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Rudy’s Ties to a Terror Sheikh

Three weeks after 9/11, when the roar of fighter jets still haunted the city’s skyline, the emir of gas-rich Qatar, Sheikh Hamad bin Khalifah al-Thani, toured Ground Zero. Although a member of the emir’s own royal family had harbored the man who would later be identified as the mastermind of the attack—a man named Khalid Sheikh Muhammad, often referred to in intelligence circles by his initials, KSM—al-Thani rushed to New York in its aftermath, offering to make a $3 million donation, principally to the families of its victims. Rudy Giuliani, apparently unaware of what the FBI and CIA had long known about Qatari links to Al Qaeda, appeared on CNN with al-Thani that night and vouched for the emir when Larry King asked the mayor: “You are a friend of his, are you not?”

“We had a very good meeting yesterday. Very good,” said Giuliani, adding that he was “very, very grateful” for al-Thani’s generosity. It was no cinch, of course, that Giuliani would take the money: A week later, he famously rejected a $10 million donation from a Saudi prince who advised America that it should “adopt a more balanced stand toward the Palestinian cause.” (Giuliani continues to congratulate himself for that snub on the campaign trail.) Al-Thani waited a month before expressing essentially the same feelings when he returned to New York for a meeting of the U.N. General Assembly and stressed how important it was to “distinguish” between the “phenomenon” of 9/11 and “the legitimate struggles” of the Palestinians “to get rid of the yoke of illegitimate occupation and subjugation.” Al-Thani then accused Israel of “state terrorism” against the Palestinians.

But there was another reason to think twice about accepting al-Thani’s generosity that Giuliani had to have been aware of, even as he heaped praise on the emir. Al Jazeera, the Arabic news network based in Qatar (pronounced “Cutter”), had been all but created by al-Thani, who was its largest shareholder. The Bush administration was so upset with the coverage of Osama bin Laden’s pronouncements and the U.S. threats to bomb Afghanistan that Secretary of State Colin Powell met the emir just hours before Giuliani’s on-air endorsement and asked him to tone down the state-subsidized channel’s Islamist footage and rhetoric. The six-foot-eight, 350-pound al-Thani, who was pumping about $30 million a year into Al Jazeera at the time, refused Powell’s request, citing the need for “a free and credible media.” The administration’s burgeoning distaste for what it would later brand “Terror TV” was already so palpable that King — hardly a newsman — asked the emir if he would help “spread the word” that the U.S. was “not targeting the average Afghan citizen.” Al-Thani ignored the question — right before Giuliani rushed in to praise him again.

In retrospect, Giuliani’s embrace of the emir appears peculiar. But it was only a sign of bigger things to come: the launching of a cozy business relationship with terrorist-tolerant Qatar that is inconsistent with the core message of Giuliani’s current presidential campaign, namely that his experience and toughness uniquely equip him to protect America from what he tauntingly calls “Islamic terrorists” — an enemy that he always portrays himself as ready to confront, and the Democrats as ready to accommodate.

The contradictory and stunning reality is that Giuliani Partners, the consulting company that has made Giuliani rich, feasts at the Qatar trough, doing business with the ministry run by the very member of the royal family identified in news and government reports as having concealed KSM—the terrorist mastermind who wired funds from Qatar to his nephew Ramzi Yousef prior to the 1993 bombing of the World Trade Center, and who also sold the idea of a plane attack on the towers to Osama bin Laden—on his Qatar farm in the mid-1990s.

This royal family member is Abdallah bin Khalid al-Thani, Qatar’s minister of Islamic affairs at the time, who was later installed at the interior ministry in January 2001 and reappointed by the emir during a government shake-up earlier this year. Abdallah al-Thani is also said to have welcomed Osama bin Laden on two visits to the farm, a charge repeated as recently as October 10, 2007, in a Congressional Research Service study. Abdallah al-Thani’s interior ministry or the state-owned company it helps oversee, Qatar Petroleum, has worked with Giuliani Security & Safety LLC, a subsidiary of Giuliani Partners, on an undisclosed number of contracts, the value of which neither the government nor the company will release. But there’s little question that a security agreement with Qatar’s government, or with Qatar Petroleum, would put a company like Giuliani’s in direct contact with the ministry run by Abdallah al-Thani: The website of Qatar’s government, and the interior ministry’s press office, as well as numerous press stories, all confirm that the ministry controls a 2,500-member police force, the General Administration of Public Security, and the Mubahathat, or secret police. The ministry’s charge under law is to “create and institute security in this country.” Hassan Sidibe, a public-relations officer for the ministry, says that “a company that does security work, they have to get permission from the interior ministry.”

What’s most shocking is that Abdallah al-Thani has been widely accused of helping to spirit KSM out of Qatar in 1996, just as the FBI was closing in on him. Robert Baer, a former CIA supervisor in the region, contends in a 2003 memoir that the emir himself actually sanctioned tipping KSM. The staff of the 9/11 Commission, meanwhile, noted that the FBI and CIA “were reluctant to seek help from the Qatari government” in the arrest of KSM, “fearing that he might be tipped off.” When Qatar’s emir was finally “asked for his help” in January 1996, Qatari authorities “first reported that KSM was under surveillance,” then “asked for an alternative plan that would conceal their aid to Americans,” and finally “reported that KSM had disappeared.”


Giuliani’s lifelong friend Louis Freeh, the FBI head who talked to Giuliani periodically about terrorist threats during Giuliani’s mayoral years and has endorsed him for president, was so outraged that he wrote a formal letter to Qatar’s foreign minister complaining that he’d received “disturbing information” that KSM “has again escaped the surveillance of your Security Services and that he appears to be aware of FBI interest in him.”

Abdallah al-Thani remains a named defendant in the 9/11 lawsuits that are still proceeding in Manhattan federal court, but his Washington lawyers declined to address the charges that he shielded KSM, insisting only that he never “supported” any “terrorist acts.” Asked if Abdallah al-Thani ever supported any terrorists rather than their acts, his lawyer David Nachman declined to comment further. The Congressional Research Service report summarized the evidence against him: “According to the 9/11 Commission Report and former U.S. government officials, royal family member and current Qatari Interior Minister, Sheikh Abdullah (Abdallah) bin Khalid Al Thani, provided safe harbor and assistance to Al Qaeda leaders during the 1990s,” including KSM. While numerous accounts have named Abdallah as the KSM tipster, the report simply says that “a high ranking member of the Qatari government” is believed to have “alerted” KSM “to the impending raid.”

Freeh’s letter in 1996 highlighted the consequences of this government-orchestrated escape with a prophetic declaration, saying that the “failure to apprehend KSM would allow him and other associates to continue to conduct terrorist operations.” Indeed, had KSM, who was even then focused on the use of hijacked planes as weapons, been captured in 1996, 9/11 might well have never happened.

In other words, as incredible as it might seem, Rudy Giuliani—whose presidential candidacy is steeped in 9/11 iconography—has been doing business with a government agency run by the very man who made the attacks on 9/11 possible.


This startling revelation is not a sudden disclosure from new sources. It has, in fact, been staring us in the face for many months.

The Wall Street Journal reported on November 7 that one Giuliani Partners client the former mayor hadn’t previously disclosed was, in fact, the government of Qatar. Quoting the recently retired Bush envoy to Qatar, Chase Untermeyer, the Journal reported that state-run Qatar Petroleum had signed a contract with Giuliani Security “around 2005” and that the firm (of which Giuliani has a 30 percent equity stake) is offering security advice to a giant natural-gas processing facility called Ras Laffan. While the interior ministry wouldn’t confirm individual contracts, it did tell the Voice that Qatar Petroleum and security “purchasing” are part of its portfolio.

(The Journal story was followed by a similar piece in the Chicago Tribune last week, which revealed that Giuliani’s firm has also represented a complex casino partnership seeking to build a $3.5 billion Singapore resort. The partnership included “the family of a controversial Hong Kong billionaire who has ties to the regime of North Korea’s Kim Jong II and has been linked to international organized crime by the U.S. government.”)

The Journal story, however, didn’t go into detail about the unsavory connections that Giuliani had made in the Middle East. The Journal wrote that it learned about the Qatar contract after reading a speech that Untermeyer gave in 2006, when he said that Giuliani’s firm had “important contracts” in Qatar. In fact, Untermeyer—who returned to Texas when he stepped down as ambassador to join a real-estate firm partnered with the National Bank of Qatar—told the Houston Forum that Giuliani’s “security company” has “several” contracts in Qatar, and that Giuliani himself “comes to Doha [Qatar’s capital] twice a year.” Untermeyer’s wife Diana spoke at the same event about their daughter Elly, who she said “makes friends with all she meets—other kids, generals, sheikhs, and even our famous American visitors like former Mayor Rudy Giuliani, whom she deems ‘cool.’ ”

While it is true that Giuliani hasn’t disclosed the particulars of his Qatar business, he and others at the firm have been bragging about it for years, presumably on the assumption that mentioning good-paying clients is the best way to generate more of the same. Giuliani told South Africa’s Business Times in June 2006, for example, that he’d “recently helped Qatar” to transform Doha in preparation for the Asian Games, an Olympics- sanctioned, 45-country competition that occurred last December. He was in Johannesburg in part to offer to do the same before South Africa hosts the 2010 World Cup. “They had the same concerns as you,” he said at the Global Leaders Africa summit, “and I helped them pull things together. You can see not only how they pulled together physical things that were necessary, such as stadiums, but how they used the plan to improve their security.”

Richard Bradshaw, a consulting-services manager for an Australian security firm that played a two-and-a-half-year role in planning the Asian Games, says that “the ministry of the interior is essentially the chief ministry in charge of internal security”—for the games and other matters. Bradshaw says that he “heard the name of Giuliani Partners quoted in this town,” but that he knew nothing directly about their Asian Games involvement, adding that “maybe they just dealt with high levels in the government.” But Hassan Sidibe, the interior ministry’s press officer, says that a special organizing committee handled contracts for the Asian Games and that “the minister of interior was part of that committee.”


In addition to specific references to the natural-gas and Asian Games deals, Giuliani Partners has hinted at broader ties to Qatar. A New York Post story in January that was filled with quotes about Giuliani Partners’ clients from Michael Hess, a managing partner at the firm, reported that Giuliani himself “has given advice from Qatar to Spain.” Another Post story in May reported that Giuliani had made lucrative speeches in 30 countries—which he does in addition to his Giuliani Partners business—and named Qatar as one of those locations. A New York Times story in January, also laced with Hess quotes, reported that Pasquale J. D’Amuro, the ex-FBI chief who replaced Bernard Kerik as the head of Giuliani’s security division, “has traveled to meet with executives in Japan, Qatar, and other nations, often focusing on clients who seek the firm out for advice on how to protect against a terrorist attack.” Any of these dealings in Qatar that involved security would necessarily connect the firm with the interior ministry run by Abdallah al-Thani.

Peter Boyer, whose New Yorker profile of Giuliani appeared this August, quoted D’Amuro and Giuliani about the expertise and work of Ali Soufan, an Arabic-speaking Lebanese-American who also left the FBI to become the international director of Giuliani Security. Both D’Amuro and Giuliani said that Soufan, the lead investigator in the bombing of the U.S.S. Cole in 2000, had been spending “most of his time” in a Persian Gulf country that is a Giuliani client. Boyer didn’t identify the country, but another source familiar with Soufan’s assignment has confirmed that Soufan has, until recently, been based in Qatar. “The firm has helped the country with training, and with a revamping of its security infrastructure,” Boyer wrote. “The locale is an ideal listening post for someone whose expertise is unraveling the tangle of international terror.” Soufan was the firm’s point man with the royal family, according to another former FBI operative, even providing security advice for Her Highness Sheikha Mozah bint Nasser Al Missned, the emir’s favorite of his three wives.

Gulf States Newsletter, a respected news publication in the region, used similar language this October to describe the firm’s business in Qatar. Closing a lengthy piece of boosterism that assessed who was getting security contracts in Qatar, the newsletter cited a sole example “in the field of high-end consultancy,” namely what it called “well-partnered players like Giuliani Associates.” It said the firm had, “through a combination of luck and good positioning, become trusted partners” of the Qatari government. The “key lesson for any security sector incomer,” concluded the newsletter, is that “in Qatar it is necessary but not sufficient to be technically competent. As ever, it may be who you know, not what you know, that wins the day.”

Despite this ample supply of evidence, Sunny Mindel, the firm’s spokeswoman, denied in a November 11 Post story that Giuliani Partners “had any ties to Qatar Petroleum.” Mindel may have meant that the company’s business in Qatar had come to an end, parsing her verbs carefully, or she may have been denying that the contract came directly from the petroleum entity, suggesting that the government itself paid for this security advice. Mindel’s elusive answers are consistent with other efforts by the company to conceal the Qatar deals, even as Giuliani and others have occasionally talked openly about them. These efforts suggest that Giuliani is aware the association could prove disquieting, even without the embarrassing connection to the notorious KSM.

The best example of how Giuliani’s Qatar ties could prove disastrous for his presidential candidacy occurred a year ago, at the opening of the Asian Games on December 1, 2006, eleven days after Giuliani registered his presidential exploratory committee. Ben Smith, then of the Daily News and now with Politico.com, obtained a detailed internal memo from the Giuliani campaign in January, and it contained a travel schedule. Smith wrote that “Giuliani spent the first weekend in December in Doha, Qatar, at the Qatari-government sponsored Asian Games, on which he had reportedly worked as a consultant.” Giuliani’s calendar indicates that he arrived in Qatar on December 2 and left on December 3, heading to Las Vegas to address the state’s GOP. The Qatari government spent $2.8 billion to host the games, building a massive sports complex with security very much in mind. “We have 8,000 well-trained security members and the latest technology that were used in the Olympics,” said a security spokesman.

On December 1, the day before Giuliani arrived, the emir’s special guests at the lavish opening, attended by 55,000, were Iranian president Mahmoud Ahmadinejad, Palestinian prime minister Ismail Haniyeh and Syrian president Bashar Assad, all of whom are Qatar allies and were pictured sitting together on television. Giuliani’s presence that weekend wasn’t noted in news coverage at the time, even though his firm had apparently provided security advice for an event that included Ahmadinejad, whose country Giuliani has since promised to “set back five years” should it pursue its nuclear program. Ahmadinejad was later assailed by opponents in his own country for watching a female song-and-dance show that was part of the opening extravaganza. The presence of Hamas’s Haniyeh, who attended private meetings with the emir while Giuliani was in Qatar, might also have been embarrassing to Giuliani, since Qatar agreed to pay $22.5 million a month to cover the salaries of 40,000 Palestinian teachers, as well as to create a bank in the territories with a $50 million initial deposit. This break in the boycott against Hamas orchestrated by the U.S. and Israel prompted a stern rebuke from the State Department on December 5.


While Qatar’s emir has allowed the U.S. to locate its central command and other strategic facilities in the country, including the largest pre-positioning base in the region, his government was also the only member of the U.N. Security Council to oppose the July 2006 resolution that called on Iran to suspend all nuclear research and development activities. Indeed, Iran and Qatar share the North Field/South Pars natural-gas deposit off the Qatari coast, the very one that includes the Giuliani-advised Ras Laffan project. Similarly, the emir praised the Hezbollah resistance in Lebanon during the 2006 war with Israel, calling it “the first Arab victory, something we had longed for,” and he visited southern Lebanon after the war, meeting with families and giving away $250 million to rebuild destroyed homes. While Qatar had allowed Israel to open a small trade mission in Doha amid much fanfare in the mid-’90s, it had virtually shut down the office by 2000, and the last of the Israeli envoys left in 2003.

Also, Saddam Hussein’s wife, Sajida Khayrallah Tilfa, lives in Qatar, in defiance of an Interpol arrest warrant and her appearance on the Iraqi government’s 2006 most-wanted list for allegedly providing financial support to Iraqi insurgents, according to an October 2007 report by the Congressional Research Service. Invited with her daughter to Qatar by the deputy prime minister, she has not returned to Iraq despite an extradition demand issued months before Giuliani’s December visit.

Another potentially uncomfortable Giuliani visit to Doha also stayed under the radar. On January 16, 2006, Giuliani visited the Aspire Academy for Sports Excellence and the Aspire Zone, the largest sports dome in the world, built for the Asian Games as well as future international events (including the Olympic Games, which Qatar hopes to host someday). Giuliani praised the academy, which he called “a fantastic achievement,” adding that he was “looking forward to seeing it develop in the coming years.” Aspire’s communications director says that Giuliani “spent more than an hour and a half” touring its facilities, adding that the former mayor “spoke very eloquently.” But even putting his stamp of approval on such apparently benign facilities could come back to bite Giuliani: The academy, a $1.3 billion facility designed to move Qatar into the top ranks of international soccer, has been denounced in unusually blunt terms by Sepp Blatter, the head of world football’s governing body, FIFA. Blatter called Qatar’s “establishment of recruitment networks”—using 6,000 staff members to assess a half-million young footballers in seven African countries and then moving the best to Qatar—”a good example of exploitation.”

The Aspire facilities were part of the Asian Games security preparations that Giuliani told the Business Times his firm had participated in planning, since the dome allowed 10 sports to be staged simultaneously under one roof. But even the notice of Giuliani’s January appearance, which was posted on the website of an English newspaper there, made no mention of his consulting work for the government. The ex-FBI source says that Giuliani’s secretive security work in Qatar—which also includes vulnerability assessments on port facilities in Doha and pipeline security—would necessarily have involved the interior ministry.


A case officer in the CIA’s Directorate of Operations for nearly 19 years, Robert Baer—who calls Qatar “the center of intrigue in the Gulf”—laid out the KSM escape story in his 2003 book,
Sleeping with the Devil. His source was Hamad bin Jasim bin Hamad al-Thani, a close relative of the emir who was once the finance minister and chief of police. (An exile living in Beirut in 1997 when Baer began a relationship with him, Hamad al-Thani has since been captured by Qatar and is serving a life sentence for attempting to overthrow the emir.) Hamad told Baer that Abdallah al-Thani, whom he described as “a fanatic Wahhabi,” had taken KSM “under his wing” and that the emir had ordered Hamad to help Abdallah. He gave 20 blank Qatari passports to Abdallah, who he said gave them to KSM. “As soon as the FBI showed up in Doha” in 1996, the emir, according to Hamad, ordered Abdallah to move KSM out of his apartment to his beach estate, and eventually out of the country. “Flew the coop. Sayonara,” Hamad concluded.

Baer’s account of how KSM got away is the most far-reaching, implicating the emir himself. Since KSM “moved his family to Qatar at the suggestion” of Abdallah al-Thani, according to the 9/11 Commission, and held a job at the Ministry of Electricity and Water, Baer’s account is hardly implausible. The commission even found that Abdallah ah-Thani “underwrote a 1995 trip KSM took to join the Bosnia jihad.” Bill Gertz, the Washington Times reporter whose ties to the Bush White House are well established, affirmed Baer’s version in his 2002 book, Breakdown. Another CIA agent, Melissa Boyle Mahle, who was assigned to the KSM probe in Qatar in 1995, said that she tried to convince the FBI to do a snatch operation rather than taking the diplomatic approach, concerned about “certain Qatari officials known for their sympathies for Islamic extremists.” Instead, “Muhammad disappeared immediately after the request to the government was made,” making it “obvious to me what had happened.” Louis Freeh’s book says simply: “We believe he was tipped off; but however he got away, it was a slipup with tragic consequences.” Neither Mahle nor Freeh named names.


Counterterrorism czar Richard Clarke so mistrusted the Qataris that he plotted an extraordinary rendition, but the FBI, CIA, and Defense Department said they couldn’t pull it off. Then he asked the ambassador to “obtain the Emir’s approval for a snatch, without the word getting to anyone else.” Despite assurances that “only a few senior officials knew about our plan, KSM learned of it and fled the country ahead of the FBI’s arrest team’s arrival,” Clarke concluded in his book, Against All Enemies. “We were of course outraged at Qatari security and assumed the leak came from within the palace.” Clarke noted that “one report” indicated that KSM had evaporated on a passport supplied by Abdallah al-Thani’s Islamic-affairs ministry. When Clarke was told by the Los Angeles Times in 2003 that Abdallah had been elevated to interior minister, he said: “I’m shocked to hear that. You’re telling me that al-Thani is in charge of security inside Qatar. I hope that’s not true.” Having just left the Bush administration, Clarke added that Abdallah “had great sympathy for bin Laden, great sympathy for terrorist groups, [and] was using his personal money and ministry money to transfer to al Qaeda front groups that were allegedly charities.” The Los Angeles Times quoted “several U.S. officials involved in the hunt” for KSM who fingered Abdallah as “the one who learned of the imminent FBI dragnet and tipped off Muhammad.”

Even earlier than the Los Angeles Times report, ABC News’ Brian Ross reported that Abdallah had warned KSM, citing American intelligence officials, and added that KSM had left Qatar “with a passport provided by that country’s government.” Ross didn’t limit his broadside to Abdallah, saying that “there were others in the Qatari royal family who were sympathetic and provided safe havens for Al Qaeda.” A New York Times story in 2003 said that Abdallah “harbored as many as 100 Arab extremists on his farm.” The story also quoted Freeh as saying that KSM had “over 20 false passports at his disposal” and cited American officials who suspected Abdallah of tipping him off. However, the Times story also quoted a Qatari official who claimed that Abdallah “always provided support for Islamic extremists with the knowledge and acceptance of Qatar’s emir.”

Indeed, the Times reported in another 2003 story that after 9/11, KSM was said by Saudi intelligence officials to have “spent two weeks hiding in Qatar, with the help of prominent patrons.” Abdul Karim al-Thani, a royal family member who did not hold a government post, was also accused in the story of operating a safe house for Abu Massab al-Zarqawi, who later became the face of the early Iraqi insurgency but was depicted then as an Al Qaeda operative moving from Baghdad to Afghanistan. Abdul al-Thani, according to a senior coalition official, provided Qatari passports and a million-dollar bank account to finance the network.

Other connections between Qatar and terrorism have been reported in the press. Newsweek identified an Iraqi living in Doha and working at Abdallah’s Islamic-affairs ministry as being detained by Qatar police because of the ties he had to 9/11 hijackers—yet he was released even though phone records linked him as well to the 1993 bombers and the so-called “Bojinka” plot hatched in Manila to blow up civilian airlines. A Chechen terrorist financier harbored in Qatar was assassinated there by a Russian hit squad in 2004. Yousef Qardawi, a cleric with a talk show on Al Jazeera and ties to the emir, issued a fatwa against Americans the same year. An engineer at Qatar Petroleum carried out a suicide bomb attack at a theater popular with Westerners in early 2005, killing one and wounding 12.

