Secrets of the Silver Trial: A Secret Powerbroker and the Chief Judge
China’s Politburo limits its general secretary to two five-year terms, less than half of Shelly Silver’s 20-year reign as speaker of New York’s Assembly. If Silver hadn’t been forced to resign after his arrest last January, and instead served out the two-year speaker term he’d just begun, he would have ruled Albany nearly as long as Saddam Hussein ran Iraq.
Silver made it clear before his downfall that he didn’t think his record tenure was enough. He groomed no successor. And in 2013, he pushed hard to change the state constitution so his lifelong sidekick, Chief Judge Jonathan Lippman, could get a 10-year extension of his term of office, putting an unsuccessful referendum on the ballot to waive the mandatory retirement age for top judges. He wanted to continue his hegemony over two branches of state government deep into another decade.
Seventeen years before Silver became speaker in 1994, he won a vacant Lower East Side Assembly seat, aided by then-Speaker Stanley Steingut. The Democratic conference in the Assembly elected Steingut speaker precisely 40 years after they’d put his father Irwin in the same leadership post. Together Irwin and Stanley Steingut owned their Flatbush Assembly seat for 56 consecutive years.
In 1976, the year Silver was first elected, Steingut’s chief counsel was Daniel Chill, and all these years later it was Chill, an obscure embodiment of the permanent government, who was the mystery man at the heart of the criminal case against Silver. Counsel to all six speakers since the 1970s, Chill introduced Silver to Dr. Robert Taub, the Columbia oncologist whose testimony helped convict Silver. Taub testified that he then began steering prized asbestos patients to Silver’s law firm, and subsequently got a half-million in state research grants through Silver. The firm, Weitz & Luxenberg, paid Silver a $3 million slice of the Taub bonanza.
Though Chill never appeared as a witness at Silver’s trial, exhibits and testimony indicate that he was part of the Taub deal each step of the way. US Attorney Preet Bharara and Silver’s lawyers agreed to a stipulation that allowed some of Chill’s actions to enter the record without Chill’s testimony, suggesting that the government did not want to put him on the stand. Chill did not respond to multiple requests for comment.
Chill first casually introduced Silver and Taub in 1984, but he set up a second meeting in 2003. Taub testified that Chill arranged the second meeting so that his childhood friend Taub could ask Silver if he could get the Weitz firm to financially support Taub’s mesothelioma research. Silver indicated he didn’t think he could do it, but just days later, Chill came back to Taub to relay Silver’s request that the doctor refer his mesothelioma patients to the Weitz firm, which specializes in multimillion-dollar asbestos settlements. When Taub began supplying the lucrative referrals, Silver asked him not to tell Chill about any new ones.
Chill then suggested that Taub ask Silver for state grants, recommending an annual amount of $250,000. Chill even helped draft the letter to Silver seeking the initial grant, court exhibits revealed. When Taub’s first draft of the letter included a reference to Chill, the lawyer asked Taub “not to put his name in it,” and Chill’s name was omitted from the final letter.
It would’ve been awkward to include Chill on an Assembly grant submission since he’s one of the Assembly’s most expensive attorneys, having moved on from a staff counsel position to its outside counsel on all reapportionment matters in 1981. The only records available indicate that Chill’s firm, Graubard Miller, has been paid $4.4 million by the Assembly since 1996, an astonishing windfall approved by Silver even though the Assembly has had few real apportionment issues over these years. The Assembly payments to Graubard hit a high-water mark in 2003, the year Chill, Silver and Taub did the asbestos deal.
New Speaker Carl Heastie has continued to use Chill, who filed a brief on Heastie’s behalf in September.
