Former NY state senator convicted of theft

New York State Senator Pedro Espada joins other legislators in a news conference on the steps of City Hall in New York City, demanding Mayor Bloomberg negotiate with them before they vote to reinstate his control of the largest school system in the United States, July 19, 2009.

NEW YORK (Reuters) - A federal jury in Brooklyn on Monday found a former New York Democratic state senator, whose brief flirtation with the Republican party gridlocked the senate, guilty of embezzling money from federally funded healthcare clinics.

But the jury failed to reach a unanimous verdict on related conspiracy charges.

Pedro Espada Jr. and his son, Pedro Gautier Espada, were accused of bilking more than $600,000 from Soundview HealthCare Center, which has received more than $1 million in federal funding. The elder Espada, a former three-term Democratic senator representing the Bronx, serves as CEO of Soundview, which was founded in 1978.

After 11 days of tense deliberations, the jury on Monday told U.S. District Judge Frederic Block that Espada, 58, was guilty of four counts of theft. The jury then deliberated for several more hours before announcing they were unable to reach a verdict on the remaining four counts against Espada, which included theft and conspiracy.

A mistrial was declared on all eight counts against Pedro Gautier Espada.

Block gave prosecutors until June 5 to decide whether to retry the Espadas on all or some of the undetermined counts.

After the verdict was read, Espada appeared somber, comforting his wife in the courtroom.

"It's a sad day for Mr. Espada, and a sadder day for Soundview and the community," Espada's attorney, Susan Necheles, said outside the courthouse.

Brooklyn U.S. Attorney Loretta Lynch said Espada will "now be held to account for his crimes."

"The people of the Bronx trusted Pedro Espada to have their best interests at heart," Lynch said in a statement following the verdict. "Instead, he abused that trust to the tune of more than half a million dollars."

New York Governor Andrew Cuomo also weighed in on the verdict, calling Espada "the prime example of government corruption."

ACCUSATIONS OF BULLYING

Deliberations nearly ground to a halt several times in the two weeks since the jury received the case. On Wednesday, Block told jurors to resume deliberations after they sent him a note that they were "deadlocked." In other notes, there were complaints that one juror refused to deliberate and accusations of bullying.

During the six-week trial, witnesses for the government included Maria Cruz, Espada's long-time assistant, who said he put family members on Soundview's payroll and its board of directors.

Other Soundview employees testified that Espada routinely spent clinic funds on personal items like presents and flowers, fancy meals and even an elaborate child's birthday party featuring a pony. The Espadas also were accused of rigging bids for cleaning contracts with Soundview.

Necheles acknowledged during the trial that her client spent Soundview's money, but only as part of his contract, which entitled him to pay certain personal expenses with company funds. If any of the funds were used improperly, it was the fault of Soundview's accountants, who apparently green-lit the payments, she said.

Espada, who served as New York Senate majority leader from 2009 until 2010, was ousted from his Senate seat in the 2010 primary election. He faces up to 40 years in prison for the counts on which he has been convicted.

His son, who was a member of the New York Assembly and helped his father run parts of Soundview, faced 10 years on each of the five counts of theft, and 15 years on the three conspiracy counts.

(Editing by Noeleen Walder; Editing by Eric Walsh)