Experts: Feds can target convicted state lawmakers' pensions

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ALBANY -- Federal prosecutors can try to seize the pensions of convicted New York lawmakers, even though the state constitution appears to forbid it, because U.S. forfeiture laws trump state pension protections, experts say.

"The law is very clear," said Evan Barr, a former federal attorney who now specializes in white-collar criminal defense in Manhattan. He said the "legal doctrine of federal supremacy" means that the feds are free to target convicted politicians' pensions.

The issue flared on Sept. 17, when U.S. Attorney Preet Bharara filed court documents signaling he'd go after the pension benefits of several state and New York City lawmakers recently indicted in alleged corruption schemes.

"The common-sense principle is a simple one: Convicted politicians should not grow old comfortably cushioned by a pension paid for by the very people they betrayed in office," Bharara told a panel created by Gov. Andrew M. Cuomo to investigate corruption.

Bharara said he would seek penalties and fines that "take into account the money a corrupt official might derive from a publicly funded pension." If a convicted lawmaker can't pay any financial penalties imposed, the prosecutor said he would use "federal civil forfeiture actions" to seize pension benefits.

Cuomo, asked the next day, sounded skeptical. He said he considered adding penalties to target pensions as part of a 2011 package of ethics legislation.

"We tried to do exactly this," Cuomo told reporters at an event in Staten Island. "We wanted to take the pensions of members who were convicted of felonies. It was not constitutional to take their pension as their pension, because that was a right that was already vested."

He's right -- but only under state law.

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Article 5, Section 7 of the state constitution says: "After July first, nineteen hundred forty, membership in any pension or retirement system of the state or of a civil division thereof shall be a contractual relationship, the benefits of which shall not be diminished or impaired."

Experts said Cuomo couldn't take away pensions under state law unless he persuaded lawmakers to amend the constitution. But federal prosecutors and federal judges aren't so tied.

"Federal law can trump the state constitution because of the supremacy of federalism," said Eric Lane, a dean at Hofstra University Law School and a former counsel to the state Senate. "A federal judge will take an extra look at the state constitution, but he isn't bound by it."


Barr and others referred to a 2007 case involving Florida's so-called homestead law, a state statute that says the government can't seize real property to satisfy a legal judgment. A court ruled the federal forfeiture laws pre-empted Florida's law.

In addition, in a 2000 case known as U.S. v. Kennedy, a federal court ruled: "Federal law decides what interests are subject to forfeiture."

Precedent clears the way for federal officials to go after a convicted politician's ill-gotten gains as well as legitimate assets, such as pensions.

"Even indisputably clean money can be subject to forfeiture by federal prosecutors, as so-called substitute assets, in order to satisfy a forfeiture judgment against an individual convicted of a crime," Barr said.

According to a spokesman, Attorney General Eric T. Schneiderman said prosecutors should be able to target a convicted politician's pension, but he wouldn't weigh in on whether state law should be changed.

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"Attorney General Schneiderman strongly believes that politicians convicted of crimes related to their public service should be subject to forfeiture of their pensions," spokesman Damien LaVera said in an email.

A spokesman for Bharara said the prosecutor will move forward on his initiative. He has charges pending against state Sen. Malcolm Smith (D-Queens), who allegedly tried to rig a ballot spot in the New York City mayoral election, and Assemb. Eric Stevenson (D-Bronx), who allegedly took bribes in exchange for writing legislation to protect some adult day-care businesses.

"It may be an obstacle for the state itself," Bharara spokesman Jim Margolin said, referring to the New York constitution. "But it doesn't apply to a federal court or a federal judgment."

Lawyers are slated to argue motions in the Stevenson case on Nov. 15. A pretrial conference is scheduled in the Smith case for Dec. 13.

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