How we do things in New York State - Lesson I

Some readers of this blog find the references to New York state and city politics a bit obscure. Allow me to provide a handy introductory course.

Pedro Espada, Jr., is currently a member of the New York State Senate representing a district in the Bronx, one of the city’s five boroughs. In fact, he is the president of that legislative body (how he got there is a long story). To get a firm grasp of how things are done in Albany, our state capital, please continue reading.
Espada founded a nonprofit community health-care facility called ‘Soundview’ in 1978. It is not unusual for a politician to shower his district with public works, get his name above the door and smile for the cameras at the ribbon-cutting. Soundview, however, is not your typical community service organization.

Espada himself is president and CEO of Soundview where he earns $287,000 a year or approximately four times his salary as a state senator. His son Gauthier Espada is its facilities manager where he oversees the janitorial services provided by Espada Management Company, which is owned by his dad and which miraculously wins the Soundview contract for maintenance every year. Gauthier is also the contract compliance manager where he checks to make sure there are no conflicts of interest.

Soundview’s marketing director is another son, Alejandro Espada, who runs outreach and mass mailings. Lo and behold these often extol the bounteous good deeds of dad, even when he is running for office—an obvious violation of Soundview’s nonprofit status.

All in all, 12 members of the Espada family work at Soundview and collectively have received $2 million in compensation from the clinic in the past five years.

However, Soundview’s director of human resources is not a blood relative of the Espada’s. Indeed, Maria Cruz is not an Espada, merely a convicted felon for illegally diverting Soundview resources to the 2005 Espada reelection campaign. Christian forgiveness reigns at Soundview—her case lost, Ms. Cruz still had a job—at the nonprofit she had just looted. Her $10,000 in legal fees were generously paid by Pedro Espada, Jr., who cashed in some of his three months of annual paid vacation from Soundview to do so.

Two other Soundview employees were also convicted in the 2005 case and remain on its staff. One of them, Norma Ortiz, now serves as Espada’s administrative assistant and manages his Soundview corporate credit card. That alone turns out to be a full-time job.

In the last four years, Espada has racked up $250,000 in charges on that card, including: family vacations in Puerto Rico, Las Vegas and Miami and $80,000 in restaurant bills (including $20,000 for carry-out sushi) delivered to his suburban home.

To provide a fig leaf for this looting, Soundview’s board authorized Espada to take 14 weeks of paid leave per year, which accumulates indefinitely and can be converted to cash. After living high on the Soundview dime, Espada periodically declared that he was cashing out some vacation time and thereby annulled the ‘personal’ expenses.

Espada represents the Bronx but actually lives in Westchester county at a comfortable remove from the urban grit. To resolve his legal requirement to live in the impoverished district he represents, he turned once again to Soundview. The clinic increased his CEO salary by $2,500 a month to cover the cost of renting a coop.

With such burdensome expenses involving the Espada family, Soundview has become, not surprisingly, a deadbeat with its suppliers. With the accounting department in disarray, the entity was prosecuted by the IRS for failure to fund payroll withholding taxes in the amount of $700,000.

In addition to Espada’s annual salary, his board also awarded him an automatic 100% bonus for each of his 30 years of ‘service’, to be paid to him or his inheritors upon his departure for any reason (including prison or death). That now adds up to another $9 million in obligations to the chief, leaving the clinic technically insolvent. Were the board to become displeased with Espada for some far-fetched reason, his departure would trigger the severance provision, thus effectively destroying the institution.

This is the gentleman whom the distinguished senators of the state of New York elected to preside over their august deliberations.

[All details above gleaned from public documents available at the Web site of the Attorney General of New York State - www.ag.ny.gov]