NEW YORK CITY — The cooperating witness who was instrumental in the alleged bribery plot that took down state Sen. Malcolm Smith, a Queens councilman and city GOP bosses is a bankrupt, smooth-talking real estate investor who personally owes a staggering $126 million to Citigroup, DNAinfo.com New York has learned.
Moses "Mark" Stern, 40, brokered the backroom deals that involved $80,000 in cash payoffs and a scheme to get Smith, the Democratic senator, on the Republican ticket for this year's mayoral race, according to sources.
His sweet-talking and negotiations led to Tuesday's arrests of Smith, Councilman Dan Halloran, Bronx Republican party head Joseph Savino, Queens GOP vice-chairman Vincent Tabone and two Rockland County officials. In the criminal complaint against the six defendants, Stern is never identified but only referred to as the cooperating witness, or "CW."
Stern, who has a scraggly beard and wears a yarmulke, seems to have a knack for the art of persuasion. In the spring of 2007, at the height of the real estate bubble, the Monsey, N.Y., resident got Citigroup to give his firm First Republic Group Realty $126 million in mortgage loans to buy 11 strip malls in the southeast, despite his spotty track record on investments, according to court records.
First Republic bought the properties for $128 million but went bankrupt in 2009. That same year Citigroup sued Stern, claiming he was on the hook for all the money.
The failed real estate deal also led to federal fraud charges in 2010 against the escrow agent involved in the loan transaction, according to an indictment in Manhattan Federal Court. The escrow agent is accused of lying about paying millions of dollars in closing costs..
Stern does not appear to have ever been charged. But the criminal complaint against the six political figures says the cooperating witness pleaded guilty on March 11.
Stern, who is reportedly married with nine children, owns two properties next to one another in Monsey. One is a ramshackle home, while the other is a mansion currently under construction. People who answered the door on Tuesday night and Wednesday at the addresses declined to comment.
Records show that two previous companies Stern ran, Grupo Xtra and Clothestime Stores, filed for bankruptcy.
In a response to Citigroup's civil filing, Stern said in an affidavit that he didn't owe the banking giant a dime since it bought First Republic — and its 11 properties — for $1,000 at a public auction.
He claimed the properties were valued at $140 million and brought in annual profits of $5 million. Still, Citigroup won a judgment against him for all the money.
A lawyer who represented Stern in the civil action recently won a judgment against him for unpaid legal fees.
Stern's work as a cooperating witness with federal investigators dates back to at least Aug. 5, 2011, when he and the Spring Valley, N.Y., Mayor Noramie Jasmin discussed him obtaining a parcel of town property to develop, according to the criminal complaint.
The real estate project led to the arrests of Jasmin and her deputy, Joseph Desmaret, on fraud charges Tuesday. Stern went on to wheel and deal on behalf of Smith in his efforts to bribe Halloran and the party bosses for their blessing to run on the GOP ticket, according to the criminal complaint.
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