Finally, the long-smoldering question of whether Osama bin Laden played a role in the 1996 bombing of the American barracks at Khobar Towers—funneling 20 tons of C-4 explosives into Saudi Arabia through Qatar—resurfaced in a story based intelligence reports and endorsed by none other than Dick Cheney. In 2003, Steven Hayes of The Weekly Standard wrote a celebrated story based on a 16-page Defense Department intelligence assessment. The thrust of the story was to advance the administration’s thesis about Al Qaeda’s ties to Iraq, but Hayes also found that in a January 1996 visit to Qatar, Osama bin Laden “discussed the successful movement of explosives into Saudi Arabia, and operations targeted against U.S. interests” in Khobar and two other locations, “using clandestine al Qaeda cells in Saudi Arabia.” The 2007 CRS study says that it is “unclear” if those conversations were “related to the preparations for the June 1996 attack” that killed 19 servicemen, but that the “Qatari individual” who reportedly hosted bin Laden for these discussions was none other than Abdallah al-Thani. Bill Gertz and others have been writing for years that the path to the carnage at Khobar led through Doha.

The Khobar attack closely followed an unsuccessful coup attempt against the emir on February 20, 1996, which Qatar officials, in later criminal prosecutions, formally accused Saudi Arabia of fomenting. Analysts in the region have suggested that any use of Qatar as a launching pad for the Khobar attack so soon after the coup attempt was likely to have been approved at the highest levels of the government. In October 1996, within months of both the KSM escape and the Khobar bombing, Abdallah al-Thani got his first major promotion, elevated by the emir to Minister of State for Interior Affairs, a cabinet position.

All of this evidence of Qatar’s role as a facilitator of terrorism—reaching even to the emir himself—was reported well before Giuliani Partners began its business there “around 2005.” Yet even the New York Times story, filled with quotes from Giuliani’s friend Freeh, didn’t deter him. Nor did the firm’s retention of D’Amuro and Soufan, two ex-FBI counterterrorism experts who certainly knew the terror landscape of Qatar.

Soufan, in fact, was the primary investigator who assembled the case against the terrorists who bombed American embassies in Africa in 1998. And the testimony in that 2001 trial established that the Qatar Charitable Society, a nongovernmental agency that is said to “draw much of its funding from official sources,” helped finance the attack. Daniel Pipes, a foreign-policy adviser to the Giuliani campaign, has branded the Qatar Charitable Society “one of bin Laden’s de facto banks.” Reached at home and asked about his work in Qatar, Soufan declined to comment.

Even the revelations about Khobar Towers didn’t slow Giuliani down, though he’s subsequently made the bombing a central feature in his stump-speech litany of the Clinton administration’s failings. Giuliani also ignored an official State Department report on terrorism for 2003—released in mid-2004, just before his firm began doing business in Qatar—which said that the country’s security services “monitored extremists passively,” and that “members of transnational terrorist groups and state sponsors of terror are present in Qatar.” The report added that Qatar’s government “remains cautious about taking any action that would cause embarrassment or public scrutiny” when nationals from the Gulf countries were involved. (Later reports issued by the new secretary of state, Condoleezza Rice, moderated the department’s Qatar assessment.) Also in 2004, Michael Knights, an analyst at the Washington Institute who works with the Defense Department, wrote that a “Wahhabi clique” tied to extremists “is still in charge [in Qatar], and seeded the security establishment with personnel of their choosing.” But even this strong, specific warning didn’t deter Giuliani Partners’ interest in Qatar.

Presumably, Giuliani’s rationale for doing business there was that Qatar had become an American ally, hosting up to 40,000 troops. The CRS report put the complexity of the relationship well, noting that American concerns about Qatari support for terrorists “have been balanced over time by Qatar’s counterterrorism efforts and its broader, long-term commitment to host and support U.S. military forces.” In a footnote, the CRS report adds that the emir may finally be downplaying Abdallah al-Thani’s influence, even as he reappointed him this year. The U.S. government may have to be satisfied with that suggestion of progress; it does not have limitless military options in the Middle East. (The emir, for his part, once reportedly explained his willingness to host U.S. forces by saying: “The only way we can be sure the Americans will answer our 911 call is if we have the police at our own house.”)

Giuliani Partners, however, has a world of choices, quite literally. Some American companies who do business in Qatar, like Shell and ExxonMobil, have to chase the gas and oil wherever they are. But a consulting company with instant name recognition like Giuliani’s—and which claims to carefully vet its clients—can be both profitable and selective. Moreover, it’s the only American company known to be providing security advice to Qatar; the rest hail from Singapore, Australia, and France. A company headed by a man who has known that he would make this presidential run for years—and with 9/11 as its rationale—could have chosen to make his millions elsewhere. Especially a candidate who divides the world into good guys and bad guys, claims that this war is a “divine” mission, and shuns complexity. For that kind of a candidate, Qatar may become one Giuliani contradiction too many.

 

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Mario Cuomo: The Governor Looks the Other Way

It’s time we started taking Mario Cuomo seriously.

He’s in his sixth year as governor, and mamma stories, as rich as they are, just won’t wash anymore — at least not as a substitute for governance. The four-year presidential tease of the Great Liberal Hope is over; an ethnic northeastern governor with a record is the nominee. The disenchanted of this state — the homeless, tenants, environmentalists, minorities, and reformers — can’t afford more schmaltzy personality profiles that devote a few buried paragraphs to Mario Cuomo’s government. It’s time to judge him for who he is and what he is doing, rather than forever anticipating what he may become.

This is the story of one test of Mario Cuomo’s government: its ethics. The governor has set a rather high moral standard for himself. He says he is inspired by no less than Saint Thomas More, who was executed for a principle. Son Andrew Cuomo, who at 30 is the only man Mario Cuomo actually listens to, has been attracting news attention for years about the ties between his booming law practice and his father’s governments. He practices in a Park Avenue office under a picture of Thomas More.

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More had a word or two for moral miscreants. “The air longs to blow noxious vapors against the wicked man. The sea longs to overwhelm him in its waves, the mountains to fall upon him, the earth to spilt open beneath him, hell to swallow him up after his headlong fall…” The wicked don’t drive Mario Cuomo quite as mad. Indeed, as the six episodes in this story demonstrate, he is gracious in the face of wrongdoing, even when committed by those with whom he has intimately shared his public trust. Loyalty is also a More virtue, but in these tales, Cuomo takes it to perverse lengths.

Documented here is a record of Cuomo indifference to the grave ethical errors of several high state officials, ranging from longtime Cuomo confidant Al Levine, who twice helped set up companies in his daughter’s name that indirectly did business with the state agency he worked for, to onetime Battery Park Authority chairman Robert Seavey, the Cuomo appointee who formed an upstate business partnership with a developer seeking designation on a Battery Park site.

This two-part series starts with the takeover of a seemingly mundane state agency, the Thruway Authority, by Levine and Hank Bersani, another Cuomo aide who’d been with him for a decade. It details their apparent attempts to turn the Authority into their own personal toll booth, and their determined support of a new Thruway exit seemingly designed to benefit a major Cuomo contributor. The final episode this week deals with the same Cuomo contributor’s attempt to secure a lucrative state lease. Three Cuomo officials — Seavey, OGS Commissioner John Egan, and State University Construction Fund chairman Sheldon Goldstein — play disturbing roles in the exit ramp or lease tales.

In each of the instances that will be described this week and next week, Mario Cuomo emerges as a man who empowers sleaze, watches in silence when news of it surfaces, and then, if pressed, publicly forgives it. Even Cuomo’s admirers have long found his tolerance for the tawdry as curious as it is consistent; it clashes with his studied monasticism. He has put himself on a contemplative hill, revering “the law” while sectors of his government slide toward the sewer.

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Under the glare of an aroused media after the first suicide attempt of Donald Manes, Ed Koch has had to answer for his government’s ties to and handling of the less-than-sublime. Well, Mario Cuomo has his own Victor Botnicks. His are less notorious, mostly because they and the governor who appointed and excused them have been protected by the Albany cocoon, operating daily 180 miles outside the range of city cameras.

While Cuomo will not discuss these issues, his secretary, Gerry Crotty, his counsel, Evan Davis, his son, Andrew, and other advisers will. They make some good points for him, and these arguments should not be a footnote to this story.

The Cuomo advisers point out that he took on the legislature in 1987 to fight for an ethics bill. He did, it got dirty, and the governor stood his ground. He vetoed a bill and forced them to make it better. It is a fact that the performances of assembly speaker Mel Miller and senate leader Warren Anderson have frequently made Mario Cuomo look saintly; but this story is not a course in comparative ethics.

Andrew describes a father who at a gut level would not broach a wayward turn. He has his own tales — about the governor dispatching him in a helicopter on a Saturday morning to a park retreat when they learned that two high officials had brought their wives there on a weekend lark at state expense. He recounts how the governor gathered lists of the state’s summer employees and compared them with the names on his own executive chamber payroll, looking for relatives who might be getting a well-placed perk.

Andrew, whose own virtues include the fact that the private HELP group he founded for the homeless may build more permanent housing than his dad’s government, tells these stories with conviction. In the end, though, Andrew’s anecdotes only make the governor’s, and his own, conduct in these tales even more inexplicable. They are apparently quite willing to resist their own finer instincts.

I asked Evan Davis three times to name a single personnel action by the governor that sent a message that he will not tolerate unethical conduct, even if that conduct does not lead to a criminal indictment. Davis kept dodging the question. The governor missed the essence of More — who spit in a king’s eye rather than acknowledge his illicit marriage, even though the king was his friend. Sometimes a moralist has to be mean.

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Al Levine’s Thruway Dowry

When Mario Cuomo was appointed secretary of state by Governor Carey and assumed his first public office in 1975, he began a 12-year relationship with a savvy former Air Force major who’d already been working at state for years, Al Levine. Except for a brief stint during the second Carey term, when Levine was employed by another state agency, he would work directly for Cuomo until his abrupt resignation as Thruway director last November.

Levine was so close to Cuomo that during the dark days of 1981, when Cuomo was lieutenant governor and his chief of staff was arrested for stealing the paychecks of fictitious employees, he asked Levine to assume the top staff job. Levine continued to run Cuomo’s office throughout the gubernatorial campaign of 1982, and he and his wife handled the computerized mailings to campaign donors out Levine’s suburban home. When the new governor took office in 1983, Al Levine, a high school graduate who’d worked his way up the military ranks as an enlisted man, was given the title of administrative director of the executive chamber, making him a centerpiece of the new power structure on the second floor of the Capitol building.

In March 1984, Cuomo made Levine executive director of the Thruway Authority, a traditional patronage haven. Levine came into the Authority shortly after a new Cuomo chairman, Hank Bersani, who also had been with Cuomo since the start of the governor’s public career.

Neither Levine nor Bersani had transportation, engineering, or even top-level managerial backgrounds. But the two did share a similar, seedy élan: the white-haired, deal-talking Bersani, who’d risen from the street politics of grimy Syracuse, and the burly, tattooed Levine, who’d ingratiated himself with the Cuomo clan, particularly the governor’s wife, Matilda, over the years. On one wall in his Thruway headquarters office Levine hung a framed copy of the governor’s speech at the 1984 Democratic convention. On the other wall he displayed half a dozen photos of his favorite trotters.

Though ensconced after 1984 at his own public agency for the first time, Levine assiduously maintained his ties to the state’s first family. That year he set up the Executive Mansion Preservation Society, a private, prestigious corporation charged with raising funds to refurbish the Albany mansion that the Cuomos rarely left. Levine met frequently with Matilda Cuomo to plan the renovations, and managed the $850,000 collected from wealthy donors like Harry Helmsley ($25,000). He used the Thruway Authority’s accounting firm to manage the books and his own lawyers to incorporate and represent the society.

When Thruway chairman Bersani had to resign suddenly in June 1987 — provoked by revelations about his criminal past — Cuomo once again turned to Levine, describing him publicly as “a trusted old friend” and asking him to take Bersani’s title while retaining his own. The combination would have made Levine the first simultaneous chairman and director of the Authority. But six days after Bersani’s resignation, a letter signed “Concerned thruway employees” was delivered to key senate Republicans. The letter leveled detailed charges about Levine’s involvement in a computer services firm that provided software to engineering companies under contract with the Thruway Authority.

As soon as the governor’s office formally submitted Levine’s nomination to the senate in mid-June, Gerry Crotty, then the governor’s counsel, got a copy of the anonymous note from a legislative source, and immediately passed it on to Cuomo’s in-house inspector general, Joe Spinelli, who began an investigation. Levine withdrew his nomination a few days later, labeling the charges in the anonymous letter “totally unfounded.”

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The next day Cuomo urged the anonymous tipster to come forward, promising his “personal protection.” He also warned that the issue should not be blown out of proportion. “Let’s not elaborate this to unreality,” he said. The IG’s investigators, however, went to the Authority immediately and found willing witnesses — including the two top Carey holdovers there, deputy director James Martin and counsel Bob Farrell, both of whom were at odds with Levine and had been identified by insiders as possible authors of the letter.

Levine took sick leave for a week while the charges exploded around him, mostly in upstate newspapers, but the decision was made to stick with him. Cuomo told reporters: “I choose to believe that he is a man of the highest quality and I have seen no evidence that proves otherwise. I know him. I love him. He’s a good fellow. The process will work and it will prove he did nothing illegal or unethical.”

But while Levine remained director, Cuomo had to come up with another candidate for chairman. Former Power Authority chairman John Dyson turned the offer down when he couldn’t get assurances from Cuomo that he could replace Levine with his own director. “I knew that Al Levine had to go,” Dyson said later. “I had heard he might have ethical problems,” referring to a period before news of the IG probe broke.

Cuomo then turned to Bill Hennessy, the former Carey transportation commissioner and ex-state Democratic Party chief. Hennessy’s first act as Thruway chairman was to fire Martin and Farrell. Levine remained in charge for months, while the suspected whistleblowers were already out the door.

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Betasoft Bombshells

Looking over IG Joe Spinelli’s shoulder virtually from the inception, and questioning many of the same people approached by him, was the State Investigation Commission (SIC), the quasi-independent, anticorruption irritant that had dogged the Cuomo administration on many ethical cases in recent years. Also a recipient of the anonymous letter, the SIC took a temporary back seat to Spinelli, but the inevitability of its eventual report had to be a prod, pushing the IG probe. In the end, Spinelli came up with hard evidence of Levine’s misconduct, then laid the details of it out in a report bereft of meaningful conclusions.

In October, the report was referred to two state prosecutors, but Spinelli carefully told reporters: “This referral does not represent a finding with regard to possible violations of the law.”

Indeed, Spinelli’s written recommendation was that a prosecutor “review” the allegations “to determine if there is a basis to commence criminal proceedings” — a curious conclusion since that was ostensibly the purpose of his own probe. The highlights of Spinelli’s factual findings were:

● After determining that the Authority needed precisely the sort of software Betasoft would eventually offer, Levine set up the company and put together a small group of investors and directors, including his daughter Michelle, which met 30 times in Levine’s home during the two-year life of the firm. The four initial partners, in addition to Levine’s daughter, an employee of the state Parks Department, were also state employees long tied to Levine — two Thruway staffers, the computer chief in the governor’s office, and the deputy general manager of the State University Construction Fund. Levine’s wife incorporated the firm and opened its checking account, and Levine personally attended all its organizational and board meetings, offering advice and acquainting himself with all of the company’s business activities.

● Betasoft’s business was almost entirely based on the solicitation of engineering firms under contract or seeking contracts with the Thruway Authority. Even after Thruway staffer Cynthia Bloom became Betasoft’s chief operating officer, she remained at the Authority, reporting only to Levine and contacting potential Betasoft customers from Thruway offices even though the customers were Thruway contractors. According to Bloom, Levine even gave her computerized lists of Thruway consultants to solicit. In three instances he brokered discussions between Thruway contractors and Betasoft, playing a central role in the company’s first sale. Though 30 per cent of the Authority’s consultant payments went to the four engineering companies that did business with Betasoft, Levine, who single-handedly selected the consultants for the Authority, talked of going to work for Betasoft when he left state government.

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The governor refused to comment on the findings, but his new Authority chairman Hennessy concluded: “There’s no criminality of any kind even inferred here.” Hennessy said Levin was “hurt” by the Betasoft controversy, “but he’s fine. He has no misgivings about his role in it and he knows perfectly well this will have to play itself out.” Levine’s criminal attorney, Richard Meyers, said Levine had viewed his participation in Betasoft as a “good idea for his child.” In what some saw as a reference to Mario Cuomo’s role in setting up the Manhattan law firm that employs his son, Andrew, and represents clients that do business with the state, Meyers said: “Presidents and governors do it.”

The 59-year-old Levine was on sick leave when the report was released, and had already quietly submitted his retirement papers. He was awarded a discretionary disability pension, meaning that his retirement was technically not due to the findings of the Spinelli report, but to a heart condition. Combined with his federal pension, Levine began collecting $44,480 a year in benefits.

The only disciplinary action to result from Spinelli’s findings involved George Kash, a Levine protégé and $58,000-a-year data processing supervisor in the governor’s office. A shareholder and active director in Betasoft, Kash was orally reprimanded by Cuomo aide Hank Dullea for not seeking clearance from the governor’s counsel about “the appropriateness of his outside business activity.” Though the governor’s press office once claimed that Kash would also be transferred to another state agency, he still runs Cuomo’s computers.

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The SIC took another five months before releasing its own report, which drew the conclusions Spinelli had hesitated to make. “The Commission has concluded,” said the April 1988 report, “that Levine crossed this line between unethical and criminal conduct,” suggesting that upstate federal prosecutor Fred Scullin “consider the merits and feasibility of a prosecution for extortion.” The unequivocal SIC judgment was that Levine’s “conduct falls within the Hobbs Act definition of extortion,” a reference to the federal criminal statute.

The Commission was also tough on Levine’s state-employed partners, blasting Kash because he knew that the company was owned by Thruway employees, yet sold software to Thruway consultants, and criticizing the Thruway employees for “violating the Code of Ethics” and “conducting Betasoft work during Thruway work hours.” But the report was harshest in its description of Jay Handwerger, the counsel and number-two man at the State University Construction Fund. Though the SIC assailed his “poor judgment” in “overlooking the ethical issues,” Handwerger wasn’t even admonished. The governor’s counsel, Evan Davis, says that Cuomo, who appoints the Fund’s board, is powerless to act.

All the governor would say about the SIC findings was that they were “consistent” with Spinelli’s. He expressly rejected the legislative recommendations made by the commission concerning conflicts of interest, saying that the changes in law sought could be adopted by regulation. John Baniak, a Levine protégé, was inserted in his place at the helm of the mansion preservation society, and as the new number-two man on the staff of the Thruway Authority.

The SIC decision to refer the case to the feds was more likely to lead to a prosecution than the governor’s earlier decision to send Spinelli’s report to the office of Albany D.A. Sol Greenberg — a burial ground for public corruption cases. Even though Greenberg had not questioned a single witness named in Spinelli’s report, he had already publicly dismissed the possibility of any criminal case against Levine.

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Second Time Around

Almost as a footnote to its report, the SIC uncovered an early warning of Levine’s propensity for this sort of conflict of interest. The Commission found that Betasoft was the second time Levine had helped set up a company to do indirect business with the state agency he worked for, and the second time he’d used his daughter as a shareholder.

The first time was in 1980, when Levine was with the state’s student financial aid agency, the Higher Education Services Corporation (HESC), working with another protégé, HESC’s executive vice-president, Michael Cruskie, a computer whiz with a straight-arrow reputation.

The SIC reported that Cruskie, Levine, who was HESC’s director of system support development, and three other top officials of HESC combined to form Charter Account Systems Inc. expressly to sell computer services to the same lending institutions that were participating in HESC’s loan programs. Indeed, one service marketed by Charter to the banks, sometimes by Cruskie, was the administration of their student-loan portfolios, including the filing of reports with HESC. While Cruskie and the others invested directly, Levine’s stock was held by the then 19-year-old Michelle.

What the SIC did not examine was whether Levine’s role in this blatant conflict was known within the governor’s inner circle for years and ignored. In fact, it was, and the high-level indifference to Levine’s prior moral lapse may have been one of the factors that led him to believe he could get away with Betasoft.

The Cruskie/Levine affair was extensively described in a December 1981 memo by HESC counsel Gilbert Harwood, who concluded that the three Charter partners then still with HESC had “failed to meet” the ethical standards of the Public Officers Law. Harwood also noted that Levine had left HESC and had pulled out of the company when asked to ante up $7,500 on top of the initial $2,500 investment. “Insofar as Al Levine is concerned,” Harwood wrote, “inasmuch as he’s no longer with HESC, the issue as to him is moot.” As a result of the Harwood memo, Cruskie was required to sever his ties to Charter, and he claimed in a March 1982 letter that he was complying with that directive. Neither HESC nor Cuomo will answer questions about whether Levine’s involvement in Charter was known within the Cuomo inner circle at the time it surfaced in late 1981, when Levine was simultaneously taking over the management of Cuomo’s lieutenant governor’s office.

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On Levine’s recommendation, Cruskie was appointed Cuomo’s deputy commissioner of the Division of Criminal Justice Services in March 1983 (three months later Michelle Levine went to work for him as a project assistant). In the spring of 1984, he had to file his first financial disclosure report with the state’s Board of Public Disclosure, and the board’s counsel, Bennett Leibman, noticed that Cruskie had disclosed his membership on the Charter board, an apparent violation of a Cuomo order barring such corporate connections. Leibman wrote a memo to two disclosure board members — Michael Delgiudice, the governor’s secretary, and Gerry Crotty, his counsel — calling the Cruskie revelation to their attention. They instructed him to look further.

Leibman retrieved the Harwood memo and noticed Al Levine’s involvement. He wrote another note to Delgiudice and Crotty, reviewing the findings regarding Cruskie and mentioning Levine’s role. Both recall learning of Cruskie’s and Levine’s involvement, but add that they “don’t think” they told the governor. All they did was instruct Cruskie to step down from the Charter board, an automatic requirement under the governor’s regulations. Though Crotty conceded that Cruskie’s reported activities “bothered” him, no further action was taken against Cruskie.

When the Charter issue resurfaced as part of the SIC’s probe of Betasoft, Cruskie tried desperately to cover up the fact that he had never cut his ties to the company as required in 1982, even “fabricating” a stock certificate and lying before the Commission, according to the report. A perjury and obstruction of justice case against him has been referred to prosecutors. Earlier this year Cruskie suddenly resigned from Criminal Justice, and went to work at Charter.

Mario Cuomo has yet to make a single public comment about any of the HESC or Thruway conduct, or amend the last sweeping public endorsement he made of his old friend Levine. Neither has the newly installed leadership at the Thruway Authority passed a resolution or issued a statement acknowledging any wrongdoing and pointing toward a new way of doing business. State officials have made no policy or personnel changes directly attributed to either Levine affair.

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Loyalty for a Bagman

When Lee Alexander was elected mayor of Syracuse in 1969, Hank Bersani, the president of Syracuse Canada Dry and longtime Democratic kingmaker, was the electoral engineer. A few months later, shortly after Alexander began 16 consecutive years as mayor, Bersani, already in his 10th year as treasurer of the county party, started making kickback collections for Alexander from city contractors.