Silver’s isn’t the first scandal Chill has survived. In fact, by the time Silver won his Assembly seat, Chill had already become a focus of the scandal that would cost Steingut his own seat in 1978. While Steingut’s top aide, Chill was also representing the most notorious nursing home owner in New York, Bernard Bergman, who was convicted of massive Medicaid fraud in 1976. The Bergman scandal, featuring deplorable conditions victimizing largely Jewish nursing home residents, pushed Chill out of his counsel position, but Steingut retained him as his commissioner on the Legislature’s bill drafting commission.
The bridge between Steingut and Chill was Chill’s father-in-law, Harold Jacobs, a leader in Steingut’s powerhouse Madison Club in Brooklyn (also home for Mayor Abe Beame and a builder named Fred Trump). It was also Jacobs, an influential rabbi who became president of the Orthodox Union, who rallied support for the unknown Silver in his first election in 1976, paving the way for the relationship between Chill and Silver. Chill, too, became a member of the Orthodox Union’s board of governors.
As lucrative as Chill’s Assembly business has been, it’s petty cash compared with what he won in a nine-year lawsuit, Lawrence v. Graubard Miller, which wound up affirming one of New York’s largest contested contingent law fees and most generous client gifts ever. The case went up and down the ladder of state courts twice, ending in a 2014 decision by the Court of Appeals, the state’s highest court, that awarded over $85 million to the Graubard firm.
This case, too, had a Silver connection. Jonathan Lippman, who cast the decisive fourth vote on the seven-member Court of Appeals in favor of the $5 million gift, and was one of five votes approving the $80 million fee. Silver had aided Lippman’s climb up the court ladder for years, using his influence with Westchester party leaders to make him a Supreme Court judge and pushing Governor David Paterson to select him as chief judge.
Though Chill ultimately won, the long trail of the litigation was a rebuke to him in many ways. The referee assigned to first hear it, Howard Levine, a former Court of Appeals judge, said Chill’s testimony was “incredible,” “implausible” and “demonstrably inconsistent” years ago, but the finding had no effect on Chill’s continuing representation of the Assembly. Two of Chill’s former Graubard partners, including the partner that hired him, Scott Mollen, testified in connection with the Lawrence case that they “would not believe Chill even if he were under oath.”
The saga started in 1983, when Graubard welcomed Chill as a partner, in part because of his Assembly business. It was also when Alice Lawrence, the widow of Manhattan real estate titan Sylvan Lawrence, retained the firm to sue her husband’s business partner and executor of his will, according to court documents in the case. That dispute over the disposal of the properties owned by the partnership lasted for 22 years, with Lawrence paying Graubard $18 million in hourly fees.
In 1998, after a win in one of the many battles, Chill trekked out to Lawrence’s Connecticut home and, though he denied soliciting it, managed to get her to give $5 million to the three Graubard partners who worked the case, $2 million of it for himself. Later, Lawrence agreed to pay the $2.7 million tax on the gifts, which went to the same three Graubard attorneys that handled the Assembly business.
Testimony at the prolonged hearing in the case revealed that Lawrence and Chill decided in 2005 to change their hourly arrangement to a contingency fee. Chill wanted 50 percent of any future settlement, but Lawrence agreed to 40 percent, still high for a contingency contract. Less than five months later, Graubard reached a $106 million settlement, laying claim to $44 million of it. Lawrence sued, branding the fee “unconscionable” and attacking the gifts as inappropriate.
The gifts were particularly scandalous because Chill and the other two partners never told the firm or the three Lawrence children about them. One of the other partners did not even tell her spouse, who was a Manhattan judge. Chill also reportedly did not tell Lawrence she should seek independent counsel on the gifts, which the conduct code requires. Judges called the “magnitude” of the gifts virtually unprecedented.
On the first run up the ladder, Levine ruled in 2006 that an evidentiary hearing was necessary to determine the fairness of the fee. He reported to the Manhattan surrogate, who agreed. Lawrence argued that the fee was unconscionable on its face, requiring no hearing, and lost appeals to the Appellate Division and the Court of Appeals, sending the case back to Levine in 2008.
