Pedro Espada Indictment

8/2/2019 Pedro Espada Indictment

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CP:RB:TKF.#2010R00420

UNITED STATES DISTRICT COURTEASTERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA- aga ins t -

PEDRO ESPADA, JR. andPEDRO GAUTIER ESPADA,

Defendants ,

x

- - - - - - - - - - - - - XTHE GRAND JURY CHARGES:

fiLEDIN ~ L E R K ' S OFFiceu.s DISTRICT COURT EO.N.Y.* JAN 172012 *

BROOKLYN OFFICE

S U P E R S E D I N GI N D I C T M E N T

Cr. No. 10-985 (S-2) (FB)(T . 18, U.S.C. , 371,666 (a ) (1 ) (A),981 (a) (1 ) (c ) , 982 (a) (7) ,982 (b) , 1001 (a) (3) ,1349, 2 and 3551 e tseq . ; T. 21, U.S.C. , 853 (p) ; T. 26, U.S.C. , 7206(1) and 7206(2)) ;T. 28, U.S.C. , 2461(c)

INTRODUCTION TO ALL COUNTSAt a l l t imes re l evan t to t h i s Ind ic tment , unless

otherwise i nd ica t ed :I . The Defendants

1 . PEDRO ESPADA, JR. ("ESPADA") was the ChiefExecut ive Off ice r and Pres ident of Comprehensive CommunityDevelopment Corpora t ion ("CCDC"), a l so known as SoundviewHeal thcare Network ("Soundview"). Beginning in January 2009,ESPADA was a lso an e l ec t ed member o f the New York Sta te Senate ,represent ing the 33

rdSena to r ia l D i s t r i c t in the Bronx, New York.

Pr io r t o rep re sen t ing the 33 rd Sena to r i a l Di s t r i c t , ESPADA servedseve ra l te rms in th e New York Sta te Senate rep re sen t ing the 32 ndSena to r i a l D i s t r i c t and a l so ran fo r o ther e l ec t ed p o s i t i o n s .

Case 1:10-cr-00985-FB Document 47 Filed 01/17/12 Page 1 of 31 PageID #: 304


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2. PEDRO GAUTIER ESPADA ("GAUTIER ESPADA"), ESPADA'se ldes t son, was the Direc to r o f Environmental Care a t Soundview.GAUTIER ESPADA a l so he ld pos i t ions in Community ExpansionDevelopment Corpora t ion ("CEDC") and Soundview ManagementEnte rp r i se s ("SME"), j a n i t o r i a l se rvice companies founded andowned by ESPADA.I I . The Relevant Companies

A. Soundview Healthcare Network3. ESPADA founded Soundview in 1978 as a char i t ab le

no t - fo r -p ro f i t organ iza t ion under Sect ion 501(c) (3) of theI n t e r n a l Revenue Code. Soundview was a network of hea l th carec l in i c s loca ted in the Bronx. Soundview rece ived more than $1mil l ion per year each year from 2005 through 2009 in g ra n t moneyfrom the United Sta tes Department of Heal th and Human Services ,which gran t money was administered through the Health Resourcesand Services Administ ra t ion ("HRSA").

4. As a no t - fo r -p ro f i t organ iza t ion , Soundview had tomeet seve ra l requirements to be granted and to main ta in t ax-exempt s t a tus . Those requirements , under sec t ion 501(c) (3 ) o fth e In t e rn a l Revenue Code, inc luded the fol lowing:

a . the organiza t ion must be "organized and opera tedeXClus ively fo r exempt purposes s e t fo r th insec t ion 501 (c) (3)" ;

b. th e organ iza t ion must not be organized or operatedfo r the benef i t of pr iva te i n t e re s t s ;

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.c . "none of [ the organiza t ion ' s ] earnings may inureto any pr iva te shareholder or indiv idual" ;d. the organizat ion "may not par t i c i pa t e in anycampaign ac t iv i ty fo r or aga ins t p o l i t i c a l

candidates" ; ande . the organiza t ion ' s asse t s must be permanentlydedicated to an exempt purpose .5. Soundview's amended Art ic le s of Incorporat ion

s ta ted the fol lowing:The purposes fo r which th i s corporat ion i sformed are exclus ively char i t ab le and a re toes tab l i sh , opera te , maintain , and l ease adiagnos t ic and t rea tment heal th care cen te r fo rthe prevent ion, diagnosis and t r ea tment ofhuman disease , pain, in jury , deformity ando ther phys ica l condi t ions .6. Further , Soundview's Art ic le s of Incorporat ion

express ly required t ha t it operate in a manner t ha t would notjeopardize i t s tax-exempt 501 (c ) (3) s t a t us .

7. Soundview l eased severa l proper t i e s , inc luding 731White Plains Road in the Bronx, where it maintained i t sheadquarters , and severa l s a t e l l i t e c l i n i c s .

B. Community Expansion Development Corporat ion8. CEDC was a fo r -p ro f i t j an i to r ia l serv ices company

incorporated by ESPADA in 1980 and owned by him. From 1994 un t i l2002, CEDC provided Soundview with j a n i t o r i a l and maintenanceserv ices for a l l the Soundview f ac i l i t i e s . Soundview paid CEDCtwice each month.

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9. In approximate ly 2003, CEDC employees were placedon the Soundview payro l l . As Soundview employees, thosei nd iv idua l s were pa id by Soundview and rece ived f u l l Soundviewemployee benef i t s .

10. In January 2005, ESPADA t r a n s fe r r e d ownership ofCEDC to Soundview, making it a subs id ia ry of Soundview. InJanuary 2006, notwi thstanding th i s t r ans fe r , ESPADA dec la red tothe Soundview Board of Direc to rs t ha t he was "donat ing" h ispurported remaining 49% i n t e r e s t in CEDC to Soundview.

