In January 1978, Stanley Friedman moved out of City Hall, where he’d been Abe Beame’s deputy mayor and principal political operative. There were some negative news stories about the fact that one of Beame’s last official acts was to name Friedman as lifetime chairman of the city’s water commission, a seldom-show, $25,000-a-year post, with extras like a chauffeured limousine. Jack Newfield had written in The Voice as early as November 1977 that Friedman had also lined up another post for himself — he would become a partner in the law firm of Saxe, Bacon and Bolan, a firm noted for a name that does not appear in its corporate title — Roy M. Cohn. The firm acts as a kind of general counsel and adviser to [Donald] Trump and represents him on certain aspects of the Commodore. As predicted, Friedman not only joined Cohn’s firm that January but moved himself into Cohn’s office in the firm’s East 68th Street townhouse. Shortly thereafter, Stanley Friedman cashed in the chips he’d accumulated as deputy mayor and got himself elected Bronx Democratic county leader by vote of its district leaders. Roy Cohn at last had his own in-house party boss.
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But before Friedman left the city to join his new firm, he had to clean up a few loose ends for longtime Cohn client Donald Trump. In the last two weeks of the Beame administration, Stanley Friedman frenetically pieced together the final, extraordinary pieces of Trump’s Commodore deal and bound the city to it in ways that new mayor Ed Koch could not undo.
Friedman’s advance work for his new firm included forcing an “escrow closing” that ended on December 21, 1977, 10 days before the end of the administration. Hadley Gold, special assistant to the corporation counsel, told me it was “the only escrow closing I’ve ever been involved in or heard of in 11 years” of handling the city’s real estate transactions. The problem was that Trump was unable to close the deal because he hadn’t lined up his private financing. He didn’t have the bank’s $10 million to buy the hotel from Penn Central or the $60 million he needed to renovate it. Financing is usually an indispensable ingredient for the closing of a real-estate transaction, but it was clear that Trump could not get his until after December 31, by which time Beame and Friedman would have left office.
No one was sure that the Koch administration would accept the project on the same terms negotiated under Beame. In addition, Trump’s option with Penn Central had been timed to end 20 days after Beame left office. (The political timing of Trump’s options is now a familiar pattern — his options on the 30th and 60th street yards also ended with Beame.) The fear was that even Trump’s allies at Penn Central —because of the booming hotel market — might be forced to consider higher bids. A new developer might have been willing to renovate the hotel at less expense to the city and state.
So, at Stanley Friedman’s hurriedly arranged escrow closing in late December, a three-party agreement was signed — between Friedman for the city, Richard Kahan for UDC, and Trump. The UDC lease and a host of other agreements with Trump were also executed and Friedman signed them as the mayor’s designee. All of these documents were placed in escrow with UDC anomeys, awaiting the final closing, when the agreements would be exchanged and the purchase price paid. The city and UDC were bound to the project. Trump could walk away if he failed to complete the financing. But if Trump got his financing, the new city administration could not change one word of the deal.
Participants described Friedman’s closing as “a marathon session that went on for days.” One said “Nobody knew what was coming next.” Another negotiator, who’s handled city real-estate transactions for 20 years, said he’d never known of any other escrow closing and that the city would generally not participate in any, because it meant that the city would be taking all the risks, committing itself when the private developers and lenders weren’t ready to make a commitment.
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Friedman told me he’d never been involved in an escrow closing before, either for the city or as a private attorney. He claimed he’d signed the agreements “on advice of city attorneys that everything was kosher” (so “don’t try to stick this thing on me,” he said). But participants in the closing said Friedman was pushing city attorneys, forcing them to complete their review of the documents. “Sure I told them to move it,” Friedman conceded, “but I don’t know if I’d call that pressuring them … my whole thing was to get it accomplished fast.”
In addition to the escrow closing, Friedman, acting as the mayor’s designee, signed a lucrative franchise agreement — which he’d pushed through the Board of Estimate a month earlier — for Trump on December 29, two days before he left city government. The agreement permitted Trump to build a glass-enclosed “Garden Room” restaurant 18 feet beyond the Commodore property line and extending over the city sidewalk. As part of the last-minute negotiations, the city’s Bureau of Franchises agreed to increase the length of the franchise from 10 to 25 years and cut Trump’s annual payments to the city in half for the first 10-year period, to a fixed $28,000 a year. Trump brought in Sandy Lindenbaum and Louise Sunshine to help Friedman push the franchise through.
Friedman told me that he “didn’t recall” discussing the Commodore with Cohn at the time and that “he didn’t know Trump was a Cohn client until the spring of 1978” (Cohn’s representation of Trump was front-page Times and Daily News copy). Friedman did acknowledge that he “may have met Trump at Cohn parties” before he’d arranged the escrow closing and left the city.
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Friedman’s other line of defense was that the escrow closing and franchise agreement had also been approved by “those fancy lawyers up at UDC,” led by Richard Kahan, then the agency’s director of economic development. In addition to executing the escrow closing for UDC, Kahan — without the approval of his board — also allowed the developer to switch the Garden Room franchise from a city agreement with Trump to one between the city and UDC, resulting in highly favorable terms for Trump. Kahan also wrote into the lease the provisions that permitted Trump to use the waived sales taxes on the project’s construction materials in ways that benefined Trump. Kahan told me that this significant grant of tax funds to Trump was already in place when he joined UDC in the summer of 1976; but there is no reference to it in the draft lease submined to the agency’s board that fall.
Kahan’s actions in this period occurred at a time, after both Ravitch’s and Cohen’s departure from UDC, when the agency, in effect, had no head. Kahan was also willing to remedy that problem: He became a candidate for president of the agency. “I kept my candidacy to myself the first five months after Cohen’s resignation in October,” Kahan told me. “Then I had many discussions.” Among his principal supporters for the Carey appointment were Sunshine and Trump, the governor’s chief fund raiser and his second largest contributor.
Carey left the position vacant for eight months and then, a month after Kahan concluded the final closing on the Commodore, he appointed Kahan president. The 32-yearold Kahan had joined the agency only two years earlier as an assistant director of a single unit in the agency. Kahan’s selection cannot be simplistically attributed to his service of and support by Sunshine and Trump. He is a brilliant and resourceful bureaucrat and was also backed by people like Robert Wagner, Jr. What this record told me was that Kahan was willing to court political insiders, like Trump and Sunshine, even at the possible expense of sound public policy.
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Under Kahan’s authority, a few days before his appointment as president, condemnation papers were served several of the hotel’s commercial tenants. In one case, Trump had actually signed an agreement with the tenant to give him a new lease, almost doubling his rent to $180,000 after threatening to use UDC condemnation powers. Six months later Trump was demanding $100,000 more per year and $100,000 cash up front. These demands were in effect enforced by a UDC condemnation order only a week after the owners refused to pay the increases.
Friedman and Kahan wound up indirectly back together on just this case, though neither appeared in court. Friedman’s partner, Roy Cohn, had represented Trump in several aspects of the case against this particular tenant. In the condemnation proceeding itself, Trump was not a party (UDC v. Strawberry). Nonetheless, Cohn accompanied Trump to court as an observer. Indeed, after it was revealed that the judge in the case had met Trump at a recent party in Cohn’s home, she removed herself from the case and Cohn stopped visiting the proceedings. Cohn has, however, brought a separate damages suit for Trump against the tenant and, like the condemnation, that case is also still being litigated. ❖