Appointed by Alexander to the Planning Commission, Bersani’s job was to make periodic deliveries of cash payoffs to Alexander — usually set at 10 per cent of the value of a city contract. When Bersani would arrive at City Hall for a private visit with the mayor, Alexander would open the top left-hand drawer of his desk and Bersani would drop the envelope into the drawer without saying a word. If Alexander got confused about who the cash was from, Bersani would write the name on one of the lift-up pads kids play with, and then erase the name with a yank of his wrist.

Before Alexander was fully indicted, this onetime president of the U.S. Conference of Mayors would collect millions in bribes, burying them as nearby as in a floor safe built under his laundry room, and as faraway as Panamanian bank accounts.

After fundraising for Alexander’s unsuccessful run for the Democratic nomination for the U.S. Senate in 1974, Bersani pulled back from the day-to-day tribulations of being an Alexander bagman, and went to work for Hugh Carey’s new secretary of state, Mario Cuomo. He would later claim he left because Alexander got too greedy, escalating his demands; but Alexander, backed by Bersani’s replacement as a bagman and a contractor, would later say Bersani was dropped because Alexander suspected him of shorting him on a $9,000 bribe. In any event, Bersani introduced his open-palm substitute — a business partner — to contractors at meetings in his bottling plant, and gradually drifted out of the kickback scheme.

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No one ever figured out just what Bersani’s public responsibilities were as a community affairs coordinator in Cuomo’s office, but he still did campaign fundraising and organizing in the Syracuse area for local and statewide campaigns, including Cuomo’s in 1978 and 1982. Eventually, his cousin Gene Bersani, a Syracuse lawyer whose firm did millions in city business and kicked back hundreds of thousands for it, also became an Alexander bagman. For years, Hank Bersani’s paychecks came from whatever office Cuomo held — switching from the secretary of state job to the lieutenant governor’s staff, and finally to the governor’s office, always holding the title of Cuomo’s area representative in Syracuse. He had long ago given up his troubled soda business and had been dabbling in local real estate, getting headlines when he stiffed city government for $50,000 in back property taxes. His 1984 appointment, at age 63, to head Cuomo’s Thruway Authority was a backroom toll-taker’s ultimate dream.

But a year after Bersani began his nine-year term at the authority, U.S. attorney Fred Scullin began the grand jury probe of Alexander. Finally, in August 1986, the FBI raided Alexander’s home, as well as the home of Bersani’s bagman successor, seizing records that detailed the scope of the extortion scheme. By September, even Bersani’s cousin was a cooperating witness. Though the writing was on the wall, Hank Bersani held out. Since his bag operations were supposedly more than 10 years old, the statute of limitations might have run on his crimes, unless he was charged under the RICO statutes. All the time he bartered with the government, Bersani remained Cuomo’s man at the authority, even though prosecutors soon discovered he had already brought some of the Alexander predators into a Thruway deal.

In early 1985 Bersani moved to declare a three-acre parcel owned by the authority, located just outside of Syracuse, to be surplus property. Thruway staff was mystified because the property was used to stockpile supplies and change authority truck tires. But Bersani pushed for an immediate sale of the property, staging an auction a month after the property was offered for sale and getting only one bid. The buyer, who paid the authority’s minimum price of $260,000, was a Syracuse developer who’d gotten $1.5 million in no-bid construction contracts from Alexander and had become a target of the grand jury probe.

Four months after Bersani signed over the deed, the developer sold the property to a national motel chain at a $400,000 profit. The developer used two brokers on the deal — Gene Bersani and an Alexander appointee on the city’s zoning board — and paid them $66,000. Federal investigators are still examining this deal.

The prosecutors, and the FBI, kept the governor’s office broadly informed about the case against Hank Bersani. While the FBI described Bersani’s bag operations in the conversations with state officials and predicted Bersani would be indicted, Scullin was more sanguine. Scullin says he told the state that Bersani was “a concern to us,” and that his office was “looking at certain things” involving Bersani very closely. Scullin says he gave state officials no advice about whether or not they should dump the Thruway chief, adding that he told them to “proceed as they normally do.”

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Bersani Hangs On

Mario Cuomo and his advisers decided that the sketchy information they were getting — combined with the uncertainty of Bersani’s indictment — justified retaining him until the picture cleared. One predictable lobbyist for this posture was Bersani himself, whose name was by then popping up in upstate news stories about the Alexander probe. He roamed the corridors of the second floor, assuring the governor’s staff that he believed he could emerge from the case unscathed. Though Scullin now says Cuomo’s office had no basis to take action against Bersani during this period, he did remain in a key public position for a year after the first revelations about his kickback activities, even though there were indications that he was engaged in suspicious land deals at the authority.

Scullin eventually sent an indictment of Bersani to Washington without a recommendation that it be approved. “I dropped it in their lap,” he says. Washington rejected a RICO conspiracy count, so Scullin gave Bersani limited immunity, meaning he couldn’t be charged for any crimes he testified about, but could still be nailed in the second phase of the probe that is still ongoing. Only when the Alexander indictment was imminent did Bersani finally resign.

Bersani’s June 1987 resignation was attributed in news stories to the fact that he had been drawn into the Alexander probe. All the governor’s office would say was that he’d quit for “personal reasons,” insisting that his departure had “nothing to do with the activities of the Thruway Authority.” But then, when Bersani was named as Alexander’s “bagman” in the July indictment, the mum Cuomo finally had to answer questions at a press conference. He called Bersani “a very, very fine individual who gave us public service” and insisted, “I know nothing but good things about him.”

When a reporter said that Bersani had been implicated in the Alexander case, a combative Cuomo challenged him: “He was not implicated. I wish you would not say that. He was not named in the indictment. I hope you don’t report that. Let’s get something clear. He was not named. He was not accused. He is not charged. Maybe he will be. I don’t know.” This was precisely the distinction Bersani had been making for months. But, in fact, though he hadn’t been indicted, he was named in the Alexander indictment and called a bagman.

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The Bersani issue largely disappeared until March 1988, when the Syracuse Herald American sent Cuomo copies of Bersani’s grand jury testimony, released by prosecutors as part of a presentencing memo about Alexander, who had pleaded guilty. The Herald American wanted Cuomo to examine the testimony to see if it warranted a state investigation of Bersani’s Thruway dealings, especially after the revelations that the owner of one of the companies that paid Alexander bribes was also a Thruway contractor who’d used Al Levine’s software company. A Cuomo press spokesman said he was too busy to read the testimony, and wouldn’t react to it.

Then, on the heels of this stubborn defense of Bersani, the governor named a new Thruway chairman with his own ethical baggage. Bersani’s replacement, Bill Hennessy, a longtime Albany pol, had been running his own consultant business since 1985, earning most of his money lobbying the state transportation department he’d once headed. When Hennessy took the authority job, he and the governor’s office issued an unusual statement, announcing that Hennessy would remain a 90 per cent partner in his lobbying firm, and the firm would still be permitted to lobby state agencies. Hennessy agreed, however, not to share in the profits the firm makes from its lobbying activities. (The $25,000-a-year part-time chairman, contacted by the Voice at his lobbying firm, said that his only outside earnings now are from the real estate appraisal end of his business and that he “hopes” he will be able to leave the authority soon and return to full-time lobbying activity. He acknowledged that other than a listing of his firm’s lobbying clients with the authority, the policing of this arrangement has been left to him.)

One current Hennessy client, on a $30,000-a-year retainer, is Unisys, the defense contractor whose New York lobbying operations are a focus of the Pentagon probes. The Hennessy firm began representing the company in 1987 and reported lobbying the executive chamber, the division of the budget, the comptroller, and the Office of General Services about the state’s procurement regulations concerning the purchase of information systems. Hennessy chose a former transportation department deputy, John Shafer, to replace Levine. Hennessy had appointed Shafer to his earlier transportation post, had subsequently lobbied him on behalf of private clients, and had even received a $13,000 consultant contract from Shafer.

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Highway to Heaven

In January 1984, when Mario Cuomo appointed Hank Bersani to the Thruway Authority, he also made one other Thruway announcement. In his State of the State address that month, the governor declared: “We will also explore a number of highway improvements elsewhere in the state that may have significant economic development value — for example, the construction of a new thruway interchange near Sterling Forest.”

It was an unusual statement for several reasons. The top management of the Thruway Authority had no idea it was coming, neither did the local Democratic assemblywoman who was trying to attract support for such a ramp. New exits off the thruway rarely occur. None have ever been built as a trigger to development; transportation and traffic needs have dictated thruway policy. In addition, an exit at Sterling Forest — the 30-mile tract of Orange County private timberland only an hour from the city — had been rejected repeatedly when raised in the 1960s and 1970s because of traffic studies that demonstrated it wasn’t warranted.

The other unusual feature of the Cuomo announcement was its specificity, not at all characteristic of the broad sweep of so grand a speech. Neither before nor since has the governor, the authority, or anyone else surveyed the 400 miles of thruway to determine where it might make sense to open exits for economic development reasons. Instead, the only consequence of the Cuomo declaration was that the new team at the authority — Bersani and Levine — made the Sterling Forest interchange a top priority.

Levine pushed the interchange relentlessly despite the opposition of his own planners and those in the Transportation Department. One top deputy recalls that when he raised numerous technical problems with the exit, Levine stopped making rational arguments and said simply, “This is heavy-duty political stuff.” Misrepresenting a neutral report on the exit as if it were an endorsement, the governor announced in June 1985 the submission of an end-of-the-session bill to authorize up to $7 million to build it. That July, Cuomo went to the Orange County Fair to sign the bill with great fanfare, despite the emergence of environmental issues that would’ve stalled a strip-miner.

The environmental questions began with the fact that the state identified the Sterling Forest tract, owned by the Home Group Insurance Company, as the prime potential beneficiary of the interchange, suggesting that several corporate research facilities be built on the timberlands, as well as a conference center and hotel. But at the same time, New Jersey’s and New York’s environmental agencies were contemplating acquiring portions of the tract, which lies in both states, for conservation and outdoor recreation purposes. So, in addition to the howls of environmentalists, the interchange managed to earn the enmity of the environmental agencies of both states.

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New Jersey was in a rage because the interchange-connected development of the timberlands would destroy its nearby reservoirs, the source of water for two million people. Even the New York environmental agency wrote repeated letters questioning the premises of the project, ultimately concluding that there was “little need for it other than speculative purposes,” and warning that the department “may be unable to make a positive finding” in favor of the exit.

Even as these issues publicly surfaced, Levine was quoted as insisting that the project was still one of the governor’s top priorities. It also attracted the leeches at the Cuomo Thruway Authority. The Authority awarded a no-bid design contract for the interchange to a consultant represented by a law firm that once included Gene Bersani and still did joint legal work with him. The consultant was then approached by Levine, who suggested they use Betasoft to handle their computer services.

One active developer in the region is Shelly Goldstein, a tough-talking, Rockland County-based owner of luxury condos and federally subsidized apartment complexes. Goldstein, who has personally given $49,000 to Cuomo campaigns, was one of the governor’s largest individuals donors when he was scratching for money in the struggle against Ed Koch in 1982.

At that time, Goldstein was also the most important client of the small Manhattan law firm that Cuomo’s longtime aide Jerry Weiss had set up, at Cuomo’s request, as a possible nesting place should Cuomo lose the gubernatorial race. Weiss also became a Goldstein partner in a major real estate deal, and candidate Cuomo went out to a Rockland golf outing hosted by Goldstein to raise contributions for the campaign. Over the years Cuomo became friendly with the flashy 59-year-old Goldstein, who drives a new silver Mercedes convertible, dresses “Miami Beach,” and, at one point, dyed his hair jet black.

Once Cuomo became governor, he appointed Goldstein to the chairmanship of the State University Construction Fund. Goldstein’s son Jeffrey began getting contracts to manage state housing projects. Neither Goldstein nor the governor will answer questions about whether they ever discussed the interchange; Weiss told the Voice he never had anything to do with the project.

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Goldstein’s Land Grab

What’s clear is that Shelly Goldstein has owned property in Orange County that would benefit from the interchange for 20 years, and that he began to develop a 30-store shopping mall on a 28-acre site in the Town of Chester shortly after the new exit was announced. Goldstein also bought a 160-acre site owned by the International Nickel Corporation (INCO) and his own environmental impact statement found that the development of this site would be enhanced by the interchange. Most importantly, Goldstein submitted a $35 million bid in an unsuccessful attempt to acquire the Sterling Forest tract itself, principally for the same sort of luxury housing he planned to build on the INCO site.

By the time Goldstein bid on the Sterling Forest property in 1986, however, he was no longer represented by Weiss, who’d abruptly quit the practice of law in late 1984. Andrew Cuomo, who had worked summers at the Weiss firm while in law school and joined as a full partner in 1985 at age 26, and his then girlfriend, partner Lucille Falcone, had taken over the banking and real estate interests of Shelly Goldstein. The relationships that developed were so close that Goldstein placed Andrew Cuomo on the board of a Union City, New Jersey bank as part of a settlement that permitted the bank’s management to avoid a Goldstein takeover attempt, and did the same for Falcone at the Savings Bank of Rockland, where Goldstein is a major shareholder.

At one point in 1986, the Sterling Forest acquisition was clearly the biggest deal in Andrew Cuomo’s life. He was not merely representing Goldstein, as he did on two Rockland co-op conversion plans filed with the state attorney general’s office; Cuomo was scheduled to get both legal and real estate brokerage fees on the sale, and Goldstein was going to allow him to retroactively invest those fees as a partner in the purchase.

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Goldstein and Cuomo, who ran his father’s two gubernatorial campaigns and was a special assistant to the governor during the early days of the administration, had another partner in the venture with powerful state ties — Bob Seavey, chairman of the state’s Battery Park City Authority. Seavey, 61, a developer of subsidized housing projects in the city, had been appointed by Cuomo in 1984 as the part-time head of the Battery Park board. Seavey’s son Avery later became a partner in the Cuomo firm, and Seavey and his wife joined it in 1986 — not as partners but as counsels to it. Lucille Falcone and the senior Seavey, a rumpled and grandfatherly figure, now head the firm’s booming real estate department.

A millionaire with homes in the Hamptons and Williamstown, Massachusetts, Seavey allowed one of his state- and city-subsidized projects — a luxurious complex located at 401 Second Avenue, built long before the Cuomo era — to become home for the singles wing of the Cuomo network, including at one point everyone from Falcone to Cuomo’s daughter Maria to the daughters of Cuomo friend Jimmy Breslin. The failure of many of Seavey’s tenants to meet the income requirements of the subsidy program was of little apparent concern to anyone.

Seavey’s connections to the Sterling Forest deal with Goldstein were somewhat awkward. Seavey’s Battery Park board was then in the middle of selecting a developer for its next phase of state-subsidized luxury housing. One of the finalists was Shelly Goldstein. In addition, Seavey was helping to raise financing for his and Goldstein’s Sterling Forest bid. Sometime between May and October, several developers with Battery Park City sites, including the Milsteins, some of the principals of Dic Underhill, and Related Housing, were asked to invest in the project and told that Seavey was a partner in it. Seavey’s board had acted on leases for some of these same developers, all of whom eventually declined to invest. But then, Seavey has made a career of living on just this sort of edge.

Seavey first became a focus of media attention in the mid-’60s when the State Investigation Commission criticized him for wearing two hats — representing both the cooperators in Mitchell Lama co-ops and the builder. The SIC also focused on Seavey’s relationship with Tammany Hall leader Ray Jones, the first black county leader in New York and Seavey’s number-one client. Seavey’s financial records were subpoenaed, revealing a pattern of four $5,000 payments from one Harlem housing company to Seavey, each of which was followed by huge withdrawals from Seavey’s account.

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Later a Seavey corporation and his partner were indicted in Brooklyn on charges of bilking the Mitchell Lama project at Cadman Plaza; but, after waiving a jury trial, they were acquitted by then Supreme Court judge Vito Titone. In the late ’70s Seavey was also eyed in the city’s day-care lease scandal and the comptroller wound up withholding $158,000 in rental payments to him because of suspicious overcharges.

In August 1986, just as Seavey, Goldstein, and Andrew Cuomo were getting together their bid for Sterling Forest, the Voice and Mike Oreskes, a reporter for The New York Times, were preparing news stories about the curious clients attracted to Andrew Cuomo’s small young law firm. Both Seavey and Goldstein became the focus of reporters’ questions. In a letter addressed to Mario Cuomo, dated August 26, the day before both stories appeared, Seavey referred to a conversation he’d had with the governor the night before and announced he would be resigning from the Battery Park board, effective five days later.

In an extraordinary sequence of events, Goldstein’s partner wrote a letter to Battery Park two days after Seavey’ resignation from the authority, withdrawing his proposal for Battery Park designation. The letter noted that Goldstein’s organization, the Lynmark Group, had decided to “stay within our geographic area,” adding that it has “entered into negotiations on one of the largest parcels in that area,” an obvious reference to the Sterling Forest deal. A month later, however, Home Group Insurance Company rejected the Seavey/Goldstein offer.

Seavey and Goldstein got so friendly during the course of this deal that Goldstein installed Seavey on the same Bank of Rockland board as Falcone, and bought a condo in the Sovereign, a luxury building at 425 East 58th Street where Seavey has lived for years. Andrew Cuomo, too, continued to work closely with Goldstein, joining him in a Florida bank takeover bid that blew up in ugly court cases and uglier headlines last year. While Cuomo managed a successful settlement of the Florida situation, he says he was disturbed enough by Goldstein’s performance in this and other cases that he “has not talked to him for six or seven months.” Cuomo says Goldstein “threatened to kill” the bank’s resistant owners.

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Andrew’s Answer

In a wide-ranging defense of the events surrounding the interchange, Andrew Cuomo contended that there was no conflict because Goldstein was a Rockland developer who did not enter the Orange County market until after the interchange was approved. In fact, Goldstein owned substantial property in two Orange County towns — Chester and Woodbury — and started discussing the development of a mall with Chester officials in 1985. Cuomo, who says he knows nothing about these properties, handled Goldstein’s purchase of a third Orange parcel, the INCO site, and maintains that Goldstein’s option on this site was obtained after the passage in July 1985 of the bill authorizing the interchange. Neither Cuomo nor INCO officials, however, will say precisely when that option was signed or show the Voice a copy. INCO’s president, Sam Goldberg, testifying in a local zoning case, refused to get specific about the timing of Goldstein’s initial interest, though he did concede that the property was put up for sale within days of the 1984 Cuomo speech.

Cuomo’s argument also ignores Goldstein’s longtime dominance as a developer in neighboring Rockland, even though the governor’s memo on the interchange bill said that the exit would “enhance significantly the economic development of Orange and Rockland Counties.” Vincent Monte, the Democratic county leader in Rockland and a private realtor who’s handled title insurance for Goldstein, told the Voice that Goldstein “had always intended — long before the governor’s speech — to expand his Rockland condo development into Orange County.”

Finally, Cuomo sweeps aside the importance of the on-again, off-again nature of the governmental approval process, particularly with a project that has so many downsides and roadblocks. Goldstein, Seavey, and Cuomo could afford to speculate on the likelihood of future state actions that might impact on the interchange with a little more certainty than the next guy. If the Andrew Cuomo group had actually become the owners of this tract in 1986, the state would then have been put in the difficult position of conducting a highly controversial environmental impact review to justify the construction of a virtual driveway into the governor’s son’s land.

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Cuomo’s defense of Seavey, who would not comment, is that if any of the Battery Park developers had joined the Sterling Forest bid, “I wouldn’t have gone ahead with the deal, and I don’t think Bob would have either,” which makes it even stranger that Seavey asked them. Cuomo stresses Goldstein’s withdrawal from Battery Park and Seavey’s resignation as acts that minimized the “appearance of conflict,” adding that “any solicitation” Seavey “may have done” of BPC principals “may have happened” after his resignation. “Once all the pieces were put together on a deal” for Sterling Forest, if the offer had been accepted, he and the others would’ve analyzed the package and, if there was a conflict, “we wouldn’t have gone ahead with it.”

A year after the Goldstein bid was rejected, the exit project was suspended. By then the project was awash in opposition elicited during the environmental process and buffeted by a Times story a few months earlier that explored some of the conflict issues. New Thruway Authority director John Shafer, who had shepherded the interchange through the Department of Transportation when he was there, issued a terse and inexplicable explanation for the suspension. He cited concerns that the project would be “inconsistent” with “the possibility of state land acquisition or land-use planning for park and other environmental purposes in the vicinity.” That problem had been apparent from the inception of the project three years earlier.

Various top Cuomo officials have made contradictory claims to the Voice about how it died. Hennessy says he decided to stop it without ever talking to the governor who announced it. Cuomo’s counsel Evan Davis says it was killed “on the advice of condemnation lawyers from the attorney general’s office.” A spokesman for the attorney general says a representative from that office attended a top-level 1987 meeting on the second floor about the interchange but made no recommendation of any sort. Supposed decisionmaker Hennessy knows nothing about this crucial meeting. The demise of the ramp is as mysterious as its origins, and these conflicting recollections appear to conceal the hand of the one man with the power to both create and kill the project, Mario Cuomo.

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Lease Lust

Around the same time in 1984 that the governor first announced the Sterling Forest interchange, his largest campaign contributor, Shelly Goldstein, was getting himself involved in another controversial state project. He began discussing a partnership arrangement with Rockland County builder Harry Partridge, who had bought the old police property building at 400 Broome Street in Little Italy. Partridge had snared a multi-million-dollar state lease for the dilapidated and abandoned building in the dying days of the Carey administration, and when Cuomo became governor, he was going broke trying to renovate it.

Goldstein’s interest in the building would ultimately become a titillating feature of a SIC investigation that raised questions about his own conduct, as well as Andrew Cuomo’s and that of another top state official, General Services Commissioner John Egan.

The criminal focus of the Broome Street saga was on the relationship between Partridge and Joe Siggia, a middle-level OGS director who picked sites and helped negotiate leases for the move-out of thousands of state workers from the World Trade Center. Siggia retired from OGS and went to work for Partridge shortly after delivering the lease to him, just as he did for two other landlords who won state leases in the move-out sweepstakes. Manhattan D.A. Robert Morgenthau eventually indicted both Siggia and Partridge on bribery charges but convicted them only of lying under oath at the SIC about whether or not they’d discussed Siggia’s future employment while Siggia was still in his state job. A judge dismissed the perjury counts after the conviction, and his ruling is now being appealed by Morgenthau.

But the SIC did not spend two years conducting over 200 interviews and 25 audits because of a penny-ante relationship between an unknown builder and a hustling bureaucrat. Beneath the surface of these shady dealings were intimations of an extraordinary power play pitting Cuomo and son Andrew against the ex-governor’s appointments secretary and Democratic Party chief John Burns.

