Frank Carone, a close associate and former chief of staff to New York City Mayor Eric Adams, was arrested Wednesday in Brooklyn federal court on charges related to an alleged bribery and fraud scheme exploiting the city’s migrant crisis. Authorities allege Carone, along with his brother Anthony Carone, hotel owner Yan Po Zhu, and Zhu’s business manager Crystal Chen, conspired to divert nearly $7 million in federal grant funds to a Long Island City hotel in exchange for $120,000 in bribes.

The federal indictment claims the group orchestrated the scheme between June 2022 and December 2023 by securing a multi-million-dollar emergency shelter contract for the Microtel, a 75-room hotel, despite initial rejections by the city’s Department of Social Services. Zhu and Chen reportedly hired a consultant to obtain shelter contracts but were initially denied because the neighborhood already had several such facilities. Undeterred, Zhu contacted Frank Carone directly seeking assistance. Text message evidence submitted by prosecutors shows repeated exchanges, with Zhu asking, “Who I need contact with?” and thanking Carone for his help.

According to federal prosecutors, Frank Carone used his influence to pressure city officials to reconsider their decisions, ultimately securing a $6.8 million contract for Microtel despite community opposition. The indictment states Carone accepted a series of bribes funneled through a law firm where his brother Anthony Carone is a partner. The payments were allegedly used to cover personal expenses, including credit card bills. The indictment also cites communications suggesting dissatisfaction over the portion of bribe money and efforts to negotiate further payments.

The charges include fraud, bribery, money laundering, obstruction of justice, and tax fraud. FBI Assistant Director in Charge James Barnacle described the alleged operation as a betrayal of taxpayer trust, stating the defendants “chose greed over integrity” by exploiting emergency funds intended to assist asylum seekers.

Frank Carone served as Adams’ chief of staff from January 2022 until he stepped down near the end of that year to start a lobbying firm. He was arrested at his Manhattan residence early Wednesday morning, alongside his brother, Zhu, and Chen.

Carone’s attorney, Arthur Aidala, criticized the indictment as weak and based on circumstantial evidence, calling it a “sad day for our criminal justice system” and emphasizing his client’s intention to seek acquittal in court. Aidala asserted the Carone brothers have a reputation for integrity and dismissed the allegations as the government’s effort to find a target through prolonged investigation.

The arrests come amid broader investigations into alleged corruption involving city officials with ties to Adams. Authorities have recently conducted raids related to another suspected bribery case during the former mayor’s tenure.

New York state and city received over $4 billion in federal grants in 2022 and 2023 to address the surge of migrants arriving from the southern border. The funds were intended to support emergency housing and services for asylum seekers in sanctuary cities, including New York.

As the case develops, it highlights scrutiny on how city officials managed federal aid intended for vulnerable populations amidst a politically sensitive migrant crisis. The defendants are scheduled to appear in court in the coming days.