Real estate company did not want Sheldon Silver as 'an enemy,' witness testifies

An official from the New Hyde Park real estate company accused of bribing former Assembly Speaker Sheldon Silver testified Monday the company's multimillionaire owner Leonard Litwin went along with a fee-sharing arrangement because he didn't want to alienate the powerful speaker.

"The concern was not to make an enemy out of Mr. Silver," head Glenwood Management lobbyist Richard Runes testified at Silver's corruption trial in federal court in Manhattan.

Silver, 71, is accused of bribery and extortion for giving what prosecutors claim was favorable treatment on real estate legislation to Glenwood to get the company to send lucrative tax-reduction cases to a Manhattan law firm sharing its fees with Silver. Prosecutors say Silver had referred Glenwood to the firm and made $700,000 in referral fees.

Runes testified Glenwood officials were "upset" when they first learned in late 2011 of the fee-sharing after it was disclosed by the law firm Goldberg & Iryami, because of a new legal ethics rule that required notification to clients of fee-split arrangements.

The company, Runes said, "didn't know if in fact this was legal," and was concerned because there were both risks in the arrangement, and risks in angering Silver

He compared it to having a tiger by the tail."If you hold a tiger by the tail, you have a difficult choice to make," Runes testified. "Whether to let go or not."

Runes said a Glenwood legal adviser on lobbying -- David Grandeau, a former state ethics official -- told him that, hypothetically, it would be legal for a management company to lobby someone who, like Silver, was getting fees from separate subsidiaries created to own each Glenwood building.

Although Runes was still "uncomfortable," he said Litwin decided to keep the fee arrangement, but included it in a side letter, not in the retainer between Glenwood and the law firm.

U.S. District Judge Valerie Caproni asked Runes what could be gained by putting the arrangement in a side letter. Runes said it was his understanding the retainer, not the side letter, could potentially become a public document. Prosecutors repeatedly asked Runes why Glenwood didn't just end the relationship with the law firm and Silver. He hedged, and finally Caproni cut in to ask if the company feared "retribution" from Silver, a key element in an extortion charge.

But even with her prompting, Runes would not use the word. "The concern was it would alienate Mr. Silver," Runes said. Litwin, 101, is not expected to testify. Silver resigned as speaker when he was charged, but continues to represent his Lower East Side Assembly district.

Testimony resumes Tuesday.