Former N.Y. Senate Leader Bruno Charged With Fraud (Update2)

By Martin Z. Braun and Michael Quint

Jan. 23 (Bloomberg) -- Joseph Bruno, the former leader of the New York State Senate, was indicted on federal corruption charges.

Bruno, a Republican who retired last year after almost 32 years as a state lawmaker representing Rensselaer and Saratoga counties, failed to disclose he was paid more than $2 million to solicit union pension funds on behalf of two brokers, according to an eight-count indictment unsealed in Albany today. He is also accused of lobbying for three individuals pursuing state business, receiving $1.2 million for his efforts.

The indictment said Bruno exploited “his official position for personal compensation and enrichment, knowing and believing that his reasonably perceived ability to influence official action would, at least in part, motivate those he contacted to enter into financial relationships beneficial to his personal financial interests.”

The former state senator wasn’t accused of bribery or extortion and such charges are not likely to emerge, acting U.S. Attorney Andrew Baxter said at a press conference in Albany.

Bruno, 79, was accused of violating his fiduciary duty to provide the state and citizens with “honest services,” Baxter said. The investigation was complicated by Senate rules and procedures making it difficult to identify individuals promoting legislation, he said.

The indictment says Bruno created consulting companies to collect almost $3.2 million between 1993 and 2006 from five groups, including labor unions.

Alleged Payments

The largest amount came from Wright Investors’ Service of Milford, Connecticut, which paid Bruno $1.37 million from March 1994 to December 2006 after 11 union pension or annuity funds hired the firm to manage a portion of their assets.

Bruno “routinely” didn’t disclose to the unions that he was working for Wright nor disclose to the public or lawmakers he was being paid by the firm, the indictment said. He is also accused of taking unspecified actions to benefit the unions.

“Wright was unaware of any improper or unethical activities by Mr. Bruno,” Kerry Hall, a spokesperson for the company said in an e-mail statement. “Mr. Bruno and his attorney assured us that the type of activities he performed for Wright were cleared by the proper ethics groups in New York” and that “he disclosed his association with our firm when talking to clients,” the statement said.

Bruno was arraigned earlier this afternoon before U.S. Magistrate Judge David Homer in Albany. If convicted, Bruno faces a maximum sentence of up to 20 years in prison and fines of up to $250,000 on each of the eight counts.

‘Been the Target’

“I have been the target of a “Get Joe Bruno Campaign,’” Bruno said in a statement issued after he was indicted. Bruno said a jury will find him innocent, and politically motivated federal prosecutors overreached in their accusations.

Charges that he defrauded the state and citizens of their right to his “honest services” will send “a frightening message to all elected officials who are not wealthy.” Lawmakers could “become target practice with a statute that can infer, insinuate and imply because they can’t find the facts to make a criminal case.”

Bruno compared the latest accusations with attempts by former Governor Eliot Spitzer to surreptitiously use the state police to investigate his use of state aircraft for political trips. “The former governor’s aides, even when they illegally used state police, could find nothing,” he said in a statement.

Aircraft Investigation

Investigations into Bruno’s use of the aircraft, and Spitzer’s attempts to use that information for political gain became known as “Troopergate,” and caused such discord that the two stopped speaking to each other, even about government business. Bruno was eventually cleared of wrongdoing while top aides to Spitzer were found to have unlawfully used state police. Spitzer resigned in March 2008 amid a federal prostitution investigation.

Bruno disclosed in December 2006 that the Federal Bureau of Investigation was probing his private business dealings. At a June 2008 press conference in Albany, Bruno said he was retiring and the probe wasn’t part of his decision. “I’ve never done anything wrong,” he said then.

Outside Interests

Since selling a telecommunications business in 1990 he helped found, Bruno worked with Capital Business Consultants of Albany, offering business development and strategy advice.

From the Senate, Bruno guided state government along with Sheldon Silver of Manhattan, the Democratic leader of the Assembly, and former Governor George Pataki, a Republican whose 12-year tenure ended in 2006. The Brennan Center for Justice at New York University School of Law ranked the Legislature as the most dysfunctional in the U.S. during a four-year period ending in 2004.

The case is U.S. v. Joseph L. Bruno, U.S. District Court, Northern District of New York.

To contact the reporters on this story: Martin Z. Braun in New York at mbraun6@bloomberg.net; Michael Quint in Albany, New York, at mquint@bloomberg.net.

Last Updated: January 23, 2009 17:21 EST