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It was lobbyist Burns, retained by Partridge, who managed in late 1983 to get his old friends from the Carey days — OGS commissioner John Egan and Cuomo deputy Hank Dullea — to approve the state’s rental of an additional Broome Street floor. And it was Andrew Cuomo, then his father’s special assistant, who mysteriously got wind of this last-minute boon for Partridge, and the old boy network that produced it, and turned himself into a one-man state police force, interrogating deputy commissioners in the middle of the night and taking days to plough through OGS’s files on the lease. Not surprisingly, Andrew Cuomo’s expressed suspicions prompted Egan to cancel the new floor he’d just ordered, and Mario Cuomo’s displeased questions quickly convinced his deputy Dullea to turn his back on Burns.

The Cuomo version of these events is that sleuth Andrew smelled influence peddling and blew the whistle. The SIC, which never released Andrew’s testimony and never grilled the governor, could not settle the question of whether or not there was any connection between the actions the Cuomos took to block the rental of the additional floor, and Shelly Goldstein’s reasons for wanting it blocked. But the apparent coincidences of the Broome Street affair, when combined with the similar coincidences of Sterling Forest, present a disturbing scenario of possible conflict — one that has now been embraced in an ongoing civil suit brought by Manhattan Savings Bank, which financed Partridge’s renovations.

The bank’s attorney, Terry Gilheany, has argued in court that Andrew Cuomo acted “at the behest of a major campaign contributor to the governor.” The bank’s court papers suggest that the Cuomo-provoked cancellation of the additional floor, and the state’s refusal to pay the full rental that Partridge claims he is due, were part of a campaign to either force Partridge to sell up to 60 per cent of Broome Street to Goldstein at a discounted price or at least to punish Partridge for defaulting on an unrelated contract he had to install windows in a New Jersey building owned by Goldstein.

Goldstein concedes in his own SIC testimony that he “blew up” at Partridge when Partridge failed to deliver new windows on a 21-story federally subsidized project Goldstein owned, with Jerry Weiss and others, in New Jersey. “I threatened to ruin him in the state of New York. I threatened to do anything,” Goldstein testified. Partridge recalls that Goldstein said: “I am going to fucking destroy you so that you will never do business again in New York State. I am going to fucking destroy you in a way that you will know exactly where it came from, and how it was done, but you will never be able to prove it.”

Paul Adler, a Partridge lobbyist who’d known Goldstein for years and was well connected in Albany, testified that Goldstein threatened him at the same time in almost precisely the same language. “He told me my name would be mud,” said Adler.

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A Sudden Reversal

The Broome Street brouhaha climaxed in January 1984 — the same month that Mario Cuomo announced the Sterling Forest interchange. The governor simultaneously embarked on a sudden and angry campaign to get at the root of OGS’s decision to award Partridge an additional floor. His counsel, Gerry Crotty, got the lease file from OGS. Then, according to SIC testimony, the governor summoned one of his top deputies, Hank Dullea, and grilled him about his contacts with Burns, asking if anyone had suggested that the governor had a personal interest in the issue of the extra floor. Once Cuomo told Dullea he’d gotten the facts wrong about the need for an additional floor, Dullea left the meeting “very troubled.” Later Dullea, approached by Burns to talk about Broome Street near the elevator on the second floor, accused him of misrepresenting the situation in their previous discussions, and walked away.

After Crotty returned the file, Andrew Cuomo reclaimed it. Andrew would subsequently testify, according to the SIC report, that his interest in the lease was piqued by an anonymous oral tip that made no clear allegation but merely suggested that “it would be worth looking at 400 Broome Street.”

The flurry of intense activity at the highest levels of state government that following this “tip” was most unusual. In a Voice interview, Andrew Cuomo conceded that anonymous callers did not frequently get through to him in the executive chamber, and that his information might not have come from one, but rather from a confidential source whose identity he has since forgotten. He insists that it wasn’t his father, Goldstein, or Goldstein’s lawyer and Cuomo confidant Jerry Weiss who suggested he begin his unusual investigation. Andrew Cuomo also could not explain why he didn’t turn this inquiry over to the SIC, or the comptroller’s office, or a D.A. In any event, shortly after Cuomo began his internal investigation, he told Egan to kill the deal.

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By February, an embarrassed Egan, who had awarded Partridge the additional floor against the advice of all his top staff, traveled out to Broome Street, introduced himself to Partridge for the first time, and told him that he couldn’t go through with it. Egan told the Voice that his conversations with Andrew and others had convinced him that the governor himself was “damn upset” about the maneuverings to deliver the floor.

Then suddenly Goldstein’s attitude changed. He had learned all about the Broome Street lease and, according to Partridge and Adler, began talking buyout. “He indicated to me that he could cure” the extra floor problem, Partridge testified. And in a letter Partridge wrote in 1985, he claimed that Goldstein promised “to make me a rich man again” if Partridge brought him into Broome Street, suggesting he could get the lease negotiated.

A macho man who wore cowboy boots and fashioned himself a frontier entrepreneur, Partridge was by then on his knees, damaged by the decision about the additional floor and the escalating costs at Broome Street. “He broke down crying at one meeting that he was being ruined because of this building in New York,” recalled Goldstein. “Harry is a big man. This really cracked us up a little bit.” Partridge says he refused to sell to Goldstein; Goldstein says Partridge just never gave him the hard numbers on which he could base an offer.

At one point, lobbyist Adler says Goldstein told him: “What the hell’s the matter with that guy — isn’t he afraid of me, of what I can do to him? Tell him to see — he’ll be rich again.” But Partridge never buckled, ultimately lost the building, and went bankrupt. “I think it was too close a coincidence,” Adler told the SIC, “and I think there was an opportunity there to take advantage of a business venture at a weak point. I think the eighth floor was taken away.”

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A Blast from the Past

With contradictory testimony and no clear resolution, the SIC dropped this aspect of its probe. Its May 1986 report was instead an unprecedented attack on a sitting state commissioner — the gregarious career civil servant Egan. “The predominant and disturbing conclusion of the Commission’s investigation,” said the report, “concerned the utter failure by OGS to demonstrate an appropriate degree of concern for the standards of conduct required of state employees.” Citing the $371 million OGS budget, the report said that “attitudes towards ethical conflicts within the agency must be profoundly changed, from the field level employees up to the Commissioner.”

The rationale for this assault was Egan’s apparent indifference to Siggia’s conflicts with Partridge and two other landlords associated with the World Trade Center move-out, as well as his accommodation to Burns on Broome Street. The SIC characterized the Broome Street dealings as “self-serving behavior and favored treatment for old friends,” concluding that Egan’s “evaluation and professional judgment appeared to have been formed to a far greater extent on the basis of who last spoke to him rather than on the merits of the transactions.”

The SIC may have come down on Egan this sharply because, after pouring resources into its two-year probe, the commission stopped short of bringing the Cuomo/Goldstein issues to any conclusion. In any event, its hard-hitting findings against Egan have been blithely ignored by the governor’s office. Indeed Andrew Cuomo’s attitude about the SIC probe is one of contempt, even though three of the seven commissioners who conducted it, including the chairman, David Trager, were appointed by Governor Cuomo and came from the top levels of the U.S. attorney’s office. A fourth commissioner, appointed by the assembly, was Joe Hynes, whom the governor subsequently named special state prosecutor.

A couple of weeks before the report was released, Goldstein quit his post as chair of the State University Construction Fund, but Andrew Cuomo says the resignation had nothing to do with Goldstein’s bullying conduct in the Broome Street affair. Of course, Andrew Cuomo’s relationship with him grew closer in the aftermath of the report, so there was certainly no attempt by the Cuomo family to distance itself from him.

Half a dozen top OGS officials immediately below Egan were slammed in the report, or embarrassed at the hearing, none more savagely than OGS counsel Emeric Levatich, who was described as routinely approving the most blatant conflict-of-interest arrangements between OGS staffers and firms doing business with the agency. Egan and Levatich respond that Siggia’s employment by landlords who benefited from his state decisions didn’t violate the law until new legislation was passed last year — a law the SIC recommended be adopted.

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While one deputy commissioner has left the agency to return to a high-level post at the Corrections Department, it is unclear that this transfer was in any way connected to his role in the lease scandal. Other than him, a couple of low-level agency personnel were demoted. This record of response tends to confirm the indifference the report identified.

Egan says he’s survived because the governor “has a lot of trust in us.” He says Cuomo “was very much aware of the report,” and that “if the governor thought any of the allegations were true, I’d be long gone.” The commissioner makes an impassioned defense of his agency’s overall record for honesty, citing the World Trade Center move-out as an aberration that bypassed the normal leasing procedures. He also points out that he referred the case against Siggia to the D.A., though it was long after the SIC had opened its own probe, initiated by a complaint from the Republican senate.

John Egan is a man who learned early in life how to please those with power. He personally handles the petty favors in Albany that make powerful friends — everything from state cars to office furniture. Just as he had shuttled feverishly from side to side during the Broome Street battle, he appeared to weave back and forth again as a witness at the SIC a year later. In his first appearance he testified that Andrew Cuomo hadn’t advised him to cancel the eighth floor, and then, after Andrew said he had, Egan confirmed Andrew’s testimony in a second appearance. He says he didn’t know about Andrew’s intervening testimony.

Egan advertised himself during a Voice interview as someone who’d been around long enough to anticipate what governors and those with power expect of him. At the SIC he might’ve anticipated wrong. But in the end, his performance obviously satisfied the only audience that really mattered. ❖

Categories
From The Archives NYC ARCHIVES THE FRONT ARCHIVES

Al D’Amato: Hopelessly Corrupt

Start a War? Violate a Constitutional Privilege? Spur Economic Disaster?
For Al D’Amato, Nothing’s Too Much for a Big Donor. 

One more sleaze story that puts Al D’Amato in bed with a contributor is like one more sex story about Ted Kennedy, in or out of bed. A decade of endless revelation has made New York’s two-term junior senator the Madonna of corrupt coupling. But since he is saluted as Senator Pothole as often as he is derided as Senator Shakedown, all that the electorate is left with is the perception that at least the state has a feisty senator who never fails to shake the pot. With the election less than a week away, despite almost a dozen years of saturation tawdriness, Al D’Amato’s most spectac­ular senatorial achievement is that he has somehow man­aged to immunize himself from ethics charges, at least in certain regions of the public mind, by making new sagas of his duplicity so “hopelessly” redundant that few readers have the patience to wade through them again.

Many of the millions of New Yorkers who will vote again for him next week will do so knowing he is a con man. You can see them holding up their hands when they are ap­proached by reporters and insisting that they don’t want “to hear about the past.” They know he is taking care of himself — horse-trading with every special interest imagin­able to pay for the $21 million worth of televised lies that have been protecting his Senate seat since 1981. But as long as he convinces these voters that he might also be taking care of them free of charge, they will tolerate his bartered service.

D’Amato’s campaigns are seen as raffles with enough prizes for everyone who plays to win a little something. Sure, those who buy a block of tickets get a Washington wallet-full, but ordinary voters out in Buffalo or Melville think they own a reassuring piece of him themselves, even if all they get is a promised tax break or a bone tossed to a personal bias. He will never be so lofty they can’t visualize him coming to their house for dinner, and bringing an expensive dessert. If he is Jesse James, it is not their bank deposits he is stealing.

Inside this review of D’Amato’s life and times are three new Fonz fables that show just how far he is willing to go for the ticket buyers who can afford the wallet-full. For friend and financier Donald Trump, he was willing to violate the constitution by volunteering privileged informa­tion on the witness stand. For Drexel-Burnham, he was just as prepared to submarine legislation that, had he pushed it, might have restricted junk bond influence on S&L col­lapses and hostile corporate takeovers. The story also re­veals D’Amato’s shocking effort to manipulate the Manhat­tan U.S. Attorney’s office in ways that benefitted his Drexel donors.

The third episode in this trilogy of a contributor-con­scious career exposes D’Amato as a senator whose attitudes about the Noriega government shifted with those of a longtime donor, even to the point of becoming an advance man for an invasion that would ultimately secure his client company’s oil pipeline interests.

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Of course, it’s a given that D’Amato be­lieves in nothing. Though it has somehow passed unnoticed all these years, even his personal life is a fraud. As soon as he won his 1980 Senate race, just before he as­sumed office two months later, he separat­ed from Penny, his wife of many years. Twelve years later he is still separated, yet they have never divorced. In the meantime he has dated half of Manhattan and Wash­ington, demonstrating an ironic fondness for former and current prosecutors, yet maintaining the political sanctity of his Catholic marriage, a presumed prerequisite for reelection in a decidedly Catholic state. While other Catholic politicians with way­ward views but less wayward lives must keep a wary distance from the unpredict­ably disapproving cardinal, tuxedoed Al D’Amato is welcome at the Al Smith dinner or at O’Connor’s hospital bedside after­ward, photographed on his way to this cor­poral act of mercy by attending news cam­eras and allowed by a tolerant cardinal to wrap himself around a church pillar. Per­haps O’Connor thinks that Al, too, is a celibate.

The senator’s technical avoidance of the sinful stain of divorce, as well as his possible pillow talk with a top organized crime investigator, might ordinarily be fodder for the New York Post; but in recent years, it has been owned by the senator’s longtime finance chair, Peter Kalikow. It would not be too hard for the Post to source the story, since D’Amato began using his friend Kali­kow’s Fifth Avenue apartment as his legal address when he left his wife all those years ago, even sometimes visiting the develop­er’s penthouse for a change of clothes.

Consistent with this counterfeit life, D’Amato has, in the final weeks of what may be his final campaign, shed a “principled” po­sition a day, transforming himself into a Clinton Republican, redefining his abortion position, embracing gays, waffling on plans to punish the welfare pregnant. His com­mercials have been such transparent ho­kum — ranging from the ridiculous misuse of Benito Mussolini, Geraldine Ferraro, and 26-year-old assembly votes by oppo­nent Bob Abrams — that D’Amato almost seems to be winking at the voters, offering up openly banal explanations so they can justify their otherwise indefensible urge to support him. This campaign of high-priced deceit has been such an outrage because D’Amato knows he is not just running for reelection; he is running for his life, pain­fully aware that a Justice Department liberated by a Democratic administration, with federal prosecutors in New York nominated by two Democratic senators, might not be as forgiving as those who’ve been in charge of the constant probes of him that have occurred in recent years.

While D’Amato may still be able to draw on this cynical grassroots acceptance and win, he knows now that a consensus has finally coalesced against him at the elite levels of New York politics. When Newsday and The New York Times brilliantly as­sailed him in same-day endorsements of Abrams last week, he officially became an outcast, revered only by the “he’s-never-­been-charged-with-a-crime” Post. Even when he extended his hand for one final dance with his old partner Mario Cuomo, the governor slapped him in the face, ap­parently well aware that too many people were watching to resume their once mutual­ly soothing tango. As the Times, which had endorsed D’ Amato last time, put it about the senator’s vice, enough was finally enough.

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Mike Armstrong, the savvy and loyal D’Amato lawyer and confidant, reminded me last week that the ethics cloud over D’Amato was first floated by the Voice during his bitterly reminiscent 1980 campaign. But when Jack Newfield, Joe Conason, and I finished that four-part series, we sadly came to realize that we’d actually helped him win his narrow victory. The grave charges we launched — all based on his prior career as a Nassau County official with a penchant for plunder — created such a stir that we’d go to an Alphonse press conference and the cameras would surround us. The D’Amatos, with brother Armand playing an aggressive role in the publicity war, successfully positioned themselves as the targets of the far-left, progay, anti-Italian Voice and rode the hard truth of our charges to triumph. (Then, as now, D’Amato declined to talk to the Voice.)

I remember the Fonz’s father, Armand D’Amato Sr., whom we unveiled as a dou­ble-dipper on public payrolls who collected exorbitant insurance brokerage fees from the county through his son, chasing our car down an Island Park street, shaking his fist at us. I remember our discovery during the series that D’Amato had hired a private investigator who’d once worked for Colom­bo capo Sonny Francese to tail us.

But mostly, I remember the salty taste in our mouths at the end, disappointed that we had been portrayed as mere partisans, though our portrait of the Nassau GOP machine was a carbon copy of our earlier work on the Brooklyn Democratic organization.

Since then, the breaking stories about Alfonse, published by every newspaper but the Post, have come nonstop. He is the only elected official in the state who’s been the recipient of three sets of illegal contributions, all of them earned by public perfor­mance on behalf of the compromising do­nors — $30,000 from Wedtech (“the most corrupt little company in America,” ac­cording to the subtitle of one book); $10,000 from Unisys, the defense contrac­tor whose payments to brother Armand led to his current indictment; and $32,000 from a group of Puerto Rican HUD devel­opers, who are also the subject of a pending criminal case.

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D’Amato is the only senator in America who has acknowledged having conversa­tions on behalf of two mobsters with a United States Attorney, contacting Rudy Giuliani in one instance to “warn” him that “lawyers” thought he might be “embarrassed” over the possible loss of a racke­teering and murder case against boss of bosses, Paul Castellano. Just as unique was D’Amato’s appearance as a character wit­ness for mob-tied disco owner Phil Basile, whom the senator kissed on both cheeks in the courtroom after proclaiming him “a man of honor and truth.” D’Amato rents his office to this day — paying the highest congressional rent in America and far more than the market rate in the building — from a landlord who was involved in a parking lot deal with convicted felon Basile (both Basile and the building’s owner, who have contributed thousands of dollars to D’A­mato, have also been represented by broth­er Armand).

Of course he has also distinguished himself before the Senate Ethics Committee, which found barely a year ago that he “con­ducted the business of his office in an im­proper and inappropriate manner” by let­ting his brother “systematically misuse” it for “personal gain,” writing a letter for Unisys on the senator’s stationery. While others in Washington have only bad checks to count, D’Amato may have set other kinds of Guinness records — seven immu­nized witnesses forced to testify about his actions, 41 wiretapped conversations from various federal jurisdictions where his name came up, 35 potential witnesses who took or said they would have taken the Fifth Amendment rather than testify about him, and four full days of sealed testimony by a senator seeking reelection.

Of course the committee never consid­ered the charges now being entertained by a federal grand jury in Washington, which is reportedly examining the senator’s attempt to induce a HUD regional director to per­jure himself for him. As Newsday‘s Bob Greene has revealed in recent days, the Washington prosecutors are also reviewing for possible perjury prosecution 11 pro-D’Amato witnesses who appeared before the Ethics Committee about the Island Park houses, and they are doing it on the recommendation of the Senate.

D’Amato has of course so far survived the recurring investigations that have dog­ged him, but conduct that so frequently attracts prosecutors yet falls short of an indictable offense is hardly an affirmation of innocence. Indeed these bouts with grand juries have become so routine that a self-conscious Newsday downplayed Greene’s exposé of the latest one, and the Gabe Pressmans of this city’s media pack have yet to shove a mike under the sena­tor’s chin to even ask him about the alleged perjury coaching. A prospective deputy mayor who may or may not have harassed a female aide has gotten much more atten­tion, even in the Times, than these criminal allegations against a senator up for reelec­tion. Astonishingly, Greene’s second story, shaking the foundation of the Ethics Com­mittee’s already hesitant findings on Island Park and announcing the probe of the 11 witnesses, was shunted off on page 23.

It is indisputable that if Abrams, rather than D’Amato, were suddenly revealed as the subject of a criminal probe, it would be banner headline news in every newspaper and would bury his candidacy. But even though the new charges against D’Amato resonate against a background of endless allegations (or perhaps because they do), they cannot compete with the media mag­net of another black hard-on and have been relegated to the back pages. D’Amato is once again saved, in part because of the familiarity of his sins. It is as if the worse editors in this city’s media establishment be­lieve he is, the less they will allow them­selves to reveal it.

Almost every one of these D’Amato scan­dals has involved a contributor, an unsur­prising fact for a public official who proud­ly told the Times that “only 35 per cent of those who give expect something in re­turn.” Since that adds up to over $3 million in quid pro quo contributions since 1981 — at a mere $ 1000-a-head — the senator has been very busy indeed, by his own account, delivering to demanding donors.

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The irony is that he has successfully made Abrams’s questionable fundraising techniques a focus of his campaign commercials, zeroing in on the Feerick Com­mission’s conclusion that the Attorney General solicited a $15,000 contribution from a developer who had millions in condo plans pending before Abrams’s office. What no one’s noticed is that D’Amato himself has collected $23,500 since 1980 from the family and employees of this developer, who goes unnamed in the sena­tor’s television commercial, and that D’Amato has done more for the developer than Abrams ever dreamed of doing. The devel­oper is Donald Trump, who in addition to contributing actually hosted D’Amato’s an­nual fundraising dinner at the Grand Hyatt at a deliberately reduced rate five years in a row during the ’80s. The senator in fact may have decided not to mention his friend’s name in the commercial for fear of jeopardizing the possibility of spending an­other weekend at Trump’s dazzling Mar-A-Lago in Palm Beach, as D’Amato did in the late ’80s — a far cozier scene than Abrams’s breakfast with Trump.

While there is no evidence that Abrams ever personally participated in his office’s review of Trump’s condo plans, D’Amato himself took the witness stand for Trump in the biggest legal case of Donald’s life, the United States Football League’s $3 billion antitrust suit against the National Football League in 1986. D’Amato was used as a witness to lay the groundwork for a key contention in the USFL case that was, in the end, flatly rejected by the jury: that the NFL had engaged in a conspiracy with New York Jets owner Leon Hess to block Trump’s USFL team from getting a New York stadium and franchise. D’Amato tes­tified about three conversations he had with Hess that supposedly proved this the­sis, but a Voice review of the legal billings submitted to the USFL after the trial has revealed that a partner in the law firm Trump handpicked for the floundering league talked to D’Amato shortly before two of the conversations with Hess. The timing of these contacts suggests that the Fonz may have been acting as a conscious agent of Trump’s lawyers when he called Hess, setting the Jets owner up for testimo­ny at trial.

The Voice has also obtained sealed side­bar discussions with the judge prior to D’A­mato’s testimony revealing that the senator was planning to testify about much more than his Hess conversations, but was stopped by an embarrassing legal ruling. He was prepared to detail talks he had with other senators who supposedly told him that NFL Commissioner Pete Rozelle “was making personal threats to yank franchises unless they voted right” on certain key NFL antitrust legislation “or to grant fran­chises if they would go that way.” But U.S. District Court Judge Peter K. Leisure ruled that D’Amato’s proffered testimony would violate the Speech and Debate Clause of the U.S. Constitution, which bars senators from revealing in court privileged conversa­tions with other senators. The judge pre­vented Trump’s lawyers from asking any questions about the Rozelle conversations, though D’Amato was apparently quite will­ing to break a senatorial confidence for his ingratiating supporter.

Such boldness, however, was a small mat­ter compared to how far he would go for that other billionaire emblem of the ’80s, Mike Milken.

