitation.

(UPDATE: Prosecutors are moving to seize Levitis’ properties. Additionally, two other co-conspirators were identified and have already pleaded guilty.)

Prosecutors say that Mission Settlement Agency claimed to help customers struggling with credit card and bank debt by helping them reach settlements that could cut the amount owed. But the company “systematically exploited and defrauded” customer, the criminal complaint says, by charging fees without ever rendering services.

Mission also served as the middle man, collecting payments from customers that were supposed to be passed on to those they owed. Instead, the indictment says, from mid-2009 to March 2013, about 2,200 customers paid nearly $14 million, of which only $4.4 million went to the creditors.

The company kept $6.6 million for itself as fees. As many as 1,200 of the clients paid $2.2 million in fees without “a single penny” reaching their creditors.

Meanwhile, Levitis used the remaining funds as his personal piggy bank, directing some of it to pay his own debts on Rasputin Restaurant (2670 Coney Island Avenue), as well as to lease two luxury Mercedes cars. He did also manage to pay down the credit card debt of his mother, Eva, who owned the company on paper, the Post reports.

According to the indictment, as part of his sales pitch, Levitis touted an affiliation with the federal government and one of the three leading credit bureaus in the U.S., relationships that prosecutors say was all smoke.

It’s not the first time Levitis has claimed a government relationship he may not have had.

Back in 2010, Levitis was charged with lying to federal agents after he got caught up in a bribery case involving former State Senator Carl Kruger.

Levitis told a fellow nightclub owner, who was secretly recording the conversation for the FBI, that he had an inside line to the state pol, and could assist him with a liquor license issue if he steered thousands of dollars to Kruger – with a kickback for Levitis’ role in setting it up.

As the case moved forward, Levitis’ claim that he had influence in Kruger’s office began to unravel, and Levitis, who is also an attorney, later pleaded guilty to lying to federal agents, sentenced to three years probation and fined $15,000.

In April, Levitis was also hit with a six month suspension of his license to practice law – retroactive to January 2012 – for his role in the case. According to Reuters:

The appeals court said it took into account mitigating factors presented by Levitis, including “the aberrational and unplanned nature of his misconduct,” his remorse, his cooperation with the grievance committee’s investigation and his reputation as an “ethical and honest attorney.”

Levitis, his mother and his wife, Marina, were also the co-stars of Russian Dolls, a failed Lifetime reality series canceled less than two months after its premiere.

The case against Levitis and Mission is being hailed as historic, as it’s the first criminal referral from the U.S. Consumer Financial Protection Bureau, an agency established after passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. The CFPB is also bringing civil charges against Mission, Levitis and others.

John Sampson (center) Source: nysenate.gov

It looks like the federal net for nabbing corrupt New York politicians is getting wider. According to a New York Times report, State Senator John Sampson, whose recently redrawn 19th District represents a chunk of Sheepshead Bay, was ensnared in a broader federal corruption probe that has already led to charges against other local pols.

Sampson’s charges stem from conversations he had with former Queens State Senator Shirley Huntley, who has pleaded guilty of stealing taxpayer money through a nonprofit organization.

In March of 2012, Sampson allegedly sought out Huntley’s advice after being approached by a businessman allegedly offering bribes in exchange for help regarding his business at Kennedy International Airport. The airport is located in the district Huntley used to represent.

Through court papers, the Times learned that Huntley, as a cooperating federal witness, recorded conversations she had with several local politicians, which, according to prosecutors, yielded useful evidence.

Sampson is expected to be charged with obstruction of justice. At this time, it is not known if other politicians will also be charged.