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Former New York City Council Member Pleads Guilty To Federal Fraud & Money Laundering Charges

LawFuel.com
LEV L. DASSIN, the Acting United States Attorney for
the Southern District of New York, and ROSE GILL HEARN, the
Commissioner of the New York City Department of Investigation
(“DOI”), announced that former New York City Council Member
MIGUEL MARTINEZ pleaded guilty today in Manhattan federal court
to fraud and money laundering charges in connection with his
submission to the City of false invoices and his diversion of
funds from non-profit organizations that resulted in over
$100,000 for his own benefit. MARTINEZ pleaded guilty to one
count each of conspiracy to commit honest services fraud, mail
fraud, and conspiracy to commit money laundering, contained in an
Information filed today in Manhattan federal court.
According to the Information as well as statements made
during today’s guilty plea proceeding before United States
District Judge PAUL A. CROTTY:

From 2002 to 2009, MARTINEZ served as a member of the
New York City Council representing New York City’s 10th Council
District in Manhattan. Among other things, MARTINEZ’s official
duties included approving expenses to be paid from his Council
office expense budget; designating non-profit organizations to
receive New York City Council discretionary funding; and acting
as a public advocate on behalf of constituents and others.
MARTINEZ was allocated an annual Council office expense
budget, in an amount ranging from approximately $112,000 to
$135,000 per year. To obtain reimbursement for Council office
expenses, MARTINEZ submitted invoices for the expenses to the
City. From October 2002 through May 2008, MARTINEZ, in concert
with others, created, approved, and submitted fictitious invoices
to the City for payment. For example, some invoices falsely
claimed that a particular vendor had performed a variety of
services for MARTINEZ’s Council office, including media outreach,
organization of constituent workshops, and staff development
consultations, when in fact, the vendor had not provided such
services. Vendors who received payment on the fictitious
invoices returned approximately $51,000 of the payments to
MARTINEZ for his personal benefit.

In addition, since at least 2003 MARTINEZ has been the
principal sponsor for the Washington Heights Arts Center. Since
that time, the City of New York has provided the majority of the
Arts Center’s funding, amounting to at least $163,000 through
2005. Funds allocated by MARTINEZ were intended to pay for
services for the Washington Heights community, including tutoring
for children, art classes, and after-school programs. From 2003
to 2005, a co-conspirator of MARTINEZ was a signatory on the Arts
Center’s bank account. During that time, at MARTINEZ’s
direction, the co-conspirator provided approximately $15,000 from
the Arts Center’s bank account to MARTINEZ for his personal
benefit.

Finally, during 2004 and 2005 the New York City Housing
Development Corporation (“HDC”) lent a particular developer
approximately $35 million so the developer could construct four
low-income housing developments in the 10th Council District and
elsewhere in the Bronx. At the time, under applicable law, if
the developer partnered with a local non-profit organization to
sponsor a low-income housing development, the developer would be
eligible to receive substantial tax benefits. MARTINEZ discussed
with the developer the possibility that the Upper Manhattan
Council Assisting Neighbors (“UCAN”), a non-profit organization,
would associate with the developer on the projects for this
purpose. In August 2004, at MARTINEZ’s direction, the developer
met with the co-conspirator previously referenced to discuss
UCAN’s association with the low-income housing projects. At that
meeting, acting at MARTINEZ’s direction, the conspirator
instructed the developer to make a series of payments to UCAN,
and from August 2004 to December 2005, the developer made
approximately $96,000 in such payments. Based in part on those
payments, the developer was able to obtain millions of dollars in
tax credits. Although each of the developer’s checks were
written to UCAN-related entities, the co-conspirator, at the
MARTINEZ’s direction, deposited the checks into other bank
accounts. MARTINEZ ultimately received approximately $40,000
from these other bank accounts for his personal benefit.
During the guilty plea proceeding, MARTINEZ stated, “[I]
was able to engage in these schemes because I was a New York City
Councilman.”

MARTINEZ, 39, of New York, New York, faces a maximum
sentence of 20 years in prison on each of the three counts to
which he pleaded guilty. He is scheduled to be sentenced on
October 21, 2009, at 2 p.m. by Judge CROTTY.
Mr. DASSIN praised the investigative work of DOI. He
also thanked the New York City Campaign Finance Board and the
U.S. Department of Housing and Urban Development, Office of
Inspector General, for their assistance in the investigation.
The prosecution is being handled by the Office’s Public
Corruption Unit. Assistant United States Attorneys KATHERINE A.
LEMIRE, GLEN A. KOPP, and BRENT S. WIBLE are in charge of the
prosecution.
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