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What Jesse Kornbluth in his new book, Highly Confident: The Crime & Punishment of Michael Milken, called the “leveraged buyout of Al D’Amato” is already a fairly well-known story. First reported in 1986 by The Wall Street Journal, it is standard D’A­mato fare, only this time with a peculiarly high level of impact. When the Fonz took the money and tanked it for Drexel, he managed, according to much of the hindsight analysis, to encourage the junk bond explosion in both corporate takeovers and S&L’s, leading eventually to the collapse of companies and banks laden with over­-priced debt.

While the Senate Ethics Committee cleared D’Amato of “any improper con­duct” on the Drexel charge, its carefully
worded finding addressed only the question of whether D’Amato had “changed his po­sition on junk bonds” after he “promised to introduce restrictive legislation.” Since the committee restricted itself to reviewing the charge only in its most damning form — a callous reversal of position after collecting the cash — the result was predictable. Unless Drexel witnesses at the very top were willing to say that they told him they’d give him thousands if he would tank the swirl of 1985 reform bills, the committee was doomed to come up dry.

Instead, of course, something vaguer hap­pened, and either Mike Milken, who per­sonally hosted the May 31, 1985, D’Amato fundraiser at Chasen’s in Beverly Hills, nor D’Amato, who tried embarassingly hard in retrospect to insinuate himself deeply in­side the glamorous Drexel fast track, is likely to ever say just what it was. But the fact is that the Milken party occurred, generating at least $34,000 for Alfonse barely two months after his subcommittee launched hearings on junk bond reform and just a week before Drexel CEO Fred Joseph testified. Then, one week after D’Amato pro­duced a watered-down study bill on junk that December, Joseph and 34 other Drexel executives bought $500 tickets to a giant D’Amato fundraiser in New York.

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D’Amato called the timing “absolutely coincidental,” but what is not coincidental was just how often this sort of awkward happenstance has hit the senator. When these two large chunks of donations are added to those from Drexel’s PAC and oth­er individual contributions, the Fonz’s total hits $70,750 by the end of 1986. Voice calls to many of the donors last
week found few willing to discuss their gen­erosity, though one, Jon Jetmore, said that “someone” at the company asked him to give, indicating that “it would be good for Drexel” and explaining that “there were few in Congress defending Drexel publicly and that D’Amato was the only one the company felt would listen.” Jetmore, who contributed after D’Amato produced his toothless December bill, recalled that the Drexel donations might have been connect­ed with the fact that D’Amato had “voted against inhibiting legislation” Drexel opposed.

If most of the donors were still shy about such a straightforward explanation, the sen­ators who were pushing for restrictive legis­lation at the time no longer are. Former Wisconsin senator Bill Proxmire, who has never before been quoted on the subject, said in a Voice interview last week: “The legislation could’ve been very good for our economy because it would have prevented hostile takeovers and that is certainly one of the reasons we have so many major bankruptcies today. [D’Amato] got contri­butions because he was chairman of the securities committee; they were buying in­fluence. PAC’s don’t contribute because they admire someone’s principles or their looks. I think D’Amato was unusually sup­portive of Drexel. That is why he got the contributions.”

Senator Howard Metzenbaum told the Times back in 1986, three weeks after D’A­mato was reelected, that D’Amato had giv­en him “a firm commitment” to introduce a bill aimed at curbing takeovers “before the July 4, 1985 recess,” but that it “never came to pass and I never heard another word about it.” Last week he told the Voice that D’ Amato later “offered a number of excuses for his failure to do so, none of which I considered compelling.” Metzen­baum added that D’Amato’s eventual bill came so late and was so weak it “effectively eliminated any possibilities of passing take­over legislation that session,” which came at an unusual, historical moment, when leading Republicans were temporarily out­raged by Milken tactics. “It’s clear that by failing to move forward as promised, Sena­tor D’Amato squandered a golden opportu­nity to enact meaningful reform at a point in time when it was needed most.”

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D’Amato counsel Mike Armstrong likes to point to a supposed discrepancy between Metzenbaum’s post-1985 comments and his attempt that November at typical sena­torial back scratching when he praised D’A­mato during a committee session for run­ning “excellent hearings.” But the fact is that in the same brief statement, Metzen­baum said he was still hopeful his reluctant colleague would “soon introduce his own tender offer bill,” making his ultimate dis­appointment perfectly consistent.

Most of the reporting about D’Amato’s Drexel relationship ended with that bill, but the relationship itself didn’t. Prime Drexel clients like Integrated Resources dumped $58,750 into the D’Amato coffers, much of it in the midst of the 1985 machi­nations, and employees of Saul Steinberg’s various Reliance entities donated another $56,000. Everyone from Drexel raider Boone Pickens to the Milken-manufactured billionaire Nelson Peltz to several Drexel lawyers like Richard Sandler to Milken publicist Linda Robinson dropped change in the passing D’Amato hat.

The senator was flown out to Beverly Hills for four days in April of 1986 at Drexel’s expense, paid a $2000 speaking fee, and entertained at the infamous High Yield Bond Conference, better known, at least after Connie Bruck’s 1988 book, as “The Predators’ Ball.” Before bringing him out to the coast, Drexel paid for a strange stop in Denver, where D’Amato was appar­ently the beneficiary of another fund raising festival, collecting over $18,000 from 51 Colorado donors, led by executives of the MDC home building company. Described in S&L bestseller Inside Job as “a junk bond Frankenstein given the spark of life by Dr. Milken,” MDC president Larry Mi­zel kicked in $1000 for D’Amato, while his brother and several other company officials gave $300, the ticket price for the party (two Mizel companies later pled guilty to making illegal campaign contributions to a Colorado congressional race).

Once out in California, D’Amato stayed in the luxury Palm Desert, condo of Co­lumbia Savings and Loan president Tom Spiegel, currently under indictment in Los Angeles for bilking his bank of millions and one allegedly illicit transaction with his mentor Milken. Drexel’s Dennis Levine, the insider-trading felon who wrote his memoirs in prison and was himself a D’A­mato donor, recounts one brief exchange with D’Amato during the notorious confer­ence festivities: D’Amato, “effusively work­ing the room” at a Chasen’s dinner party and approaching his table, slapping Boone Pickens on the back and extending “a warm hello” to Boesky. When D’Amato moved on, Boesky muttered to Levine, “That bas­tard cost me five thousand dollars” — an apparent reference to past campaign contributions.

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The Republicans lost the Senate, and D’A­mato lost his subcommittee, in the begin­ning of 1987. With Boesky’s indictment a few weeks earlier, Drexel, too, was in the midst of dramatic change. Instead of chas­ing every consumable company, they had suddenly become the quarry themselves. Ironically, Drexel’s pursuer was none other than an appointee and friend of Al D’Ama­to’s, U.S. Attorney Rudy Giuliani, whose office had wired up Boesky for meetings with Milken shortly before the inside trad­er’s $100 million guilty plea was publicly announced. The fear of Giuliani on Wall Street and in Beverly Hills was palpable at the time: pressing forward with new theo­ries of securities prosecutions, he seemed both unreachable, in standard political par­lance, and dangerously skillful when it came to making towering cases stick.

Before 1986 ended, Mike Milken’s broth­er Lowell, a top Drexel executive with po­tential exposure in the unfolding scandal, hired as his criminal attorney Mike Arm­strong, the senator’s strong right arm. A former federal prosecutor and the principal powerbroker on the D’Amato screening panel that nominates federal prosecutors and judges in New York, Armstrong imme­diately flew out to California to meet with his client and his client’s brother. Over the next three years, Armstrong would play a broad role in the joint Milken defense, run­ning up a fortune in Drexel and Milken bills (he still represents Lowell on outstand­ing civil matters).

Armstrong maintained in a Voice inter­view that neither Milken brother discussed his ties to D’Amato. At the time, however, Armstrong was starting his seventh year of periodic pro bono representation of D’A­mato. Beginning in 1980, during the first Senate campaign, D’Amato asked Arm­strong to advise him about the possible release of his earlier grand jury testimony about a Nassau County 1 per cent kickback scheme, which had become a hot issue in a close race. Named to D’Amato’s panel as soon as the senator took office in 1981, he continued representing D’Amato in a feder­al probe of the senator’s involvement with a Hempstead recycling plant, ultimately ap­pearing in court with the senator when D’Amato testified at the trial of one recy­cling plant defendant. He was there again in 1983 when D’Amato appeared on behalf of Phil Basile, and later during the senator’s Wedtech testimony.

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Armstrong’s Legal Aid list for D’Amato, including aspects of the many HUD inves­tigations and the Meade Esposito case, goes on and on. He didn’t charge D’Amato, however, until 1989, when he took on the senator’s defense in the Senate Ethics Com­mittee probe. Today, a senator who claims a net worth of $60,000 owes Armstrong $400,000 for the concluded probe.

A few months after Armstrong went on Drexel retainer (he was paid by the compa­ny until the two Milkens were indicted in 1989, when Lowell was forced to pay his own bills), Al D’Amato called Giuliani and said he “wanted to talk politics,” inviting him to dinner and asking that he bring his wife, television newswoman Donna Hano­ver. Though D’Amato wasn’t any more spe­cific than that, Giuliani discovered what the agenda for the August 1987 dinner was while riding there in his car. WTNS report­ed that D’Amato was trying to talk the politically ambitious Giuliani into running against Democratic senator Pat Moynihan. That night, for hours, and for weeks later, chummy Al kept the pressure on, promising to raise millions for the run. Giuliani, whose four-year term was winding up, was sorely tempted, even writing a declaration speech at one point. But U.S. Attorneys don’t have to leave when their term expires, and Giuliani was also reluctant to leave, with so many giant cases hanging in the balance.

Giuliani and D’Amato, undercover on a 1986 drug bust

He asked that D’Amato allow him to pick his own successor, announcing public­ly his preference for an aide, Howard Wilson, but D’Amato balked. Then news re­ports appeared listing a half dozen finalists that Armstrong’s panel was considering to replace him, and describing prominent de­fense attorney Otto Obermaier as the front­runner. This worried Giuliani, and he said so in news interviews, but only in the most general terms, expressing a concern that several of the senator’s prospective appoin­tees specialized in representing the securi­ties industries or white-collar criminals. When D’Amato charged that Giuliani’s re­luctance was “provocative and not too smart,” Giuliani replied that he’d tried to “convey to the senator that I’m not being arrogant,” adding that he was “concerned about four or five very, very sensitive investigations.”

The concerns started with Armstrong, whom Giuliani refused to talk to about the transition, precisely because of the defense lawyer’s Milken conflict, a message Arm­strong concedes was sent directly to him. Another powerful player on the panel, Paul Curran, represented Robert Freeman, the head Goldman, Sachs trader whose Wall Street handcuffing and arrest in early 1987 had caused a media stir. Obermaier had a client squarely in the middle of the same case. Bob Morvillo, a partner in Ober­maier’s small, top-flight criminal firm, was just starting to represent Tom Spiegel, the senator’s California condo host whose S&L had $3 billion in Milken junk. The firm was also representing top Drexel brass, includ­ing one potential witness it has refused to identify when questioned by reporters to this day. While Obermaier seemed the all­but-certain designee, others on the pub­lished list of candidates were also involved in the securities cases, including a partner of Peter Flemming, Mike Milken’s princi­pal attorney.

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The efforts to induce Giuliani to leave were so carefully monitored at Drexel that the weekly meetings of its so-called “War Council” — discussions that included 15 or so executives, lawyers, and consultants — ­were regularly interrupted by chitchat about his possible departure. Even Arm­strong conceded in a Voice interview that he “may have talked about the Southern District situation in a conversational way” with his client Milken. “I didn’t agree with the way Rudy was running the office,” says Armstrong. “I wanted him to leave.” Arm­strong had in fact convinced D’Amato to name John Keenan to the post in 1983, and the Keenan appointment was only blocked when Giuliani, who worked in the Justice Department then and had strong support there, prevailed on D’Amato to change his mind.

Armstrong also acknowledges that it was he who recommended Obermaier, an old colleague from their days in the U.S. Attor­ney’s office together, though he claims he was unaware of Obermaier’s published views, mostly in a New York Law Journal column, bashing insider-trading and other securities cases. It was this philosophy that most upset Giuliani, since not even an Obermaier recusal on an individual case where his firm had a client could protect the office’s securities prosecution from a wholly different point of view about every­thing from the use of the RICO statutes against white-collar criminals to deferring to the SEC on trading cases. Giuliani was so uncomfortable with these columns he carried them around with him and showed them to friends. “Otto had the same point of view as everyone else,” Armstrong ar­gues now, listing several former securities prosecutors who shared Obermaier’s views, and not even noticing that all of them wound up with Drexel clients. “Rudy didn’t know shit from Shinola about securi­ties cases,” Armstrong declared.

By early 1988, Giuliani had all but decid­ed to pass on the Moynihan race. Wilson had appeared before the D’Amato panel, and Armstrong and Curran had left the room during his interview, implicitly recus­ing themselves on his review, though at least Armstrong was clearly involved in the ultimate selection. Neither Giuliani nor Wilson would return Armstrong calls on the matter or discuss it with him, until he final­ly cornered Wilson at the swearing-in of a federal judge. According to a memo Arm­strong prepared — out of what he says was caution over how Giuliani might one day misinterpret his conversation with Wil­son — he offered to make Wilson chief assis­tant under whoever was the new U.S. At­torney, and give Wilson control over “the ongoing investigations about which Rudy had expressed concern.”

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While Armstrong sees this memo as proof that Drexel wasn’t his motive in try­ing to facilitate a Giuliani departure, it is clear that Armstrong’s offer was a last-ditch proposition on the eve of Giuliani’s an­nouncement that he would not run. Indeed the memo reports that Wilson told Arm­strong that Giuliani had already decided not to run even though he very much wanted to.” Wilson says that Armstrong “may have said I’d be someone’s deputy, but I don’t think so”; he was “positive that the Drexel thing wasn’t presented.” Even Jesse Kornbluth, whose sometimes-persua­sive Milken book is a staunch defense, spent hours discussing this pivotal period in the effort to block a Milken indictment with Armstrong, Milken, and many others, leading him to tell the Voice last week: “It’s pure projection; but it’s hard to believe that the effort to get Rudy out wasn’t fully dis­cussed. God knows every other avenue of saving the Milkens was gone over innumerable times from 1986 to the end.”

When Giuliani announced he wouldn’t run, D’Amato seemed to lose whatever in­terest he ever had in fielding a Republican opponent against Moynihan, endorsing an obscure Long Island businessman who’d long been a backer of his, but declaring that he was “too busy” to campaign with him. Giuliani stayed in the office another year, took Drexel’s guilty plea but could not get Milken’s. In a sudden, and deliberately ar­ranged maneuver, he resigned and brought back to the office from private practice a onetime top aide, Benito Romano, getting the Justice Department’s approval to install him as an interim U.S. Attorney in an end-­run around D’Amato. One top Justice De­partment official who cut the Romano deal with Giuliani, Robin Ross, said that an angry D’Amato called him and was “quite blunt about his displeasure.” D’Amato immediately moved to nominate the ever-pa­tient Obermaier, but Justice and the White House sat on his name for 10 months, leav­ing Romano in office.

That gave Romano time to finally either indict Milken or get a guilty plea. When the two Milkens did not meet a March plea deadline offered by Romano, he filed a racketeering indictment against them. Though Romano remained in office until October, Milken’s lawyers never resumed plea discussions with him. “I wanted to resolve the case before D’Amato’s replace­ment got there,” Romano told the Voice. “Whether they were waiting” for Ober­maier, “you’d have to ask them.” A few months after Obermaier arrived, Mike Mil­ken finally pled guilty to six felony counts, none of them on the racketeering charges, and the always-difficult case against Lowell Milken was dropped.

Obermaier recused himself on the case, as he has on at least 34 other cases that went to indictment since he took office. (Since the only information the office will provide about this unprecedented number of recusals is the press releases issued by the chief assistant when Obermaier is con­flicted out, there is no way to count recusals in cases that never get to indictment. By contrast, the U.S. Attorney in Brooklyn, Andy Maloney, has recused himself on two cases though he’s been in office twice as long as Obermaier.)

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While there are certainly aspects of the office’s handling of Milken that have con­tinued the tough traditions of the Giuliani/Romano era, the decision this summer to write a letter to sentencing judge Kimba Wood, citing his “substantial” cooperation, in direct contradiction to a letter sent by the SEC enforcement chief, has been widely questioned. What Giuliani himself says made the government’s position on sen­tence reduction so strange was that its letter offered no critique of Milken’s testimony as a defense witness for one Drexel client, even though Milken’s “appearance against the government was expressly rejected as unbelievable by the jury,” which convicted Milken’s friend anyway.

Wood, who wound up citing the letter from Obermaier’s office as a basis for re­ducing Milken’s sentence to two years (slightly less than Boesky, the witness who brought him down), did not dispute in her opinion the SEC contention that Milken was principally offering information to prosecutors about Drexel folks who’d coop­erated in the investigation of him. The judge cited only one other letter in her decision — a voluntary submission helpful to Milken on the issue of his attempt to make restitution to those he’d damaged. The attorney who wrote it, Pat Hynes, rep­resented a group of civil claimants whom Milken had agreed to make a sizable pay­ment to, though she was hardly the princi­pal litigant in these separate lawsuits. A close friend of D’Amato’s who Armstrong acknowledged used to date the senator, Hynes was recently dubbed by D’Amato to join the Armstrong screening panel.

In addition to the favorable treatment for Milken by Obermaier’s office, it has also recently passed on retrying the Drexel spin­off, a case against several traders from Princeton-Newport that was overturned principally due to a sentencing error by the judge, and also decided not to prosecute Columbia S&L’s Spiegel (eight months lat­er, federal prosecutors in L.A. indicted him on largely different charges). Obermaier re­cused himself on these cases, as well he might since his law firm is extensively in­volved in both. But his recusal did not prevent him from summarily dismissing the prosecutor who’d tried Princeton-New­port and, though he’d since left the office, was available to work on its appeal. Ober­maier used the assistant’s appearance in a television interview as a rationale.

While there is no smoking gun establish­ing what D’Amato’s purposes were in all the intricate machinations surrounding his Southern District appointment, the final proof is in the pudding. The office that once pioneered Wall Street cases has not made a new, significant securities prosecu­tion since the “scholar-on-Ottomatic” got behind Rudy’s desk.

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It Is January 1983 and Al D’Amato, just starting his third year in the senate, is aboard a chartered flight to Panama City. He and his daughter Lisa are taking a four­-day trip to Panama paid for by the Long Island petroleum giant that will soon em­ploy her as an economic analyst, Northville Industries. While Northville will fly over 300 people down to Panama to join in ceremonies and receptions celebrating the opening of its new, 80-mile pipeline across the heart of the Isthmus, D’Amato is the only U.S. senator aboard. But he isn’t going just because of his daughter’s imminent job.

In fact his daughter’s job was an out­growth of his own almost 30-year friend­ship with the president of this family­-owned firm, Harold Bernstein. According to Northville vice-president Joseph Ackell, Bernstein and the company were major financial supporters of D’Amato’s during the early days in Nassau politics, and news reports indicate that on occasion, at least, he purchased oil from them as Hempstead’s presiding supervisor. Since D’Amato’s 1980 primary race against then senator Ja­cob Javits, the Bernstein family, the company PAC, and a few Northville executives and their wives have donated at least $28,000 to D’Amato campaign coffers. In addition, Bernstein was named by D’A­mato as one of his six top fundraisers in a 1986 Times story.

The pipeline Northville opened that Jan­uary was erected by the U.S. Congress. Its viability to this day utterly depends on the periodic renewal of a controversial piece of legislation barring the export of Alaskan oil anywhere outside the U.S. (its principal pri­or market was Japan). Originally instituted in the mad days of the 1970s energy crisis, and rationalized as part of a national strate­gy for oil independence, the ban led to the building of the pipeline in 1981 — D’Ama­to’s first year in the Senate. The senator has been a major force in the preservation of that ban ever since, helping to sustain the pipeline, which stretches from the Pacific coast port of Charco Azul to Chiriqui Grande Bay on the Caribbean and is designed to carry 800,000 barrels of oil a day.

Far cheaper than shipping the oil through the Panama Canal, the pipeline has become the principal conduit for the transport of Alaskan oil to markets along the East Coast of the United States. It also became, as spokesman Ackell described it in a Voice interview, “the biggest thing going in the Panamanian economy,” throwing off hun­dreds of millions in taxes, fees, and pay­ments to Panama’s government, which is a partner with Northville in the ownership of the line.

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Of course, the government of Panama in 1983 was dominated by military strongman Manuel Noriega. Already serving as the number-two man in the Panamanian mili­tary that January, he was slated to become commander in chief by March under the terms of a prior agreement with his ally, Ruben Paredes (a short delay resulted in Noriega’s formal takeover that August). The country’s civilian vice-president, Jorge Illueca, a Noriega front whom he would later install as president, hosted the actual opening ceremony, which was held near a remote Indian village outside Panama City at the Atlantic terminus of the pipeline.

While Ackell says he did not see Noriega himself at the ceremony or any of the host of receptions and other events surrounding the four-day celebration, others remember his participation, including Noriega’s one­-time minister of commerce and industry Mario Rognoni, who is currently the oppo­sition leader in the Panamanian National Assembly. Ackell also tries to downplay the company’s relationship with Noriega dur­ing the flush years of 1983 to 1987, but he concedes that Northville “had to find a way to work with each administration.” Everett Briggs, the American ambassador to Pana­ma during most of that period and current ambassador in Portugal, goes a bit further, recalling that “it’s safe to say” that the relationship between Northville and Nor­iega was “probably very good.”

Just how D’Amato fit into this relation­ship is somewhat murky, though Ackell ac­knowledges that the senator “might have been identified with the company” in the minds of Panamanian officials, then and now. The senator flew down to Panama for a second four-day stay paid for by North­ville in December of 1983, after Noriega’s formal ascension to power, but Ackell said he could not recall why (Northville paid for a third D’Amato trip in 1988 as well, this time, to Pennsylvania).

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Escolastico Calvo, the editor of a Pana­manian newspaper who once served as a close Noriega aide, specifically recalled a D’Amato meeting with Noriega in Panama, but was fuzzy about the timing. And legisla­tor Rognoni was certain that D’Amato and the general “knew each other personally” and that D’Amato was “friendly” with the Noriega government “while he was dealing with his business interests,” which he iden­tified as Northville. D’Amato routinely vot­ed in favor of military and other aid appro­priations for Panama during these years, though he hardly distinguished himself as particularly active on these issues.

What he did distinguish himself on was pipeline legislation. As a member of the banking committee, which has jurisdiction over the Export Administration Act, he be­came a cosponsor in 1983 of a bill that passed the Senate a year later extending the Alaskan oil ban for six years. D’Amato even went so far as to introduce, with a handful of other senators, an unsuccessful measure to extend the ban forever. This bill also attempted to void the conditions con­tained in the old law that permit the presi­dent to lift the ban, with the consent of Congress, if he could make a showing that it was in the national interest (D’Amato is still pushing this rather extraordinary bill, having cosponsored it again in 1990). The ban is still effective even though its last extension expired in 1990, since it remains in force unless the president meets the conditions set in the law for lifting it.

