Nassau Legis. David Denenberg surrendered to FBI agents Friday and was arraigned on felony charges accusing him of bilking a client of his former law firm out of $2.3 million.
Denenberg, a Merrick Democrat, pleaded not guilty to eight counts of mail fraud in U.S. District Court in Central Islip.
Prosecutors were in plea negotiations with Denenberg, according to Eastern District prosecutor Lara Treinis Gatz. She said Denenberg has repaid a good portion of the money and planned to repay the rest.
The eight-term lawmaker declined to discuss the allegations after leaving court, saying only: "I want to thank my family and friends . . . I'm sorry that we are going through this."
He was released after posting a $500,000 personal recognizance bond, officials said.
Between November 2006 and June 2014, Denenberg defrauded a client of his Garden City law firm, Davidoff Hutcher & Citron, of the money, according to a charging document known as an information.
Denenberg billed the client for $2.2 million for "legal services never rendered," the information said. He also is accused of billing the same client for about $126,000 "for expenses never incurred."
Sources familiar with the case said the reason for the alleged fraud remains unclear, since Denenberg was well-off financially.
The client was identified in the information as a Port Washington company that is "a retailer of personal computers, computer-related accessories and consumer electronics." Other court papers have identified the company as Systemax.
A spokesman for Systemax, Mike Smargiassi, referred calls Friday to Denenberg's former firm.
"Davidoff Hutcher & Citron has provided legal counsel and litigation support to Systemax. Any questions regarding . . . this matter should be directed to the firm. We will have no further comment," the company said in a statement.
Jeff Citron, a senior partner at the Davidoff firm, declined to comment.
Denenberg's attorney, Jason Russo of Bay Shore, said Friday that he arranged for his client to surrender to the FBI.
Denenberg decided to be "cooperative" with federal authorities because that's "better than having them knocking your door down," Russo has said.
Mail fraud typically carries a sentence of up to 5 years in prison under federal sentencing guidelines, but could also lead to a sentence without prison time.
A civil lawsuit filed by Denenberg's former firm in September accused him of billing for "fictitious services" never performed and referred the matter for criminal investigation to the office of Loretta Lynch, the U.S. attorney for the Eastern District, which includes Long Island.
"These bills -- mailed via U.S. Postal Service, or transmitted to the client over the Internet, all at Denenberg's direction -- were works of fiction," according to the suit.
Denenberg's attorney in the civil lawsuit, Jeffrey Gold of North Bellmore, said the suit is in the process of being settled. He declined Friday to divulge any details.
"It's a very sad day," Gold said of the criminal charges.
Russo said his client has no intention of resigning from the Nassau legislature but may have to step down if convicted.
Nassau Democratic chairman Jay Jacobs said Denenberg should be allowed to hold his seat while he defends himself.
"He is an elected representative, and the people of the 19th District deserve a representative," Jacobs said, noting that his opinion would change if Denenberg is found guilty.
A spokeswoman for Nassau Presiding Officer Norma Gonsalves (R-East Meadow) declined to comment on Denenberg's status in the legislature.
Denenberg dropped out of the race for State Senate in the 8th District hours after his former firm sued him.
At the time of the allegations, Denenberg called the suit politically motivated. He did not specifically deny the allegations, saying instead that he would work with the U.S. attorney's office to "establish the truth."
Denenberg was first elected to the legislature in 2000. He was born and raised in East Meadow, has an engineering degree from Cooper Union and a law degree from Brooklyn Law School.
With Robert Brodsky