Denenberg accused in elaborate fraud scheme; drops out of Senate race

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The former law firm of Nassau County Legislator David Denenberg is suing him in State Supreme Court in Manhattan, seeking $3.6 million in damages. The firm alleges that Denenberg systemically and fraudulently overbilled a client to the tune of $2.3 million over eight years, and sought a 25 percent annual bonus from the firm based, at least in part, on those billings.

The Garden City-based Davidoff Hutcher & Citron LLP filed the suit on Tuesday, alleging that Denenberg, an intellectual-property attorney, engaged in a “cold, calculated scheme” that he “willfully executed and concealed.”

Denenberg, a Democrat from Merrick, was locked in a fierce battle for the 8th State Senate District seat with County Legislator Michael Venditto, a Republican from Massapequa and the son of Oyster Bay Supervisor John Venditto. But Denenberg dropped out of the race only three hours after the lawsuit was filed in Supreme Court.

"While these charges are extremely serious, the timing, politically, should raise many questions," Denenberg said in a statement. "I retained counsel to vigorously defend me against these allegations and prosecute my claims against the firm. I look forward to cooperating with the U.S. attorney's office to establish the truth. Unfortunately, given the political calendar, it is impossible to continue my campaign for State Senate."

"My family, the electorate, the campaign and this position are way too important to be subject to outrageous allegations and negative attacks against me personally," Denenberg continued. "Therefore, I withdraw from the race."

Charles Fuschillo Jr., a Republican from Merrick who previously held the Senate seat, resigned last Dec. 31 to become CEO of the nonprofit Alzheimer’s Foundation. The outcome of the Denenberg-Venditto race could have determined the balance of power in the State Senate, where neither party holds a solid majority now. Now it appears uncertain what will happen.

According to the New York State Board of Elections website, Sept. 22 was the last day, by law, on which Democrats could have put up a candidate other than Denenberg in the 8th Senate District race. Now, according to two knowledgeable political sources, Denenberg’s name must appear on the November ballot, even if he were to withdraw from the race.

Nassau County Democratic Chairman Jay Jacobs, however, reportedly said that he could take advantage of a technicality in the law and nominate Denenberg for a judicial post, which would allow Democrats to put up a new candidate.

According to the lawsuit, Denenberg’s salary at Davidoff Hutcher & Citron was $325,000 in 2007, and was raised to $360,000 in 2008. With bonuses, he collected an average of $487,685 per year from 2007 to 2013. According to Davidoff Hutcher & Citron, the firm fired him earlier this year, though Denenberg told Newsday in June that his departure was by mutual agreement.

According to a statement issued by Denenberg’s former firm on Tuesday, an internal investigation indicated that he acted alone, without knowledge of anyone at the firm. Davidoff Hutcher & Citron reportedly referred the case to U.S. Attorney Loretta Lynch for possible criminal prosecution.

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