U.S. Attorney’s Office
May 14, 2012
Eastern District of New York
Former New York State Senate Majority Leader Convicted of Stealing from Non-Profit Medical Clinics
Earlier today, a federal jury in Brooklyn, New York, returned guilty verdicts against Pedro Espada, Jr. (Espada), on four counts of stealing from non-profit medical clinics that received federal funding. The jury was unable to reach a unanimous verdict as to the remaining counts against Espada. Espada is a former New York State Senator for the Bronx and served as the New York State Senate Majority Leader from 2009 to 2010. When sentenced, Espada faces up to 10 years’ imprisonment on each count of conviction. The jury deadlocked as to all counts in the indictment against Espada’s son, Pedro Gautier Espada (Gautier Espada), who previously served in the New York State Assembly and the New York City Council.
The guilty verdicts were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Janice K. Fedarcyk, Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office; and Victor Lessoff, Acting Special Agent in Charge, Internal Revenue Service-Criminal Investigation, New York.
Espada was, until recently, the CEO and president of Soundview Healthcare Center (Soundview), a network of health care clinics that served the underprivileged in the Bronx. Gautier Espada was Soundview’s director of environmental care. Espada founded Soundview in 1978 as a charitable not-for-profit organization under the Internal Revenue Code. Soundview received more than $1 million per year in federal grant money from the United States Department of Health and Human Services, and millions more annually in Medicare and Medicaid reimbursements, and New York State funding.
The government’s evidence at trial established that Espada abused his leadership position at Soundview through a number of schemes designed to steal Soundview funds for his personal use and for the benefit of favored family members and friends, including the following:
Espada used the charity’s credit card to pay for over $100,000 in personal expenses, including more than $10,000 in home renovations, $60,000 in weekend restaurant bills, spa treatments for his wife and other family members, and a four-day trip to Puerto Rico that tallied $20,000.
Espada caused Soundview to pay for his wife’s $60,000 SUV, a GMC Yukon, and to make a $20,000 down-payment on a Mercedes Benz automobile for himself.
Espada submitted fraudulent receipts for reimbursement, totaling thousands of dollars, as legitimate business expenses, including weekend meals that he falsely claimed were work meetings, expenses that Soundview had charged on its credit card and already had paid, and invoices for work that a Soundview employee had performed at no additional charge.
As the leaseholder at various properties, Soundview subleased conference rooms and other facilities to medical professionals, Weight Watchers, and other subtenants. Espada caused these subtenants to make rent and other payments to his privately owned janitorial companies, rather than to Soundview. Between 2005 and 2009, the subtenant rent payments Espada caused to be diverted from Soundview exceeded $200,000.
Through the various schemes, Espada stole more than $500,000 from Soundview.
“Pedro Espada, Jr. embezzled funds to finance his personal lifestyle and lavish gifts on friends and family members at the expense of taxpayers and underprivileged members of the Bronx community who were deprived of needed health services and medical equipment. The people of the Bronx trusted Pedro Espada to have their best interests at heart. Instead, he abused that trust to the tune of more than half a million dollars. Under obligation to use the funds he received for the benefit of people sorely in need of quality health care, he chose instead to benefit himself and his family at their expense,” stated United States Attorney Lynch. “The defendant will now be held to account for his crimes.” Ms. Lynch expressed her grateful appreciation to the Federal Bureau of Investigation and the Internal Revenue Service, the agencies responsible for leading the government’s investigation, and thanked the office of New York State Attorney General Eric T. Schneiderman for its assistance.
The government’s case is being prosecuted by Assistant United States Attorneys Carolyn Pokorny, Roger Burlingame, and Todd Kaminsky.