C. Soundview Management Ente rp r i se s11. SME was a fo r -p ro f i t j a n i t o r i a l se rv ices company

incorpora ted by ESPADA in Ap r i l 2007. ESPADA was the so le ownerof SME. GAUTIER ESPADA managed SME on a da i ly bas i s , con t ro l l edthe h i r ing and f i r i ng of a l l employees, i s sued checks toemployees, decided who rece ived bonuses, and, u n t i l 2009,co l l e c t ed the t ime shee ts from SME employees.I I I . The Defendants ' compensat ion

12. Soundview provided fo r ESPADA to be pa id a basesa la ry ranging from approximately $235,000 in 2003 to $246,750 in2009. Soundview pa id GAUTIER ESPADA a base sa la ry and f r ingebenef i t s in amounts ranging from $94,678 in 2003 to $111,667 in2009. CEDC pa id GAUTIER ESPADA a base sa la ry in amounts rangingfrom $40,200 in 2005 to $65,100 in 2007, and SME pa id him $50,840in 2008.

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IV. The Conspi racy To Embezzle. Stea l , Misapply and Defraud13. As se t for th below, between January 2005 and

February 2010, ESPADA and GAUTIER ESPADA conspi red to embezzle,s t ea l , misapply and obta in by f raud money and o the r proper ty fromSoundview s ign i f i can t l y above and beyond t ha t which they weree n t i t l e d to as employees of Soundview. To e f f e c t ua t e t h e i rconspiracy, they devised and executed the fol lowing schemes.

A. Soundview American Express Card Scheme14. In o r about 2002, a t ESPADA's d i r e c t i on , the Chief

Financia l Off ice r ("CFO") o f Soundview appl ied fo r a Soundviewcorpora te American Express card ( the "AMEX ca rd" ) . Due to thepoor c red i t hi s tory of Soundview and ESPADA, in order to obta inth e AMEX card, the CFO served as the ca r d ' s guarantor and assumedpersonal r espons ib i l i ty fo r payment of the account . The onlyauthor ized users of th e AMEX card were ESPADA and the CFO.

15. According to ESPADA's employment con t r ac t withSoundview and th e minutes o f meetings of the Soundview Board ofDirec tors , ESPADA was permi t ted to use the AMEX card fo r personalas well as bus iness expenses , provided t h a t he re imbursedSoundview fo r a l l personal expenses charged on the card .ESPADA's Soundview employment con t r ac t permi t ted him to reimburseSoundview fo r h is personal AMEX card charges by deduct ing daysfrom h is accrued s ick and vacat ion t ime to cover the t o t a l amountof h is personal AMEX charges . ESPADA's employment con t r ac t

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provided him with e ig h t weeks of pa id vaca t ion t ime and s ix weeksof pa id s ick t ime.

16. Each month, the CFO provided ESPADA with th emonthly AMEX s ta tement so t ha t ESPADA could ident i fy whichcharges were h is pe r sona l expenses . Any AMEX charges nots pe c i f i c a l l y marked "personal" by ESPADA on those s ta tements werefu l ly pa id fo r by Soundview as business expenses . When reviewingthe monthly Soundview AMEX s ta tements , ESPADA i n t e n t iona l lyfa i l ed to ident i fy more than $115,000 in pe r sona l charges as h ispersona l expenses . As a r e s u l t , Soundview, r a t h e r than ESPADA,pa id fo r those pe r sona l expenses .

B. The CEDC Scheme17. As noted above, in January 2005 CEDC became a for

p r o f i t subs id iary of Soundview, a char i t ab le no t - fo r -p ro f i tcorpora t ion . As such, CEDC's pro f i t s and a s se t s were to inure tothe benef i t o f Soundview, and not to the benef i t of any pr iva teind iv idua l . Never the less , ESPADA and GAUTIER ESPADA cont inued tocon t ro l and opera te CEDC as i f it were still ESPADA's pr iva tecompany t ha t ex is ted fo r h is and h is family ' s persona l b e n e f i t .During the per iod CEDC was a subs id ia ry of Soundview, ESPADA usedCEDC funds to pay pe r sona l expenses, inc luding expenses re l a t edto h is p o l i t i c a l campaigns, and ESPADA and GAUTIER ESPADAt rans fe r red CEDC money to themselves , and fo r the b e n e f i t oft h e i r family members, a t w i l l . Through t h i s scheme ESPADA andGAUTIER ESPADA s to l e more than $175,000 from Soundview.

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C. The Rent Payment Scheme18. As the leaseholder of var ious proper t i e s ,

Soundview subleased conference rooms and o ther f a c i l i t i e s tomedical profes s iona l s , re l ig ious organiza t ions and o thersub tenan t s . In o r about and between 1999 and 2009, ESPADA andGAUTIER ESPADA caused sub tenan t s o f Soundview to make r e n tpayments and o ther payments to themselves , to CEDC, and to SME,ra the r than to Soundview. Through t h i s scheme, between 2005 and2009, ESPADA and GAUTIER ESPADA s to le more than $200,000 insubtenant ren t payments from Soundview.

D. The Bid-Rigging Scheme19. In o r about Ju ly 2007, Soundview began so l i c i t i ng

bids fo r a j a n i t o r i a l se rv ices con t rac t . In o rde r to ensure t ha tSME, the fo r -p ro f i t corpora t ion founded by ESPADA in Apr i l 2007,would win the con t rac t , ESPADA and GAUTIER ESPADA orches t r a ted af raudu len t scheme to subvert the bidd ing process ( the "BidRigging Scheme"). In fu r therance o f t h i s scheme, GAUTIER ESPADAfa l se ly informed j a n i t o r i a l se rv ice s companies t h a t submit tedbids fo r the con t rac t , among othe r th ings , t ha t (a) more j a n i to r swere requi red to c lean Soundview's f a c i l i t i e s than a c t u a l l y wererequ i red , and (b ) Soundview's f a c i l i t i e s needed to be cleanedmore f requent ly than ac tua l ly was requi red .