There is little doubt about why D’Amato has been such a pipeline champion. Ted Sorenson, the former Kennedy aide who has represented Northville for years, says D’Amato called him at one point in the 1983 controversy over the bill: “He said he was going to make a speech for it on the floor and I said fine.” Why was he on the inaugural trip and why has he been such a strong supporter of the ban? “He’s a friend of Harold Bernstein,” explained Sorenson. “They went way back.” Steve Toth, the Washington lobbyist for Chicago Bridge & Steel, which is a 20 per cent partner of Northville and the Panama government in the ownership of the pipeline, put it simi­larly: “D’Amato supports the ban because the principal owner is Northville Industries and Al supports his constituents. He shows his support with his votes.”

Like Northville and the other bulwark of the lobbying force behind this legislation, the maritime industry, D’Amato has resist­ed any efforts to modify this total ban. The coalition even opposed Alaska Republican senator Frank Murkowski’s amendments to permit the export of 200,000 barrels a day. Based on the premise that it is wrong to bar only Alaska from exporting its oil, Mur­kowski’s changes were nonetheless rejected, though he offered to continue to require that the exported oil be carried on U.S.-flag tankers.

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Critics of the ban, like Marshall Hoyler, who did a study for the Georgetown Uni­versity Center for Strategic and International Studies, have branded it “a scandal,” saying it has “enriched a small number of individuals and corporations, who have formed a vocal interest group in its behalf.” Hoyler calculated years ago that federal revenues would jump over $10 billion over the next quarter century if the ban was dropped (and that oil costs would drop over the long haul). A staff economist for the Senate Banking Committee, Paul Freeden­berg, explained the support for the ban when the D’Amato extension was under consideration in 1983 by observing: “Too many people are making money because of the way it is now.”

While the strongest rationale advanced for the ban is the need to reduce American dependence on foreign oil, William Silvey, the Energy Department’s planning director, argued when the ban was last extended that “the congressional perception” wasn’t tak­ing into account that “there is one world petroleum market and that we are part of it,” concluding that because of the export restrictions, “we are charging ourselves more than we need to” for oil.

But there are indications that D’Amato’s ties to Northville help explain more than just the pipeline aspects of his Panama pol­icy. All the public remembers about D’A­mato and Panama is his explosive opposi­tion to Noriega, when he moved center stage in the Washington debate about Pana­ma policy in mid 1987, at first urging sanc­tions and eventually an invasion. Though D’Amato’s rage was ostensibly over Norie­ga’s cocaine trafficking (D’Amato called him “a tinhorn drug dealer”), it is hard to explain it on just those terms. Sy Hersh had revealed Noriega’s smuggling activities in June of 1986 on the front page of The New York Times, even detailing an American plot to assassinate the then lieutenant colo­nel in the 1970s as a common drug dealer. Yet D’Amato remained silent for almost a year.

Like many other senators, D’Amato moved when Gabriel Lewis, the former Panamanian ambassador to the U.S. and onetime Noriega ally, broke with the gov­ernment and began lining up opposition to it in Washington. One of the architects of the Panama treaty, the well-connected and wealthy Lewis, who once hid the Shah of Iran in his Panama home as a favor to American authorities, struck up a close re­lationship with D’Amato. Long tied to the Kennedys, and close to Ted Sorenson, Lew­is was one of three Northville appointees on the board of Petroterminal de Panama, the joint venture of Northville, Chicago Bridge & Iron, and the Panamanian gov­ernment that owned the pipeline.

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Lewis pieced together the Kennedy/D’Amato alliance that suddenly turned the Senate into a firestorm of Noriega opposition. D’Amato even became a harsh Rea­gan administration critic on the issue, blast­ing the administration as
“cowards” for not moving against the general and provoking Defense Secretary Frank Carlucci to public­ly object to D’Amato’s “insults.” The sena­tor solidified his relationship with Lewis during this rhetorical war, getting so close that he has become a periodic visitor at Lewis’s Panama estate since Noriega’s ovenhrow.

It would be an oversimplification to attribute D’Amato’s sea change solely to a Northville agenda. While many factors were surely involved, D’Amato’s goal of compelling an American take-out of Nor­iega was perfectly compatible with North­ville’s objectives. The company’s spokes­man Ackell concedes that during this period, Northville was “very anti-Noriega,” including “everybody who worked for us down there, from the workers to the manag­ers,” adding that the company was “pleased” with the December 1989 inva­sion. Indeed, on the eve of the invasion the Washington Post reported that if it “contin­ues as planned, it should become easier for Northville Industries to do business in Panama.”

Relations between Northville and Nor­iega were so strained in 1988 and 1989 that the company stopped meeting altogether with its partners on the Petroterminal board, which Noriega had stacked with his brother-in-law, publicist, and finance min­ister. A freeze ordered by the Reagan ad­ministration, and expanded under Bush, barred Northville and other American busi­nesses in Panama from making any pay­ments to the Noriega government, and Northville pumped over $70 million due to Panama into an escrow account here. Northville got a waiver from federal offi­cials so that they could keep the payments in its own account, rather than make them to the exiled Delvalle government, a shell entity recognized by the U.S. Fat with funds from other American interests, the Delvalle government retained as its lobby­ist John Zagame, the former D’Amato aide who is still very close to the senator, and Rich Bond, the current head of the Repub­lican National Committee.

Throughout these tense two years, the pipeline continued to function virtually un­interrupted, with Noriega apparently con­vinced that any disruption of the line might be used as a rationale for an American invasion. He even used his army to force striking electrical workers back on their jobs in early 1988, in part because the strike had knocked out a pumping station along the pipeline. While anti-invasion leaders like Rognoni believe that Northville was itself trying to cause a stoppage in early 1988 to provoke U.S. action against Nor­iega, Ackell says the company was simply biding its time.

Since Noriega was replaced with the cur­rent American-installed Endara govern­ment, relations with Northville, said Ackell, have been “very good, as good as things can go.” The only one left muttering is opposi­tion leader Rognoni, who calls D’Amato a hypocrite and claims that Noriega himself once told him “how surprised he was that D’Amato had turned against him.” ❖

SPECIAL REPORTING ASSISTANCE BY SUSANNA DOYLE. RESEARCH BY SCOTT ANDERSON AND LOU PACILLI. 

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LETTERS TO PRISON

While U.S. Senator Al D’Amato was ready to go to war in Panama to nail one drug dealer, his office relayed letters to federal prison officials on behalf of 23 drug dealers who were complaining about their treatment in jail, the Village Voice has learned. The senator also for­warded letters from two mob bosses, in­cluding Phil Rastelli, the former head of the Bonanno crime family.

While other federal officials also pass along similar letters, D’Amato has set a record for one more form of constituent service. The U.S. Bureau of Prisons says it sent 50 prisoner response letters in a recent year to D’Amato, compared with a mere 15 for D’Amato colleague Pat Moy­nihan, and a total of 13 to a sample group of five congressmen.

From 1987 10 1991, crimebuster D’Amato sent more than 200 such letters about inmates whose offenses ranged from heroin and cocaine distribution to murder and racketeering. The prisoners’ sentences ranged from a year to 75 years, including one drug dealer with a 20-year sentence. Because prison officials will only disclose fragments of the correspondence file, it is impossible to determine how many times D’Amato wrote his own letter on behalf of the prisoner in addi­tion to relaying the prisoner’s letter.

The letter D’Amato forwarded for Phil Rastelli sought a transfer from Oklahoma to a prison closer to his New York home, citing medical reasons. The June 1987 letter to D’Amato was written only eight months after Rastelli began serving a life sentence. When D’Amato sent the Ras­telli request to the bureau, his form letter took no position on the merits of the proposed move.

Robert Fueselo, executive director of the Chicago Crime Commission, said he regarded the routine forwarding of these letters “as inappropriate as can be to act on behalf of any prisoner who has been involved in hideous crimes, let alone an organized crime boss.” Rudy Giuliani said it was okay to forward this kind of letter without screening it, “except in the most notorious cases.” D’Amato for­warded more letters for drug offenders than any other criminal category. — W.B.

Categories
CITY HALL ARCHIVES From The Archives NYC ARCHIVES THE FRONT ARCHIVES

Meade Esposito, Runnin’ Scared

State Supreme Court Judge Alvin Klein’s recent dismissal of a legal motion to unseat Brooklyn Democratic boss Meade Esposito was in part the result of a series of compromises and a lack of prosecutorial zeal by State Attorney General Robert Abrams.

Abrams, who inherited the complaint against Esposito from former Attorney General Louis Lefkowitz, cooperated with Esposito’s attorney in the selection of Judge Klein to hear the case, allowed Esposito to miss two default deadlines, failed to use important evidence he had gathered against Esposito, and did not even seek out other available and obvious evidence. Last week Abrams, who was supported by Esposito for attorney general in 1978, refused to answer specific questions about the case directly, despite repeated requests by the Voice. Instead, Abrams’s press aides selectively responded to some of the questions and issued a general denial, calling “any insinuation that the Esposito matter” wasn’t handled thoroughly and professionally “reckless and totally inaccurate.”

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The County Leader’s New Clothes
Klein’s decision itself represents a cynical attempt to isolate the law from the real world, surrounding Esposito with legal fantasies so bold as to nullify the last century of machine politics in this city. The essence of Klein’s ruling was that Esposito, who has become a caricature of the county party boss, is in fact no boss at all and thus cannot be penalized for breaking state laws that limit the commercial activity of a county leader.

The complaint alleged that Esposito violated a 25-year-old statute that requires public and party officials to forfeit their office if they do any business with a racetrack. Esposito was charged with sharing in the insurance and mortgage fees for the Parr Meadows racetrack in Suffolk County. (He was paid as a partner in two firms that represented the track.) Two weeks ago, Klein decided that Esposito couldn’t be required to give up the office of Brooklyn county leader on the novel ground that there is no such title in the Brooklyn party. A few hours after Klein’s decision was released, Abrams announced his intention to appeal. But indications are that Abrams contributed to the awkward result he is now challenging.

Klein based his decision on the fact that Esposito, like every other county leader in every borough for decades, holds the title of “chairman of the executive committee” of the Brooklyn organization. A strict reading of the rules of the organization, claimed Klein, reveals no reference to the term “county leader.” The language of the statute used against Esposito covers “county leaders” and a host of other titles, but does not specifically list the title “chairman of the executive committee.” So, concluded Klein, the law does not apply to Esposito. “He is not the county leader,” wrote Klein, “since no such position exists.”

Klein granted Esposito’s motion for summary dismissal of the case, meaning that the question of whether or not Esposito is a county leader is so beyond doubt that it is not a “triable fact.” Though Esposito’s attorney, James LaRossa, submitted an affidavit denying that Esposito was a county leader, Esposito himself was not even asked by Klein to do so. If Klein had asked, it would’ve blown the whole house of cards. Esposito wouldn’t have denied he was county leader in a sworn statement because that would’ve invited a perjury prosecution.

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Unless the appeal prevails and a trial before a jury is eventually ordered, Esposito may never have to admit in court that he is in fact the cigar-chomping, jowled, potbellied, gravel-voiced party boss he’s been playing these 10 years. If the facts stand as Klein left them, Brooklyn will have but a shadow leader, masquerading at Foffe’s Restaurant and on Court Street as a kind of historic replica of the old machine tradition. Klein has abolished the position in order to allow Meade to continue to hold it. But, after Klein’s decision, all Esposito will legally hold is an obscure and bureaucratic title having something to do with an executive committee. Brooklyn, the grand old county of organization politics, will have no official leader.

When I visited Klein and his law clerk, Steve Zarkin, I asked them why Esposito hired one of the most expensive criminal lawyers in town to defend a position he didn’t hold. Since the worst that could have happened to him under this statute was the forfeiture of the title “county leader” — not the loss of the executive committee chairmanship — why fight to keep a title that Klein insists doesn’t exist? Seemed to me, I said, that his willingness to pay to defend the title proved he had it. Klein looked bewildered. Zarkin laughed. “To tell you the truth,” said Zarkin, “we never thought of that.” Apparently neither did Bob Abrams. But then again, it might not be much of a legal argument. It makes too much sense. And Klein was bent on redefining the universe, turning his courtroom into an abstraction uncomplicated by the nuisance of real life.

There was a kind of “Free Meade” hysteria beneath the surface of both the decision and my interviews with Klein, Zarkin, and others about this case. The statute used against Esposito is viewed as ancient, and the violation as technical and ill­-matched to such a grand loss of power. As a result of this thinking, there were few limits on the willingness by Klein and others to invent frivolous dodges that sidestepped the obvious. But the statute is a sound and tested conflict-of-interest prohibition, and the clear intent of the 1954 legislature that adopted it was to bar political leaders able to influence racing legislation from acquiring an interest in those same racetracks.

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Picking the Judge
After years of watching election cases in Brooklyn courts, I learned that the critical moment in political cases is when the judge is assigned. I recall one case where countervailing political pressures twice succeeded in changing the judge assigned and, with each switch, the preordained winner also changed. Two powerful, regular Brooklyn organizations were battling over the assignment and, once the judge was finally in place, the leaders who lost the assignment battle never even appeared for the hearing. Everyone knew how the county had decided the case would go.

In his last month in office, prodded by insistent revelations in Newsday concerning Esposito’s interests in the racetrack, Lefkowitz brought the case against Esposito in Manhattan Supreme Court. The technical grounds he used to bypass Brooklyn courts was that the attorney general’s office is in Manhattan. Lefkowitz’s choice of venue was an implicit indictment of the Brooklyn judiciary. But the chances of finding an independent judge in Manhattan to handle so extraordinary a political case were only slightly better than in Brooklyn.

The Manhattan judicial district includes the Bronx, and Alvin Klein became a judge after a lifetime of politics in the Bronx regular Democratic organization. For 14 years he was personal secretary to the legendary Bronx county leader and congressman, Charles Buckley. In 1963 Buckley decided to reward Klein with a civil court judgeship. But Buckley’s antagonist, then mayor Robert Wagner Sr., balked momentarily, in part because the bar association had rejected Klein as unqualified. So county leader Buckley called a meeting of the Bronx executive committee, which he chaired, and they anointed Klein as the party candidate anyway. Wagner was subsequently forced to agree. So Klein knows something about executive committees and county leaders: that’s how he became a judge.

Esposito is the heir to a boss tradition symbolized by Buckley and his Manhattan ally, Carmine DeSapio. The best example of Buckley’s style of leadership was his boast once at a dinner honoring the Bronx district attorney that every assistant DA in the Bronx for the previous 50 years had been recommended by his district leader. “They were not Liberals or reformers,” he said, “they were honest-to­-God Americans.” It was a couple of decades of subservience to that kind of organizational mentality that prepared Klein for his decision in the Esposito case.

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I asked Klein if he regarded his former mentor Buckley as a county leader and whether Buckley held the same executive committee chairmanship as Esposito. Klein said yes to both questions, then conceded: “He was in the same position as Esposito.” Catching his own slip, he corrected himself: “I may have looked at Mr. Buckley as the county leader … But suppose 50 people call somebody a boss. Suppose the newspapers call somebody a boss. That doesn’t mean he’s a boss.” As one attorney familiar with both the case and the judge told me: “Klein couldn’t do anything but decide that way. His whole life has led him to certain feelings about these institutions — the party, the leadership. No one would have to buy a contract to persuade him. The instincts of a lifetime would only permit one result.”

If anyone should’ve known that about Alvin Klein, it was Bob Abrams. Abrams got his start as a Bronx reform assemblyman in the mid-‘6os, fighting against the Buckley machine. Klein says that he and Abrams met in Bronx politics and have known each other for years. Pat Cunningham, who came out of the same Bronx club as Buckley and Klein and eventually became Bronx county leader, used to call Abrams the “Hirohito of the Bronx reform movement” — meaning its kamikaze pilot, its cutting edge. It was Abrams’s archfoe Cunningham who elevated Klein to a Supreme Court judgeship at the 1972 judicial convention. Indeed, when I first talked with Abrams’s aides about the Esposito case, they were openly contemptuous of Klein’s machine roots and his shabby legal reasoning in this case. All of this made it only the more surprising when I later read the full court file on the case and discovered that Abrams had acquiesced in the selection of Klein.

Judge-shopping in Manhattan courts begins in something called Special Term Part I, where much civil litigation is processed. Judges are assigned to Special Term on a weekly, rotational basis by Administrative Judge Edward Dudley. As certain pretrial proceedings are filed in Special I, they are marked on the calendar of whatever judge happens to be sitting in Special Term when the papers are ready for what’s called “final submission” (that is to say when both sides are ready to have the matter heard). The judge who gets a case while in Special Term may often be the judge who eventually decides it.

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Alvin Klein was assigned to Special Term a total of five weeks in his first five years in the Supreme Court, far less than many of his colleagues. He has mostly worked the criminal courts, where he has never had any difficulty recognizing felons or understanding legislative intent. Klein was assigned to begin his first week of service as a Special Term judge this year on May 14. One of the first cases submitted to Klein the morning of his first day on the bench was Abrams v. Esposito.

What got the case before Klein was a stipulation signed on May 9 by Abrams and LaRossa, Esposito’s counsel, which specified that even though the case would not be ready for submission until June 6, both sides would accept May 14 as the submission date, putting the case squarely in Klein’s lap.

The scenario that preceded the stipulation makes it even more difficult to understand why Abrams agreed to it: Abrams filed the complaint on April 10, giving LaRossa the required 20 days to answer or default. The 20 days expired and LaRossa hadn’t answered. So Abrams gave LaRossa a five-day extension.

LaRossa filed his motion to dismiss the complaint on May 4 and, in his papers, set the return date as May 14. LaRossa could’ve picked any day for the next couple of months as a return date. He picked Klein’s first day. In leaving only 10 days between the filing of his motion and the date for final submission, LaRossa was giving Abrams the shortest amount of time to reply permissible under the rules of the court. Presented with this rushed deadline and having already granted LaRossa an extension, Abrams had a sound legal basis for requesting and getting an adjournment of the May 14 date, putting the case before a judge other than Klein. A check of the court calendar revealed there were several brighter prospects: Judge Oliver Sutton, whose leanings in a case like this are certainly less predictable than Klein’s, was scheduled for the next week; Judge Martin Stecher, one of the city’s most respected and independent jurists, was set for the second week in June, almost exactly to the day the final papers really were submitted.

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Instead of seeking another date, Abrams executed the stipulation, and on May 14 the stipulation was filed with Klein, giving him custody of the motion. Because the hearing date had been adjourned by agreement, no appearances were made by either side, and there were no submissions of any papers. Abrams met the deadlines set in the stipulation and submitted his final papers opposing the motion on May 31. LaRossa didn’t, and once again Abrams gave him an extension.

Abrams’s press aide told me they signed the stipulation because “the alternative was to throw ourselves at the mercy of the court” and go before Klein on May 14 “with the possibility that the judge would refuse the adjournment and not give us the time we needed.” This explanation, especially in view of LaRossa’s delays and the short response time, seemed implausible to the lawyers I asked about it. Abrams’s aide added that the attorney general didn’t want to ask for an adjournment because Newsday editorials had criticized Lefkowitz for his delay in bringing the case, and they didn’t want to open themselves to the same criticism. This argument doesn’t say much for Abrams’s willingness to take possible short-term flak to achieve long-term success. It is also a little silly since the stipulation was signed by Abrams and constituted a postponement anyway. Presumably Newsday might’ve been persuaded that some judge-shopping delays were justified.

Though Abrams’s press aides did their best to portray Abrams as having been forced to take Klein, the judge volunteered to me that he “understood that Abrams wanted this case before me.” Klein contended: “I wasn’t looking for this case. They signed a stipulation to put it before me. It is my understanding that Abrams’s office initiated the stipulation because Abrams knew I would decide this case solely under the law as I saw it.” After hearing this, I called Abrams’s office, informed them of the judge’s “understanding,” and asked if they’d “initiated” the stipulation. They never got back to me with an answer.

There are only two possible explanations why LaRossa and Abrams might’ve wanted the same judge: either Abrams miscalculated and, despite Klein’s background, thought him a worthy trier of this sensitive matter, or both sides were after the same result.

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Proving the Obvious
In an extensive reply-brief and affidavit, Abrams’s staff managed to devote no more than a handful of paragraphs to the issue of Esposito’s role as county leader. The document went on for pages on the intricacies of the Parr Meadows transactions and submitted an inch-thick stack of documents and exhibits supporting their analysis of these aspects of the case. But their only evidence establishing that Esposito is a county leader was a collection of half a dozen news clips. You don’t have to be a lawyer to know the probative value of a Daily News story calling him a county leader. Abrams also resubmitted the evidence Lefkowitz originally offered: a 1975 state Red Book listing Esposito as a “county chairman.” That was all Abrams could marshal to prove the pivotal fact in the case.

I thought he could have done better. I went to the archives of the Kings County Democratic organization at St. Francis College in Brooklyn. Archivist Arthur Konop said that no one from the attorney general’s office had ever reviewed any of his records, including the minutes of every meeting of the executive committee from the 1880s to 1969. I started with 1969 and worked my way back to 1920. The record made it unmistakably clear that the titles of county leader and chairman of the executive committee are historically indistinguishable. In these records, every chairman of the executive committee in this century has been described — or has even described himself — as county leader.

The archives’ records end when Esposito became county leader. But since then, there haven’t been any rule changes that would alter the equation of titles that is already a century old. Nonetheless, I decided to try to see the recent records and called Bill Gary, secretary of the county organization (once listed by Jack Newfield among the 25 worst hacks in city government; Voice, December 8, 1975). When Gary did not return my calls, I went to see him at the party’s Court Street headquarters. He would not let me in his office, but I did make it into the reception area, where I could see him and he could see me. We shouted back and forth at each other. Gary, who is Brooklyn borough president Howard Golden’s former law partner and was editor of the City Record under Abe Beame, told me that the minutes of the largest county political party in the state are “not public record.” He sneered, laughed, and snapped: ”You’re not gettin’ anything outta here.” (The Voice has asked the New York Public Interest Group and the ACLU to examine the possibility of bringing suit to unlock the apparently private records of the Brooklyn Democratic Party.)

When I questioned Abrams’s office about why they hadn’t pursued these records, they called back with an answer that raised new questions. An aide said that Abrams had “substantial, additional evidence” to prove Esposito’s county leader role, but refused to say what the evidence was. He just described it several times as substantial and then said they didn’t submit the evidence to Klein because “it was not necessary at the initial stages of the case.” We all have to wonder what they are saving it for.