After a protracted hearing, Levine offered a split decision in 2010, calling the fee “astounding” but not unconscionable, cutting it to $16 million and sustaining the gifts. The surrogate affirmed the formula Levine used to get to the $16 million, but said the gifts emitted an “odor of overreaching” and required that they be returned.
In 2013, a unanimous, four-member panel of the Appellate Division also revoked the gifts. But they also found that the fee was “both procedurally and substantially unconscionable.” They ruled that Graubard could only collect an hourly fee, $1.7 million.
By the time the case returned to the Court of Appeals, it was the buzz of the bar. One of the reasons another Graubard loss was anticipated was that three of the judges on the court had joined the 2008 decision that sent the case back to Levine, signing on to an opinion that said: “On its face, the amount of the fee seems disproportionate to the five months of work since the agreement’s revision.” A fourth judge, Robert Smith, who had also joined the earlier opinion and derided “so much money for so little work,” recused himself when it came back in 2014, citing his onetime connection to a new firm representing Lawrence. A fifth judge also recused herself, for unexplained reasons.
The most important new factor the second time around was Lippman, who joined the court in 2009. With one judge dissenting on the gifts, Lippman’s vote was the minimum needed to sustain them. The five voting judges then approved a fee that, with interest, exceeded what the family received from the settlement. Chill collected at least $14.7 million personally and kept his $2 million gift, undoubtedly the biggest payday of his life. Prior to this ruling, no court had even suggested the firm was entitled to so total a victory.
The majority, including Lippman, acknowledged that the gifts “may fairly be characterized in many unflattering ways,” but said the statute of limitations had run out, an issue barely considered over all of the years of litigation. The previous consideration of the merits of the gift question at every other court level indicated that no one else bought the statute argument and assumed that Lawrence hadn’t sued until seven years after she gave Chill the gifts because the firm was still representing her, meaning that her deadline to object “tolled” during those years.
The majority validated the contingency fees because the firm “risked” receiving no compensation for its continuing work on the case. They regarded Lawrence as a capable businesswoman who could have fired the firm at any moment, though she’d stuck with them for nearly 23 years.
One signal-sending new influence in the case was the New York State Trial Lawyers Association, which filed an amicus brief for the first time when the case went before the Lippman court, contending that the appellate decision threatened “the sanctity of the contingent fee system.” Silver has long been closely tied to the association, a major donor to Silver’s majority ($768,000 between 2006 and 2013), which has been rewarded repeatedly by Assembly actions, such as protecting New York’s unique liability laws for leased cars. Silver’s two partners, Weitz and Luxenberg, were association directors and officers.
Lippman has voted with the trial lawyers in other cases as well, in the 5 to 2 Ramkumar decision in 2013, when the association also filed an amicus brief, arguing that no documentary evidence be required to sustain an accident claim. The two dissenters on the court said the Lippman majority had lowered “the barriers that courts have erected against baseless no-fault claims,” while the association said the court had “once again injected reason into the process.”
The other edge Chill had was his attorney, Michael Carvin, a Washington-based Republican attorney who argued the “Obamacare” case before the Supreme Court. Carvin has worked with Chill for years as the lawyer for the New York Senate majority, with the Republican Senate and Assembly Democrats joined at the hip, and they won a reapportionment case together before the Lippman court in 2012. The redistricting cases are one reason why Chill was seen as “Shelly’s guy” at the highest levels of the state courts.
Chill and another senior partner at the firm took such a high percentage of the fee distribution that the partner who billed the lion’s share of the hours, Steven Mallis, is claiming in a just-filed suit that they shortchanged him. Graubard responded with a barrage against Mallis, quoting judicial findings from the prior Lawrence litigation that Mallis had concealed the gift from the firm and engaged in “self-dealing,” without looking in the mirror at Chill.
