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The Mob is Dead! Long Live the Mob!

WHERE WERE YOU when the Mafia died?

It has been more than a year since that historic Thursday when a Brooklyn jury adjourned for lunch and found John Gotti guilty before the soup arrived. “The mob as we have known it in New York City is on its way out,” eulogized James Fox, head of the FBI’s New York office. “This could be the death knell for organized crime … in the United States.”

Gotti’s conviction, the experts crowed, was the culmination of the government’s most recent war against organized crime, a crusade begun in the mid ’80s by racketbuster Rudolph Giuliani, our erstwhile Tom Dewey with a comb­over. The swift verdict confirmed what The New York Times had been tirelessly report­ing for years: the mob was on life support, finally reduced to the street gang J. Edgar Hoover always knew it was. We were wit­nessing the “twilight of the dons,” one TV special informed us.

In fact, the Mafia’s prospects appeared so bleak, it seemed inevitable that the Italians would be usurped by other ethnics: the Ghost Shadows would seize control of Teamsters Local 282; the price of concrete would now be fixed by the Jamaican pos­ses; and the Albanians would become the secret force at Kennedy Airport.

It seemed like just yesterday that the Ma­fia was perceived as the enemy within. With Gotti doing life, was it really possible that the next capo di tutti capi might be a Russian from Brighton Beach? How did things disintegrate so quickly?

John Gotti was the guiltiest of pleasures for investigators and journalists alike. The underworld has long been dominated by bland men in zipper jackets and polyester blends, which made Gotti’s cheesy suits and 40 mph haircut seem all the more refreshing.

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And just as Nicky Barnes once played and dressed up to his reputation as Har­lem’s reigning pusherman, Gotti introduced the Method to the Mafia, becoming the Dapper Don. What’s not to like about an Italian guy in a silk raincoat leaving a Mulberry Street social club, entering a $60,000 Mercedes-Benz, and heading to Regine’s for some Cristal? Such “style” hadn’t been seen since the heyday of Frank Costello.

Television was especially guilty of inflat­ing the Gotti myth. But who could blame them? Those Brioni suits and garish hand­painted ties were so much more visual than the standard Adidas warm-up. When Gotti waved an index finger at WNBC’s John Miller and warned the reporter to “behave yourself,” well, that was great television. The telegenic Gotti is a convicted mass murderer, but his Q rating probably ap­proaches those of Barney and Roseanne.

Even his homicide style got high marks: the brazen rush-hour murder of Paul Cas­tellano had such panache, it seemed almost an homage to the classic New York rub­outs: Albert Anastasia in the Park-Sheraton barber shop, Kid Twist out a window in the Half Moon Hotel, Carmine Galante’s last supper.

So it is not surprising that many report­ers — like Daily News gossip Linda Stasi­ — appear to be suffering from separation anxiety, judging by the regular accounts of the exiled Gambino boss’s prison reading habits and exercise regimen. Tabloid read­ers have also been provided with detailed accounts of a Jon Peters-produced Gotti movie (screenplay by Joe Eszterhas!) and a lame rap tribute (lyrics by Big Lou!), which deserves a spot under Calvin Butts’s next steamroller.

Banished to a cell in southern Illinois, Gotti has been forced to live on in absentia as the Boss of Bosses, the Godfather — titles bestowed on him by the FBI in the wake of the Castellano rubout. The titles had been previously tossed about, but nobody had grown into the role — or captured the pub­lic’s attention — like Gotti. Does anyone really remember Godfather Frank Tieri?

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But in the media’s rush to coronate Gotti, nobody bothered to ask just what the Godfather did, what great powers the Boss of Bosses exercised. Gotti surely didn’t con­trol the city’s four other crime families, and there wasn’t even a consensus in law en­forcement circles that the Gambino gang was New York’s premier crime syndicate; the Genovese family was just as large, prob­ably earned more money, and exerted influ­ence over crime groups in other cities, like Philadelphia, Buffalo, and Cleveland.

In the midst of the media frenzy follow­ing the Castellano murder, the FBI virtually signed on as Gotti’s press agent, puffing him up in anticipation of the day it would bring him down.

Of course, the notion that Gotti — or any single mob figure — was some sort of omnipotent New York mafioso is ludicrous. The word “Godfather” had a nice, Brando-­esque ring, but the title itself is a fraud. It was far simpler for law enforcement offi­cials — usually the FBI — to try to encapsu­late the entire Mafia into a single Boss of Bosses than it was to explain the complicat­ed relationships among New York’s five mob families.

More importantly, when Gotti was con­victed — and he would be convicted — it would be easier to claim victory over the entire Mafia with the Godfather wearing prison blues.

The FBI’s rabid promotion of Gotti-as­-Godfather reminded one prosecutor of a story about Mafia investigations: “We used to joke that when we started an investiga­tion, the target was considered a mob asso­ciate. Then, by the time we reached the grand jury, he had magically turned into a soldier. And when we held the press confer­ence announcing the indictment, we’d pro­moted him to captain.”

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In the end, it wasn’t the bureau’s bugs, Sammy Gravano’s tales from the crypt, or the twin curse of greed and hubris that doomed Gotti. He took the bait and was swallowed whole by the Myth of the Godfather.

The “death of the Mafia” talk, which has grown since Gotti’s conviction, first cropped up following Giuliani’s successful RICO prosecutions of the Commission and the mob’s concrete cartel. The Times has delivered Mafia obituaries since at least 1988 and has regularly chronicled organized crime’s “widespread instability” and “disarray.”

Earlier this year, the paper reported that the FBI was so pleased with its recent ef­forts against Mafia bosses that the bureau was now lowering its sights to middle man­agers. The paper even noted that some FBI officials were considering deëmphasizing Mafia investigations in favor of focusing on emerging “nontraditional” crime groups like Jamaican posses or Colombian drug gangs. “I think the FBI is ready to declare victory and move on,” one federal prosecu­tor told the Voice.

