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Skelos, son face new charges in corruption probe

Sen. Dean Skelos (R-Rockville Centre) and his son,

Sen. Dean Skelos (R-Rockville Centre) and his son, Adam, on May 4, 2015, after leaving federal court in Manhattan where they were arraigned on bribery and extortion charges. Credit: AP / Craig Ruttle

ALBANY - The son of Sen. Dean Skelos allegedly put in just one hour of work during his first week at a new job that his powerful father secured for him and later threatened to "smash in" the head of a supervisor who complained, according to an expanded federal criminal indictment released Tuesday.

In the document, U.S. Attorney Preet Bharara broadened his case against Skelos (R-Rockville Centre), the state's former top Republican, and his son, Adam, by adding two additional charges alleging the senator solicited bribes and extorted a Long Island-based malpractice insurer to hire his son in return for protecting it through favorable legislation.

The senator and his son faced six counts when arrested in May. The original charges alleged Skelos extorted a real-estate company to make campaign contributions to Republicans and finance a job for his son through an environmental company. Skelos then allegedly pressured Nassau County to award the environmental firm a $12 million stormwater contract, and successfully shepherded state legislation that benefitted the real-estate company.

Sen. Skelos has said he and his son are innocent. His Republican colleagues forced Skelos to step down as majority leader in May, but he has retained his Senate seat.

Lawyers for Skeloses did not return calls Tuesday seeking comment.

The malpractice insurer wasn't named in either the original or superseding indictment but has been identified as Physicians Reciprocal Insurance, based in Roslyn and headed by Anthony Bonomo, a campaign contributor to Skelos, Gov. Andrew M. Cuomo and others. The company has acknowledged it has been contacted in the probe and has said it is cooperating. Bonomo, citing the investigation, has stepped down as chairman of the New York Racing Association, a post Cuomo appointed him to earlier this year.

A spokesman for Physicians Reciprocal said Tuesday in a statement, "In light of the on-going criminal proceeding by the United States Attorney's Office for the Southern District of New York against Dean Skelos and his son, Adam, we have no comment on the superseding indictment and continue to cooperate with this ongoing investigation."

Newsday reported in June that lawmakers tucked a provision into the 2015-16 state budget that benefited Physicians Reciprocal -- a major player in the malpractice market -- and one smaller company.

The fresh charges add details about Skelos allegedly pressuring Physicians Reciprocal to not only give his son a full-time job on the payroll at a $78,000 salary, but also steer court reporting business to a firm that employed Adam's wife. Insurance and other benefits brought Adam Skelos' compensation from the company to $100,000.

According to the indictment, the younger Skelos began getting paid as a malpractice insurance administrator in January 2013 even though he lacked a license to sell insurance. In his first week on the job, Skelos allegedly put in just one hour.

When a supervisor phoned to ask about his absence, the younger Skelos said he didn't have to show because of his powerful father. Skelos then threatened to "smash in" the supervisor's head, said he would "never amount to anything" and told him he "couldn't shine (my) shoes," the indictment said.

Later that day, the indictment said, Sen. Skelos called the company CEO and "demanded to know why Adam Skelos was being 'harassed' by the supervisor." The CEO told the senator his son was verbally abusive. The senator responded by saying the company needed to resolve its issues with Adam. After that conversation, the CEO believed firing Adam would adversely impact his company's business, according to the indictment. The company website identifies Bonomo as its CEO.

Over the next four months, Adam only worked part of five days, according to the indictment. Later that fall, he agreed to become a part-time consultant earning $36,000 per year that required him to make 100 sales calls per week. He made only a small fraction of the required calls and sold no insurance policies, the indictmernt said.

Despite that, the company extended Adam Skelos' contract till March 31, 2015 -- about the same time lawmakers voted on the final parts of the 2015-16 state budget.

The budget included a provision that prevents regulators from liquidating malpractice insurers that have a negative financial balance. The law has been in place for years and wasn't set to expire until 2016. But lawmakers took the unusual step of renewing it a year early.

Bharara cited the extension in the indictment.

Just five companies are authorized by the state to offer malpractice coverage to physicians and surgeons and two operate with a "negative surplus," according to industry lobbyists and state officials.

Bonomo has contributed $6,100 to Skelos since 2012, according to campaign records. Other family members listing the same Manhasset address gave $40,000 last September to the Senate Republican Campaign Committee, an entity Skelos controlled until stepping down as leader.

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