- Created on Saturday, 13 October 2012 21:18
- Written by FBI
Brooklyn, New York - Pedro Espada, Jr. pled guilty before the Honorable Frederic Block in U.S. District Court in Brooklyn, New York, to filing a false and fraudulent federal tax return. Previously in this case, Espada, a former New York State Senator in the Bronx who served as the Senate Majority Leader from 2009 to 2010, was convicted by jury of four counts of stealing from Bronx non-profit health clinics that received federal funding.
Espada’s son and co- defendant, Pedro Gautier Espada (Gautier Espada) also pled guilty before Judge Block today to one count of stealing federal funding from the Bronx non-profit health clinics and one count of failing to file a tax return.
When sentenced, Espada faces up to 43 years’ imprisonment and forfeiture, fines, and restitution in excess of $2 million. As part of Espada’s guilty plea, he agreed not to appeal or otherwise challenge the jury’s guilty verdicts, returned on May 14, 2012. Gautier Espada faces up to two years’ imprisonment at sentencing.
The guilty pleas were announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York; Mary E. Galligan, Acting Assistant Director in Charge, Federal Bureau of Investigation, New York Field Office; and Toni Weirauch, Acting Special Agent in Charge, Internal Revenue Service-Criminal Investigation; New York.
Until recently, Espada was 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.
Espada today pled guilty to a charge of filing a false and fraudulent personal tax return for the year 2005. In that return, Espada willfully concealed money he took from Soundview through a janitorial company he owned. Espada also willfully defrauded the IRS of taxes owed on income he earned from the sale of a property on Leland Avenue in the Bronx by falsely claiming that it was his primary residence. (According to IRS regulations, an individual is exempt from paying taxes on the sale of one’s primary home.) In fact, Espada lived in Mamaroneck in Westchester County while renting out the Bronx property.
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.
Gautier Espada pled guilty today to stealing federal funds awarded to Soundview to provide medical services to underserved residents of the Bronx and neighboring areas. He also pled guilty to willfully failing to file a personal tax return for the year 2009, despite acquiring income of over $100,000.
“Today’s guilty pleas signal the end of an era,” stated United States Attorney Lynch. “For years, Pedro Espada, Jr. betrayed the trust of the people of the Bronx by taking money designated to provide health services to a struggling community and using those funds to prop up his own lavish lifestyle. Soundview clinics were unable to pay personnel and could not obtain vital medical equipment, because Espada siphoned off funds to pay for luxury cars, spa treatments, sushi dinners, and vacations. In keeping with his pattern of fraud and deception, he lied to the federal government as well, filing a false income tax return that failed to declare money he stole from Soundview and money that he made from the sale of real estate. His son, Pedro Gautier Espada, has admitted that he also stole money from Soundview which he then hid from the IRS by failing to file a tax return. Far from the ‘black magic’ Espada previously blamed for his conviction, today’s guilty pleas illustrate that these defendants were brought down by their own greed. Having admitted their betrayal of trust, they will now be held accountable for their actions.” 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 Todd Kaminsky, Roger Burlingame, Carolyn Pokorny, and Claire Kedeshian.
Pedro Espada, Jr., age 58
Pedro Gautier Espada, age 39