Beginning with Hoover, FBI officials have underestimated the Mafia’s influence and tenacity and, in the process, allowed organized crime to become a part of the fabric of New York City, where it remains as the openly criminal wing of the city’s Permanent Government.

A Voice review of more than 500 pages of confidential FBI memorandums, volumes of court testimony, plus interviews with two dozen investigators and prosecutors in­dicates that, despite a rash of convictions over the last five years, the New York mob has shown a resilience rarely acknowledged by FBI officials, other law enforcement agencies, or the media.

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The latest round of prosecutions will probably result in the convictions of a few dozen high-ranking mob figures, principally from the Gambino, Luchese, and Colombo families. This leaves, by city police department and FBI estimates, a total of more than 1000 initiated members spread among New York’s five families. In addition, thou­sands of uninitiated “associates” are affili­ated with these made members.

Historically, the conviction or death of a boss — whether it be Genovese, Luchese, Corallo, Persico, Salerno, Rastelli, or Gotti — means little to the family’s criminal entrepreneurs, who are well suited to sur­vive the fall of a boss. In fact, a recent FBI affidavit asserted that the Luchese crime family — undeterred by the defection of two former high-level mobsters and intense law-enforcement scrutiny — “continued to con­duct business as usual,” receiving payments from a wide range of criminal operations, including shakedowns in the Garment Cen­ter, area airports, union locals, and building contractors.

The very grassroots nature of the Mafia, with thousands of mob figures surviving the fall of a boss, means that organized crime still has its hand in the everyday lives of New Yorkers. Mobsters like Angelo Prisco and Liborio “Barney” Bellomo — ­hardly household names — are the Mafia’s backbone, men content to operate in the shadows while dopes like Gotti pay dearly for their turn in the spotlight.

Build a road, buy a dress, go to dinner, fill up the car, attend the San Gennaro festival, even clean up the debris in the aftermath of the World Trade Center bombing. It’s all brought to you by the mob.

Gotti’s imprisonment has been por­trayed as the government’s crushing blow to the mob. But while bosses may be at the top of those nifty FBI flowcharts, the Ma­fia’s real power comes from the ground up. A family’s lowest-ranking members, “sol­diers,” and the family’s associates are the true criminal masterminds: they still con­trol industries, infiltrate unions and legiti­mate businesses, and run gambling and loan-sharking operations.

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Since late 1991, the FBI’s pool of intelli­gence about New York’s crime families has expanded greatly, thanks in large part to the cooperation of a variety of former mob figures. These ex-mobsters have provided an unprecedented look at the Mafia’s mind­boggling array of economic crimes and, in the process, debunked the repeated claims that successful prosecutions have left the mob mortally wounded. Industries suppos­edly cleaned up by previous prosecutions were quickly reinfiltrated by the mob, the informants reported.

Despite the FBI’s public declarations of victory and death knells, informants in fact have provided so much information that the bureau’s organized-crime squads have been unable to investigate most of the ex­tortions and shakedowns they have been told about. Investigators conceded in Voice interviews that these economic crimes — at the Mafia’s very heart — are still rampant.

“We have to pick and choose what cases we’ll pursue,” one federal prosecutor said. “We have a mountain of raw intelligence, but the majority of the crimes we’ve been told about can’t be pursued because of stat­ute problems, corroboration, or manpower problems.” Another prosecutor noted that “most of the recent RICO cases are based on murders and murder conspiracies. You don’t see us doing shakedown and extortion cases because the so-called victims don’t cooperate. In fact, I don’t even think the agents bother chasing those down.”

Despite the recent wave of Mafia defec­tions, FBI organized-crime squads are still staffed at the same levels as they were a decade ago, according to bureau spokesman Joe Valiquette, who declined to detail how many agents work on each of the groups assigned to the five Mafia families.

While Sammy Gravano’s testimony against Gotti has received the most atten­tion, the government’s most prolific Mafia asset has proved to be former Luchese member Alphonse D’Arco, whose recall of criminal activities fills more than 350 pages of FBI debriefing memos.

D’Arco, along with Gravano, has provid­ed investigators with a new insight into the mob’s continued corruption of the concrete industry, supposedly cleaned up years ago when Giuliani successfully prosecuted the mob’s concrete cartel for rigging $140 million in construction bids.

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In August 1991, according to D’Arco, representatives of three mob families met secretly to carve up another piece of New York.

John A. Gotti Jr. was there representing the interests of both the Gambino family and his imprisoned father. The Colombo gang’s acting boss, Victor “Little Vic” Orena, took a break from his own family’s civil war to attend. And D’Arco, then the Luchese family’s acting boss, rounded out the power trio.

The August sit-down was then just the latest in a number of clandestine meetings about the Mafia’s control of the concrete industry. Despite the late-’80s attempt by Giuliani and the FBI to dismantle the city’s bid-rigging “concrete club,” the mob had quietly regrouped and again cornered the market. The August meeting’s agenda car­ried one item: what to do with the West 57th Street concrete plant.

The Manhattan plant was designed by the Koch administration in 1986 to be a Mafia-free zone, operating on city-owned land that would provide concrete for mu­nicipal projects. The city viewed West 57th Street as its best chance to break the mob’s concrete monopoly and considered the plant’s $2 million price tag a wise investment.

But by 1991, the plant’s inexperienced operator, Philip Elghanian, was flounder­ing, and his troubles were becoming of great interest to the Colombo and Luchese crime families, according to FBI reports.

Both the Colombo and Luchese families were secretly connected to major concrete producers eager to get control of the Man­hattan plant, with its central location and its built-in municipal work. The Colombo family’s concrete stake, according to Gra­vano and D’Arco, has been exercised through Ferrara Brothers, a Queens-based supplier (Ferrara Brothers’s distinctive or­ange-and-white trucks and mixers have pro­vided concrete for jobs at Battery Park City, Kennedy Airport, and the Archer Av­enue train station). The Lucheses were as­sociated with businessman John Quadrozzi and his assorted companies.