20. Based on the f a l s e informat ion provided by GAUTIERESPADA, the j a n i t o r i a l serv ice companies competing fo r thecon t rac t sUbmit ted bids t ha t were in excess o f what they would

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have been had they known of the t rue work sp e c i f i c a t i o n s . As ar e s u l t , when SME of fe red to perform the t rue work spec i f i ca t ions ,SME's pr ice appeared to the Soundview Board to be lower than thelowest b id submit ted by the othe r j a n i t o r i a l se rv ice companies .

21. In December 2007, the Execut ive Committee o fSoundview's Board of Direc tors voted to award Soundview'sj an i to r i a l con t rac t to SME. The Execut ive Committee 's dec is ionwas then r a t i f i e d by the e n t i r e Board because the Board had beent o ld t ha t SME had submit ted th e lowest bid .

22. On January 15, 2008, Soundview and SME ente redi n to a one-yea r con t rac t fo r SME to provide j a n i t o r i a l se rv icesto Soundview fo r approximately $34,000 per month. SME thenperformed the con t rac t based on Soundview's ac tu a l j a n i t o r i a lse rv ice s needs, not on the fa l se work spec i f i ca t ions presented tothe competing companies to f raudulent ly cause them to submithigher bids . Soundview pa id SME approximate ly $389,700 in 2008pursuan t to t h i s co n t r ac t .

23. In fu r therance o f the Bid-Rigging scheme, GAUTIERESPADA engaged in i n t e r s t a t e te lephone conversa t ions with anemployee of a j a n i t o r i a l serv ice company t ha t submit ted a bid .

i ) Fi l ing of a False 2008 Medicare Cost Repor t24. Medicare re imburses hosp i t a l s and hea l th cen te r s

such as Soundview fo r some cos t s a s soc ia ted with Medicarepa t i e n t s ' care . In order to rece ive such reimbursements , hea l thcen te r s must submit Cost Reports to Medicare. In February 2010,

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Soundview submit ted a Cost Report to Medicare per ta in ing to theyear 2008 t h a t ESPADA s igned and c e r t i f i e d (the "2008 MedicareCost Report") .

25. The 2008 Medicare Cost Repor t s pe c i f i c a l l y askedabout payments Soundview made to r e l a t e d pa r t i e s , such as nonarms- length t r ansac t ions with i t s own employees, and reques tedth e amount of p r o f i t earned by the re l a t ed par ty . Medicareobta ins t h i s informat ion so t h a t it does not re imburse an ent i tyfo r pro f i t s earned by t h a t e n t i t y ' s own employees.

26. Soundview repor ted t h a t (1 ) it made a payment toSME o f $363,000 in 2008, and (2) only $35,000 o f t h a t payment wasp r o f i t to ESPADA, with the remainder rep re sen t ing the cos t ofproviding c leaning se rv ices fo r Soundview. ESPADA prov ided theinformat ion contained in the 2008 Medicare Cost Report concerningthe pro f i t s he earned from SME and ve r i f i e d the verac i ty of t h a tin format ion by s igning and c e r t i fy i n g th e r epor t . In f a c t , SME,and thereby ESPADA, earned p r o f i t s in excess of $120,000 fromSoundview's payments to SME dur ing 2008.

E. Other Thef t27. From January 2006 through June 2009, ESPADA caused

Soundview to pay fo r i tems and se rv ice s t h a t he purchased witho f f i c i a l Soundview checks t h a t d i r e c t ly benef i t t ed ESPADA and h isfamily but were unre la ted to the conduct of o f f i c i a l Soundview

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business . These expenses inc luded over $1,000 fo r f lowers t h a twere sen t to members of ESPADA's immediate family .

28. ESPADA add i t iona l ly submit ted rece ip t s toSoundview and obta ined reimbursement fo r purpor ted bus inessexpenses charged on the AMEX card t h a t had a l ready been paidd i r e c t ly by Soundview. From January 2007 to June 2009, ESPADAcaused Soundview to pay him over $2,500 in f raudulentreimbursements in t h i s manner.

COUNT ONE(Conspiracy to Commit Thef t , Embezzlement andMisapp l ica t ion of Federa l Funds)

29. The a l l ega t ions contained in paragraphs 1 through28 are r ea l l eged and incorpora ted as i f fu l l y s e t fo r th in t h i sparagraph.

30. In o r about and between January 2005 and February2010, both dates being approximate and inc lus ive , within theEaste rn Di s t r i c t of New York and elsewhere , the defendants PEDROESPADA JR. and PEDRO GAUTIER ESPADA, agents of Soundview, didknowingly and w i l l f u l l y conspire to embezzle, s t ea l , ob ta in byf raud, i n t e n t iona l ly misapply , and otherwise without lawfulau thor i ty knowingly conver t to the use of a person o th e r than ther i gh t fu l owner, proper ty of Soundview, an organ iza t ion t h a treceived within a one-year per iod benef i t s in excess of $10,000under a Federa l program involving a grant , con t rac t , subsidy,loan, guarantee, insurance and o ther forms of Federal as s i s tance ,

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which proper ty was valued a t $5,000 o r more, and was owned by andunder the care , cus tody, and con t ro l of Soundview, con t ra ry toTi t l e 18, United Sta tes Code, Sect ion 666(a) (1 ) (A).

31. In fu r therance o f th e consp i racy , and to e f f e c ti t s ob jec t ives , with in the Eastern D i s t r i c t of New York andelsewhere , th e defendan ts PEDRO ESPADA, JR. and PEDRO GAUTIERESPADA committed and caused to be committed th e fol lowing:

OVERT ACTS(a) In o r about and between 2005 and 2007, ESPADA

used CEDC funds to pay two d i f f e r e n t law f i rms fo r work theyperformed in connect ion with l i t i ga t ion r e l a t e d to ESPADA'sp o l i t i c a l campaigns.

(b ) In o r about and between May 2005 and August2005, ESPADA used CEDC funds to pay fo r af te r - schoo l tu to r ing fo rFamily Member #2.1/

(c ) In o r about February 2006, ESPADA used CEDCfunds to pay a ghos twr i t e r to work on a persona l book pro jec t .

