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FEDERAL INDICTMENT

Republican congressman George Santos pleads not guilty, released on $500,000 bond

George Santos on Capitol Hill in Washington, DC. (Photo: Al Drago / Bloomberg)

George Santos was released on a $500,000 bond after he was arrested and charged with fraud and money laundering, as the embattled Republican congressman from New York comes under increasing pressure to resign.

Santos was arraigned on Wednesday afternoon in federal court in Central Islip, New York, where he pleaded not guilty. He will be allowed to travel between New York and Washington, according to the conditions of his bond. He will also be able to travel within the continental US but must notify court officials ahead of time for approval.

US District Judge Joanna Seybert, a Bill Clinton appointee, has been assigned to the case, according to court records.

The federal indictment, which also includes theft of public funds and making false statements to the US House of Representatives, follows a five-month investigation that began shortly after Santos’ election in November. It sheds light on some of the mysteries surrounding the 34-year-old representative, who gained office on the strength of a CV of Wall Street accomplishments that turned out to be almost entirely made up.

The 13-count indictment was returned by a grand jury on Tuesday and unsealed on Wednesday. Santos said he intended to continue his re-election campaign.

The charges come at a precarious time for House Republicans, whose 222-to-213-seat edge in the chamber means they can’t have more than four GOP defections to pass most bills.

Breon Peace, US attorney for the Eastern District of New York, described a brazen scheme.

Santos “used political contributions to line his pockets, unlawfully applied for unemployment benefits that should have gone to New Yorkers who had lost their jobs due to the pandemic, and lied to the House of Representatives”, Peace said in a statement.

Santos’ congressional spokesperson, Naysa Woomer, referred questions to his lawyer Joe Murray, who didn’t return calls seeking comment on the indictment.

Two Alleged Scams

Prosecutors allege that Santos took part in two criminal schemes.

They claim he solicited funds from donors for his campaign and used them instead for personal expenses including designer clothing, deploying a shell company that in effect operated as an illegal super-PAC. They also say he committed unemployment insurance fraud, illicitly receiving $24,744 in benefits in 2020 and 2021. Along the way, the government contends, Santos misled the House and the public about his finances in connection with each of his two congressional campaigns.

The US alleges that both Santos’ 2020 and 2022 financial disclosures were fraudulent, in part because he failed to reveal the unemployment income.

Richard Serafini, a criminal defence lawyer in Florida who was previously a Justice Department attorney, said it wasn’t surprising for a public official to be investigated if they “carry around a neon sign that says: I’m a liar”.

Serafini said the involvement of the Public Integrity Section of the Justice Department’s Criminal Division suggested the case would be even stronger than most.

‘Compelling Evidence’

“The Public Integrity Section is very careful in terms of indicting a public official, because that person has been in their position by the voters,” he said. “Only in very important circumstances — and with compelling evidence — will the government bring a case against a sitting public official.”

Santos must step down, Nassau County Executive Bruce Blakeman said in a text message.

“He is a stain on Congress and he’s doing a disservice to the residents of his district,” the Republican said.

Santos’ district, which includes part of Queens in New York City and much of Nassau County, leans Democratic.

‘Viable Contender’

Ed Cox, chairman of the New York Republican State Committee, said the party in Nassau County “has made it absolutely clear” that Santos should resign. Cox said he had “complete confidence” in the county party to “find a viable contender to run in his district,” given its performance in recent elections.

Santos is seen as a loyal vote for House Speaker Kevin McCarthy, who nevertheless said Tuesday that he would ask Santos to resign if convicted. Santos could also be expelled by a two-thirds vote of the House, but as of Tuesday an expulsion resolution had just 37 co-sponsors, all Democrats. If he is forced out, his seat would be filled by a special election within three months on a date to be set by New York Governor Kathy Hochul.

But there is little chance of getting such a vote in a chamber controlled by GOP leaders trying to protect a razor-thin majority. It was Santos who on April 26 dramatically cast the final, deciding vote to pass a Republican bill addressing the debt ceiling, after a handful of GOP defections.

“There was a time Republicans would have taken such action,” said Blake Chisam, a former staff director and chief counsel for the House Ethics committee, referring to demands that Santos resign. “He would have already been gone. Now it’s more about the whip count.”

Rags to Riches

Santos’ improbable rags-to-riches story rang alarms at the North Shore Leader, a local weekly newspaper that questioned an “inexplicable rise” in his net worth. When he ran for office in 2020, Santos disclosed assets of zero and an income of $55,000. Two years later, he claimed to be worth as much as $11.2 million, with a salary of $750,000.

It wasn’t until after he was elected that the New York Times dismantled his fabricated life story. He didn’t work at Goldman Sachs or Citigroup, as he claimed, the Times reported. He never graduated from Baruch College and never played on its championship volleyball team. And he wasn’t Jewish but rather, as he later claimed, merely “Jew-ish”.

Lying to voters isn’t illegal, and Santos has cast the falsehoods as mere “embellishments” of his CV.

But allegedly false statements on his campaign finance reports helped draw the attention of the Justice Department. Santos said he had lent $705,000 to his campaign, without disclosing the ultimate source of those funds.

37 Items at $199.99

His spending also drew scrutiny, with his campaign claiming expenditures of precisely $199.99 on 37 items. The threshold requiring receipts is $200.

Santos said his income came from his salary as managing principal of the Devolder Organization, which he said was a capital introduction firm named after his mother’s family. Before that, he worked for Harbor City Capital, a Florida firm shut down by the Securities and Exchange Commission in 2021 as a “classic Ponzi scheme”.

Santos is at least the sixth member of Congress charged with federal crimes since 2017, and the fifth of a string of Republicans. Former New York Representative Anthony Weiner, a Democrat, pleaded guilty to transferring obscene material to a minor. The five Republicans, including former New York Representative Chris Collins, were all charged with various financial and election-related crimes.

The case is US v Santos, 23-cr-197, US District Court, Eastern District of New York (Long Island).

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