Developer at Brooklyn Navy Yard charged in federal bribery case

By Adam Pincus | March 10, 2011 06:58PM

[Updated 8:41 p.m.] The founder of a successful Midtown-based real estate firm is accused of funneling nearly $500,000 in alleged bribes to Brooklyn State Senator Carl Kruger, who in turn took action to benefit that company’s development projects, a complaint unsealed today in Manhattan Federal Court says.

Prosecutors allege Aaron Malinsky, a principal with PA Associates, made the payments to an entity called Olympian Strategic Development, and that money was used to improperly benefit Kruger (see complaint below). Kruger allegedly received at least $1 million in bribes from Malinsky and others between 2006 and 2011, investigators said. Malinsky could not immediately be reached for comment. An attorney for Malinsky, Scott Mollen, who is a partner at Herrick, Feinstein, said, “It would be inappropriate to comment because we just received the complaint.”

In addition to Malinsky, authorities accused lobbyist Richard Lipsky, a principal with Richard Lipsky Associates, whose clients include Forest City Ratner, of involvement in the alleged bribery schemes.

The complaint charges that between November 2007 and June 2010, Lipsky sent more than $250,000 in payments to Olympian, while Malinsky sent $472,500, which improperly benefited Kruger.

Prosecutors say that payments from Malinsky affected the outcome of various real estate developments, including what appears to Be Canarsie Plaza at 8925 Avenue D in Brooklyn (the complaint did not cite the project by name). In that case, investigators say the local Community Board 18, which Kruger had strong ties to, backed a PA Associates plan in 2007 after rejecting similar big-box development plans in earlier years, just two weeks before a $5,000 payment (the first of many) was made to Olympian.

Canarsie Plaza at 8925 Avenue D

In another incident, Kruger allegedly used his official capacity to help Malinsky in connection with Four Sparrows Retail Center at Mill Basin, where Forest City Ratner is the developer, although the project and Forest City are not cited by name in the complaint.

This is the second time in 14 months an elected official has been accused of wrongdoing in connection with one of Forest City’s projects. A spokesperson for the company wasn’t immediately available for comment.

PA Associates is well known in the borough. It was tapped in April 2010 by the non-profit Brooklyn Navy Yard Development Corporation, in partnership with ShopRite, to develop a supermarket on a six-acre site owned by the federal government. In addition, PA Associates is developing a 50,000-square-foot retail building at City Point in Downtown Brooklyn. The firm also partnered last month with discount retailer Target and Simone Development to buy a postal facility in the Bronx, which they plan to develop into a shopping center. None of those entities were alleged to be involved in any of the bribery schemes.

A total of eight people including Malinsky, Kruger and Lipsky, were charged in the complaint. Calls to attorneys for Kruger and Lipsky were not immediately returned.

The charges carry a maximum penalty of 20 years, prosecutors said.Kruger, Carl Et Al Complaint