William Rapfogel charged in $1 million kickback scheme

William Rapfogel speaks during the Met Council's 40th

William Rapfogel speaks during the Met Council's 40th anniversary celebration in Manhattan on April 25, 2013. (Credit: Michael Priest)

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A former New York City power broker with ties to Assembly Speaker Sheldon Silver was charged Tuesday with pocketing more than $1 million in a kickback scheme that lasted two decades.

William Rapfogel, 58, who led the Metropolitan Council on Jewish Poverty before resigning in August, was arraigned in Manhattan on felony charges that include grand larceny, money laundering, criminal tax fraud and conspiracy.

Rapfogel, the husband of Judy Rapfogel, longtime chief of staff to Silver (D-Manhattan), pleaded not guilty. Supreme Court Justice Kevin McGrath released him on $100,000 cash bail.

Investigators have recovered more than $400,000 that Rapfogel allegedly stashed in his two homes, and Rapfogel turned over some of the money himself, officials said.

The scheme involved Century Coverage Corp., a Valley Stream insurance agency, and two co-conspirators who worked for the company, according to a criminal complaint state Attorney General Eric T. Schneiderman filed Tuesday. The co-conspirators were not named and no one from the company has been charged.

 

Schneiderman said Rapfogel conspired with others to inflate insurance payments paid by Met Council, a major nonprofit social services group, while pocketing the difference between the inflated costs and actual costs, "amounting to more than $5 million stolen from the organization over roughly 20 years." Some of the money was funneled by Rapfogel and employees of Century Coverage into campaign contributions to various politicians, Schneiderman alleged.

Schneiderman said Rapfogel "received about $1 million himself and shared the remainder with his co-conspirators." The criminal complaint doesn't spell out precisely how the money was divided.

The prosecutor said Rapfogel received regular payments, either in envelopes stuffed with cash or through checks made out for personal expenses.

At one time, Rapfogel converted $100,000 in cash into a check to help his son purchase a house, the complaint said, and another time used $27,000 to pay a contractor working on his residence.

Rapfogel told an investigator that he kept some of the money in his homes.

"It's always sad and shocking when we discover that someone used a charity as their own personal piggy bank -- but even more so when that scheme involves someone well-respected in government and his community," Schneiderman said.

Schneiderman and state Comptroller Thomas DiNapoli conducted a joint investigation into the alleged conspiracy.

"The scale and duration of this scheme are breathtaking," DiNapoli said. "When individuals in the mission of helping others instead help themselves, it is particularly egregious."

 

Rapfogel "directed an owner" of Century Coverage to channel some of the kickback money "to various politicians in an effort to benefit Met Council," according to the attorney general.

Benjamin Brafman, attorney for Century Coverage owner Joseph Ross, didn't directly address the allegations Tuesday. "I have no comment other than we are aware of the investigation and we intend to address these issues in a responsible fashion," Brafman said.

Century Coverage employees have donated at least $140,000 to Democratic candidates in New York City since 1999, according to the New York Campaign Finance Board website, as well as at least $62,000 to statewide races, a review of records in August showed.

When news of the scandal broke in August, Rapfogel issued a statement saying he regretted his "mistakes" and would "make amends." His attorney Paul Schechtman said later that "whatever [Rapfogel] did, neither his wife nor Speaker Silver knew anything about it."

Schechtman didn't comment immediately Tuesday.

A Silver spokesman cited the Assembly speaker's previous comment that he was "stunned" by the allegations.

The Met Council, which relies in part on state and city funding to provide food, shelter and care for thousands of New Yorkers, has received $26.3 million in state grants since 2008, according to a Newsday review of records.

Rapfogel's former organization frequently received grants known as "member items," often criticized as pork-barrel spending, from state government. A 2006 report showed that six grants, listed under Silver's name in budget documents and totaling around $1 million, went to the council.

At that time, Rapfogel told The Associated Press that the organization received state grants long before Silver was speaker. Rapfogel said his wife "disqualifies herself in terms of any discussion that relates to the organization."

Rapfogel also said then that he'd known Silver for more than 40 years -- since Silver was his youth basketball coach.

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