NY State Senator and Son Indicted for Alleged Fraud Scheme

Yesterday a federal grand jury in Brooklyn returned an indictment charging Pedro Espada, Jr., a New York State Senator for the 33rd Senatorial District in the Bronx, New York, and his son, Pedro Gautier Espada, with five counts of embezzlement from a nonprofit health care network receiving federal funding, and one count of conspiracy. The individuals’ initial appearances are scheduled for today at 2:00 p.m. before United States Chief Magistrate Judge Steven M. Gold at the United States Courthouse in Brooklyn, New York.

As detailed in the indictment, from 2005 through 2009, the individuals allegedly abused their positions at Soundview Healthcare Center (Soundview), a network of health care clinics located in the Bronx, through a number of alleged schemes designed to divert Soundview funds to their personal use and for the benefit of favored family members and friends. The total amount allegedly embezzled exceeded $500,000.

Pedro Espada founded Soundview in 1978 as a charitable not-for-profit organization under Section 501(c)(3) of the Internal Revenue Code. Soundview receives more than $1 million per year in federal grant money from the United States Department of Health and Human Services, as well as millions of dollars more in Medicare and Medicaid reimbursements.

If convicted, the individuals face a maximum sentence of 10 years’ imprisonment on each of the embezzlement counts and five years’ imprisonment for conspiracy, as well as a fine of $250,000 on each count of conviction. Because Pedro Espada is a state senator, and therefore considered a public official, his sentence may be more severe than his son’s.

It is also important to keep in mind that an indictment merely contains allegations. When the government presents its case to the grand jury, legally they are not required to show any evidence or call any witnesses. Further, there is no opportunity for the accused individual(s) to present a defense. Unfortunately, the grand jury hears only one side of the story before granting an indictment.

Douglas McNabb and other members of the firm practice and write extensively on matters involving Federal Criminal Defense, Interpol Litigation, International Extradition and OFAC Litigation.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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