Lippman and Silver have known each other since they were six, growing up together on the Lower East Side, and Silver made no secret of his use of power on Lippman’s behalf, so much so that Lippman referred to him as “family” at one swearing-in. The first chief judge since the 19th century to have never served on the Court of Appeals, Lippman catapulted to the top despite a career that was almost entirely administrative rather than judicial, thanks in large part to the speaker.
Neither Silver nor Lippman, however, was satisfied with this unlikely triumph. Though Silver had never supported a referendum to change the age limits for judges until Lippman neared the retirement age of 70, he pushed it onto the ballot in 2013 despite the opposition of Governor Andrew Cuomo and the black and Latino caucus of his own members, both of which wanted to replace an overwhelmingly white, and disproportionately Republican, cadre of older judges.
A political action committee that supported the referendum was principally financed by leaders of the state Trial Lawyers Association, including the Weitz firm, which made the second largest donation, $50,000. A report by Politico New York indicated that Lippman “urged several longtime associates to form” the PAC, though sitting judges are barred from fundraising. MirRam, a consulting firm run by an ex-assemblyman close to Silver, managed the losing campaign, consuming nearly all of the half-million dollars raised by the PAC. The trial lawyers, whom Cuomo called “the single most powerful political force in Albany,” endorsed the referendum while the state bar declined to take a position. The losing referendum occurred, coincidentally, at precisely the same time as the Graubard case first came before the Lippman court.
David Bookstaver, who has been Lippman’s spokesman for 20 years, told me that it would be “wildly irresponsible” to try to link Lippman “to Mr. Silver and any of his wrongdoing,” adding that Lippman did not discuss the Graubard case or any other with Silver (nor did he know Chill). Bookstaver, who responds to every probing question about Lippman with outrage, used much the same tone when questioned in 2013 by Politico about Lippman’s role with the referendum PAC, calling such rumors “abhorrent” without denying that Lippman had asked “others to form the PAC.”
In fact, despite Bookstaver’s irresponsibility charge, both the New York Times and the New York Post have done stories connecting Lippman to court appointments that either benefited Weitz & Luxenberg asbestos clients or those of a second firm that made payments to Silver that led to his conviction.
For example, Lippman named Supreme Court Justice Sherry Klein Heitler an associate justice of the Appellate Division in 2007, and “approved” her elevation to administrative judge overseeing all Manhattan Supreme Court civil cases in 2009, according to Bookstaver press releases.
When Heitler got her 2009 promotion, she was already in charge of a special court hearing major asbestos claims, where Weitz & Luxenberg was the plaintiff’s attorney in more than half the cases and winning huge awards. Earlier in 2009, just as Lippman became chief judge, the Weitz firm began petitioning Heitler to reverse a decades-old ruling banning punitive damages for asbestos patients, a potential mother lode for the firm. Heitler eventually did just that, and even after her asbestos role exploded in headlines early this year, Lippman named her to one of his top executive posts, chief of policy and planning.
Bookstaver also acknowledged that “it is likely that Judge Lippman has during the normal course of business attended a meeting with Mr. Weitz or representatives from his firm – as he has with countless large firms in the state.” Other judges contacted by City & State find any Weitz & Luxenberg meetings disturbing, especially in the context of the mutual Silver connections, the Heitler rulings and the referendum PAC contributions.
Lippman wanted all of the upside of his familial relationship with Silver over the years, but now, none of the downside. His liberal record drew favorable farewells recently, omitting decisions like the one in the reapportionment case defended by Chill and Silver that led to an extra seat in the Senate and contrived continuance of Republican rule.
Silver’s iron hold on the Assembly and Lippman’s on the courts are finally at an end, though there appears to be no term limit on the culture, which blames the spotlight of Preet Bharara more than the conduct of its icons.
Former Village Voice reporter and columnist Wayne Barrett covered New York politics for 40 years and co-authored City for Sale, a chronicle of the great municipal scandal of the 1980s. His piece appears courtesy of a content-sharing agreement with City & State.