State Sen. Malcolm Smith (D-Queens) is surrounded by the media...

State Sen. Malcolm Smith (D-Queens) is surrounded by the media after being arraigned in federal court in White Plains after his arrest on fraud and bribery charges. (April 2, 2013) Credit: Patrick E. McCarthy

Democratic state legislator Malcolm Smith, once a political powerhouse, and Republican City Councilman Daniel Halloran participated in a brazen money-grabbing scheme to make the one-time State Senate majority leader a candidate in the upcoming New York City mayoral election, federal prosecutors charged Tuesday.

In a convoluted plot that involved secret meetings in hotels, cars and restaurants, Smith and Halloran were accused of arranging for tens of thousands of dollars in secret payments to Republican Party officials so that Smith -- a Democrat from the Hollis section of Queens -- could appear on the GOP primary ballot this year as a mayoral candidate. Both Smith, 56, and Halloran were arrested before dawn Tuesday.

Queens Republican Party vice chairman Vincent Tabone and Bronx Republican Party chairman Joseph Savino were charged with taking bribes arranged by Halloran to smooth the way for Smith to try to get on the GOP primary ballot.

The money used to bribe officials, the 28-page federal complaint states, came from a fake real estate development company controlled by an undercover FBI agent.

Land scheme alleged

Mayor Noramie Jasmin, 49, of upstate Spring Valley, and Deputy Mayor Joseph Desmaret, 55, are accused of corruption, as officials said they reaped financial benefits involving the sale of public land to that development company. As part of the Spring Valley land scheme, Smith allegedly agreed to help the undercover agent and a cooperating witness get $500,000 in state funding for roadwork.

"The charges we unseal today demonstrate, once again, that a show-me-the-money culture seems to pervade every level of New York government," said Manhattan U.S. Attorney Preet Bharara at a news conference announcing the arrests.

At one point, Halloran, after he allegedly took a $7,500 payment for his failed 2012 congressional campaign, commented to a cooperating government witness that "money is what greases the wheels -- good, bad or indifferent," Bharara said.

In a court appearance in White Plains Tuesday, no pleas were entered and all six defendants were each released on $250,000 personal recognizance bonds and had to surrender passports. Smith has to stay within the state, while Halloran is restricted to the city and Long Island.

Smith's attorney, Gerald Shargel, asked the public to withhold judgment and said Smith didn't plan to resign.

"Malcolm Smith is a dedicated public servant who has served both the State of New York and his constituents in an exemplary fashion," Shargel told The Associated Press. "He steadfastly denies the allegations that are contained in the complaint."

Halloran's attorney, Dennis Ring, said, "The councilman denies all allegations and looks forward to clearing his name and returning to court."

Tabone's attorney, Vito Palmieri of Mineola, said prosecutors seem to be "trying to make the business of politics into a crime."

If Smith became mayor, Halloran, 42, wanted a high-ranking deputy commissioner job in the NYPD or a spot in the new administration, Bharara said.

The charges amounted to an "unappetizing smorgasbord of graft and greed" that extended from Albany to Rockland County and into the city, Bharara stated.

"It ensnares Republicans as well as Democrats, elected officials as well as party leaders, and it details corruption in the city, the suburbs, as well as the capital," Bharara noted.

Bribery plot charged

Federal prosecutors describe three basic corruption schemes: the plot to bribe New York City Republican leaders to get Smith, a seven-term Democratic senator, on the primary ballot; the bribery of Halloran to steer city funds to a company controlled by the government witness; and the bribery of the Spring Valley officials on the land deal.

Smith was portrayed in the charges as allegedly playing a pivotal role in two of the corruption schemes and was labeled "Malcolm in the middle" by Bharara, alluding to the television program of that name.

The FBI taped hours of conversations from Nov. 16, 2012, until late March involving the accused, the cooperating witness and the undercover agent. The cooperating witness pleaded guilty in March, according to the federal complaint.

In one meeting on Jan. 25, Smith met with the cooperating witness in Rockland County and allegedly talked about possible payments to Republican committee leaders, the complaint says.

"It's a pretty penny," the witness said.

"Yeah, it's worth it, as long as they're going to do it," Smith said.

Later that day, Halloran met with the undercover agent at a Queens restaurant and allegedly talked about payments to Tabone and Savino. Halloran said Tabone wanted $100,000 and $50,000 for the Queens Republican Party, the complaint stated, adding that Halloran wanted help on a mortgage as com-pensation for brokering the deal.

Under state law, a majority of one party's county committees must endorse a candidate registered with another party who seeks to run for a citywide office, federal officials said.

Smith faces 45 years in prison if convicted of bribery, fraud and extortion. Halloran is also facing 45 years for wire fraud and bribery. Tabone and Savino face 25 years and Jasmin and Desmaret are facing 20 years if convicted of mail fraud.

The complaint was filled with instances in which money was allegedly passed during meetings between the undercover operatives and defendants in restaurants and hotel rooms, mostly in Queens and Manhattan.

"That's politics . . . not about whether or will, it's about how much," said Halloran in one taped conversation, "and that's our politicians in New York, they're all like that."

Case began 3 years ago

Rockland County District Attorney Thomas Zugibe said that the charges resulted from a case his office initiated more than three years ago.

"It was clear we took it to a certain level and it was clear we didn't have jurisdiction to take it beyond that level, so that is why I asked the U.S. attorney and FBI to get involved," Zugibe said.

Billionaire candidate John Catsimatidis, who is vying for the Republican line in the mayoral race and employed Tabone, said in a statement that he and his campaign and business had learned of the investigation earlier this year and had cooperated with the probe. Tabone was fired from the campaign and suspended from Catsimatidis' company, a spokesman said.

Republican primary candidate Joseph Lhota, who was recently endorsed by Halloran, declined to comment.

Mayor Michael Bloomberg took the opportunity to blast partisan election politics. "Generally speaking, partisan elections deprive the public of the right to pick their own leaders," Bloomberg said. "It's very hard to argue that it is democratic."

Gov. Andrew M. Cuomo said the allegations are serious. "I hope that [Smith] thoroughly cooperates with the investigation, and I hope the investigation is thorough and speedy and that it gets to the facts," the governor said. "But it is very, very troubling; we have zero tolerance for any violation of the public integrity and the public trust."

Halloran has been stripped of his committee assignments and money-allocating authority. Smith was removed from his committee assignments and leadership post in the breakaway Independent Democratic Conference that formed a majority coalition with Senate Republicans.

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