Sen. Malcolm Smith Arrested In Alleged Plot To Rig New York City Mayor's Race

NEW YORK (CBSNewYork) -- It's a stunning and wide-ranging public corruption scandal.

Six highly-placed politicians are accused of using bribery to rig this year's New York City mayoral race.

There were three distinct parts to the public corruption and bribery scandal, but in all three money flowed freely and, at times, city and state funds -- your tax dollars -- paid the freight, CBS 2's Marcia Kramer reported Tuesday.

"The charges we unsealed today demonstrate once again that a 'show me the money' culture seems to pervade every level of New York government," U.S. Attorney Preet Bharara said.

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WEB EXTRA: Read The Complaint (pdf)

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The six defendants nailed by the feds Tuesday certainly represent many levels of government. State Sen. Malcolm Smith, a Democrat, allegedly wanted to rig the 2013 mayoral race so he could run as a Republican. Republican City Councilman Dan Halloran reportedly helped arrange the bribes to buy Smith a waiver, and two Republican officials had their hands out, reportedly saying "show me the money and the waiver is yours."

"Senator Smith drew up the game plan and Councilman Halloran essentially quarterbacked it by finding party chairmen who were wide open to receive bribes," Bharara said.

An effort by Smith to run as a Republican is not unprecedented. Mayor Michael Bloomberg switched from the Democratic to Republican parties shortly before his first successful run for mayor in 2001. The path is attractive to candidates because it is easier to get on the ballot for the Republican mayoral primary in a city crowded with Democratic politicians.

Smith, however, cannot run as a Republican without the written consent of three of the city's five Republican Party county chairmen, who were scheduled to meet on Wednesday.

It was not Smith's first flirtation with GOP politics. He made a surprising move last year in the state Legislature to join forces with Republicans to form a first-of-its-kind coalition to run the fractured Senate. The move by Smith and four other renegade Democrats allowed the state GOP to keep control of the Legislature's upper chamber.

Officials told CBS 2's Kramer the mayoral race scandal consisted of three distinct but related bribe schemes.

First was the attempt by Smith to buy the GOP mayoral line.

He allegedly arranged for $40,000 to be paid to Bronx GOP Chairman Joseph Savino and Queens GOP Assistant Chairman Vincent Tabone. Halloran reportedly received $20,500 in cash bribes to act as the intermediary with the political leaders.

In the second scheme, Halloran allegedly received $18,300 in cash bribes and $6,500 on straw donor contributions in exchange for steering an $80,000 City Council contract to a company he believed was controlled by one of those who paid him the bribes.

Halloran allegedly told a wired government informant, "You can't do anything without the money ... Money is what greases the wheels ... good bad or indifferent," CBS 2's Jessica Schneider reported.

"After statements like this and a string of other public corruption scandals we continue to expose, many may understandably fear that there is no vote that's not for sale," Bharara said.

The final scheme involved Noramie Jasmin, the mayor of Spring Valley in Rockland County, and her deputy, Joseph Desmaret. They allegedly got financial benefits to approve a new road that was to benefit one of the reported bribe payers and Smith was to get hundreds of thousands in state money for the road.

"The criminal complaint describes an unappetizing smorgasbord of greed involved six officials who together build a corridor of corruption," Bharara said.

All six defendants were arraigned in court in White Plains on Tuesday afternoon and were each released on $250,000 bond. None of them spoke as they left the courthouse, WCBS 880's Marla Diamond reported.

Smith's lawyer, Jerry Shargel, said his client plans to plead not guilty.

"I ask anyone reading this or reading about this to withhold judgment. We intend to enter a plea of not guilty," Smith's attorney told reporters. "The allegations in this complaint do not tell the full story. I think that there is much more to this story."

Shargel declined to answer when asked if Smith would resign from the state Senate, but Smith has been removed from his leadership post because of the allegations, Diamond reported.

Political sources told Kramer the feds are looking to turn some of the defendants into government witnesses in order to catch bigger fish.

Smith and Halloran each face up to 45 years in prison if convicted of the conspiracy. On Tuesday evening, Halloran was stripped of his committee assignments and money-allocating authority in the City Council, 1010 WINS learned.

Cuomo: The Allegations Are Very Serious

Reaction to the scandal came fast and furious Tuesday from top officials across New York City and the state, including Gov. Andrew Cuomo.

The governor, who was in Buffalo, didn't mince words when talking about the scandal that engulfed Sen. Smith.

"I hope that he fully cooperates with the investigation, and I hope that the investigation is thorough and speedy and gets to the facts, but it is very, very troubling," Cuomo said.