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D’Arco told the FBI that in early 1991 Quadrozzi came to him and complained that he believed Ferrara had secretly gained control of the West 57th Street plant. D’Arco stated that Ferrara “… because of his organized-crime associations, could not purchase the 57th Street yard. Ferrara made arrangements to purchase the compa­ny through another individual.” City rec­ords indicate that Elghanian relinquished operation of the plant in March 1991; the plant’s new manager denied in a Voice in­terview D’Arco’s assertion that the Mafia has infiltrated the West 57th concrete operation.

D’Arco said the August 1991 sit-down ended with Orena stating that “the Colom­bo, Gambino, and Luchese LCN [La Cosa Nostra] families would all have a split in the money from the 57th Street yard.” D’Arco then added that before he began cooperating with the government in Sep­tember 1991 — one month after the concrete sit-down — the Luchese family had al­ready received two payoffs in connection with the West 57th Street operation.

D’Arco’s account raises serious questions as to whether, despite the best intentions of the Koch and Dinkins administrations, the Mafia has infiltrated the one concrete oper­ation designed to be clean. Besides produc­ing concrete for city construction projects and street repairs, the West 57th Street plant has branched out and supplied both state and federal projects, including the new federal courthouse near Foley Square.

Though the operation was supposed to produce concrete at below-market prices, the West 57th Street plant has been charg­ing the city 12 per cent more than the local average for a cubic yard. Daniel Kryston, deputy director of the Mayor’s Office of Construction, which monitors plant opera­tions, acknowledged the increased price in a Times interview. “We tried a new tech­nique to bring down costs and we think it’s working,” he said, emphasizing that one of the city’s goals was to reduce mob influence in the concrete industry.

D’Arco first told the FBI of the mob’s West 57th Street connection in late 1991, but the feds have never bothered to inform city officials about D’Arco’s claim that three Mafia families apparently have honed in on the operation. The FBI has long been criticized for refusing to share its informa­tion with local law enforcement agencies, let alone with bureaucrats at City Hall.

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Both Gravano and D’Arco have identi­fied Thomas Petrizzo, a Colombo family captain, as Ferrara Brothers’s main mob contact, according to testimony and FBI records. D’Arco recalled one 1990 meeting he attended with Luchese underboss Antho­ny “Gaspipe” Casso, Petrizzo, Orena, and Joseph Ferrara Sr., president of his family firm. The meeting concerned a joint Quadrozzi-Ferrara Brothers cement importa­tion business and how payoffs would be made to the two families as well as to an associate of the Gambino organization. Gravano has also told of attending a meet­ing with Petrizzo, Orena, and John Gotti in which the men discussed boosting the price of concrete by $5 a yard.

Ferrara Brothers is the current employer of Anthony Ameruso, the former Koch transportation commissioner who was con­victed of perjury in 1987, and Ferrara has also used influential attorney Sid Davi­doffs firm as its municipal lobbyist. Joseph Ferrara Jr., the company’s attorney, denied in a Voice interview that the firm had any­thing to do with the mob. “I don’t know where they get that from,” Ferrara Jr. said of D’Arco and Gravano.

Quadrozzi, too, has denied any involve­ment with the Luchese crime family. He was indicted last year on contempt and conspiracy charges after D’Arco testified that the businessman paid the Luchese fam­ily $20,000 a month for “labor peace.”

The importance of the Luchese-Colombo control of the concrete market was under­scored by D’Arco, who provided the FBI with a behind-the-scenes account of plans to kill Lou Valente, a Bronx-based concrete producer who precipitated a price war. Va­lente decided to drop his prices in a bid to expand his business. Valente’s gambit led both families to consider murdering him because of their concern that Valente would steal business away from the Ferrara/Qua­drozzi operations. After D’Arco checked with Gravano to make sure Valente wasn’t associated with the Gambino gang, “serious talks began about killing Valente,” D’Arco reported last year.

Valente was not eventually harmed by the Colombo-Luchese avengers, sources said, because he decided to abandon his price war. Valente did not return Voice calls.

Addressing the Mafia’s attraction to le­gitimate industries, Robert Mass, former chief of the Manhattan district attorney’s labor-racketeering unit, noted that “unlike narcotics trafficking, law enforcement ef­forts in the field have tended to be weak and sporadic; and the criminal penalties for the fraud and bribery crimes arising from industrial racketeering are not severe.” Mass added that industrial racketeering gives mob members and associates “the ability to make illegal money for the family, while retaining status and credibility in the legitimate community.”

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The mob survives in New York’s very infrastructure, and not only in concrete. Due largely to spotty law enforcement at­tention, a steel company controlled by Co­lombo captain Petrizzo has prospered, becoming the textbook example of a firm that has capitalized on its Mafia connections.

Headquartered in Keasbey, New Jersey, Petrizzo’s company, A. J. Ross Logistics, specializes in the production of rebars, steel rods that reinforce concrete used in build­ings, bridges, roads, and other structures.

Despite — or possibly because of — the mobster’s upfront role with the company, A. J. Ross has done work on almost every major public and private construction job in New York over the past decade, includ­ing the IBM building. Equitable Towers, the North River sewage treatment plant, the Javits Convention Center, the refur­bishments of the FDR Drive, and the ongo­ing West Side Highway project. Petrizzo’s client list contains every major city con­struction firm: Lehrer/McGovern, H.R.H Construction, Olympia & York, Tishman Construction, Turner Construction, and dozens more.

Petrizzo founded A. J. Ross in December 1975 and took the company public in 1985, according to Securities and Exchange Com­mission records. Petrizzo is the firm’s larg­est single stockholder and, until he stepped down as president and Chief Operating Of­ficer last year, his salary was $329,409. SEC records also reveal that Petrizzo, who re­fused to take Voice calls, has received an unsecured $800,000 loan from the company.

