Lee Higgins, and Jonathan Bandler

The Journal News

An FBI informant at the center of a political corruption probe that brought down the former state Senate majority leader says he helped elect Rockland Family Court Judge Sherri Eisenpress by using her money to bankroll an illegal campaign finance scheme and by bribing a public official, an investigation by The Journal News found.

The cooperator, Orthodox Jewish developer Moses Stern, never mentioned Eisenpress by name when he testified about the scheme at the 2014 corruption trial of ex-New York City Councilman Dan Halloran. But, in recent weeks, two independent sources confirmed to The Journal News/lohud that Stern was referring to her.

WHO'S WHO: Those involved in the Eisenpress case

ON THE AIR: Orthodox Jewish radio show used in FBI sting

INVESTIGATE: Rockland legislator wants Eisenpress donations probed

GUILTY: Ex-Spring Valley mayor gets 4-year sentence

Stern claimed the key to the scheme was creating fake donors to give the appearance that Eisenpress, a virtual unknown seeking her first term on the bench, had broader community support than she actually did. To create the bogus donors, Stern gave her money to individuals who funneled it back into the campaign, he testified.

Through others, the judge has denied any knowledge of Stern's scheme and no one has ever been charged with a crime stemming from the allegations.

"The matter was investigated and we found no evidence of criminality," said Rockland County District Attorney Thomas Zugibe.

Howard Reiss, who was Eisenpress' campaign treasurer and former law partner, dismissed the allegations, saying her ethics are "above reproach." To his knowledge, he said, all campaign finance reports were filed truthfully and accurately.

"He (Stern) didn't set up anything using Sherri’s money. That’s nonsense," Reiss said. "How would we know what Mark Stern did? I have no idea what you’re talking about, nor does that make any sense to me.”

When a reporter read Stern's testimony and told Reiss the scheme was detailed in Stern's cooperation agreement, Reiss said, “I don’t care what Mr. Stern may have said or what you may be reading from a transcript, but I don’t believe it.”

Eisenpress is facing an investigation by the State Commission on Judicial Conduct, which can sanction a judge found guilty of misconduct. It's unclear who filed the complaint against Eisenpress and whether it touches on the scheme and bribe.

The revelations have prompted Rockland Legislator Charles Falciglia to call for Eisenpress’ resignation.

“She had to know of this scheme,” said Falciglia, an anti-money laundering expert who has questioned how Eisenpress attracted many first-time donors who gave near-maximum contributions.

“Obviously, she was trying to influence the outcome of an election. It appears she’ll do anything to get elected," he said. "This is the kind of person you want on the bench?”

Eisenpress' campaign finances first came under public scrutiny in 2013, when the FBI announced six arrests in the sting operation targeting state Sen. Malcolm Smith, who was convicted of trying to bribe his way onto the New York City mayoral ballot.

It was revealed that the key FBI cooperator was Stern, who was a client of Eisenpress' for at least eight years. Key straw donors in the case were identified as Joseph and Esther Markowitz of Monsey, who were listed as giving $20,000 to Eisenpress' campaign either individually or through companies linked to their address.

Stern helped convict Smith, Halloran and four others in the sting, including ex-Spring Valley Mayor Noramie Jasmin for selling her vote on a proposed community center and catering hall. The Journal News uncovered in March that Stern used an Orthodox Jewish radio show set up by Joseph Markowitz to show political candidates he had pull in the ultra-Orthodox community, where candidates were eager to secure the bloc vote, particularly in primary elections. Eisenpress appeared on the radio show in November 2010, a year before she was elected.

Stern testified that he began cooperating with the FBI in late 2010 after defrauding Citigroup out of roughly $126 million. He was hoping to shave time off a potential 455-year prison sentence. Stern has pleaded guilty to 18 criminal counts and awaits sentencing.

Several members of the Manhattan U.S. Attorney's Office signed off on Stern's cooperation agreement, in which he details a litany of crimes he committed over two decades. They included Lorin Reisner, then the chief of the criminal division of the U.S. Attorney's Office in the Southern District of New York, and then Assistant U.S. Attorneys Douglas Bloom and Alvin Bragg. Stern and his lawyer, Kerry Lawrence, also signed the agreement.

Under state law, knowingly filing campaign finance reports with false information is a felony, as is bribery during an election. Stern's testimony and cooperation agreement do not detail how many people were involved in setting up the scheme, how much money was used and how many donors participated. The public official Stern said he bribed not to support any of Eisenpress' opponents has not been identified.

In exchange for Stern's cooperation, the federal government agreed not to prosecute him for his admitted activity in the campaign finance scheme and several other crimes.

Zugibe declined comment on the pending complaint before the Judicial Commission,, as did the commission.

A call to Eisenpress requesting comment specifically about the scheme and bribe was referred to the Office of Court Administration, which runs the state court system.

"As is required by law, Judge Eisenpress was not privy to the names of campaign contributors, nor involved in campaign fundraising efforts other than to attend scheduled fundraisers," said OCA spokesman Lucian Chalfen. "Her campaign staff complied strictly with all such restrictions on judicial candidates. All contributions were duly reported in compliance with all election law requirements by her campaign."

Chalfen did not address Stern's claim that he used Eisenpress' money in the scheme.

The Journal News/lohud learned of the scheme while investigating the New York Jewish Communications Channel, an Orthodox Jewish radio show and communications network through which the U.S. Attorney's Office and FBI targeted politicians seeking the ultra-Orthodox bloc vote. Stern used the show and its literature to gain credibility with FBI targets, at least some of whom were also given straw donations. The NYJCC claimed to be a major force in the 2010 elections, representing a bloc of over 100,000 Jewish voters and acting as a channel for elected officials to communicate with the Jewish community.

