The Silver Era

What to make of the arrest of NYS Assembly Speaker Sheldon Silver? The allegations against him of taking bribes and kickbacks and trading on his power are certainly serious and distressing. He is accused of steering real estate companies to a law firm with which he was affiliated, in exchange for the firm paying him a substantial sum of money, and for referring patients of a doctor to another law firm with which he was affiliated, in exchange for compensation as well as the grant to the doctor of New York state research funds. Apparently, these arrangements were known for years.

The presumption of innocence should apply, of course, something lost on many people in this age of hysteria, hyperbole and sensational headlines. I cannot comment on his guilt or innocence as all the facts have not yet been adduced, and the media reports do not sound good.

But I am confused. Most of the charges against him are based on the so-called “Honest Services” law which has been roundly criticized by courts and judges for its ambiguity and disconnect from reality. So note the following:

In 2008, the investors in Solyndra donated more than $83,000 to the Obama campaign. One year later, the company was awarded a federal loan in the amount of $532,000,000 (that’s million, quite a return on their investment). That money – our money, taxpayer money – was completely lost in the Solyndra bankruptcy, although it stands to reason that the investors were somehow repaid before bankruptcy was filed. In essence, money goes to political campaign, victorious politician (in the guise of his Department of Energy) funnels money – a lot of money – to that company. Legal? I suppose so. It has never been prosecuted.

The current US Ambassador to France, whose presence at the great anti-terror march was considered unworthy of this great republic, is what is known as a “political appointee.” Jane Hartley was a prodigious fund-raiser for President Obama in the 2012 election, bundling together more than $500,000 for his campaign. She was then appointed Ambassador to France and Monaco (good gig). In essence, money goes to political campaign, and a government job – at taxpayer expense – is awarded to the fund-raiser. Legal? I suppose so. This has been going on forever, under both Republican and Democrat administrations. Some appointees are “diplomatic” (i.e., on the merits, such as career foreign service officers) and some are “political” (i.e., friends of or donors to the president). Hartley’s predecessor as Ambassador to France – he actually spoke French – was co-finance chair of the 2008 Obama campaign. Same deal, in effect. There are hundreds of similar examples that can be cited from across the political world and spectrum.

Is there a difference between these two cases and the Silver allegations? Maybe, but if there is, it is a difference in degree, not in kind. It is the same process. Perhaps in the aforementioned cases, the quid pro quo is not explicitly articulated but is winked at or self-understood; is that really a substantial difference, enough to distinguish between legal and illegal? Perhaps the difference is in timing – there was a delay of 1-2 years separating between the quid and the quo. But does that really matter?

This is emphatically not to say that “everyone does it” and therefore it is capricious to prosecute one when 100,000 could be prosecuted. “Everyone does it” does not make any particular action legal. But “everyone does it” can define what is common custom or, said another way, how modern politics is practiced in America today and probably always.

We should face one simple truth. How many Americans donate to political campaigns without expecting something in return? Sure, there are probably some that love an individual candidate (or hate his opponent enough) that they give on the merits. But the really big campaign money – from Big Oil, Big Pharma, Big Business, Big Insurance, labor unions, teachers unions, environmentalist groups, etc. – is always proffered by those who are demanding something in return. (That is one reason why George Washington decried the formation of political parties, and felt they would promote endemic corruption in American life.)

Thus, people – good people, not necessarily scoundrels – donate to politicians because they want something. Some want a job – ambassador, cabinet, government agency, etc. (A job aspirant called President Coolidge in the middle of the night, and informed him that the Chairman of the Port Authority had just died, and the caller would like to take his place. Coolidge: “If it is all right with the undertaker, it is fine with me.” And Coolidge then hung up.)