(d) In o r about June 2006, ESPADA used CEDC fundsto pay a plumbing, hea t ing and a i r cond i t ion ing se rv ice companyin connect ion with se rv ic ing th e a i r c o n d ~ t i o n i n g system a tESPADA's home in Mamaroneck, New York.

iFami ly Members #1 through #8, whose i d e n t i t i e s a re known tothe Grand Jury , a re r e l a t i ve s of ESPADA and /or GAUTIER ESPADA byblood o r a f f i n i t y .

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(e) In o r about June 2006, ESPADA used CEDC fundsto pay an i nd iv idua l to c a t e r Family Member #3 ' s bi r thday par ty ,held a t ESPADA'S home in Mamaroneck, New York.

(f) In o r about July 2006, ESPADA used CEDC fundsto pay an i nd iv idua l to video tape th e June 2006 bi r thday par tyheld a t ESPADA's home.

(g) In o r about June 2006, ESPADA used CEDC fundsto pay the Bronx Equest r i an Center to prov ide a pe t t i ng zoo andpony fo r the June 2006 bi r thday par ty he ld a t ESPADA's home.

(h ) In o r about October 2006, a t Bent ley of LongIs land, ESPADA presented a check from one of CEDC's bank accountsin th e amount of $49,000 as a down-payment fo r a Bent leyautomobile worth $125,000. Ult imately , the check was notnegot ia ted because ESPADA's f inancing app l ica t ion was re j ec ted .

( i) In o r about May 2007, ESPADA used CEDC fundsto pay Profusion Management, a c re d i t - r e pa i r company h i red byESPADA to improve h is persona l c re d i t score .

(j) In o r about January 2008, ESPADA used CEDCfunds to pay a pr i n t e r fo r campaign mater ia l s produced fo rESPADA's 2008 New York Sta te Sena to r ia l campaign.

(k ) In o r about and between January 2008 andOctober 2008, ESPADA used CEDC funds to pay ren t fo r ESPADA'scampaign headquar te rs fo r the 2008 New York Sta te Sena to r ia lcampaign.

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(1) In o r about 2007, GAUTIER ESPADA caused CEDCto pay him approximate ly $5,200 fo r expenses purpor tedly incurredby him, but which expenses CEDC had a l ready pa id fo r through i t scorpora te American Express card .

(m)-( j j ) In or about the months s e t fo r th below,ESPADA caused CEDC to pay funds v ia checks to himsel f , GAUTIERESPADA and the fol lowing family members and as soc ia tes , whichfunds were ou t r igh t g i f t s , purported loans , "consul t ing fees" andfa l se re imbursements :

OVERT DATE RECIPIENT AMOUNT MEMO SIGNATUREACTm July 2005 ESPADA $1,500 Loan ESPADAn September GAUTIER $1,500 Loan ESPADA2005 ESPADA0 November ESPADA $5,000 Loan ESPADA2005P December Family $499.50 Blank ESPADA2005 Member #4q January ESPADA $5,000 Loan ESPADA2006r February Family $5,000 Loan ESPADA2006 Member #5s March Family $500 Loan ESPADA2006 Member #4t July 2006 GAUTIER $4,234 Loan ESPADA

ESPADAu August Family $2,999 Blank ESPADA2006 Member #6

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v November Family $1,000 Loan ESPADA2006 Member #7w May 2007 ESPADA $952.50 Reimbursement ESPADAx May 2007 ESPADA $1,000 Consul t ing ESPADAFeey June 2007 GAUTIER $2,200 Loan ESPADA

ESPADAz June 2007 ESPADA $955 Reimbursement ESPADAaa July 2007 ESPADA $5,000 Loan ESPADAbb July 2007 SME $3,000 Blank ESPADAcc October Family $500 Gif t ESPADA2007 Member #8dd November GAUTIER $2,500 Loan ESPADA2007 ESPADAee November ESPADA $1,500 Consul t ing ESPADA2007 Feeff March ESPADA $365.50 Reimbursement ESPADA2008gg March ESPADA $254 Reimbursement ESPADA2008hh May 2008 GAUTIER $300 G if t ESPADA

ESPADAi i August ESPADA $4,300 Loan ESPADA2008j j Apri l ESPADA $440 Blank ESPADA2009

(kk) In o r about and between 2007 and 2008,GAUTIER ESPADA caused an indiv idua l to pay him $500 p er month incash for the r i g h t to use a Soundview conference room to conductSunday re l ig ious se rv ices .

(11) In o r about and between l a t e 2008 and mid2009, ESPADA caused a t enant rent ing space in s ide of one o f

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Soundview's locat ions to pay r en t in the approximate amount of$11,200 to SME r a the r than to Soundview.

(mm) In o r about and between May 2005 andSeptember 2008, ESPADA caused Weight Watchers to pay CEDC a t o t a lof approximately $16,000 in checks to r en t a Soundviewconference room fo r i t s weekly c lass , which checks were i ssuedfrom Je r icho, Long I s l and .

(nn) In o r about and between February 2005 andNovember 2009, ESPADA charged, caused to be charged, and causedSoundview to pay charges fo r more than $100,000 in persona l mealson the Soundview AMEX card . Those charges included, but were notl imi ted to , the fol lowing:

( i) $4,260.29 in charges a t Lum YenRestaurant in Mamaroneck, New York between 2005 and 2009;

( i i ) $20,155.89 in charges a t Toyo Sushi inMamaroneck, New York between 2006 and 2009;

( i i i ) $4,761.16 in charges a t the MamaroneckDiner in Mamaroneck, New York between 2006 and 2009;

( iv) $4,013.08 in charges a t the Naut i lusDiner in Mamaroneck, New York between 2005 and 2009;

(v) $7,700.34 in charges a t Legal Sea Foodsin White Pla ins , New York between 2005 and 2009; and

(vi) $5,468.59 in charges a t SeasonsJapanese Cuisine in White Pla ins , New York between 2005 and 2009.