D’Arco, Gravano, and former Luchese captain Peter Chiodo have all told the FBI about Petrizzo’s booming business and how the mob steers business to him in return for kickbacks. D’Arco said that, in connection with A. J. Ross’s work on the West Side Highway, Petrizzo kicked back $800,000 to the Luchese family; the payment was made by the Colombo captain because he was doing the highway project in conjunction with a contractor associated with the Luchese family.

Chiodo recalled his dealings with one businessman who not only tried to avoid paying off the Luchese family, but who also refused to use Petrizzo’s steel company on his construction jobs. The Luchese hierar­chy was so annoyed by the contractor’s behavior, Chiodo was ordered to kill the recalcitrant businessman. The attempt was foiled when Chiodo’s gun jammed.

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As with most of its municipal construction work, Petrizzo’s firm was a subcontractor on the West Side Highway project, which allowed it to avoid the screening and background checks that are standard for a project’s general contractor. Loopholes like this — which are commonplace on govern­ment construction projects — allow Mafia figures to continue hiding in plain sight. The one exception to this rule is the School Construction Authority, which has established an aggressive screening process to weed out undesirable contractors. SCA officials, some of whom have worked with the state Organized Crime Task Force, gather information on firms from a variety of sources — court cases, press accounts, in­vestigators — in an effort to keep public dol­lars out of tainted hands.

Clearly, the Mafia’s infiltration of the construction industry has never waned; hundreds of businessmen owe their success to an affiliation with organized crime. When a major general contractor like Her­bert Construction hires Gambino member Anthony Scotto as an executive, it sends a clear message about the mob’s influence. Scotto, a former crime captain, was demot­ed to soldier following his conviction on labor-racketeering charges.

Two other prominent businessmen are indicative of both the mob’s entrenched role in the construction industry and the government’s inability to combat this alliance.

Thomas Nastasi has been implicated — ­but never charged — in bid-rigging and brib­ery schemes dating back a decade, but this has not prevented him from becoming the drywall industry’s most prominent figure. Nastasi’s Queens-based firms, Circle Indus­tries and Nastasi-White, have done work on everything from the American Embassy in Moscow to the platform at last year’s Dem­ocratic National Convention at Madison Square Garden. Nastasi, who has long been associated with Genovese crime family fig­ures, is also a friend of U.S. senator Al D’Amato and has helped organize fund­raisers for the politician.

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Like Nastasi, Bronx-based contractor Sidney Silverstein has also been tied to a Mafia bid-rigging conspiracy, but he con­tinues to do significant business with public housing agencies. Silverstein’s firm, Spar­row Construction, has built hundreds of units of low-cost housing in the Bronx and Brooklyn under contracts with the federal Department of Housing and Urban Devel­opment and the city’s department of Hous­ing Preservation and Development.

Silverstein once admitted to the Voice that he employed Luchese captain Steve Crea as a “labor consultant” and paid him more than $100,000 a year. When a report­er mentioned Silverstein’s mob ties to HPD’s inspector general — the city agency’s in-house cop — he did little more than shrug his shoulders.

Along with direct links to construction firms themselves, the mob’s control of vari­ous labor unions continues to be a source for tens of millions in payoffs. Though fed­eral prosecutors and union trustees have targeted some locals over the past few years, D’Arco has said that these efforts have been minimally successful in breaking the mob’s union stranglehold.

The government’s filing of civil RICO lawsuits against mob-tainted unions has proved successful, but such litigation is ex­pensive, time consuming, and demands a governmental commitment that has sometimes lagged. For example, after almost three years of arduous pretrial maneuverings, the government’s civil racketeering lawsuit against the corrupt, Mafia-riddled District Council of Carpenters is finally scheduled to open later this month in Foley Square.

Like many construction unions, various carpenters locals have been transformed into Mafia outposts, where businessmen are forced to pay as they go. The FBI debrief­ings of Chiodo and D’Arco contain more than a dozen instances in which representa­tives of the Luchese family shook down construction contractors and developers for labor peace.

Nobody, not even the wealthy or politi­cally connected rides for free. D’Arco cited one instance in which one of the city’s best­-known developers allegedly paid Luchese soldier Dominick Truscello “a substantial amount of money” to “settle a labor dis­pute” that arose during the late 1980s con­struction of a residential high rise on the Upper East Side. “After making the pay­ment to Truscello,” D’Arco reported, “the labor dispute was settled.”

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Every major mob turncoat over the past 25 years — Yalachi, Fratianno, Cafaro, Leonelli, Lonardo, as well as the recent group of inductees into the Witness Securi­ty program — has told investigators that the Mafia’s corrupt influence of labor unions and legitimate businesses often falls to crime family associates. These operatives come from a variety of ethnic and religious backgrounds — many are not ltalian and are therefore ineligible for initiation — and are key cogs in the Mafia’s criminal machines.

“He’s a good Jew,” Anthony Casso once said proudly of Sidney Lieberman. “If he wasn’t a Jew, we’d straighten him out,” the Luchese underboss added, referring to the prospect of inducting Lieberman into the Mafia.

Like Nastasi and Silverstein, Lieberman is one of thousands of money-making asso­ciates dispersed among the five New York families. He is the family’s key contact in the Garment Center, which has been a Lu­chese family stronghold since the 1950s, when John “Johnny Dio” Dioguardi ruled Seventh Avenue.

FBI records indicate that Lieberman fronts for the Luchese family in a number of trucking companies and that he “shakes down businesses … awards concessions and sweetheart contracts along with con­ducting extortions in regard to which ma­terials … businesses in the garment center must buy and from which manufacturer they must buy them from.”

Like most successful mob associates, Lie­berman has avoided the limelight and has so far dodged criminal prosecution, becom­ing in the process one of the most powerful figures in the Garment Center, the emin­ence grise of Seventh Avenue.

During the Manhattan D.A.’s investiga­tion of Thomas and Joseph Gambino’s trucking operations, Lieberman was caught on wiretaps counseling Thomas Gambino about trucking industry matters. He was never charged. Investigators now concede they were unaware of Lieberman’s extensive Mafia contacts.