Of course, the evidence they chose not to use, as well as the archive records they never reviewed, cannot now be added to their appeal. The Appellate Division will only have whatever evidence Klein had. That makes it at least conceivable that the appeals judges will reach the same conclusion. Of course, they may be more willing than Klein to open the case to a common-sense nose test about Esposito’s county leadership. In that case, the paucity of the evidence won’t matter that much. But even if the Klein decision is reversed on appeal, Esposito has, at the very least, bought time.

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A Background of Relationships
Joe Conason (Voice, June 26, 1978) covered the state Democratic convention that nominated Abrams for attorney general. Conason described how reformer Abrams entered the convention with 76 percent of the delegate vote, including the support of almost all the regular party leaders, and then barely held on to the majority he needed. When Governor Carey, Queens county leader Donald Manes, and upstate party leaders subtly moved away from Abrams, and some of them lined up behind Abrams’s opponent, Delores Denman, Abrams was able to keep two county leaders behind him: Esposito and the Bronx’s Stanley Friedman. When Conason asked Esposito about Abrams becoming a regular, Esposito laughed and said: “He’s just come out of the closet, that’s all.” Esposito explained his persistent support of Abrams as “following his conscience.”

Conason also described the increasingly close political relationship between Abrams and Bronx leader Friedman. Friedman, who has spent his career working for Brooklyn regulars like city council majority leader Tom Cuite and Mayor Beame, is the county leader closest to Meade. Their recent two­-county partnership is the talk in regular party circles.

Judge Klein has a long-standing friendship with Friedman and Friedman’s law partner, the omnipresent, sometimes Esposito counsel Roy Cohn. Klein described Cohn to me as “a close personal friend for many years” and said he’d attended several of Cohn’s parties.

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Klein said, however, that he never discussed the case with either Cohn or Friedman. Cohn said he’d had nothing to do with the case, but the minute I asked him about Klein, Cohn went directly to the question of Abrams: “I never had a case with the attorney general’s office,” claimed Cohn, “where the AG didn’t have a strong say in picking the judge. He usually controls when it comes up.” These shifting relationships — Klein, Cohn, Friedman, Abrams, Esposito — form the important backdrop to this case.

The other leading Bronx reformers of the Abrams period — Jay Goldin and Herman Badillo — have become, respectively, an embodiment of the bus­-shelter scandal and a silenced, outcast deputy mayor. Their Manhattan and Queens reform colleagues, Manfred Ohrenstein and Jack Bronston, are now collecting legal clients such as shelter-scandal magnate Saul Steinberg. Brooklyn’s reform linguist Shirley Chisholm has become a fund-raiser and political bulwark for convicted felon and former councilman Sam Wright, as well as Esposito’s brightest black star. Ed Koch, the reformer who beat Carmine DeSapio 16 years ago, has a special relationship with Canarsie district leader Tony Genovesi, who comes from Esposito’s home club and has been chosen by Esposito to succeed him as county leader.

And now Bob Abrams has prosecuted Esposito on a dual track. For public consumption, he refiled the Lefkowitz complaint and is now doggedly appealing his loss. But on another level, he has left a trail of subtle omissions and gentlemanly concessions which allowed Esposito to win.

Reform in this town is but a phase in the political maturation process. When those who successfully use it grow up and reach an appropriately lofty height, they allow themselves to become the compromised, but still temporarily respectable, veneer for the same power relationships they previously campaigned to “reform.” ❖

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Categories
From The Archives NEW YORK CITY ARCHIVES NYC ARCHIVES THE FRONT ARCHIVES

Harrison Goldin: A Very Small Town

At the beginning of [Donald] Trump’s campaign for Board of Estimate support of the Com­modore abatement plan in late 1975, Trump and attorney Sandy Lindenbaum met with Comptroller Harrison Goldin and Dick Wells, a Goldin aide. Goldin wound up the meeting by assigning Wells to meet with Trump and Lindenbaum to study the par­ticulars of the project. Wells didn’t handle Board of Estimate matters for Goldin then, nor was he experienced in assessing a compli­cated real-estate transaction. Instead, Wells, who managed Goldin’s recent statewide campaign, was described to me by a former Gol­din aide as the comptroller’s principal politi­cal assistant.

Those on Goldin’s staff who did handle Board of Estimate issues, as well as those ex­perienced in real-estate transactions, were ex­cluded from these early discussions. In place of them, Wells involved Charles Goldstein, a partner in the law firm of Baer and McGold­rick, to serve as a pro bono counsel to the comptroller in assessing the Trump proposal. The addition of Goldstein further politicized the issue.

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The Baer firm, which recently became Schulte and McGoldrick, has been the legal and fund-raising arm of Goldin’s political campaigns for at least a decade. Goldin says he’s known Thomas Baer, a founder of the firm, since he was 13 years old. He has known Charles Goldstein for 15 years. Elev­en partners and associates of the firm con­tributed $10,000 to Goldin’s 1978 race. Even when he had only minor opposition in 1977, the same 11 kicked in $6100. The return ad­dress on Goldin’s filings with the Board of Elections was 460 Park Avenue, the Baer firm’s address. In 1973 five different Baer partners were listed as treasurers for 15 diff­erent Goldin committees in his first campaign for comptroller. Goldstein is even listed as a treasurer for Goldin’s 1972 state senate race.

Goldstein began negotiations with Trump and city attorney Michael Bailkin, who de­signed the tax-abatement plan. The initial plan called for Trump to purchase the hotel, sell it to the city, and then lease it back from the city at a nominal rental (and no real-estate taxes). “Goldstein argued that the city lease­back might have constitutional problems,” recalls Bailkin. “So he suggested we use the state’s Urban Development Corporation.” Goldstein and Wells discussed the UDC con­cept with its president, Edwin Cohen, another close Goldin associate. Cohen and Goldin had been associates in the same law firm in the ’60s; Cohen’s wife worked in Goldin’s office as an assistant counsel.

Goldstein happened to be on retainer as outside counsel to UDC at the time. He represented the agency in co-oping apart­ments on Roosevelt Island, a business with­out much of a future since the project was near completion. His UDC fees had declined from $73,000 in 1974 to $29,000 in 1975. The negotiations — now between UDC, Bailkin, Goldstein (still representing Gol­din), and Trump resulted in the following ar­rangement: The leaseback arrangement would be with UDC, not the city; UDC would receive a $300,000 fee and Goldstein would be retained as UDC’s counsel on the deal (his fees would be paid by Trump and funneled through UDC). “I suggested that UDC retain Goldstein,” explained city anor­ney Bailkin, “because the comptroller trust­ed his judgment. I thought it would secure Goldin’s vote for the project.”

In the first of what has become a series of city-UDC business-incentive projects, Gold­stein earned $66,000 on the Commodore. Though Goldstein had done no economic­-development projects for UDC prior to the Commodore, he has since been paid $857,ooo in fees and expenses on a dozen in­centive projects. Every investment project represented by the Baer firm has been sup­ported by Harrison Goldin at the Board of Estimate, though his staff has sometimes re­quired changes in the terms. (Goldin subse­quently hired a staff assistant referred to him by Goldstein and assigned her to handle all of Goldstein’s projects at the board.)

Goldin’s support of the UDC tax-exempt projects is ironic since a recent draft audit by Goldin has assailed another city program of business tax exemptions as giveaways. UDC is not involved in this other program, whose abatement terms are not nearly as generous as are the Goldstein deals invariably supported by Goldin.

Goldin said that anyone who believed that Goldstein’s retainer would secure his vote for the Commodore and subject incentive pro­jects was “naive.” He denied that he had any special tie to the Baer firm and claimed that he’d known each of the 11 partners who con­tributed to his campaign before they joined the firm. “It’s really quite a small town,” he explained.

Goldin insisted that he would not have signed off on the project unless Walter Praw­zinsky, his deputy comptroller, approved it. I asked him if that meant Prawzinsky, a ca­reer civil servant known for his fiscal shrewd­ness, was an unelected comptroller. Goldin quickly explained that he made the policy de­cision as to whether or not the Commodore tax exemption and UDC/city agreement should be supported. He said Prawzinsky merely indicated when he’d extracted the best terms from Trump that he thought he could. Prawzinsky was not involved in Goldin’s initial meeting with Trump and Lin­denbaum. Nor was he consulted when Gol­din turned it over to Wells and Goldstein. He was brought in later in the process and by the time he was, he knew where Goldin, Wells, and Goldstein stood. All that was left for him was a salvage job.

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•••

Sources close to UDC say that Goldstein’s firm has, in effect, run the UDC legal depart­ment in recent years. While the Goldin con­nection may have had something to do with Goldstein getting into the UDC contracts, it’s clearly not the only factor keeping him there. The firm contributed $7800 to Carey’s recent race. They’ve also established a close relationship with UDC’s new president, Richard Kahan, who was formerly staff di­rector for the incentive projects and worked closely with Goldstein.

When Kahan was named president by Carey, Goldstein co-hosted a formal celebra­tion at the Plaza Hotel. One partygoer described the scene: “I got an invitation to ‘meet the new president’ of UDC, and here it’s from a guy UDC pays fees to. I went and there was a Baer partner at the door. He would steer each dignitary that arrived over to a photographer who’d take pictures of Ka­han, the dignitary, and a Baer partner togeth­er.” Another Baer partner, who’d gone to law school with Kahan, did the closing when Kahan bought a $60,000 East Side co-op. Under Kahan, Baer fees at UDC have con­tinued to rise.

Last October, Kahan asked the Baer firm to handle negotiations on a new Trump/UDC project, the $400 million convention center. Earlier, Ed Koch had named Baer, formerly the head of the firm and still associated with it, as his pro bono representative on conven­tion-center negotiations. The city and state — in the person of Baer and Goldstein — could negotiate convention-center positions without ever leaving their office. Goldstein could now bill UDC for discussions with his own former partner.

Though his firm earned more than a mil­lion public dollars from UDC and city con­tracts he got through Goldin, Goldstein re­fused to talk to me. ❖

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The Bowery and the UDC: Letter Perfect

Across the street from the Commodore is the main branch of the Bowery Savings Bank, with $5 billion in assets, second largest savings bank in the country. The Bowery’s stake in the renovation of the Commodore is unmistakable. The Bowery stated that inter­est in an impassioned letter to the Board of Estimate supporting the Commodore project and warned that the hotel would become “a major blighting influence in midtown Man­hattan” unless renovated.

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Bowery had a relationship with UDC. Its marketing vice-president, Pazel Jackson, had been appointed to the UDC board by Carey in 1975. UDC chairman Richard Ravitch was also a friend of the bank’s and would shortly be named to its Board of Trustees. Ravitch and Jackson voted for the UDC general pro­ject plan on the Commodore, as well as a batch of other resolutions authorizing aspects of the deal. When three resolutions went to the board in May 1978, making the project technically operative, Jackson voted for them (Ravitch had left the board by then). No one ever raised the issue of Jackson’s possible conflict, even after the Bowery became the second largest lender on the project, with almost a $15 million mortgage investment. Ra­vitch wasn’t named to the Bowery board un­til a month after he left UDC.

But the most curious aspect of the Bowery/UDC relationship is the striking similarity between letters sent by both to the city con­cerning the Commodore deal. Each letter makes the same four recommendations to the city on how to structure the deal. In several parts of the letters, the wording is identical.

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One of the issues on which the bank and UDC agreed — in almost exactly the same terms — was that Hyatt’s participation was re­quired. It is easy to understand why the Bow­ery took this position. Since critics of the Commodore plan, like the Citizens Union, had attacked it for ”subsidizing tourists at the upper end of the income scale,” it’s more difficult to explain UDC’s insistence on it as a condition for agency participation in the pro­ject. Neither Ravitch nor Jackson could ex­plain the striking similarities in the Bowery/UDC letters and positions. Nor would the Bowery tell me what its earnings or rate of in­terest was on the Commodore loans, one of three UDC projects it financed that were ap­proved by the Ravitch/Jackson board. ❖

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Richard Ravitch: Ties That Bind?

The Village Voice once called Richard Ravitch “the city’s most honorable builder.” That quote wound up cited in The New Yorker and even in the court records of the Penn Central bankruptcy case (by brokers ­representing Ravitch who were trying to im­press a judge then considering a Ravitch bid). Considering the competition, it wasn’t much of a compliment even then. But his recent record makes it impossible to repeat it. For one thing, Ravitch recently sold his third-generation family firm, HRH Construction Co., so he’s no longer a builder. More important, the Commodore story led me into a series of possible conflicts concerning his role as the unpaid chairman of the state’s Urban Development Corporation:

When Ravitch took over UDC, he brought in his company’s law firm with him — Barrett, Smith, Schapiro and Simon. Since 1975 UDC has paid the firm $1.5 million in fees. They remained counsel to HRH and Manhattan Plaza, Ravitch’s most important housing project, throughout Ravitch’s two-year at UDC. Ravitch told me he saw “no conflict.” This dual role placed a difficult ­burden upon the lawyers in determining what portions of their conversations with Ravitch were to be billed to UDC and what portions to Ravitch’s own company, HRH.

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Two weeks after Ravitch resigned from UDC, he sold HRH to Starrett Housing Co. Starrett would become UDC’s principal builder, with almost $150 million worth of contracts on UDC jobs. Indeed, after the sale by Ravitch, as a Starrett subsidiary, received the contract to build the Commodore, the largest UDC project approved while Ravitch headed the agency. As part of his agreement with Starrett, Ravitch divested himself of any interest in HRH projects like the Commodore (though he set up his own office at Starrett and began working jointly with them on a number of unrelated projects). Ravitch’s longtime partner, Irving Fisher, still president of HRH, is building the Commodore ­and has become both a major shareholder and chief officer of Starrett’s domestic construction activities. The rest of the HRH staff has gone with Fisher.

A week before Ravitch voted to approve UDC’s role in the Commodore in 1976, he wrote the state Board of Public Disclosure: “No part of HRH Construction Corporation’s business has any involvement in any project or activity currently subject to UDC jurisdiction and I do not anticipate that there will be any future dealing with matters subject to UDS jurisdiction [itals added].” A few months after this letter, Ravitch began negotiations with Starrett to sell HRH and Donald Trump began negotiations with Starett to build the Commodore. These negotiations proceeded simultaneously through late 1976 and early 1977, and when they concluded, Starrett owned HRH and Trump was com­mitted to use HRH as his Commodore build­er.

Trump and Ravitch — who are not friend­ly — say they did not talk to each other about their simultaneous bargaining with Starrett. Starrett isn’t answering any questions about what either said to them. Though Trump ne­gotiated with Starrett — not HRH — his con­tract ultimately was made with HRH and he didn’t switch to Starrett until the Starrett/HRH negotiations had begun.

This complicated intertwine may have also affected UDC policy. There were dozens of decisions affecting the Commodore being made at UDC while both the Ravitch and Trump negotiations with Starrett proceeded. Trump and Starrett are partners in major ventures and Trump is the largest equity investor in Starrett City (Ravitch says he was unaware of this relationship). Were Ravitch’s UDC to create problems for Trump’s Com­modore, it might have affected Ravitch’s ne­gotiations with Trump’s friends and business partners at Starrett. Were Starrett assured of a major institutional job like the Com­modore, it might have increased the firm’s interest in acquiring HRH.

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In addition to the Commodore, UDC was at various stages of negotiations on four other projects where Starrett eventually acted as developer or builder. The discussions be­tween UDC and Starrett regarding all of these projects were going on while Ravitch was still at UDC and negotiating with Star­rett himself.

Several months after UDC designated Starrett on these projects, the agency re­quested an after-the-fact opinion from the state Board of Public Disclosure on the pro­priety of these relationships. The ethics guidelines for UDC staff during Ravitch’s reign stressed the need to avoid “not only real compromises of integrity but also the ap­pearance of such conflicts or compromises” and barred direct or indirect financial interest that have “or might soon have a substantial business relationship with UDC.” But the board’s staff secretary managed a decision dated one day after the request and — in one paragraph — found no conflict. There are no public filings about the HRH/Starrett mer­ger; so there is no way to penetrate these ne­gotiations. But the appearance is there: can anyone be sure that Ravitch’s influence over UDC projects was not what Starrett thought it was acquiring when it was negotiating to take over HRH? ❖

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Stanley Friedman: Going Away Gifts

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. ❖

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Koch’s Clan: The Way We Were

NEW HAVEN — It is worth remembering what might have been. If Ed Koch had been elected governor in 1982, Stanley Friedman would not merely be the boss of the Bronx. Governor Koch would have made him head of the state Democratic Party in early 1983. Later that year the governor and his party chief would have moved to elect Donald Manes mayor. Then Manes, as the Queens boss once promised his bagman Geoff Lindenauer, “would’ve really showed” Lindy “how to make money.” In Ed Koch’s city, Stanley Friedman and Donald Manes were the twin towers of insider trading, the most powerful of the mayor’s men. The just­-completed trial record of their crimes is in a sense Ed Koch’s third book — a can­did account, at last, of his government.

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It is also worth remembering what was. Twenty years ago, Donald Manes and Friedman’s codefendant Michael Lazar first assumed public office. In January 1966, they were sworn in as newly elected members of the City Council. At precise­ly the same moment, an unknown club­house lawyer from the Bronx, Stanley Friedman, got his first City Hall job as associate counsel to the City Council majority leader. A few months later, Ed Koch won the Village council seat in a special election and joined the other three in City Hall. The four became gi­ants in this city on virtually the same calendar — until Manes decided to cele­brate their mutual 20th anniversary of public prominence by slashing his wrist on January 10. Lazar was by then king of the clubhouse developers, cut in even on Times Square, while Friedman and Ma­nes owned entire counties. Koch, who be­came mayor in 1977 by running against an administration then dominated by Deputy Mayor Friedman, Transportation administrator Lazar, and Borough Presi­dent Manes, wound up giving pieces of his own government to these same per­manent pols, in exchange for a recurrent position on Manes and Friedman’s Elec­tion Day palmcards. Koch would now have us believe he was naïve. He says he didn’t know who he was dealing with.

Finally, it’s worth noting what’s to come. The Times‘s Josh Barbanel recent­ly reported that the city’s former taxi chief Jay Turoff, slated for trial in Febru­ary on federal bribery charges, may soon be reindicted, adding new charges. His trial will lift the curtain on the operations of another Koch agency ceded to the clubhouse: the Taxi and Limousine Com­mission. In addition, U.S. Attorney Rudy Giuliani told Gabe Pressman on a Sunday talk show that Friedman’s conviction is hardly the climax of the city scandal, that there are more cases to come. Giu­liani says that he has “concrete reasons” to expect the convictions to loosen other tongues. The most likely new government witnesses are two longstanding Friedman allies who, unlike most Friedman friends, never made a supportive appearance in New Haven: Bronx party secretary Mur­ray Lewinter and former city planning commissioner Ted Teah. Bronx beep Stanley Simon has been publicly volun­teering to go into a Giuliani grand jury. The brewing Giuliani cases revolve around cable, towing, and water tunnel contracts, as well as city economic devel­opment projects.

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Former city transportation chief Tony Ameruso has just been indicted, and fed­eral prosecutors in Brooklyn are closing in on the borough’s former Democratic boss Meade Esposito and Bronx con­gressman Mario Biaggi. The new U.S. at­torney in Brooklyn, Andrew Maloney, is still considering the long dormant case against Staten Island beep Ralph Lam­berti. Federal and state probers are also refocusing on the Brooklyn and Queens projects of developer Joshua Muss, whose special relationship with the city’s Public Development Corporation led to his des­ignation for two prime public sites.

There may also be more direct reper­cussions of the Friedman case. Manhat­tan District Attorney Robert Morgen­thau still has his own version of a Friedman case ready for trial. In addition to Friedman and his businessman code­fendant Marvin Kaplan, the state case involves three more principals of Citi­source, the Friedman computer firm whose city contract was the centerpiece of Giuliani’s case. Two of the state defen­dants, Martin Solomon and Kaplan’s brother Albert, regularly attended the trial in New Haven. Since Morgenthau is presently probing a state Citisource deal that involved the Biaggi law firm, this federal conviction may give the D.A. new leverage to cut a deal with the Kaplans that could protect the state defendants not nailed in New Haven.

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While there is no indication that either Kaplan would be willing to cooperate, an­other defendant in the Friedman case, Michael Lazar, went to a lawyer close to Giuliani and tried to negotiate a deal be­fore the trial began. He may well seek to lessen his time in federal prison by reap­proaching Giuliani before Judge Whit­man Knapp sentences him in March. A close friend of Manes’s, Lazar had exten­sive dealings with PDC, the department of Housing Preservation and Develop­ment, and other city and state agencies. Lazar’s trial strategy seemed to concede conviction on the two cash bribe counts and concentrate instead on undermining the two other, more arcane racketeering charges (involving Lazar’s alleged bribe of former PVB director Lester Shafran by offering him an investment opportunity in a mid-Manhattan real estate ven­ture and Lazar’s promise of an equity interest for Lindy and Manes in a collec­tion company, Miller & Rothman, that never got off the ground).

Had Lazar been convicted only on the cash bribes, he could have tried to get the whole case thrown out on appeal by argu­ing that the cash bribes should have been a single count and were arbitrarily split into two counts (under federal racketeer­ing statutes, a defendant must be nailed on at least two racketeering acts). But his conviction on the Miller & Rothman charges, as well as the cash bribes, leaves him with little to appeal (though he is reportedly considering using high-priced appellate attorney Alan Dershowitz). In­deed, the only defendant convicted in New Haven with appealable legal issues is Marvin Kaplan, who was convicted on only two racketeering charges that argu­ably might be regarded as the same act. But Kaplan was also found guilty on per­jury and mail fraud charges.

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Friedman was convicted on every rack­eteering and mail fraud count. The jury apparently had little difficulty making up its mind about Friedman since only one of their notes to the judge asked a question about his case (most of the jury notes required the readback of testimony related to Shafran and Lazar). The one note about Friedman had nothing to do with the allegations involving the Citi­source stock scam, which the jury accepted without question. Clearly the jury did not believe that Friedman, whose two days of testimony constituted virtually the entire defense case, was telling the truth.

So far the Friedman appeal discussions have focused on Judge Knapp’s decision to bar the testimony of an assistant dis­trict attorney who interviewed Manes im­mediately after the first suicide attempt and would presumably have testified that Manes initially lied about trying to kill himself. Friedman attorney Tom Puccio was going to use this testimony, together with a videotape of Manes in his hospital bed admitting he lied, to suggest that Manes had deceived Lindenauer about Friedman’s role in the Citisource scam. Such are the slim pickin’s of a Friedman appeal. ❖

Research assistance: Leslie Conner and Kathy Silberger 

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What Did Koch Know, and When Did He Know It?

Anatomy of a Cover-Up

I’m the perfect route to the downfall of this administration.
— Bess Myerson, New York magazine,
March 30, 1987

In the middle of the afternoon last Friday, Ed Koch slouched in his office chair, with just a cou­ple of cameras to perform for and a handful of print reporters. He’d called a press conference to badger the City Council and the Board of Estimate about the budget, but the reporters wanted one more run through the Myer­son thicket — a complex and mounting series of questions about the mayor’s knowledge of former Cultural Affairs commissioner Bess Myerson’s wrongdoing, which had dominated news coverage at City Hall all week. For the next half-hour, the mayor became a zombie.

