NEW YORK -- In a story first reported by NewsChannel 4's Jonathan Dienst, seven-term Democratic state assemblyman Brian M. McLaughlin, who also is president of the nation's largest municipal labor council, was arrested on federal racketeering charges Tuesday, accused of stealing more than $2 million from the state, labor unions and even a Little League fund.

McLaughlin, 54, was accused in an indictment of teaming with associates to steal money from several organizations in which he held official positions. They allegedly stole money from labor unions, the state of New York and not-for-profit groups.

McLaughlin, who surrendered and was released on $250,000 bail, has been under investigation for several years. If convicted, his sentence could theoretically be 500 years in prison. McLaughlin and his lawyer, Jonathan Bach, declined to comment as they hastily left U.S. District Court in Manhattan and entered a waiting sedan.

The million-member labor council is an umbrella group of unions that has supported Mayor Michael Bloomberg.

"The Midas touch turned everything into gold; the McLaughlin touch made money disappear -- into his pockets," said Andrew Arena, special agent in charge of the FBI's New York criminal division.

"This case lends new meaning to the term `hand in the till,"' agreed U.S. Attorney Michael Garcia.

According to a 186-page indictment unsealed Tuesday, McLaughlin and others from 1995 through 2006 engaged in racketeering by using union money to pay personal expenses, including credit card bills, rent and home improvements.

Garcia said union members whose dues were siphoned off by McLaughlin and his friends suffered the most, financially and with hits to their dignity as he turned them into a private work force available for major construction projects or to change a light bulb.

McLaughlin directed union members to take his dog to the doctor, hang Christmas lights, shovel snow, clean out a barn and look for rodents in his basement, the prosecutor said. Sometimes, he added, they were called upon to deliver money to his friends.

Garcia said McLaughlin lived lavishly with his stolen money, buying his wife an $80,000 Mercedes Benz and using other money for a country club membership, a rehearsal dinner for his son's wedding, a wide-screen plasma television and renovations on his Long Island home in Nissequoque near the Hamptons.

Other money went to pay rent on Albany and Queens residences and to pay off personal credit bills, Garcia said.

Federal investigators contacted the Assembly majority earlier this year, said Charles Carrier, spokesman for Assembly Speaker Sheldon Silver. "We have cooperated. They asked us not to discuss the nature of the inquiry."

"As Americans, we take great pride in our system of justice, which is based on the presumption of innocence which extends to all citizens," said Denis M. Hughes, chairman of the Central Labor Council executive board. "Everyone should keep in mind that Brian McLaughlin has not been convicted of a crime and will be afforded the opportunity to respond to and defend himself against these allegations."

The indictment accused McLaughlin of working with others to obtain hundreds of thousands of dollars in illegal payments and other things of value from companies in the street lighting and traffic signal industry. McLaughlin is the only one named in the indictment.

The indictment accused McLaughlin of committing mail fraud, embezzlement, money laundering and labor bribery by diverting money from various funds he controlled or had access to for his own use.

Among the funds identified by the indictment were McLaughlin's political campaign committee, union accounts meant to provide benefits for union members and even contributions meant to support a Little League baseball program.

The indictment said McLaughlin and others misappropriated state funds by creating fictitious positions on his legislative staff, by providing McLaughlin with a share of salary for one purported employee and by submitting false expense forms.

The indictment said McLaughlin helped friends as well, including providing 16 checks from a Street Lighting Association union fund meant to benefit union employees between May 1997 and October 2003 to a friend. That woman spent the approximately $21,900 in checks on personal expenses, the indictment said.

In September 2000, he gave a $1,000 check to another woman with whom he had a personal relationship, the indictment said.

The indictment focused at one point on a housing development created in 1950 by union leaders and electrical industry management. It resulted in more than 30 large apartment buildings in the Pomonok section of Queens.

As part of the development, residents created the Electchester Athletic Association Inc. to finance and operate youth sports programs for children in the area.

The indictment alleged McLaughlin used his position as state assemblyman to direct the allocation of state funds to the athletic association so that children and their families could benefit.

Since 1997, McLaughlin, assisted by others, defrauded the athletic association of more than $95,000, including $6,000 McLaughlin demanded be extracted so he could pay rent for his apartment in Albany for the rest of the year, the indictment said.

Meanwhile, the indictment noted, McLaughlin continued soliciting donations to the athletic fund with sponsorship forms thanking the contributor and concluding with the message: "A CHILD IN SPORTS STAYS OUT OF THE COURTS!"