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Lieberman’s role with the Luchese family hasn’t been limited to the Garment Center. He was in the middle of a classic labor scheme at Kennedy Airport, where extor­tion and payoffs remain an everyday occurrence. The scheme, according to FBI docu­ments, involved Amerford International, a freight-forwarding company with 40 offices nationwide.

Amerford, which is owned by the German multinational Thyssin AG, has an office at JFK that once employed 30 clerical workers, all of whom were members of Teamsters Local 851. Amerford’s employee roster had a decid­edly mob flavor: the daughters of both D’Arco and Luchese captain Sal Avellino were once on the payroll and Patty Dello­russo, a suspected hitman and Luchese sol­dier, until recently served as the company’s $93,600-a-year director of national labor relations.

The freight company employed the unionized office workers until one day in 1990 when Amerford fired all the workers, replacing them with a few formerly union employees. Though such a brazen act would usually lead to pickets and union harassment, the sacking was orchestrated in part by Lieberman and a Local 851 official on behalf of the Luchese family.

In exchange for allowing Amerford to fire all of its clerical employees, the company agreed to pay a $10,700-a-week kickback­ — disguised as a management fee — to a shell corporation controlled by the Luchese gang. D’Arco told the FBI that Amerford’s man­agement was anxious to make the 1990 kickback deal “because of the savings it would receive by eliminating the union sal­aries and benefits.”

Whether or not Amerford was an extortion victim, its dealings with the mob were as an effective way to reduce company overhead. In fact, an FBI affidavit con­tends, a similar deal was discussed in which Amerford — in return for a $150,000 payment — would be allowed to sack its clerical staff in Chicago. The payoff would have been divided between Teamsters officials and the Luchese family, according to the affidavit.

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After a handful of fired employees were told by their Teamsters representatives that nothing could be done on their behalf, the employees filed complaints with the Na­tional Labor Relations Board against Amer­ford and their former union.

Amazingly, the NLRB rejected the ex­-employees’ claim that they were victims of unfair labor practices, finding that there was “insufficient evidence of an abrogation of the contract” by Amerford. Though NLRB officials were unaware of the mob’s connection to the Amerford scam, the board’s finding is still troubling in light of clear indications that the mass firing was highly unusual.

Amerford officials did not return Voice phone calls, though they issued a press release in July announcing that they are coop­erating with an ongoing federal investiga­tion into mob activity at New York’s airports. At the same time, the company canned Dellorusso as its chief labor negotiator.

The Amerford labor scheme was just one of many kickbacks and extortions that, ac­cording to Chiodo and D’Arco, regularly occur at New York-area airports. The two former mobsters have provided a laundry list of trucking companies based at JFK, LaGuardia, and Newark that have paid the mob monthly for labor peace. As with Amerford, the names of the companies aren’t familiar to most — Tangas Air Freight, P. Chimento, Air Express Interna­tional, Burlington — but they all pay off as a matter of course.

At JFK, Teamsters Local 295, which represents warehouse employees and truck drivers, is in the hands of a trustee appoint­ed last year by federal judge Eugene Nicker­son. Though the trustee, former federal prosecutor Thomas Puccio, is charged with dismantling the Luchese family’s hijacking and extortion rings, Puccio has received little support from a host of trucking com­panies that have worked in concert with­ — and paid kickbacks to — the Mafia for years.

Like most extortion victims, the trucking companies are surely worried about repri­sals if they cooperate with law enforcement. The use or threat of physical violence is a Mafia pillar, the enforcement tool that keeps mouths closed.

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The Mafia’s economic terrorism is not limited to international companies and millionaire developers. In all five boroughs, the mob continues to put the hood in your neighborhood.

The Voice spoke with six individuals identified in the FBI reports as Mafia shakedown victims; all denied having paid off mob figures. In addition, all said that they had never been contacted by FBI agents or questioned about these reported extortions.

D’Arco provided the FBI with a detailed account of the shakedown of a small Italian restaurant in the Bronx, which began when a Luchese member helped the restaurant’s owner secure a lease from a mob-connected realtor. The price tag for the mob’s inter­vention was a $15,000-a-year tribute. When the Voice reached him, the panicky restau­rant owner denied any involvement with the mob.

D’Arco also noted that the owner of a small chain of Queens video stores paid between $200 and $400 a week for protec­tion to Luchese soldier Paul Vario. In an interview, the owner denied everything.

D’Arco said he had personally received protection payments from Dom’s Trucks, a Brooklyn auto dealer. Dominick Vitucci, the firm’s owner, denied handing D’Arco envelopes stuffed with cash. “I once gave him a truck chassis as a favor for a friend,” Vitucci said. “He must be confused.”

Vitucci said that friend was Bruno Facciola, a Luchese soldier murdered in 1990 because he was suspected of informing. Af­ter he was shot to death, Facciola’s murder­ers stuffed a canary in his mouth. Chiodo identified two Gambino family members who, he reported, shook down a small Staten Island jeweler. When the Voice contacted the businessman, he admitted that one of the mobsters was a customer, “but I can’t get into the rest.” He then hung up.

A number of the informants described instances in which a businessman borrowed loan-shark money and fell behind on pay­ments; his business was then infiltrated by the mob.

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According to former Colombo associates Joseph Ambrosino and Carmine Imbriale, an owner of a lower Manhattan clothing store started as a loan-shark customer and was eventually enlisted in a credit card fraud and the sale of stolen merchandise.

A partial list of other shakedowns record­ed in the FBI memos is incredibly broad: a Brooklyn carting company, a Long Island asbestos-removal firm, an Astoria fuel oil dealer, a Brooklyn motel operator, a chain of parking garages, a Queens sausage pro­ducer, a Brooklyn asphalt producer, a Queens vending machine business, a Bronx general contractor, and a Brooklyn supermarket.