“I don’t know,” “I can’t recall,” “I can’t reconstruct that,” were Koch’s answers to question after question. He looked like a man who’d spent the night in an arcade with a pocketful of quarters; a video­game glaze had seized control of him. Having struck out on questions that pushed Koch’s memory about events as far away as 1983, the Voice‘s Wayne Bar­rett asked him to think back to when he first read the Tyler report in early April of this year. Barrett wondered if Koch could recall whether the report’s account of the activities of his close friend and aide Herb Rickman rang a bell with him, sounded like something he’d heard be­fore, or whether it was news to him — the first time he’d ever heard that Rickman had warned both Myerson and Judge Hortense Gabel not to go ahead with the hiring of the judge’s daughter. The mayor paused. The mayor grimaced. The mayor grappled. But nothing came out. He couldn’t remember again.

The mayor’s memory lapses last week were part of a four-year-old stonewall on questions about Bess Myerson. And the stonewall did not end with the confer­ence. Moments after Koch finished, the gray tape recorder that the press office used to record the conference was hurried into a small private office 40 feet from the mayor’s. The office belongs to Herb Rickman, who immediately sat with an assistant, listening to a playback of the mayor’s amnesia.

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Koch cannot be sure that Rickman will decide to match the mayor’s apparent evasions with his own. A former assistant U.S. attorney who voluntarily appeared before Judge Harold Tyler’s commission and the federal grand jury probing Myerson without even retaining an attorney, Rickman has been a sword in Myerson’s gut. If sworn or forced by the press, he might be the same to the mayor. Rick­man knows how many times Koch was warned about Myerson over the past four years and he knows the depths of the mayor’s indifference. Rickman told Tyler a good portion of the truth about Myer­son, but no one, until now, has asked him to spell out his own conversations with Myerson’s stubborn protector, Ed Koch. When Rickman raises his hand for the Ferrick Commission — appointed by Gov­ernor Cuomo to probe the city scandal — ­he may, combined with other evidence of warnings to the mayor, put Koch at the center of a legal firestorm.

The report, news stories over the last week, and Voice interviews suggest the following chronology of cover-up:

1983: FOUR DOORS FROM KOCH 

Around Labor Day in 1983, Herb Rickman, whose office is only four doors down the hall from Koch’s, learned that his longtime close friend, Bess Myerson, had hired the daughter of another friend of his, Hortense Gabel. The hiring deeply disturbed Rickman, who knew that Judge Gabel was then hearing a difficult divorce case involving Myerson’s lover, city sewer contractor Andy Capasso. A week later, the New York Post reported (on Septem­ber 14, 1983) that the Capasso divorce case was heating up and that Myerson and Capasso had “recently been playing coy” about their relationship. This story appeared the same day that Judge Gabel slashed Capasso’s alimony payments by two-thirds. Rickman says he then ar­ranged a meeting with Myerson to warn her about the appearance of impropriety and to urge her not to go through with the Gabel hiring. Later he went to lunch with Judge Gabel and warned her.

But Rickman, who was so troubled he confronted two of his friends face-to-face, has so far maintained that he said noth­ing to the mayor, even though the con­flict of interest involved the possibly ille­gal use of a city job. The mayor also says Rickman divulged nothing to him, noting that it would have been better if Rickman came forward, but insisting that Rickman did nothing wrong. Rickman’s explana­tion for his silence is that Myerson as­sured him that the major decisions in the divorce case had occurred before she hired Sukhreet and that the hiring had been “cleared by City Hall.” These expla­nations temporarily satisfied Rickman, although a City Hall sign-off on the hir­ing — minus the information he had — ­would have been routine. (Of course if Rickman saw the September 14 Post story, he would’ve known that the divorce case was still active after Sukhreet’s hiring.)

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What apparently bothered Rickman was that Myerson’s hiring of the judge’s daughter was a blatant conflict that could attract public attention. His own actions, if they were designed to both help and protect Myerson, suggested a far more subtle approach. Several months before Myerson offered Sukhreet a job, Rick­man began looking for one for her, at the urging of Judge Gabel, whom Rickman had known for years. At a lunch with Sukhreet in May or June 1983, Rickman picked up her resumé. According to Sukhreet, Rickman took it to city eco­nomic development commissioner Larry Kieves, who interviewed her, but did not offer a job. Myerson had simultaneously begun the wooing of Judge Gabel, whose handling of the divorce case had been reported in a March front-page New York Post story that featured a picture of Myerson. During this period, Myerson, Rickman, the judge, and her husband, Dr. Milton Gabel, had dinner at a restaurant. But it is unclear if jobhunter Rickman was acting only out of affection for Judge Gabel or was aware that Myerson was then engaged in what the Tyler report described as a conscious “courtship of the judge.”

The Tyler report says these various contacts culminated in a dinner party at Judge Gabel’s home, attended by about 14 people, on June 17, 1983. Myerson and Rickman attended together. (Rickman, who is gay, and Myerson have been social companions for two decades.) Myerson met Sukhreet for the first time, and the two spent most of the evening chatting. Tyler concluded: “If Myerson was looking for a way to influence Justice Gabel, and we believe she was, it became apparent by the dinner on June 17, if not before, that Ms. Gabel provided the best path to that result.”

Rickman sought a job for Sukhreet while spending several long weekends at Capasso’s Westhampton Beach house, and listening to Myerson and Capasso’s incessant talk about Capasso’s divorce and Judge Gabel. He saw the divorce papers strewn all over the house. With the collapse of his efforts at OED and the pressure of the critical alimony decisions in the divorce case, Myerson took mat­ters into her own hands. Yet when Rick­man learned that Myerson had hired Sukhreet herself — as her own special as­sistant no less — he says he kept his infor­mation to himself. And the mayor now says that’s all right with him.

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OCTOBER 1983: TWO DECEPTIVE LETTERS

On October 18, 1983, the Post re­ported that Myerson’s agency had hired Sukhreet Gabel while Judge Gabel was handling the Capasso case. Herb Rickman was surprised and outraged because the story indirectly attributed the hiring — which he had op­posed — to him. A Myerson spokesperson was quoted as saying that Rickman had tried to get Gabel a job at the Office of Economic Development, but that prob­lems had developed “so her resumé was sent to me.” Rickman told Tyler he an­grily called Myerson and her assistant, correcting the inference that he had something do with the resumé winding up at DCA. But he did not stop there.

Rickman told the press last week that he also informed the mayor the Post sto­ry was incorrect and made it clear that he’d had nothing to do with Sukhreet Gabel’s hiring. During his press confer­ence on Friday, the mayor could not re­call when Rickman told him about the error in the Post story. But sources famil­iar with the facts told the Voice that Rickman went to the mayor about the story “the moment it appeared.”

The timing is important because the day after the story Myerson sent the mayor a letter that responded to the Post piece and falsely contended that “most of what had to be decided” in the divorce case “had already been decided in the first six months, a major part of it in favor of Mrs. Capasso.” On October 21, the mayor answered Myerson’s letter with a brief note of praise, saying Myer­son had done “exactly the right thing in filling an open job with an able person.” The Tyler report has established that Myerson’s description of the hiring pro­cess in her letter to Koch was a wholesale fraud, designed to deceive the mayor.

But the mayor already had two reasons to question the truthfulness of Myerson’s letter. Rickman had just told him that Myerson’s suggestion in the Post story that he’d referred Gabel for the job was false. And the Post story of September 14 established that the divorce case was at such a critical junction after Sukhreet was hired on August 29 that Capasso and Myerson were trying to conceal their own relationship. These facts alone should have prompted Koch to hesitate before enthusiastically endorsing Myerson’s conduct. His own City Hall personnel staff could’ve told him, had they been asked, that Gabel was hired before the vacancy notice was even published, de­stroying the facade of a search concocted in Myerson’s letter.

Tyler concluded that Judge Gabel’s as­sertions that she had not read the Post stories of March and September — which describe her own decisions and link the Capasso divorce to Myerson — were unbe­lievable. Is it believable that the Septem­ber 14 Post piece was missed by Koch, a voracious newspaper reader; Rickman, who had spent much of the summer with the very people named in the story; and the mayor’s chief of staff Diane Coffey, the City Hall liaison to Cultural Affairs who reviewed Myerson’s letter with Koch? At a minimum, this story would’ve alerted them to the falseness of Myer­son’s assertion that the case was virtually over.

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1984: JULY 4 FIREWORKS

The Tyler report indicates that Myerson called Rickman in March 1984 and left a message regarding a state decision to suspend payments on two contracts with Capasso’s company because of apparent violations of law by Capasso in the use of phony minority fronts as subcontractors. By July 1984, Rickman knew enough about an investigation of Capasso’s construc­tion company, Nanco, to warn Koch not to attend a July 4, 1984 party at Capas­so’s Westhampton Beach house. Rickman declined to go himself and called Koch, telling him that he had “heard there was a problem.” Koch, who had been invited by Myerson, said at the press conference last Friday that he went because “there were no indictments.” Ultimately Attorney General Robert Abrams did indict Nanco on these charges.

Rickman’s rejection of the party invita­tion was part of a conscious decision to distance himself from Myerson. Some months back Rickman told New Yorker reporter Andy Logan that he was con­sciously cutting his contacts with Myer­son during this period, gradually ending their social relationship. The Voice has learned that Rickman told the mayor he was disassociating himself from Myerson, although it is unclear precisely when Rickman told him or whether he told the mayor why he was cutting his ties. These discussions, together with Rickman’s call about the party, constituted a second wave of warnings to the mayor.

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1985: THE GIFTS, AND A HIT-AND-RUN DRIVER

In the summer of 1985, Nancy Capas­so’s counsel, Herman Turnow, met with the mayor’s City Hall counsel, Pat Mulhearn. Turnow says he spoke to Mulhearn “about the interrelation­ship of Judge Gabel’s ruling on the alimo­ny and child support to reports that Bess Myerson hired the judge’s daughter.” Mulhearn says they “never discussed the giving of the job to her” or at least that he has “no recollection of that.” Mul­hearn and Turnow agree that they did discuss the propriety of Myerson, a city official, receiving expensive gifts — includ­ing the use of a Palm Beach condo, a company limo, and a Mercedes sports car — from a company with $200 million in city contracts. Mulhearn maintained there was no ethical violation, saying, “After all, they are friends.” Turnow says he discovered in this visit to City Hall a wholly different set of ethical standards than his own.

Mulhearn passed the issue of gifts on to the mayor, but Koch says that Mul­hearn and then corporation counsel Fritz Schwarz told him that acceptance of the gifts was “within ethics guidelines.” At his Friday press conference, the mayor angrily rejected questions by WNBC’s Gabe Pressman, who was pressing him on the appropriateness of these gifts, none of which were listed on Myerson’s finan­cial disclosure statements filed with the city clerk.

When Mulhearn met with Turnow, he was already sitting on another hot potato involving Myerson. Myerson had refused for six months to fire her city chauffeur after the Department of Investigation found that the driver had been involved in a hit-and-run incident while driving Myerson’s city car, that he’d driven Myerson for two and a half years with a suspended license, and that he had improperly been permitted to carry and dis­play Myerson’s city shield when she was not in the car. Myerson had refused to act on a detailed DOI report sent her in February 1985, and DOI had at first en­listed Mulhearn to try to force Myerson to fire the driver. When nothing happened, DOI Commissioner Pat McGinley brought the subject up at a meeting with the mayor, Mulhearn and Deputy Mayor Stan Brezenoff. The mayor reportedly told Brezenoff and Mulhearn: “Take care of it.”

Of course, as the Tyler report fully demonstrated, the driver had intimate knowledge of Myerson’s activities in the Gabel case as well as information about her violations of city law regarding both the gifts and the illegal use of his own services by Myerson. Myerson, who had directed the driver to falsify his mileage reports to the city, was protecting her own accomplice. Despite Mulhearn’s in­volvement, the driver was never fired, but resigned and was placed in a job deliver­ing payrolls for the City University of New York.

By the time the issues of the gifts and the driver were brought to Koch’s atten­tion in 1985, the mayor was wading in Myerson warnings. But he did not ask the city’s Department of Investigations, which was clearly already involved with a serious Myerson matter, to examine the gift issue, nor did be refer it to the Board of Ethics, though on its face the legal question merited more than informal as­surance from in-house counsel that ev­erything was okay.

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1986: THE MAYOR’S McCARTHYITE ATTACK 

After the Manes suicide and the explosion of the city scandal in early 1986, the Daily News published seven investigative articles on Myerson, from May 1 to May 15. Rickman was featured in many of these stories. We know Koch read them closely because on May 2, at a City Hall news conference, he accused the News of “Mc­Carthyism.” (Koch must have meant Mary McCarthy for her brilliant renderings of the decadence of the rich.) It is certainly reasonable to assume that Rick­man, whose photo accompanied the first piece, discussed the articles with Koch.

These stories — written by Marcia Kramer, Marilyn Thompson, and Barbara Ross — revealed that U.S. Attorney Ru­dolph Giuliani was investigating Capasso and “reviewing records of Capasso’s re­cent bitter divorce.” Myerson was quoted as saying, at this late date, that she and Capasso are “friends, that’s all.” These articles demonstrated that the heart of Myerson’s defense for the hiring of Sukh­reet Gabel, contained in the 1983 letter, was fiction. Judge Gabel had, according to the News, “sharply trimmed the ali­mony payments of a businessman linked romantically to Myerson one month after Myerson hired the judge’s daughter.”

At his Friday press conference, Koch could not say why he hadn’t asked Myer­son to explain the discrepancy between the News stories and her assertions in the 1983 letter. He recalled calling her and said she simply referred him back to the 1983 exchange of letters. That was enough for the mayor to reject what was by now a mountain of evidence. He did nothing. (Giuliani told the Voice this week that the investigations of Myerson and Capasso began in his office and were not a referral from DOI. Although DOI was never asked by Koch to investigate Myerson, this week DOI called in for questioning several employees of the Ap­pellate Division, First Department, to try to find out who leaked the Tyler report to us.)

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1987: SEALING THE TRUTH 

Even when Myerson’s decision to take the Fifth Amendment in a federal grand jury appearance was revealed early this year, Koch’s respons was muted. He still proclaimed at a press conference that he had “faith in her integrity” and refused to fire her, although she had hidden this appearance from him. Instead, she agreed to a 90-day suspension while Tyler did his investigation.

Tyler urged Koch not to release the full report to protect witnesses from retalia­tion and safeguard Giuliani’s ongoing probe. But Tyler did not object to revealing the report’s basic conclusions. The mayor’s decision to summarize the report in five simple sentences — one of which was exculpatory — was one more cover-up gesture. As a Times editorial noted last week, “Surely more of Mr. Tyler’s story about Ms. Myerson’s sordid manipula­tion of the judge and her daughter could have been safely revealed.” To keep the report sealed, the mayor’s attorneys had railed on in court that the lives of witnesses would be in jeopardy if it were released. But Giuliani said that after the Voice broke the story last week, “no witnesses needed protection.” Everyone “is fine,” said Giuliani, “there are no problems.”

Why has Koch gone to such great lengths to protect Myerson?

He has attributed it all to friendship. In fact, no public of­ficial is less loyal to his friends than Ed Koch. In his best-selling memoir, Mayor, he wrote about how he reduced his longtime aide and then deputy mayor Ronay Menschel to tears. He has written critically about his loyal special assistant John LoCicero. In fact, inti­mates of Koch say that he has not been personally close to Myerson for years, rarely seeing her socially. It is indeed an irony that though she is widely and accurately credited with having played a piv­otal role in making him mayor, he never mentioned her in Mayor.

The fact is that Koch has protected Myerson because he has long recognized that there is no way that a damaged Myerson wouldn’t also damage him. And perhaps turn on him. The two went to such lengths to manufacture a fictional relationship that Koch is now a captive of it. In the end, the cover-up that has insulated Bess so long was designed to protect the mayor, who was joined to her in the public mind by creative advertising. As that cover-up unravels, so does he. ❖

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THE IMMACULATE DECEPTION 

There is a great irony in the fact that Ed Koch’s gravest crisis comes from his perceived inti­macy with Bess Myerson. The irony goes back to the Immac­ulate Deception of the 1977 campaign for mayor.

During that campaign, Koch and Myerson kissed in Co-op City, hugged in Forest Hills, held hands in a syna­gogue on Rosh Hoshanna, and looked into each other’s eyes in Pelham Park­way. The Koch campaign wanted to convey the idea of a romance to refute the whispering campaign that Koch was gay.

The romance was the invention of the brilliantly cynical David Garth, who was Koch’s chief strategist and media adviser. Once, early in the campaign, Garth told Jack Newfield he had to cancel a meeting with him because he was hav­ing lunch with “the Smith Brothers.”

Newfield asked who were the Smith Brothers.

“Oh, that’s my nickname for Ed and Bess,” Garth replied.

“I don’t get it,” said Newfield.

“Two beards, shmuck,” Garth said. and laughed.

There never was any romance be­tween Koch and Myerson, although they were good friends. It was Myerson who arranged for Koch to meet Garth, and it was Myerson who pressured Garth to mastermind the campaign, in which Koch started with 2 per cent city­-wide recognition.

Gossip columnists began to print items saying that Koch and Myerson might get married after the election, a notion that surely helped Koch with working-class Jewish voters, who might otherwise have voted for Abe Beame or Bella Abzug without considering Koch.

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Late in the campaign, when political reporters started to ask Koch and Myerson about a real romance, they would give coyly clever answers, like, “Anything is possible,” “We may have an announcement after the election,” or, “For now, we’re just good friends.”

In appearances with Myerson, Koch would say to audiences, “Wouldn’t she make a great first lady in Gracie Man­sion?” On television, Koch was asked if be planned to marry Myerson, and he said, “It’s always a possibility, but I don’t want to talk about it. She’s an incredible person, a warm human be­ing that I truly adore.”

Myerson acted like a surrogate wife in the 1977 campaign. She stood next to Koch on the basic campaign post­er — the only time in anyone’s memory that a nonfamily member was used in such a fashion. She made television commercials for Koch, asking, “Have you no character, Mr. Cuomo?”

It was all a charade — a consumer fraud perpetrated by the former con­sumer commissioner. Koch and Myer­son agreed to use each other to create an illusion. Koch needed to win an election and Myerson wanted a politi­cal career. Three years later, Myerson would run for the Senate with the sup­port of Koch and Garth.

But for the past six or seven years, Koch and Myerson have not been really close friends, in the way that Koch is close to Dan Wolf, David Margolis, Leonard Sandler, or Herb Rickman.

As the Myerson scandal unravels, Koch will be paying a price for his fantasy politics of 1977, which the vot­ers believed and now remember.

— W.B., J.N. & T.R.

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BESS’S GABEL VENDETTA

The head of the city’s Human Rights Commission says Bess Myerson demanded that Sukh­reet Gabel be fired from her second city job, a top post at the Commission, which she obtained on the recommenda­tion of her mother, state supreme court judge Hortense Gabel.

At a meeting in Myerson’s Depart­ment of Cultural Affairs office on Au­gust 7, 1984, Myerson urged human rights chairwoman Marcella Maxwell to discharge Gabel without giving any rea­son. “Bess told me I had to fire Sukh­reet,” Maxwell told the Voice. “She didn’t say why, just that I had to. I was so shocked I almost fell off my chair.”

Maxwell had in fact already decided to dismiss Gabel because “she was un­able to relate to people at the agency.” But before telling Sukhreet, she took Judge Gabel — a 20-year friend — to lunch and told her that her daughter would be sacked. “She told me, ‘You can’t do that, she’ll kill herself,’ ” says Maxwell, who agreed to Judge Gabel’s request to let Sukhreet resign.

Myerson’s demand to Maxwell two days later seems puzzling. It may have been one more lurching turn on the roller coaster of affection and rejection to which Myerson subjected Sukhreet. But it came in the midst of increasingly aggressive legal strategies by Capasso’s wife, Nancy, in their divorce case, being handled by Judge Gabel. On July 25, while being deposed by his wife’s formi­dable new attorney, Herman Turnow, Capasso balked at answering questions about his business relationships with city officials — including Myerson.

Less than a week later, on July 31, Nancy Capasso secretly recorded a dra­matic conversation with her husband in which he said she knew enough about his business dealings to put him in jail “for 400-500 years.” Capasso proposed a cash settlement of the case for $1 mil­lion to $2 million; Nancy Capasso coun­tered with $7 million to $8 million. Ca­passo clearly felt a rising desperation as Nancy and her lawyers began closing in on his business dealings, his relation­ship with Myerson — and perhaps Myer­son’s favors for Judge Gabel.

Maxwell’s hiring of Sukhreet came af­ter Judge Gabel, along with many oth­ers, had written the mayor, recommend­ing Maxwell for the Human Rights position. “Hortense told me I’d need someone I knew and trusted,” Maxwell told the Voice. Even though Maxwell barely knew Sukhreet, she took Gabel’s suggestion that she hire her daughter. Ironically, Maxwell had wanted Sukh­reet to serve as an executive assistant, at a lower salary. But no such job exist­ed, and Sukhreet was instead offered the agency’s third-highest job, a $40,000-a-year deputy commissioner­ship — more than double her DCA salary of $19,000.

Myerson displayed her protective side when Maxwell asked her to approve Sukhreet’s release from DCA. Although Myerson had demoted Sukhreet and denigrated her work, Maxwell said when she called Myerson from Judge Gabel’s apartment in June 1984, “Bess was very reluctant to let her leave.”

Myerson may have had good reason to want to keep Sukhreet close by and at the mercy of her fickle attentions. Although Judge Gabel had already sharply reduced Capasso’s child support and alimony payments in September 1983 (following Myerson’s hiring of Sukhreet at DCA), several important motions were pending, and the case was still a ticking time bomb for Capasso.

But Sukhreet’e new job also quickly began to unravel. The only task Gabel seems to have been given on her own was arranging a huge swearing-in bash for Maxwell at City Hall on July 11. Gabel told the Voice she had no further dealings with Maxwell after that. “I sat isolated and alone in my office.” Once Sukhreet began to get the same treat­ment at Human Rights that she had gotten at DCA, Myerson’s attentions re­sumed. “I hadn’t seen Bees for a long time,” said Sukhreet. “I was rather de­pressed. When Marcella started treating me horribly, I showed my work to Bess and she praised it.” When, in early Au­gust, Maxwell told Sukhreet she would be fired, Sukhreet called Myerson, and got a very different reaction than Max­well later received. “Bess was support­ive,” said Sukhreet, “she made nice clucking noises.” Gabel was at a loss to account for Myerson’s demand that she be fired. “Bess is crazy,” she said, “but Marcella is mean and vicious.”

— W.B., J.N. & T.R.