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(00) In o r about and between 2007 and 2009, ESPADAcharged, caused to be charged, and caused Soundview to paycharges fo r approximate ly $1,300 in purchases from EdibleArrangements on th e Soundview AMEX card .

(pp) In o r about 2008, ESPADA charged, caused tobe charged, and caused Soundview to pay charges t o t a l i ng$1,055.57 fo r home window t rea tments on the Soundview AMEX card .

(qq) In o r about and between 2006 and 2009, ESPADAcaused Soundview to pay over $1,000 to Park F l o r i s t fo r f lowerst ha t were de l ive red to members of ESPADA's immediate family.

( r r ) In o r about and between 2006 and 2009, ESPADAcaused Soundview to re imburse him fo r over $2,500 in expensest h a t he charged on the Soundview AMEX card and fo r which he wasnot en t i t l ed to reimbursement .

(T i t l e 18, uni t ed Sta tes Code, Sect ions 371 and 3551 e tseq. )

COUNTS TWO THROUGH SIX(Theft , Embezzlement and M isappl icat ion of Federal Funds)32. The a l l ega t ions con ta ined in paragraphs 1 through

28 are rea l l eged and incorpora ted as i f fu l ly s e t fo r th in t h i sparagraph.

33. In the years l i s t ed below, within the Eas te rnD i s t r i c t of New York and elsewhere , th e defendan ts PEDRO ESPADA,JR. and PEDRO GAUTIER ESPADA, being agen ts of Soundview, d idknowingly and i n t e n t i o n a l l y embezzle, s t ea l , obta in by f raud ,

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misapply and, without au thor i ty , knowingly conver t to the use ofa person o ther than the r i gh t fu l owner, prope r ty of Soundview, anorganiza t ion t h a t rece ived in excess of $10,000 involving gran t s ,con t rac t s , subs id i e s , loans, guarantees, insurance, and o therforms of Federa l funds as s i s tance , which proper ty was valued a t$5,000 o r more and which proper ty was owned by, and was under thecare , cus tody, and con t ro l o f , Soundview:

COUNT YEAR APPROXIMATE DOLLARAMOUNT

TWO 2005 More than $70,000THREE 2006 More than $130,000FOUR 2007 More than $150,000FIVE 2008 More than $130,000SIX 2009 More than $65,000

(T i t l e 18, uni ted Sta tes Code, Sect ions 666 (a ) (1) (A), 2and 3551 e t seq . )

COUNT SEVEN(Conspiracy to Commit Wire Fraud)34. The a l l ega t ions con ta ined in paragraphs 1 th rough

28 a re r ea l l eged and incorpora ted as i f fu l l y s e t fo r th in t h i sparagraph.

35. In o r about and between July 2007 and October2010, both dates be ing approximate and inc lus ive , with in theEas tern D i s t r i c t of New York and elsewhere , th e defendan ts PEDROESPADA, JR. and PEDRO GAUTIER ESPADA, t oge the r with o ther s , d idknowingly and i n t e n t i o n a l l y conspire to dev i se a scheme and

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a r t i f i c e to defraud , and to obta in money and prope r ty by means ofmater ia l ly fa l se and f raudulent p re t ense s , r ep resen ta t ions andpromises , to wit : the Bid-Rigging Scheme, and fo r the purpose ofexecut ing such scheme and a r t i f i c e to t ransmi t and cause to bet r ansmi t t ed , by means of wire communicat ion in i n t e r s t a t ecommerce, wri t ings , s igns , s igna l s , p ic tu res and sounds, to wit :i n t e r s t a t e t e lephone ca l l s , cont ra ry to T i t l e 18, United Sta tesCode, Sect ion 1343.

(T i t l e 18, Uni ted Sta tes Code, Sect ions 1349 and3551 e t seq . )

COUNT EIGHT(False Statement)36. On o r about February 4, 2010, within the Southern

D i s t r i c t of New York, the defendant PEDRO ESPADA, JR. d idknowingly and w i l l fu l l y make, and cause to be made, and use af a l s e wri t ing and document knowing th e same to conta in amater ia l ly fa l se , f i c t i t i o u s and f raudulent s ta tement and en t ryin a mat te r wi th in the j u r i s d i c t i on of the execu t ive branch ofth e Government of the United Sta tes , to wit : the Department ofHeal th and Human Serv ices ("HHS"), in t h a t ESPADA s igned the 2008Medicare Cost Repor t t h a t was submit ted to HHS, c e r t i fy i n g t h a tSoundview Management Ente rp r i se s ("SME") earned p r o f i t s in th eamount of $35,000 in 2008 as a r e s u l t of i t s c lean ing-se rv ice scon t rac t with Soundview Heal thcare Network ("Soundview"), when,in fac t , as he then and t he re well knew and be l ieved, SME

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prof i t ed in an amount grea te r than $35,000 as a r e s u l t of itsc lean ing-se rv ice s con t rac t with Soundview in 2008.

(T i t l e 18, uni t ed Sta tes Code, Sect ions 1001(a) (3 ) and3551 e t . .g.)

COUNT NINE(False Statement)37. On o r about and between January 7, 2009 and

January 9, 2009, both da tes being approximate and inc lus ive ,with in the Southern D i s t r i c t o f New York, th e defendant PEDROESPADA, JR. , d id knowingly and w i l l fu l l y make, and cause to bemade, and use a fa l se wri t ing and document knowing th e same toconta in a mater ia l ly fa l se , f i c t i t i o u s and f raudulent sta tementand en t ry in a mat te r with in the j u r i s d i c t i on of th e execu t ivebranch of the Government of the Uni ted S ta t e s , to wit : the Heal thResources and Serv ices Adminis t ra t ion , in t h a t ESPADA reques tedthe dra f t ing o f, and approved the submiss ion o f, a January 9,2009 l e t t e r and a t tachments on behal f of Soundview Heal thcareNetwork, s t a t i ng tha t fo r the per iod February 1, 2009 to January31, 2010: (a ) ESPADA'S sa la ry of $246,750 had been reduced, when,in f ac t , as ESPADA then and the re well knew and be l ieved, h issa la ry had not been reduced, and (b ) ESPADA'S sa la ry would be$185,063, when, in f a c t , as ESPADA then and the re wel l knew andbel i eved , h is sa la ry would be g r ea t e r than $185,063.