Without a victim’s cooperation, extortions usually go unprosecuted. And that makes dismantling the Mafia improbable. “What can you tell someone, that there’s not gonna be a problem if they cooperate?” one agent asked. “People read the papers. People hear about guys like Kubecka and Barstow.”

Robert Kubecka and Donald Barstow were two Long Island businessmen who tried to help law enforcement agencies combat mob influence in the caning indus­try. In 1989, both were shot to death for their troubles.

FBI reports and court testimony indicate that the Luchese family had them killed in retaliation for their government coopera­tion. Sal Avellino, a Luchese captain who controls the Island’s carting industry, has been charged with allegedly ordering the hits because, according to D’Arco, he was upset that “these two guys were still walk­ing around.”

Just as there are few ways to combat widespread extortion, law enforcement agencies have also been unable to effective­ly strike at the heart of the Mafia’s money machine — gambling and loan-sharking op­erations — which generates hundreds of mil­lions of dollars annually. As long as it can book bets and loan money at usurious rates, it is impossible for any Mafia family to be close to extinction.

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In a city beset with homicide and drug epidemics, “victimless” crimes like taking 10 units on the Knicks or handling the Brooklyn number are not priorities. From time to time, state and federal prosecutors will announce the fruits of gambling inves­tigations, but it is rare for bookies or wire room operators to receive prison terms. Gambling cases, which don’t generate head­lines for the FBI or the police, are in vogue once a year: the week before the Super Bowl, with the raids usually carrying quaint code names like “King’s Flush” or “Full House.”

For the same reason that extortion vic­tims fall mute, loan-shark debtors — often saddled with 150 to 200 per cent yearly interest rates — rarely cooperate with law enforcement officials.

In a move to supplement their gambling take, the five families have succeeded in introducing their gambling operation into restaurants and bodegas through the place­ment of video poker machines, the elec­tronic equivalent of slot machines.

The video poker machines have become such a lucrative cash source that mob mem­bers have divided up specific “routes” that then become the exclusive property of a family — a system that parallels the mob’s garbage hauling and bread routes.

D’Arco told the FBI that several high-­level sit-downs — involving the Gambino, Bonanno, and Luchese families — have oc­curred to discuss disputes involving video gambling machines placed in locations in the city, Nassau County, and on Fire Island.

Occasional raids have netted a handful of video machines, but there is little chance anytime soon that David Dinkins will mim­ic Fiorello LaGuardia, who once took a sledgehammer to Frank Costello’s illegal slot machines.

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The exploitation of video poker ma­chines shows how the Mafia is able to iden­tify and develop illegal revenue sources. Perhaps the most lucrative example of this criminal ingenuity began when an obese Colombo associate introduced the Mafia to the gasoline tax swindle. Amazingly, more than 10 years later, the money is still pour­ing in.

At its core, the scheme is simple, with the mob pocketing 14 cents per gallon in taxes that are supposed to be forwarded to the IRS. The scam relies on a long daisy chain of paper companies, in which each one passes the tax responsibility onto the next. At the end of the chain is a paper compa­ny — and a massive unpaid tax bill.

After a decade of virtually unchecked plunder — with perhaps almost $1 billion swindled — federal officials have recently begun indicting Russian and Italian mob­sters, though there is little chance that any of the pilfered money will ever be located.

The initial federal prosecutions years ago nailed the scam’s corpulent mastermind, Larry Iorizzo. and his mob protector, ex-Colombo captain Michael Franzese, both of whom eventually became govern­ment informants.

The gas tax scam initially was the prov­ince of Russian gangsters, most of whom were based in Brighton Beach, but eventu­ally the “spaghetti-heads” moved in on the action, according to the wiretapped account of one scam participant. FBI documents reveal that the lure of major paydays brought the Colombo gang and three other families back to the trough.

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The local Mafia hub was the Inwood Ter­minal on Jamaica Bay. Here, the FBI launched an undercover operation with an agent posing as a gasoline dealer. An estab­lished wholesaler who had agreed to coop­erate in the operation became the agent’s partner, and together, the two precipitated a price war against another Inwood whole­sale operation, which was controlled by vet­eran gas tax swindler Joseph Reisch.

After six months of competition, accord­ing to an FBI affidavit, two men arrived at the office of the undercover operation car­rying flowers and a telegram. The pair banged on the door and shouted, “If you don’t get out of the fucking gas business, you’re fucking dead.” Two days later, an­other man showed up at the office with a large funeral wreath. The accompanying card read, “In Loving Memory, Rest in Peace. From all your good friends in N.Y. City.”

Just over two weeks after the wreath ar­rived, FBI surveillance agents spotted a sus­pected Colombo hitman in the vicinity of the wholesaler’s home. In a move to broker a peace agreement, the wholesaler contact­ed the daughter of a Colombo captain who, in turn, reached out to Colombo soldier Joseph “‘Chubby” Audino, bagman for fam­ily boss Vic Orena. Audino, according to the FBI affidavit, suggested the wholesaler attend a sit-down with Reisch. If the FBl’s estimates are correct, Orena stood to make as much as $4.5 million from the Reisch operation over the past four years.

When Reisch met with the wholesaler and the FBI undercover, he delivered a simple message: his competitors had to cut back their operations at the Inwood Termi­nal and turn their company into the final stop on Reisch’s daisy chain. For their ef­forts, the men were offered $90,000 a month. The pair held out for $120,000 a month and soon were receiving weekly pay­ments from a Reisch courier.

Reisch was indicted recently, but has not been arrested; officials believe he may have fled the country after walking away with $30 million of the IRS’s money.

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Where’s the money?

While the FBI claims to have dealt death blows to the New York mob, nobody has been able to follow the money.

John Gotti was the most investigated man in America for five years, and the only assets the government has tried to seize — as evidence of the fruits of racketeering — are run-down Little Italy tenements and other real estate detritus: chump change for an organization grossing hundreds of millions a year. Sure, raided wire rooms may turn up $10,000 and Gotti himself was arrested with $6000 in his pockets, but that’s only walk-around money.

