Former Conn. Treasurer Gets More Jail Time

November 21, 2003 ( - Former Connecticut State Treasurer Paul Silvester, who plunged the state into a far-reaching pension investment scandal, has been sentenced to serve 28 more months in a federal prison.

US District Judge Alfred Covello ordered Silvester, who has already served 23 months while waiting to be sentenced on charges of racketeering and conspiracy to launder money, imprisoned for a total of four years and three months, according to news reports. Silvester has already been the government’s star witness in related federal corruption prosecutions. 

Covello said it has been determined that Silvester doesn’t have the ability to pay any fine, so he didn’t impose one. The agreement under which Silvester pleaded guilty to racketeering and money laundering called on him to forfeit $230,000, the amount he was said to have received in illegal kickbacks (See  Former Connecticut Treasurer Settles Kickback Charges  ).

Silvester, 41, has admitted directing the investment of hundreds of millions of dollars of state employee pension contributions to steer hundreds of thousands of dollars of investment commissions to himself, his friends and his political associates.

Under federal sentencing guideline calculations, Covello said, Silvester was accused of diverting $2.25 million in fees generated by his state pension investments. However,  the judge suggested his sentencing decision had more to do with the erosion of confidence in state government.

“Sadly, the damage here is far greater than the assessment of a financial loss,” Covello told those in a Hartford courtroom. He said the former official held “one of the most senior and powerful elected positions in Connecticut,” but his behavior “degraded” the office.

A Betrayal of Trust

Connecticut Attorney General Richard Blumenthal expressed substantially the same concern after he was given an opportunity to address Covello on behalf of Silvester’s victims – whom Blumenthal described as state employees contributing to their pension fund, the state treasury and the citizens of Connecticut. Blumenthal said Silvester held an “extremely powerful trust” but “misused that power and betrayed that trust.” “Mr. Silvester was entrusted to do this job fairly and honestly and to make decisions in the public’s best interests – not his own interests and not for his own personal gain,” Blumenthal told the court.

Minutes before Covello imposed sentence, Silvester read a short statement. He said he wanted “to express my sincere apology and heartfelt regret” and that he was “truly sorry.”

Silvester’s sentencing effectively concludes four years of investigations and prosecutions arising from investment decisions he made while running the state treasury from 1997 to January 2000. At least nine people have been convicted of participating in schemes to bribe Silvester in return for commissions based on his state pension fund investments. Perhaps a dozen more politically connected figures, who were handed enormous commissions without kicking back payments to Silvester, will probably not be prosecuted unless new evidence surfaces, according to sources quoted by the Hartford Courant.

A Probe Begins

Connecticut Governor John Rowland appointed Silvester to the elected office of treasurer in 1997 to replace former Treasurer Christopher Burnham, who had resigned to take a private sector job. Silvester is accused of steering investments and fees until January 1999, when he was forced out of office after losing an election to current Treasurer Denise Nappier.

FBI and IRS agents began investigating Silvester’s investment decisions shortly after Nappier’s election. By the summer of 1999, Silvester was cooperating with investigators. During more than 80 meetings with investigators, Silvester described a culture in which insiders routinely collected commissions on investments they did little or nothing to arrange.

As the state officer with sole discretion over investing a state pension fund approaching $20 billion in 1999, Silvester became an enormously popular political figure. Silvester, a Republican, told investigators for example  that senior Democrats sabotaged their own candidates to keep him – and the steady stream of questionable fees he represented – in office. On at least one occasion, Silvester said he made a pension investment to secure a substantial campaign contribution for Rowland.

Silvester also was the principal government weapon in two high-profile corruption trials earlier this year. In the first, the Boston investment house Triumph Capital Group and its vice president and general counsel, Charles Spadoni of West Hartford, were accused of agreeing to pay Silvester associates $2 million as part of a scheme to obtain an investment of hundreds of millions of dollars in state pension money. The associates were accused of agreeing to kick back part of the $2 million to Silvester.

Based on the success of the Spadoni prosecution, Triumph Capital’s chairman, Frederick McCarthy, and state Republican operative Lisa Thiesfield pleaded guilty to channeling bribes to Silvester in connection with the state Triumph investment (See Jury Slams Investment Firm For CT Treasurer Bribery Scandal ).

A month ago, based on additional testimony from Silvester, a jury convicted civil rights activist Ben Andrews Jr. of agreeing to bribe Silvester in return for a $750,000 investment commission.