Monday, May 13, 2013

Brooklyn Feds Frog-March Once-Powerful Local Pol/Lawyer For Allegedly Snatching $440K In Foreclosure Sale Surplus Proceeds While Acting As Court-Appointed Referee, Then Using Loot To Fund Failed Campaign To Head County DA's Office

In Brooklyn, New York, the New York Daily News reports:

  • They've been charged with taking bribes, lying under oath, even trying to buy their way into office — but until now, there has never been a political corruption case in New York like this.

    State Sen. John Sampson was charged Monday with embezzling $440,000 and using some of it to bankroll a bid for one of the highest law enforcement jobs in the city, Brooklyn district attorney. And when he feared getting caught, he told an associate he could track down informants and “take them out,” according to an indictment unsealed Monday.

    Brooklyn U.S. Attorney Loretta Lynch called it “one of the most extreme examples of hubris and arrogance we have ever seen.” She said Sampson even pressed a high school friend working in her office, paralegal Sam Noel, to uncover information that might ease his mounting legal troubles.

    For Sampson, 47, it was an incredible fall from grace. He was once one of the most powerful politicians in New York, as Democratic conference leader of the Senate. After surrendering Monday to the FBI, Sampson pleaded not guilty — but he already had incriminated himself, according to the indictment.

    In July, when FBI agents questioned Sampson in the driveway of his Flatlands, Brooklyn, home, they told him he was lying. His response was self-destructive. “Not everything I told you was false,” the indictment said.

    According to the indictment, Sampson’s crimes began in 1998 when he started embezzling money from foreclosure sales he oversaw as a court-appointed referee.

    Sampson, a lawyer, then siphoned some of the money into his 2005 Democratic primary campaign against Brooklyn District Attorney Charles Hynes, the indictment said. But Hynes prevailed, beating Sampson, 41% to 37%.

    The following year, a worried Sampson got a Queens businessman, Edul Ahmad, to “loan” him $188,500 so he could put some of the money back, prosecutors said. But the loan allegedly had no written terms and Sampson never repaid it.

    Things got worse for Sampson in 2011 when Ahmad was arrested on mortgage fraud charges.

    Worried Ahmad would reveal the secret “loan,” Sampson offered to track down witnesses against Ahmad and “take them out,” the indictment said.

    What Sampson didn’t know is that Ahmad was already cooperating with the feds and recorded the conversation.

    The FBI later discovered a handwritten list of informants against Ahmad on the desk of Noel, the paralegal who was Sampson’s mole in the U.S. attorney’s office. Noel was fired and is now cooperating with investigators.

    Officials said they found no evidence that Sampson ever followed through on his “take them out” threat.

    Sampson was charged with embezzlement, obstruction of justice and lying to FBI agents. He was offered a plea deal calling for 36 to 47 months in prison, but entered a not-guilty plea in federal court. He faces up to five years in prison if the case goes to trial.
For the story, see Another state lawmaker busted: Brooklyn state Sen. John Sampson surrenders to FBI on charges of embezzlement and obstruction of justice (Indictment says Sampson was recorded as saying he would track down an informant and "take them out").

For the U.S. Attorney press release, see State Senator From Brooklyn Charged With Embezzlement And Obstruction Of Justice (Former State Senate Minority Leader Used Embezzled Escrow Funds to Finance DA Campaign).
  • Beginning in the late 1990’s, Sampson served as a court-appointed referee for foreclosure proceedings conducted by the Kings County Supreme Court. As referee, Sampson controlled escrow accounts holding proceeds of foreclosure sales of Brooklyn properties.

    Between 1998 and 2008, Sampson embezzled approximately $440,000 in surplus funds from the foreclosure sales of four Brooklyn properties.

    The prior owners of the Brooklyn properties, and other parties with a lawful interest, had a right to receive the funds embezzled by Sampson.(1) Sampson indicated that he had illegally diverted the stolen funds to pay expenses arising from his unsuccessful run for Kings County District Attorney in 2005.
For the Indictment, see U.S. v. Sampson.

(1) According to the indictment, by helping himself to the surplus proceeds, Sampson, an attorney, allegedly violated a fiduciary duty to the Brooklyn Supreme Court. If true, and if the funds ultimately cannot be recovered, and assuming that only licensed attorneys can act as court-appointed referees in New York, it may be that the violation of this duty may be enough to enable the court, as well as the ultimate victims (ex-homeowners and subordinate lien holders of the four foreclosed homes) to recover some or all of the pilfered proceeds from The Lawyers’ Fund For Client Protection Of the State of New York, the state's attorney ripoff reimbursement fund.

For information on "attorney ripoff reimbursement funds" in other states and Canada, see:

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