A safe assumption is that some money is invested in legitimate businesses while oth­er monies remain “on the street,” in the form of loan-shark loans. Where the bal­ance goes, that’s anybody’s guess. No informant has ever told of Swiss bank accounts, and it always seems that safe deposit boxes are sans cash, brimming instead with cheap jewelry.

The money riddle may be the best indica­tion that the Mafia isn’t dying. Federal offi­cials mistakenly believe that, with John Gotti in prison, the mob has suddenly been placed on the run. Actually, the Mafia has adopted a defensive posture.

History shows that New York gangsters have a keen sense of when it’s time to hit the mattresses. The spotlight always has a way of fading. That’s when you get back to business. ❖

Categories
From The Archives POLITICS ARCHIVE THE FRONT ARCHIVES

Memories of the Reagan and Bush Administrations

“A scraping sound,” H. M. Enzensberger describes as the beginning of the end in his famous poem. The iceberg tore a jagged opening across the Titanic‘s hull, like the trail of a can opener. Not a very long or gaping breach, but just enough to ship tons of water into the engine room. As everybody knows, the biggest casualties were among the steerage passengers, huddled below decks with their bales of belongings, their infant chil­dren, and their identity papers.

Prevailing codes of civility required that women and chil­dren be placed in the lifeboats before the adult men. There are never enough lifeboats to go around; John Jacob Astor went down with the ship, along with several other bridge-playing gentlemen on A Deck. Like Enzensberger, and you, I have eidetic images of this event, jumbled with memories of Barbara Stan­wyck and Clifton Webb in A Night To Remember. There was that one cowardly million­aire in drag whose pant cuffs betrayed him in a Collapsible B as it floated away from the blazing lights of the Titanic. This individual was, I feel certain, the prototype of a kind of social criminal that flourished in Ameri­ca under Ronald Reagan, who had himself portrayed many spineless, good-fornothing playboys in films of the 1940s.

We spent a lot of time in the 1980s look­ing at TV and newspaper pictures of these arrestingly unenigmatic men. Rat-faced Elliott Abrams, lying through his teeth about Nicaragua on the 6:30 news. Grinning so­ciopath Oliver North, in full battle drag for the CNN cameras, exposing the Mafia in the White House basement while falling on his sword. Charles Keating, the Alvaric of Lincoln Savings, Dr. Mabuse hair in dire need of a rinse. The faces never stopped. Ivan Boesky. Michael Milken, Frank Lor­enzo. Whenever one of these hapless but stubbornly unrepentant glove puppets was thrown to the wolves, another was sighted in the middle distance, snapping the reins of Dracula’s carriage. The dogs bark, as Truman Capote noted in a different con­text, but the caravan moves on.

Where did they come from? It seemed that they had always been there, in one guise or another, pilot fish attached near the gills of much heavier marine life, si­phoning blood through strata of flesh and fat. Their social betters, born to rule, had swum through Phillips Andover and Yale, sometimes Choate and Princeton, though the Glove-Puppet-in-Chief, a petit bour­geois and adult child of an alcoholic, at­tended a farm college. (His Eve Harrington made Skull and Bones.) In a quieter if not more gracious time, the smaller fish would have been dashing parasites in the middle reaches of municipal banks and govern­ment agencies, brooding for years before skipping to Antigua with a bimbo and the monthly payroll. Or fourth-string advisers in Third World consulates, quietly going to seed while waiting for an Evelyn Waugh to become their Boswell.

The ’80s “empowered” such people, puff­er fish from the Heritage Foundation and the Brookings Institution who inflated every 24 hours on Nightline, icky crustaceans like Rush Limbaugh, Dinesh D’Souza, Al­lan Bloom, and Mary Matalin, weird left­over mollusks like Evans and Novak, Pod­horetz and Deeter, Henry Kissinger, Jeane Kirkpatrick, and Cap Weinberger. For the millions of outsiders whose noses were pressed to the aquarium glass, the most colorful and scary fish were the bot­tom-feeders. These creatures of the cold depths ranged all across the floor of the cultural cesspool, iridescent, luminescent, compellingly stupid. Their visibility in the tank sufficed to divert attention from the increasingly cannibalistic escapades of the larger fish. Randall Terry, Phyllis Schlafly, Jerry Falwell, Pat Robertson, Jesse Helms, William Dannemeyer, Richard Viguerie, Henry Kravis, Peggy Noonan, Al D’Amato: just a few of the lower phyla swirling among the grasses and weeds, aquatic ruminants emitting neurotoxins while nourish­ing themselves on fish droppings.

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I remember that in 1981 we were wor­ried about a war.

We were children of the ’50s who had cowered under desks during air raid drills, and some of us had had, through most of our lives, recurring nightmares about the hydrogen bomb. Then came Nixon and dé­tente, and Ford, who really seemed harm­less, and “the little Carter,” a man who grew peanuts for a living and clearly had no interest in blowing up the planet. At the tail end of 1979, though, all hell broke loose. The Shah was flown out of Iran, and some pious American imperative to add insult to injury caused us to bring him here. The American embassy in Tehran was seized. China resumed border skirmishes with Vietnam, which had invaded Cambodia to stop the Khmer Rouge, and the Soviet Union, being an ally of Vietnam and hav­ing already invaded Afghanistan, seemed poised to invade China. Nineteen eighty turned out to be a very nervous year, and at the end of it Ronald Reagan became president.

Ronald Reagan became president, and as he was sworn in the hostages were set free, and you did not need a congressional inves­tigation to figure out that some type of mickey mouse had occurred, some deal brokered by the dark forces that had steered Reagan through his years of selling out the Screen Actors Guild to HUAC, his stump speeches for GE, his Death Valley days, his gubernatorial terms in California. They were, it went without saying, the campfire guys from Bohemian Grove.

In the depths of the fait accompli, many of us lost all interest in politics. Some were turning into cocaine, others into heroin. Perhaps you, reading this, will say that you personally were trampling through the vin­tage where the grapes of wrath are stored, and if so, good for you, but I wasn’t.

