NEW YORK CITY—For the second time this year, Glenwood Management, one of the largest developers of luxury housing in Manhattan, is at the center of a corruption scandal that will once again shake city and state politics.
Both former Democratic Assembly Speaker Sheldon Silver and Senate Republican Leader Dean Skelos face charges of taking bribes and kickbacks from the firm in exchange for helping to pass laws — lucrative tax abatements and a loosening of rent regulations — that helped Glenwood, the largest political donor in the state, thrive financially.
The biggest loser in both corruption cases may not be the public trust, as U.S. Attorney Preet Bharara has stated, but the average renter in New York City, housing advocates said.
"This money greases the wheels for the tax breaks and weaker rent laws that hurt tenants and taxpayers," said Ava Farkas, executive director of the Metropolitan Council on Housing.
She called political donations from real estate firms an "open tap of money."
According to the criminal complaint, Skelos, like Silver, used his position to get money from the firm identified as Developer-1 in both complaints.
Multiple sources identified the firm as Glenwood.
"Developer-1's business model depends in substantial part on favorable tax abatements and rent regulations that must be periodically renewed by the New York State Legislature," reads the complaint.
Glenwood, owned by 101-year-old Leonard Litwin, donated $10 million to state candidates and political action committees from 2005-2014. The company is also the largest political donor to Gov. Andrew Cuomo.
Silver received $700,000 in referral fees from a real estate law firm doing tax appeal work for Glenwood in an alleged kickback scheme as he directed tax breaks to Glenwood, the indictment claims.
Bharara says Skelos was involved in a similar scheme.
As Glenwood was lobbying Skelos about rent laws, Skelos pressured an executive at the firm, identified by sources as senior vice president Charles Dorego, to arrange a $20,000 payment to his son Adam that prosecutors say was disguised as a commission for title work which he did not perform.
Dorego, who is cooperating with federal authorities, then arranged for an environmental company, identified by sources as AbTech, to arrange monthly payments of $4,000 to Adam Skelos.
The father and son eventually extorted the payments up to $10,000 per month by threatening to derail a $12 million contract AbTech was seeking with Nassau County, the complaint says.
Adam Skelos allegedly received almost $200,000 from the environmental firm under the arrangement.
Like Silver, Dean and Adam Skelos both maintain their innocence.
While seeking and listening to Glenwood's input on renegotiating expiring rent laws, Dean Skelos repeatedly urged Glenwood to send his son title insurance work.
In exchange for payments to his son, Dean Skelos voted in favor of the Rent Act of 2011 which extended the controversial 421-a tax abatement, according to the documents. The program provides tax breaks for developers, some of whom like Glenwood, build luxury housing.
Cuomo signed the bill into law the same day Dean Skelos voted in favor of it, notes the complaint.
Another piece of legislation expanded the circumstances under which a landlord such as Glenwood could raise the rent on rent regulated tenants. Skelos voted for that bill in June 2012.
In 2013, Glenwood lobbied Dean Skelos on a bill that would extend incentives for building under the 421-a abatement and exempt alterations and improvements on multi-family dwellings from taxation.
Alan Levine, an attorney for Glenwood, did not respond to requests for comment.
Michael McKee, treasurer of Tenants Political Action Committee, a group that works to elect candidates with pro-tenant positions, said Skelos' and Silver's actions have been disastrous for renters.
"In the last 20 years, a huge amount of damage has been done to affordability in not just New York City but the three suburban counties of Nassau, Westchester and Rockland," said McKee.