Testimony about the scheme

Stern testified about the campaign finance scheme while being quizzed by Halloran's lawyer, Vinoo Varghese, about his prior conduct as outlined in the cooperation agreement.

"Now you're familiar with campaign finance schemes in that you got money from a candidate for a judge's election, and you distributed that money to donors — fake donors — so that it would appear that these donors supported the candidate, correct?" Varghese asked.

Stern responded, "Yes."

"And this was all to create the appearance of support for this judge's candidate?" Varghese asked.

Stern said, "Yes."

$4,000 donations

Falciglia has questioned campaign finance reports showing 22 donors each gave Eisenpress $4,000 over a four-day period beginning July 9, 2011. The contribution limit that year was $4,037, according to the Rockland County Board of Elections. Fourteen were first-time donors, The Journal News/lohud found.

Eisenpress, a former professor at New York Law School, was a little-known candidate who, according to campaign finance records, raised $265,000, significantly more money than her opponents. She defeated three competitors in the 2011 Democratic primary before winning the general election to secure the 10-year term.

Among the other Democratic candidates, Karen Riley pulled in about $74,000, Ed Kallen raised $41,000 and Itamar Yeger collected $9,000. Republican Paul Chiaramonte raised roughly $20,000.

Ramapo, which includes the ultra Orthodox villages of New Square and Kaser, accounted for Eisenpress’ 2,200-vote margin of victory over Riley, her closest competitor in the primary. And the bloc vote in pockets of Ramapo were the difference. In five districts, for example, Eisenpress outpolled Riley 1,495-19 — including one district where she got all 190 votes and another that she won 273-1.

Riley declined comment, citing judicial ethics rules because she's an acting village justice in Airmont. Kallen also declined comment and Yeger and Chiaramonte couldn't be reached. Stern did not return a message left with someone at a company in New York City affiliated with his phone number, and a knock at the door of his Monsey home went unanswered.

It's unclear how the Markowitzes are involved in the Smith sting and whether they were knowingly assisting the government. They are listed as donating to Halloran, Smith, Eisenpress and to Eric Schneiderman, both before and after Schneiderman, a former state senator, was elected state attorney general. All four were radio guests.

Halloran's case offers some detail about the couple's role. For some reason, the FBI had checks from accounts under the couple's name. It used an undercover agent to give the checks to Halloran to serve as illegal campaign donations, court testimony shows. The undercover agent claimed it was his own money and that's why the donations were illegal. The couple have not responded to multiple inquiries by The Journal News/lohud.

When the FBI announced arrests in the Smith sting in April 2013, Schneiderman, who received more than $100,000 linked to the couple, gave the funds to charity.

Asked why Eisenpress didn't do something similar, Reiss said all her campaign funds were used.

“We spent all the money on the campaign, so we didn’t have any money left at the end of the day” Reiss said.

Reiss said he doesn't know Joseph Markowitz, but Eisenpress might know him from prior legal work. State records obtained by The Journal News/lohud show that, when Markowitz registered the NYJCC with the state, he used Eisenpress as the lawyer to form the corporation.

Reiss also said he doesn't know anything about the NYJCC.

"We have no knowledge about this company," he said. "We formed the corporation and that was it."

Campaign finance records reviewed by The Journal News/lohud also show Eisenpress received donations from Mordechai Walter, who was listed as a donor to Smith's mayoral campaign on a date prosecutors said the senator received a batch of straw donations during the sting.

Eisenpress is listed as receiving at least $7,250 from Walter and a company he runs. Her campaign did return $3,000 of a $4,000 donation from Walter's company a month after the election, according to state campaign finance records. Reiss said he had no recollection of that refund.

Who is Zalman Beck?

Stern's cooperation with the FBI has been substantial and broader than the Smith sting, court records show. He's helped FBI agents investigate at least 30 other people in a variety of cases, according to a 2014 filing by federal prosecutors. And he hasn't worked alone.

Rabbi Zalman Beck, originally from Monsey, introduced Stern to two FBI targets in the Smith sting. Prosecutors have said Beck introduced Stern to Smith and obtained straw donations for him. Beck also introduced Stern to Jasmin, her lawyer, Ben Ostrer, has said. Prosecutors have said Beck isn't knowingly assisting the government, so it's unclear why he's involved.

Reiss recalled seeing Beck at a free fundraising concert put on by Salsa musician Tito Nieves to support Eisenpress' campaign and possibly at another campaign event. He recalled seeing Stern at one of Eisenpress' victory celebrations during the primary or general election.

Reiss said he's not aware of Beck being involved in any campaign fundraising. Beck couldn't be reached for comment by telephone or at Yoffee Coffee in Airmont, where he is a business consultant. The shop is owned by Walter, the donor to Smith and Eisenpress.

Ongoing investigations

A court order still bars the media and public from seeing much of the material prosecutors turned over to the defense regarding the Smith sting operation. U.S. District Judge Kenneth Karas issued the protective order at prosecutors' request in 2013, prohibiting the release of records, including many conversations between Stern and Beck that weren't entered into evidence.

Releasing the material could jeopardize "ongoing investigations into potentially serious criminal conduct..." he wrote.

His order doesn't describe the nature of the investigations, noting they "cover different targets, different crimes, and different time periods."