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McLaughlin’s mom wants feds to pay up

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Disgraced former Flushing Democratic state Assemblyman Brian McLaughlin’s 82-year-old mother filed a petition in October asking the federal government to return $145,000 she allegedly loaned him that was later forfeited to the government as part of his plea deal to racketeering, plus interest.

Federal prosecutors said in court documents last week that they do not have grounds to dismiss the suit and that they intend to seek discovery and other information in order to determine whether she has a viable case.

Ilene McLaughlin said her son borrowed $145,000 in March 2006 from her to help pay the mortgage on his Nissequogue, L.I., house, which he bought for $760,000 in 2003, according to real estate records.

When he first settled the federal racketeering case in March 2008, McLaughlin, the former head of the powerful New York Central Labor Council, admitted to having made false statements on a loan application for the home.

As part of a May 2009 plea deal that superseded the original settlement, McLaughlin agreed to forfeit almost $3.1 million — the amount federal prosecutors say in court papers he “obtained, directly and indirectly from the racketeering enterprise” — to the federal government and to serve 10 years in prison, where he remains. The Nissequogue home was sold and the proceeds given to the government as part of the forfeiture since construction and mortgage payments on it were funded by stolen money, according to court documents.

In the petition filed Oct. 7 in federal court in Manhattan, Ilene McLaughlin contends that when her son sold the 13-room home for almost $1.2 million as part of the settlement, she lost the $145,000 loan she says she gave him.

Ilene McLaughlin, whom the New York Post identified as a widowed, retired retail worker living in a Flushing co-op, did not return a message left on her home answering machine Tuesday afternoon.

But in a Nov. 29 filing federal prosecutors said “she fails to identify the complete nature and extent of her alleged right, title or interest in the subject properties, the precise time and circumstances of her acquisition of her alleged right, title or interest, or additional facts supporting her claim” and did not provide a copy of the alleged loan for the government to review.

Prosecutors went on to say in the document that several other factors led them to contend that it is “unlikely” she will be able to establish the legitimacy of her claim.

Prosecutors stopped short of throwing out the suit, instead requesting “a discovery and hearing schedule from the court and a more definitive statement of interest from the petitioner.”

But McLaughlin’s attorney, Michael Armstrong, who is helping his mother with the case, believes she will be able to prove she deserves to get her money back.

He said she has an official mortgage that documents the loan, which proves that she did indeed loan him the money and that she simply neglected to attach it to her original petition, which she filed without the help of an attorney. Armstrong also said she had no knowledge of her son’s criminal activity at the time he accepted the loan and that he believes that will prove it was not given as part of a scam.

“It is a perfectly ordinary loan, perfectly legitimate loan, backed up by the necessary documentation and the question for the government will be whether as a technical matter she can get her money back despite the fact that there was a forfeiture order on the house. That’s a legal matter that will be decided by the government and maybe by the court,” he said. “They’re trying to assure that this wasn’t some kind of a scam on behalf of Brian. It wasn’t.”

Reach reporter Connor Adams Sheets by e-mail at csheets@cnglocal.com or by phone at 718-260-4538.

Updated 6:14 pm, October 10, 2011
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