An indictment was unsealed this morning in federal court in Brooklyn charging New York State Senator John Sampson with two counts of embezzlement, five counts of obstruction of justice, and two counts of making false statements to the Federal Bureau of Investigation. Since 1997, Sampson has served in the New York State Senate (the “Senate”) representing the 19th Senate District in southeastern Brooklyn. From June 2009 to December 2012, Sampson was the leader of the Democratic Conference of the Senate. From January 2011 to December 2012, Sampson was also the Senate minority leader. Sampson has also served as the chairman of the Senate Ethics Committee and the Senate Judiciary Committee. Sampson will be arraigned later today before United States Magistrate Judge Viktor V. Pohorelsky at the U.S. Courthouse at 225 Cadman Plaza East in Brooklyn, New York.

The indictment was announced by Loretta E. Lynch, United States Attorney for the Eastern District of New York, and George Venizelos, Assistant Director in Charge, Federal Bureau of Investigation (FBI), New York Field Office.

“The voters of New York State rightfully expect their elected officials to represent the voters’ interests, not to trade on their positions of power to line their own pockets,” stated United States Attorney Lynch. “As charged in the indictment, for years, Senator John Sampson abused his position of public trust to steal from New Yorkers suffering from home foreclosure and from the very county he was elected to represent. But the former Senate ethics leader didn’t stop there. Senator Sampson allegedly stole that money to fund his own ambition to become Brooklyn’s top state prosecutor, then engaged in an elaborate obstruction scheme to hide his illegal conduct, going so far as to counsel lies and the hiding of evidence.” United States Attorney Lynch thanked the FBI and the Federal Deposit Insurance Corporation Office of the Inspector General for their investigative efforts, as well as the Public Integrity Section and the Office of the Inspector General of the Department of Justice for their assistance in this case.

FBI Assistant Director in Charge Venizelos stated, “Today, John Sampson has been added to the list of recently indicted New York elected officials. We could view this as an achievement for the FBI and federal prosecutors. But we share what may well be the concern of many New Yorkers that ‘incumbent’ and ‘defendant’ cannot be accepted as interchangeable. Elected officials are referred to as ‘public servants’ and that should not be confused with ‘self-serving.’ The people of New York have a right to demand, at a bare minimum, that their elected representatives obey the law.”

The Embezzlement Scheme

As charged in the indictment, Sampson is an attorney licensed to practice law in the state of New York, and his law practice has included legal work involving the sale of foreclosed properties. Beginning in the late 1990s, Sampson served as a court-appointed referee for foreclosure proceedings conducted by the Kings County Supreme Court. As referee, Sampson controlled escrow accounts holding proceeds of foreclosure sales of Brooklyn properties. Between 1998 and 2008, Sampson embezzled approximately $440,000 in surplus funds from the foreclosure sales of four Brooklyn properties. The prior owners of the Brooklyn properties, and other parties with a lawful interest, had a right to receive the funds embezzled by Sampson. Sampson indicated that he had illegally diverted the stolen funds to pay expenses arising from his unsuccessful run for Kings County District Attorney in 2005.

As alleged in the indictment, in July 2006, Sampson asked an associate who worked in the real estate industry (the “associate”) for $188,500. The associate agreed and, at Sampson’s direction, provided him with these funds in the form of three bank checks payable to third parties (the “associate transaction”). Sampson characterized the associate transaction to the associate as a loan that he would repay, the proceeds of which he would use to cover the tracks of his embezzlement before it was uncovered. However, Sampson took this “loan” without written documentation or any rate of interest. Sampson never repaid the associate. Further, Sampson concealed the associate transaction by lying on his Senate financial disclosure forms, falsely claiming that he had incurred no liabilities in excess of $5,000 or gifts or income in excess of $1,000.

The indictment further alleges that Sampson used a portion of the associate transaction funds to pay back some of the money he embezzled from two of the escrow accounts. However, Sampson never repaid any of the approximately $160,000 he stole from the two escrow accounts that are the subject of the embezzlement charges in the indictment.

John Sampson’s Obstruction of Justice

In the summer of 2011, the United States Attorney’s Office for the Eastern District of New York (the USAO) filed bank and wire fraud charges against the associate in relation to a mortgage fraud scheme (the “mortgage fraud case”). As charged in the indictment, after the associate’s arrest, Sampson engaged in a multifaceted scheme to obstruct justice so as to prevent the associate from cooperating with law enforcement authorities and disclosing Sampson’s criminal conduct. Evidence of Sampson’s obstructive conduct includes intercepted phone calls from Sampson’s cellular telephone.