Some want legislation passed that will benefit their businesses, give them an exemption from an existing law, stifle their competition, or smooth their way through some regulatory labyrinth. If they do not get what they want, they take their money elsewhere. Some corporations are wealthy (or desperate) enough that they will fund both opponents in a race, hedging their bets while retaining their influence. For some reason, if the money is transferred in an obvious and vulgar way (envelopes stuffed with cash, as in ABSCAM), it is a crime that purports to shock the conscience. But if the money is transferred in a more refined and indirect way – e.g., campaign contributions (or legal fees?)–  then it is construed to be a gracious political donation, protected by the US Constitution and rightfully so, and an indication of the donor’s sophistication and eagerness to participate in civic life.

All want access. And the money, once given to a politician, is his; certainly, if he leaves office, he takes that campaign money with him, in most cases. That can be a nice nest egg.

At the end of the day, however one parses the transactions, money is being assigned from one person to another in exchange for an imminent or expected benefit. Yet, one is legal and one is illegal. One person is deemed a criminal who deserves prison time and one person gets to spend time with the president and nights in the Lincoln Bedroom. That seems arbitrary, too fine a line on which to prosecute, convict and send someone to jail.

Other issues need to be understood as well. To a layman, the notion of “kickbacks” smacks of illegality and corruption. But in law, referral fees, as they are known, are a legal and accepted way of business. A lawyer without expertise in some area refers a client to an attorney who has expertise in that area, and receives a share of the fee in return. While a lawyer may not give a referral fee to a non-lawyer, it is legal and ethical to give it to a lawyer. That is part of the practice of law. Although the Code of Professional Responsibility requires that the referrer do some “reasonable” work on the case, the standard is very loose and rarely enforced. And even if it is: the law states that such applies to a lawyer “who is not a partner in or associate of the lawyer’s law firm.” But Silver wasn’t an outsider; he was a lawyer referring clients to firms of which he was a member. The standard is different.  Moreover, lawyers are routinely hired by firms for their ability to bring in new cases and clients. This is not sinister. This is business. And state legislators are allowed to earn outside income.

In effect, in one case, Silver allegedly referred real estate companies to a certain tax abatement law firm. That firm transacted legitimate business on behalf of those companies – business in which Silver was not involved – and for which the law firm paid Silver a salary. A further allegation is that Silver then used his position to enact legislation of some sort that would benefit those companies. Duh. Is it illegal – has it ever been prosecuted – for a teachers’ union (for one example) to give money to a politician in exchange for a bloc of votes and a favorable contract? Of course not. And that contract then provides the teachers (and the union) with more money to give to more politicians for more votes and an even more favorable contract! In New Jersey, the contract even mandates that the state (i.e., the taxpayer) essentially pays the union dues of each individual teacher. Other interest groups donate money in the hope of enacting favorable legislation. This happens every single day. When did the rules change?

Did Silver funnel state money to the doctor whom he persuaded to refer to his patients to a particular law firm? Well, assuming it is true, that might be questionable, but we should ask: did the doctor apply for those research funds properly? Did he receive the money and do the research? Was Sheldon Silver the only decision-maker? Would not politicians (or anyone) be more inclined to help people they know? Is that necessarily disturbing or criminal? If another politician gave a state job to the relative of a friend – who did good work and deserved the job –is that a crime? It seems that is exactly what happens every day, whether we like it or not.

Before people rush to judgment, we all should more carefully analyze what was done and not done, and how (whether) it differs from politics as usual, the legal kind. And we should realize that the US Attorney Preet Bharara has been a very aggressive prosecutor, which is fine, but has had a number of high profile convictions reversed on appeal, which is nonetheless devastating to the defendant. And realize as well that one of Silver’s predecessors as Speaker, Mel Miller, was convicted of fraud in 1991, and consequently lost both his speakership and his seat in the Assembly. Two years later, his conviction was reversed on appeal, and he went free.

Free – except that his personal and professional lives had already been ruined.

A cautionary tale indeed. Let the presumption of innocence exist in fact and not only in theory. That is both fair and just, and something that we would all expect for ourselves.