"We have zero tolerance for any violation of the public integrity and the public trust,'' Cuomo added.

In a statement, New York State Republican Party Chairman Ed Cox said, "The arrest of elected and party officials this morning is deeply concerning. I urge federal and state law enforcement officials to do their jobs as thoroughly and expeditiously as possible to determine the guilt or innocence of those accused."

Susan Lerner of good government group Common Cause told CBS 2's Dick Brennan: "It is a clear indictment of the pay-to-play culture that dominates all levels of New York government, a system that has to change."

One candidate for mayor, Republican billionaire businessman John Catsimatidis, said the arrests "point to a culture of corruption that permeates our city and state, corruption fueled by career politicians who put personal advancement before public service.''

Democratic mayoral candidate Bill Thompson's office also released a statement:

"These charges are extremely troubling, particularly because they involve the use of taxpayer dollars to advance corruption. These most recent developments are the latest in a history of corruption and a broken system that, despite claims to the contrary, has clearly not been adequately reformed under the Speaker's leadership. New Yorkers deserve a government as good as the people it represents. Under a Thompson Administration, we will have zero tolerance for violating the public trust and we will enforce that with the highest levels of accountability standards."

Bloomberg said he believes the opportunity for the kind of corruption alleged against the political leaders arose because political parties are part and parcel of New York City's elections.

"All of this comes out of the fact that we have partisan elections when cities aren't partisan. And what happens is, only people that can go through whatever the majority party is, whether it's Democrat here or Republican someplace else – they're the only people that really can face the voters and have any meaningful chance," Bloomberg told reporters, including WCBS 880′s Rich Lamb.

The scandal is also troubling to the people of Spring Valley, where the mayor and deputy mayor have been charged.

"I'm shocked, shocked. I can't believe this is going on in Spring Valley," resident Abdul Innocent said.

In Hollis, Queens, where Sen. Smith has been so popular for so many years, people were amazed.

"It's just a shock to me and I hope it's not true. I hope the allegations are not true," resident Carl Cush said.

"You know what? They're trusted officials. You expect more from them, so I'm disappointed, is what it is," resident Antonio Rivera said.

"I'm very much surprised. He's been a catalyst in the community. It's very unexpected," Reggie Stewart added.

Outside Smith's office on Tuesday, some of his constituents feared that if they lose him, they lose the community's clout.

"Playgrounds, basketball hoops, parks, we need a senator. Even for a little community like this, we need a senator," Kizzie Ayers said.

Long-time friend, the Rev. Alonzo Jordon, said Smith is a good man who is now facing a tough time.

"There's a scripture that says how the mighty have fallen, and so now I can only offer prayers and moral support,' Jordon said.

So many people CBS 2's Brennan spoke to, whether in Spring Valley or Hollis, insisted that they don't want to pass judgment until each person accused has had their say in court.

NYS Senate Has Checkered History

So many members of the state Senate have been in trouble over the years, the U.S. Attorney said it seems like the movie "Groundhog Day" every time he announces a new indictment.

So, can anything be done to clean things up?

Last election, Queens Sen. Tony Avella squeaked into the Senate, ousting a 38-year incumbent.

But now Avella said he wonders if it was worth it.

"Decisions are made each and every day, and the people are sold out each and every day, because of the corruption," Avella told CBS 2's Tony Aiello.

Avella said it's a shameful record in the state Senate. Ten senators have been busted on corruption charges over the last eight years -- a litany of alleged lawmaker lawbreakers.

U.S. Attorney Bharara wondered aloud if it's the worst governing body in the country.

"Not every state Legislature has this degree of criminality that's been exposed," Bharara said.

Insiders said money is at the root of this as New York senators spend an average of $400,000 to get elected -- and many donors expect influence.

"They want favors in return for that money. Therein starts the corruption right off the bat," Sen. Avella said.

Good government groups, including Citizen's Union, have pushed for reforms, such as non-partisan elections.

"Where you remove influence of political parties and who gains access to the ballot. And open it up to all citizens who want to gain access and run for political office, regardless of the party," Citizen's Union's Dick Dadey said.

Other ideas include term limits and full public financing of campaigns.

Avella something even more drastic may be in order.

"I wonder when the people of this city and the people of this state are going to wake up and throw these people out of office, across the board, and, you know, I'd be happy to go if it meant throwing everybody else out," Sen. Avella said.

Call it the "drain the swamp" approach.

CBS 2's Aiello asked Senate Leader Dean Skelos for a specific comment regarding the record of corruption in his chamber. He responded with a generic statement, calling the latest charges "extremely troubling."

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