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Nassau corruption trial: Finding an end-around on loan guarantees

Edward Mangano arrives at federal court in Central

Edward Mangano arrives at federal court in Central Islip on April 5. Credit: James Carbone

This story was reported by Bridget Murphy, Nicole Fuller and Andrew Smith. It was written by Smith.

Two lawyers at the center of events that led to criminal charges against former Nassau County Executive Edward Mangano and former Oyster Bay Supervisor John Venditto testified this past week that they had starkly different reactions when they realized the state constitution barred the town from guaranteeing loans for a private business.

To Jonathan Sinnreich, the town’s Central Islip-based outside counsel, the prohibition against guaranteeing loans for favored concessionaire Harendra Singh was just that — a clear sign the town should do no such thing.

But to then-Deputy Town Attorney Frederick Mei, the combination of bribes from Singh plus pressure from Venditto and Deputy Supervisor Leonard Genova led him to a different conclusion — that a loophole in the law must be found to allow Oyster Bay to help Singh get his loans.

The lawyers testified about events in 2010 that are at the heart of this case. That is when Singh, already the longtime operator of food concessions at the town-owned golf course in Woodbury and town-owned Tobay Beach, sought loans to expand his operations there.

But Singh and others have testified that because of the world financial crisis and his own chaotic finances, he was unable to get credit on his own. The only way to get a loan was if the town agreed to guarantee it — that is, promise to pay back the lender if Singh defaulted.

The guarantee was crucial for Singh. Earlier this month, Madison National Bank chief lending officer Thomas Gilmartin testified the bank was prepared to deny request for a $1.5 million line of credit until he learned the town was willing to guarantee the loan. That changed everything, he testified.

“The town would be on the hook,” Gilmartin said.

Sinnreich said the town had no business being on the hook. As the loan was coming together in early 2010, he told Mei and others that Article VII, Section 1 of the state constitution forbade the town from guaranteeing a loan for any private business. Singh has testified he saw Sinnreich’s objection as “devastating.”

When Sinnreich testified, he made clear that was the effect he was going for. He said he told Venditto and Deputy Supervisor Leonard Genova “on multiple occasions” that the town could not guarantee loans for Singh because it was “grossly illegal and inappropriate.”

Sinnreich testified that Mei asked him if there was a way to fix the language of the agreement to make it legal. Sinnreich replied that it was “extremely risky and unsafe” and so beyond fixing that “the entire document had to be rejected.”

But it became apparent to Sinnreich that Venditto, Genova and Mei were unusually determined that Singh should get his loan with town help.

Sinnreich stepped up his campaign against the loan guarantee.

“I urge you and the supervisor in the strongest terms to reconsider this issue,” he wrote in a March 23, 2010, email to Genova. “Just contemplate this nightmare scenario: the Town approves a draw down of say $500,000, but it is diverted to other uses, and then there is a default. How could we ever explain or justify the loss of public funds?”

He made a similar argument in a subsequent email to Mei, to no avail.

“The town did not appear to be taking seriously all of the cautions I was giving them,” Sinnreich testified.

By the end of April 2010, Oyster Bay had hired Mangano’s former firm of Rivkin Radler in an attempt to find a way around the constitutional prohibition. All the parties — Singh, Venditto, Genova, Mei, Sinnreich and the Rivkin Radler lawyers — met on the afternoon of April 28 at the drab North Massapequa storefront that Venditto used for his political headquarters. Mangano and Deputy Nassau County Executive Rob Walker were there, too.

Like others who have testified about being there, Sinnreich testified that Venditto ran the meeting and that the purpose of it was to find a way to get the loan deal done.

Sinnreich said he hadn’t known the Rivkin Radler attorneys would be present at the meeting, and as Oyster Bay’s outside counsel, “it appeared to me that they were representing Mr. Singh.” No one had told him the firm also had been working on the issue as outside counsel, he said.

Mangano, Sinnreich said, was standing against a wall behind Singh. Then Mangano stepped forward, Sinnreich said.

“He put his hand on Mr. Singh’s shoulder and said, ‘Let’s get this thing done,’ ” Sinnreich said.

Of those who were in the meeting, Sinnreich is the only one so far who has testified that Mangano said anything. Others said Mangano was silent. Mangano’s friend and former boss at Rivkin Radler, William Savino, said he couldn’t recall Mangano being there.

Singh said it was Venditto who told the group, “Folks, can you find a way to help our friend?” — a question Singh interpreted as an instruction to the Rivkin Radler lawyers.

William Cornachio of Rivkin Radler eventually came up with the idea of amending the agreement so that if Singh defaulted the town would pay him — but his right to the payment would be assigned to the bank. Gilmartin testified earlier that was the same as a guarantee, as far as the bank was concerned.

Sinnreich had the same reaction. “I told Fred [Mei] it was a sham and it couldn’t survive judicial scrutiny,” Sinnreich testified.

Mei saw the issue from a different perspective. He said that as a town employee, he was obliged to do what Venditto and Genova told him to do. And as someone who was getting bribed routinely and extravagantly by Singh, he said he was motivated to help Singh. In this case, he said those motivations aligned.

“I was directed to help him.” Mei said.

Assistant U.S. Attorney Lara Treinis Gatz asked who directed him.

“Len Genova. That was his instruction, from John Venditto,” Mei said.

Treinis Gatz asked how he knew that.

“He told me,” Mei said. “He said John Venditto wanted to help H. Singh. I was supposed to find a way to assist H. Singh in finding financing.”

That began weeks of communication with Sinnreich, about the possibility of the town guaranteeing loans for Singh.

Treinis Gatz asked what authority Sinnreich had as the town’s outside counsel.

“He provides his opinion. He provides his guidance,” Mei said. “But the town decides what to do.”

“Are you the decision maker?” Treinis Gatz asked. That was Venditto, Mei said.

Mei said he asked Rivkin Radler to provide an opinion letter for the loan closing, but the firm refused. So Mei said he wrote one himself, which the bank accepted.

He also said he made money himself when the loan closed, after he pointedly told Singh the other attorneys involved in the deal got paid for the closing.

“My intention was to see if H was willing to give me money,” Mei testified. “H picked up on what I was hinting at. He gave me $10,000 in cash.”

Treinis Gatz asked why he took it.

“Greed,” he replied.

That greed — and Singh’s ability to exploit it — resulted in Mei not always having his employer’s interests at heart, he conceded.

“My loyalties were with the town,” he said. “But perhaps I had mixed loyalties.”

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