(T i t l e 18, United Sta tes Code, Sect ions 1001(a) (3) and3551 e t seq . )

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COUNT TEN(Conspiracy to Defraud the United Sta tes)38. The a l l eg a t i o n s con ta ined in paragraphs 1 through

28 a re rea l l eged and incorpora ted as i f fu l ly s e t fo r th in t h i sparagraph .

39. On o r about and between Ju ly 1, 2004 and December31, 2009, both da tes be ing approximate and inc lus ive , with in theEaste rn D i s t r i c t of New York and elsewhere , th e defendan ts PEDROESPADA JR. and PEDRO GAUTIER ESPADA, t oge the r with o ther s , d idknowingly and w i l l f u l l y conspire to defraud th e United Sta tes byimpeding, impai r ing , obs t ruc t ing and de fea t ing th e l awfu lfunct ions of the I n t e r n a l Revenue Serv ice of th e United Sta tesDepartment of th e Treasury in the ascer ta inment , computat ion,assessment and co l l ec t ion of revenue, to wit : co rpora te incometaxes owed by CEDC and persona l income t axes owed by th edefendants .

40. In fu r therance o f the consp i racy , and to e f f e c ti t s ob jec t ives , with in the Easte rn D i s t r i c t of New York andelsewhere , the defendants PEDRO ESPADA, JR. and PEDRO GAUTIERESPADA committed and caused to be committed th e fol lowing:

OVERT ACTS(a) On o r about August 9, 2005, ESPADA used a

CEDC check in th e amount of $3,000 to pay fo r a f t e r - s ch o o ltu to r ing fo r Family Member #2.

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(b ) On o r about August 30, 2005, ESPADA used aCEDC check in th e amount of $2,600 to pay fo r a f t e r - s ch o o ltu to r ing fo r Family Member #2.

(c ) On o r about and between August 1, 2007 andAp r i l 30, 2008, GAUTIER ESPADA caused the accountants fo r CEDC tobe t o ld t h a t the $5,600 paid fo r af te r - schoo l tu to r ing in August2005 was fo r a business expense of CEDC.

(d ) On o r about February 1, 2006, ESPADA used aCEDC check in th e amount of $5,000 to pay a ghos twr i t e r to workon a persona l book p ro j e c t .

(e) On o r about and between August 1, 2007 andAp r i l 30, 2008, GAUTIER ESPADA caused the accountants fo r CEDC tobe to ld t h a t the $5,000 paid fo r ESPADA's book p r o j ec t was abusiness expense of CEDC.

(f) On o r about July 18, 2006, ESPADA used a CEDCcheck in th e amount of $500 to pay an i nd iv idua l to video tape th eJune 2006 bi r thday par ty of Family Member #3 held a t ESPADA'shome in Mamaroneck, New York.

(g ) On o r about and between August 1, 2007 andAp r i l 30, 2008, ESPADA and GAUTIER ESPADA caused th e accountan tsfo r CEDC to be t o ld t ha t th e $500 paid to th e videographer of theJune 2006 bi r thday par ty was a business expense of CEDC.

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(h ) On o r about August 28, 2006, ESPADA wrote aCEDC check in the amount of $2,999 to Family Member #6 fo rt u i t i o n a t S t. John ' s Univers i ty in Queens, New York.

( i) In o r about and between August 1, 2007 andApri l 30, 2008, ESPADA and GAUTIER ESPADA caused th e accountantsfo r CEDC to be t o l d t h a t the $2,999 paid to Family Member #6 wasa business expense of CEDC.

( j) In o r about October 2006, a t Bent ley of LongIs land, ESPADA presen ted a check from one of CEDC's bank accountsin the amount of $49,000 as a down-payment fo r a Bentleyautomobile worth $125,000.

(k) On o r about May 11, 2007, ESPADA used a CEDCcheck in the amount of $400 to pay Profus ion Management t o r e p a i rESPADA's bad c re d i t ra t ing .

(1 ) On o r about and between August 1, 2007 andApri l 30, 2008, ESPADA and GAUTIER ESPADA caused th e accountan tsfo r CEDC to be t o l d t h a t the $400 paid to Profusion Managementwas a business expense of CEDC.

(m) On or about July 30, 2007, ESPADA used a CEDCcheck in th e amount of $400 to pay an i nd iv idua l t o video tape th ebi r thday p a r ty of Family Member #9 held a t GAUTIER ESPADA's homein Connect icut .

(n) On o r about and between August 1, 2007 andApri l 30, 2008, ESPADA and GAUTIER ESPADA caused th e accountants

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fo r CEDC to be t o l d t h a t th e $400 paid to th e videographer of thebi r thday par ty was a business expense of CEDC.

(T i t l e 18, Uni ted Sta tes Code, Sect ions 371 and 3551 e tseq. )

COUNTS ELEVEN AND TWELVE(Subscr ibing to a False and Fraudulent Tax Return)41. The a l l eg a t i o n s con ta ined in paragraphs 1 through

28 are rea l l eged and incorpora ted as i f fu l l y s e t fo r th in t h i sparagraph.

42. On o r about and between March 18, 2008 and Ap r i l3, 2008, both da tes be ing approximate and inc lus ive , with in theSouthern D i s t r i c t of New York and elsewhere , th e defendant PEDROESPADA, JR. d id knowingly and w i l l fu l l y make and subscr ibe UnitedSta tes Corpora t ion Income Tax Returns , Forms 1120, on beha l f ofCEDC, fo r th e f i s c a l years s e t for th below, which r e tu rns weref i l ed with th e I n t e r n a l Revenue Serv ice on beha l f of thecorpora t ion and contained a wri t t en dec la ra t ion t h a t they weremade under th e pena l t i e s of pe r ju ry , and which tax r e tu rns thedefendant PEDRO ESPADA, JR. d id not be l i eve to be t rue andcor rec t as to every mate r i a l mat te r , in t h a t ESPADA fa l se lyrepor ted CEDC's t o t a l business expenses fo r the years s e t fo r thbelow to be th e amounts s e t fo r th below, when in fac t , as ESPADAthen and t he re well knew and bel i eved , CEDC's ac tu a l businessexpenses in those years were subs tan t i a l ly l e s s .