John Sampson’s Use of a USAO Employee to Obstruct Justice

According to the indictment, Sampson attempted to obtain confidential, non-public information regarding the mortgage fraud case. Soon after the associate’s arrest, Sampson informed the associate that he knew an individual who, at that time, was an administrative employee in the USAO (the “employee”). Sampson told the associate that he could persuade the employee to give inside information that would assist the associate’s defense in the mortgage fraud case.

As alleged in the indictment, Sampson then asked the employee to determine whether the USAO was conducting a criminal investigation of Sampson and whether certain mortgage fraud defendants were cooperating with the government’s investigation. Sampson told the associate that he was attempting to determine the identities of cooperating witnesses in the mortgage fraud case and that if they were able to identify those witnesses, Sampson could arrange to “take them out.”
According to the indictment, when the associate asked Sampson about his efforts to use the employee to obtain information about the mortgage fraud case, Sampson was reluctant to discuss those illegal efforts over the telephone. For example, while meeting with the associate in November 2011, Sampson stated, “I can’t talk on the phone....From now on, our conversation is, ‘I don’t have no contacts, you don’t know nothing.’ When we talk, that’s how we talk.”

The indictment alleges that FBI agents later confronted the employee concerning his contacts with Sampson. Immediately thereafter, agents searched the employee’s office and located a slip of paper that contained the handwritten names of several individuals who were defendants in proceedings related to the mortgage fraud case. The employee was then suspended and subsequently terminated from his employment at the USAO.

John Sampson’s Witness and Evidence Tampering

As charged in the indictment, Sampson also obstructed justice by directing the associate to withhold evidence regarding the associate transaction from the government. During a meeting on February 22, 2012, the associate told Sampson that the federal government had subpoenaed the associate’s business records, including a check register page that documented the associate transaction (the “check register page”). Before disclosing the check register page to the government, the associate showed it to Sampson. At that time, Sampson took possession of the check register page, examined it, and stated, “That’s a problem...I mean for me.”

Sampson instructed the associate not to disclose the check register page to the government. When the associate stated that it might be a problem to withhold the document from the government, Sampson told the associate to claim that the associate did not maintain all of the associate’s records. Sampson instructed, “Don’t say you don’t have it. Just say you don’t know. I don’t want you to lie, just say you don’t know.”

In addition, Sampson told the associate to remove other items from the business records the associate provided to the government to make it appear as though the associate’s records were incomplete. Sampson counseled the associate to falsely claim that the associate transaction was payment for legal work Sampson had performed. Later during this conversation, Sampson instructed the associate that, if the government asked whether the associate ever loaned Sampson money, the associate should say “No.” Sampson also suggested that, alternatively, the associate could falsely claim that the associate “forgave” the associate transaction “loan.” Sampson kept the check register page during and after this meeting and never returned it to the associate.

John Sampson’s False Statements to the FBI

On July 27, 2012, FBI special agents interviewed Sampson outside his Brooklyn residence. When shown a copy of the check register page, which he had taken from the associate on February 22, 2012, Sampson stated that the document “didn’t ring a bell,” that he “didn’t have a recollection from it,” and that he did not recall seeing it previously. Sampson admitted that he had asked the employee for information on the mortgage fraud case but claimed that he only requested public information from the employee, such as the name of the judge assigned to the mortgage fraud case. When asked why he would request public information from an employee of the USAO, when Sampson himself was an attorney, Sampson stated that he was not “good” with computers. At the conclusion of the interview, the agents advised Sampson that he had lied to federal agents, which constituted a federal crime. When asked whether he wished to revise his statement, Sampson stated, “Not everything I told you was false.”

If convicted, Sampson faces up to 10 years of imprisonment for each embezzlement charge, up to 10 years of imprisonment for a charge of obstruction of justice under 18 U.S.C. § 1503(a), up to 20 years of imprisonment for each of the remaining four charges related to obstruction of justice, and up to five years of imprisonment for each false statement charge, as well as restitution, forfeiture, and fines.

The government’s case is being prosecuted by Assistant United States Attorneys Daniel Spector, Paul Tuchmann, and Alexander Solomon.