In Malcolm Smith case, key witness has troubled past
The key cooperating witness in the corruption case against Democratic state Sen. Malcolm Smith and other politicians has been accused of fraud and forgery and owes $126 million to Citigroup stemming from his real estate dealings, according to federal court records.
Moses Stern, also known as Mark Stern, who lives in Rockland County, has been identified by legal sources familiar with the criminal complaint against Smith, as the witness who helped an FBI undercover agent in the federal corruption investigation that was detailed Tuesday.
Ensnared in the case along with Smith were Republican city councilman Dan Halloran, two city Republican Party officials and two Rockland County officials.
For years, Stern, who lives in upstate Monsey, has been facing legal troubles involving his various realty deals around the country involving hundreds of millions of dollars in financing, court records show.
In 2009, he took his company, First Republic Realty Group, into bankruptcy after Citigroup declared him in default on $126 million in financing the bank provided for Stern's company to buy 11 strip malls in the Southeast.
Stern's company had asked the bank for $111 million in mortgages for the strip malls and another $15 million loan on top of that.
But Citigroup wasn't repaid, the company argued in papers asking a judge to disallow Stern's bankruptcy filing.
Stern's bankruptcy case was completed in August 2012, with Stern's creditors losing more than $17 million.
In another case, a federal magistrate in Manhattan determined in February that there was enough evidence that Stern engaged in questionable conduct that Stern's attorneys had to provide documents and testimony about their dealings with him.
Magistrate Judge Gabriel W. Gorenstein, in a 37-page decision, noted that Stern had asserted his Fifth Amendment right against self-incrimination in refusing to answer almost every question put to him in a deposition.
But because there was evidence that Stern's various communications with his attorneys were undertaken "in furtherance of a crime or fraud," Gorenstein ordered the law firms and attorney to disclose certain materials to the court.
Specifically, Gorenstein said there was evidence by companies suing Stern that he allegedly used forged or false documents to get loans from J.P. Morgan and Citigroup.
In some cases, Gorenstein noted, "Stern's involvement is unmistakable," saying that there was probable cause to believe Stern engaged in a scheme to defraud a company of a $13 million investment.
Attorneys for Stern didn't return telephone and email messages seeking comment.
Stern is named as a defendant in more than a dozen lawsuits filed in courthouses in several counties by companies and individuals who say he owes them money, according to state records.
Among them is the Manhattan law firm Heller Horowitz & Feit, which secured a $117,000 judgment against Stern this year for legal work it did on his behalf several years ago.
"He was a good client until he stopped paying," said Eli Feit, a partner in the firm.
The criminal complaint in the Smith case involves numerous allegations of payoffs in a real estate deal for public land in Spring Valley, whose mayor, Noramie Jasmin, and deputy mayor, Joseph Desmaret, were also charged. The complaint states that the cooperating witness has pleaded guilty.
Smith, Halloran, city Republican party officials Vincent Tabone and Joseph Savino, as well as Jasmin and Desmaret are free on per-sonal recognizance bonds.
Wednesday at Stern's unfinished Monsey home, there was a note from United Water jammed in the front door, threatening to turn off the water unless a $616 overdue bill was paid.
Stern, the father of nine, began erecting the mansion in the mid-2000s, residents said.
With Timothy O'Connor
and Sarah Armaghan