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FISCAL YEAR BUSINESSEXPENSEREPORTED

ELEVEN 2004 $102,587TWELVE 2005 $328,653

(T i t l e 26, Uni ted Sta te s Code, Sect ions 7206(1) andTi t l e 18, United Sta tes Code, 3551 e t seq . )

COUNTS THIRTEEN AND FOURTEEN(Aiding and Ass i s t ing in the Prepara t ion and Presen ta t ion of aFalse and Fraudulen t Tax Return)43. The a l l eg a t i o n s con ta ined in paragraphs 1 through

28 a re rea l l eged and incorpora ted as i f fu l l y s e t fo r th in t h i sparagraph.

44. In o r about and between September 2007 and Apri l2008, both dates be ing approximate and inc lus ive , with in theSouthern D i s t r i c t of New York and elsewhere , th e defendant PEDROGAUTIER ESPADA d id knowingly and w i l l fu l l y a id and a s s i s t in , andprocure , counse l and advise the prepa ra t ion and presen ta t ion tothe I n t e r n a l Revenue Service, of United Sta tes Corpora t ion IncomeTax Returns , Forms 1120, on behal f o f CEDC, fo r the f i s c a l yearsse t fo r th below, which r e tu rns were f a l s e and f raudulent as toma te r i a l ma t t e r s , in t h a t CEDC's t o t a l business expenses fo r theyears s e t fo r th were f a l s e l y repor ted in the amounts s e t fo r thbelow, when in fac t , as GAUTIER ESPADA then and the re wel l knewand bel ieved , CEDC's ac tu a l business expenses in those years weresubs tan t i a l ly l e s s than the amounts Claimed.

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CCl'ON'r FISCAL YEAR BOSINESSEXPENSEREPORTED

THIRTEEN 2004 $102,587FOURTEEN 2005 $328,653

(T i t l e 26, United Sta tes Code, Sect ions 7206(2) andTi t l e 18, United S ta t e s Code, 3551 e t ~ . )

COUNT FIFTEEN(Subscr ibing to a False and Fraudulent Tax Return)45. The a l l eg a t i o n s con ta ined in paragraphs 1 through

28 a re r ea l l eged and incorpora ted as if fu l ly s e t fo r th in t h i sparagraph.

46. On o r about and between October 27, 2006 andNovember 14, 2006, both dates being approximate and inc lus ive ,with in the Eas te rn D i s t r i c t of New York and elsewhere , th edefendant PEDRO ESPADA, JR. d id knowingly and w i l l f u l l y make andsubscr ibe a j o i n t Uni ted Sta tes Ind iv idua l Income Tax Return ,Form 1040, fo r th e 2005 tax year , which was ve r i f i e d by a wri t t endec la ra t ion t h a t it was made under th e pena l t i e s o f per ju ry andwhich was f i l ed with the I n t e r n a l Revenue Serv ice , which taxr e tu rn the defendant PEDRO ESPADA, JR. d id no t be l i eve to be t rueand co r r ec t as to every mate r i a l mat te r , i n t h a t ESPADA repor tedf a l s e l y t h a t h i s gross income was $297,630, when in fac t , as he

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then and the re wel l knew and bel i eved , h is gross income wassubs tan t i a l ly g rea te r than $297,630.

(T i t l e 26, Uni ted Sta t e s Code, Sect ions 7206(1) andTi t l e 18, United Sta tes Code, 3551 e t seq . )

COUNTS SIXTEEN AND SEVENTEEN(Subscr ibing to a False and Fraudulent Tax Return)47. The a l l ega t ions con ta ined in paragraphs 1 through

28 are rea l l eged and incorpora ted as i f fu l ly s e t fo r th in t h i sparagraph .

48. On o r about and between the da tes s e t fo r th below,with in the Southern D i s t r i c t o f New York and elsewhere , th edefendant PEDRO ESPADA, JR. d id knowingly and w i l l fu l l y make andsubscr ibe j o i n t uni t ed Sta tes Ind iv idua l Income Tax Returns ,Forms 1040, fo r the tax years s e t fo r th below, each of which wasv e r i f i e d by a wri t t en dec la ra t ion t h a t it was made under thep en a l t i e s of per ju ry and which were f i l ed with the I n t e r n a lRevenue Serv ice , which t ax re tu rns the defendant PEDRO ESPADA,JR. d id not be l i eve to be t rue and co r r ec t as to every mate r i a lmat te r , i n t h a t ESPADA f a l s e l y repor ted h is gross income to beth e amounts s e t fo r th below, when in fac t , as he then and t he rewell knew and bel i eved , h is gross income was su b s t a n t i a l l yg r ea t e r than the amounts repor ted .

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.cOtiRT DATE CALENDAR GROSSYEAR INCOME

REPORTEDSIXTEEN August 3, 2007 and 2006 $361,657September 22, 2008SEVENTEEN November 30, 2008 and 2007 $462,560January 23, 2009

(T i t l e 26, United Sta tes Code, Sect ions 7206(1) andTi t l e 18, United Sta tes Code, 3551 e t seq . )

COUNT EIGHTEEN(Subscr ibing to a False and Fraudulent Tax Return)49. The a l l eg a t i o n s con ta ined in paragraphs 1 through

28 a re rea l l eged and incorpora ted as i f fu l l y s e t fo r th in t h i sparagraph.

50. On o r about and between the da tes s e t fo r th below,with in the Southern D i s t r i c t of New York and elsewhere , th edefendant PEDRO ESPADA, JR. d id knowingly and w i l l f u l l y make andsubscr ibe jO in t United Sta tes Ind iv idua l Income Tax Returns ,Forms 1040, fo r th e tax years se t fo r th below, each of which wasv e r i f i e d by a w r i t t en dec la ra t ion t h a t it was made under thep en a l t i e s of per ju ry and which were f i l ed with th e In t e rn a lRevenue Service , which tax re tu rns the defendant PEDRO ESPADA,JR. d id no t be l i eve to be t rue and co r r ec t as to every mate r i a lmat te r , i n t h a t ESPADA a) fa l se ly repor ted h is t o t a l c a p i t a l l o s sto be $77,775, when in f ac t , as he then and the re wel l knew andbel i eved , h is c a p i t a l lo s s was su b s t a n t i a l l y l e s s than $77,775and b) f a l s e l y repor ted h is gross income to be th e amounts s e t

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fo r th below, when i n fac t , as he then and t he re wel l knew andbel ieved , h is gross income was sUbs tan t ia l ly g re a t e r than theamounts repor ted .,-:.;>;!>Aft CALENDAR GROSSYEAR INCOME

REPORTEDDecember 23, 2009 and 200S $719,304January 13, 2010

(T i t l e 26, United Sta tes Code, Sect ions 7206(1) andTi t l e lS , United Sta tes Code, 3551 e t seq. )

CRIMINAL FORFEITURE ALLEGATION AS TO COUNTS ONE THROUGH SIX51. The Uni ted Sta tes hereby gives not i ce to the

defendants charged in Counts One through Six of t h i s Ind ic tmentt h a t , upon t h e i r conv ic t ion o f any such of fense , the governmentw i l l seek fo r f e i t u re i n accordance with T i t l e lS , United Sta tesCode, Sect ion 9S1(a) (1 ) (c) and Ti t l e 2S , United S ta t e s Code,Sect ion 2461(C), which requ i re any person conv ic ted o f suchoffenses to f o r f e i t any proper ty , r e a l or persona l , cons t i tu t ingor der ived from proceeds obta ined d i r e c t ly o r i nd i r e c t ly as ar e s u l t of any such offense , and Ti t l e lS , United Sta tes Code,Sect ion 9S2(a) (7) , which requi res any person conv ic ted o f anysuch offense to f o r f e i t any proper ty , r e a l and persona l , t h a tcons t i tu t es o r i s der ived , d i r e c t ly or i n d i r e c t l y , from grossproceeds t r aceab le to the commission of the of fenses .

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52. I f any of the above-descr ibed fo r f e i t a b l eproper ty , as a r e s u l t of any a c t or omission of a defendan ts :

a . cannot be loca ted upon th e exe rc i se of duedi l igence ;

b. has been t r ans fe r red o r so ld to , o r deposi t edwith , a t h i rd par ty ;

c. has been placed beyond the j u r i s d i c t i on o fthe Court ;

d. has been subs tan t i a l ly diminished in value ;or

e . has been commingled with o ther proper ty ,which cannot be div ided without d i f f i c u l t y ; it i s th e i n t e n t ofthe uni ted Sta tes , pursuan t to Ti t l e 21, United S ta t e s Code,Sect ion 853(p) , as incorpora ted by Ti t l e 28, United S ta t e s Code,Sect ion 2461(c) (1) and Ti t l e 18, United Sta tes Code, Sect ion982(b) , to seek fo r f e i t u re of any othe r p rope r ty ofthe defendan ts , up to the value of the fo r f e i t a b l e proper tydescr ibed in t h i s fo r f e i t u re a l l eg a t i o n .

(T i t l e 28, United Sta tes Code, Sect ion 2461(c) ; T i t l e18, United Sta tes Code, Sect ions 981 (a ) (1) (c) , 982 (a ) (7) , 982 (b) ;Ti t l e 21, United Sta tes Code, Sect ion 853(p))

CRIMINAL FORFEITURE ALLEGATION AS TO COUNT SEVEN53. The United Sta tes hereby gives not i ce to th e

defendants charged in Count Seven of t h i s Ind ic tmen t t h a t , upon

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t h e i r convic t ion of such offense , the government wi l l seekfo r f e i t u re in accordance with Ti t l e 18, United Sta tes Code,Sect ion 981(a) (1 ) (c) and Ti t l e 28, United Sta tes Code, Sec t ion2461(c), which require any person convicted of such offense tof o r f e i t any proper ty , r e a l o r persona l , cons t i tu t ing o r der ivedfrom proceeds obta ined d i r e c t ly o r i nd i r e c t l y as a r e s u l t of suchoffense .

54. I f any of the above-descr ibed fo r f e i t a b l eproper ty , as a r e s u l t of any ac t o r omiss ion of the defendants :

a . cannot be loca ted upon the exerc i se of duedi l igence;

b. has been t rans fe r red or so ld to , o r deposi t edwith , a t h i rd par ty ;

c. has been placed beyond the j u r i s d i c t i on o fthe Court;

d. has been su b s t a n t i a l l y diminished in value;o r

e . has been commingled with o ther proper ty ,which cannot be divided without d i f f i c u l ty ; it i s the i n t e n t o fth e United Sta tes , pursuant to Ti t l e 21, United Sta tes Code,Sect ion 853(p), as incorpora ted by Ti t l e 28, United Sta tes Code,Sect ion 2461(c) (1), to seek for fe i ture of any o th e r prope r ty of

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the defendants , up to th e value of the fo r f e i t a b l e proper tydescr ibed in t h i s fo r f e i t u re a l l eg a t i o n .

(T i t l e 28, United Sta te s Code, Sect ion 2461(c) ; T i t l e18, United Sta tes Code, Sect ion 981(a) (1 ) (c ) ; Ti t l e 21, UnitedSta te s Code, Sect ion 853(p

UNITED STATES ATTORNEEASTERN DISTRICT OF NEW YORK

A TRUE BILL

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Pedro Espada Indictment