I was interested in Mrs. Harris, who had shot the diet doctor. I was interested in Mark David Chapman, who had shot John Lennon. I was not especially interested in John W. Hinckley Jr., who shot Ronald Reagan that March, partly because he missed, and the assassination attempt somehow made Reagan more plausible, a hologram taking on ectoplasm.

At her trial, Mrs. Harris would say that under the spell of Dr. Herman Tarnower she had felt like a character in “Somerset Maugham’s Magnificent Obsession.” When it was pointed out to her that Maugham was not the author of Magnificent Obsession, Mrs. Harris claimed that it had just seemed too painful to say Of Human Bond­age. Mark David Chapman had a much-­thumbed copy of The Catcher in the Rye in his pocket as he waited in front of the Dakota for John and Yoko; like Holden Caulfield’s, his innocence had been violat­ed by “phonies,” though Holden Caulfield never shot one. Mehmet Ali Agca, who shot the pope that year, looked really, really cute in photographs. Another poor shot, though. One of the lessons of the 1960s was that only relatively useful people encounter competent assassins.

Martial law was declared in Poland. The Nobel Peace Prize was awarded to the UN High Commissioner for Refugees. My friend Cookie Mueller, always in the van­guard, began watching MTV as soon as it came on the air.

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Surrealism sifted down from the top, a sense of unreality spreading out into unex­pectedly pliable parts of what had seemed solid, immutable. The new government, the new president, exhibited an implacable nut­tiness, the kind of drollery that can’t be argued with. It would be like arguing with Lucy Ricardo. The Department of Agricul­ture announced that ketchup could be con­sidered a nutritious vegetable in school lunches. The president wanted to cut more social services and pour billions into the military, to put an end to the New Deal, Fair Deal, Great Society type of programs. Hasta la vista the compassion thing, the affirmative action thing. He fired the air traffic controllers. He dissolved the board of the Legal Services Corporation on New Year’s Eve to keep block grants from going out to advocacy groups. He cited welfare princesses in Cadillacs. He recommended tax-exempt status for schools that practiced racial discrimination.

It became evident that the new president could not talk. Or rather he could, being an actor, talk if he were reading lines, but his spontaneous verbiage never coalesced into sentences or paragraphs or even into intelli­gible non sequiturs. I suppose if you had asked him about Barbie he would have con­fused Barbie the war criminal with Barbie the fashion doll. He could not, after all, remember whether he had helped liberate the death camps in Poland, or had merely narrated a documentary about them, The soft, chewy, evasive language that had been such a remarkably damning feature of the Nixon crew’s Watergate testimony had re­turned to the penthouse level of govern­ment with a vengeance. Everything was hindsight, everyone misspoke himself, the most unequivocal statements needed to be clarified the next day, turned inside out, rendered meaningless.

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If you traveled a lot in those days, you were certain to notice this problem, this phenomenon of displaced persons, economic refugees, political refugees, people in flight, people from troubled Third World countries sweeping the streets of Germany and France, sweeping the streets and clean­ing the sewers, and it was clear that the local people, the ones who had rallied around Hitler and Marshal Petain, no champions of the melting pot, were becom­ing restive. A certain Nietzschean ressenti­ment could be detected in the daily papers of Frankfurt, Munich, Vienna, Berlin, Par­is, Lyons.

There was Strauss in Bavaria, Le Pen in Marseilles, the National Front skinheads in Manchester and Liverpool and London. Something was taking its course, probably the incurable in human nature.

U.S. unemployment hit 10.8 per cent, though it was a boom year for the stock market. The war on drugs was announced, emphasis on interdiction and mandatory sentencing. And there was this new illness going around, something whispered about in gay bars, some people called it gay can­cer and some people called it GRID, you had to look hard in the papers for it, be­cause in 1982 gay people were decidedly not news, and the deaths of gay people, whether by homicide or disease, were welcomed, not at all quietly, by the people the new government coaxed out of the wood­work: Jesus freaks, white-collar criminals who would become Jesus freaks in country­club prisons, military brass who wore Jesus on their lapels with their kooky decora­tions, abonion-clinic bombers with Jesus at their side, civil-rights opponents with a spe­cial relationship to Jesus, John Wayne.

I was spending a lot of time in Berlin. You did not hear much about the epidemic in Berlin. The disease was something peo­ple picked up in America. It was widely believed that only a certain type of person got it, a person who had too much sex, or the wrong kind of sex, or took too many drugs, or the wrong kind of drugs, and people would tell you this, sometimes, just before or just after having sex with you, or doing drugs, etc., etc.

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In 1983, a lot of people who were mak­ing a lot of money decided that if they jumped up and down every day in a health club, they would never get cancer, heart disease, or old.

In 1983, several people I knew were car­ried off by AIDS-related pneumonia.

In 1983, traveling behind the dreaded Iron Curtain, I discovered Ronald Reagan’s true constituency: Central European intellectuals and professional types who were, for the most part, immersed in politics as an all-male, heterosexual club, an arena for jousting between randy cocksmen, some armed with state power, others clad in the drag of superior moral truth and historical victimhood. They despised feminism, and indeed any systemic critique of the status quo except the concepts of anticommunism or anticapitalism. In Budapest and Prague and East Berlin, only the Jews seemed aware that the CP had kept the lid on pogroms, ethnic warfare, border clashes, etc.

It was the would-be Kundera types, the Brodsky and Milosz wannabes who had been unlucky enough to stay behind, the ones who weren’t getting that foxy tight pussy in Paris and London and New York, the chauvinists who wrote elegant and pow­erful books about repression and who yet maintained a stubbornly repressive attitude toward women, homosexuals, and quite of­ten people of other races and nationalities, who adored Ronald Reagan and his rhetorical willingness to go nuclear. The Soviet Union, they said, would only back down in the face of massive military confrontation, endless threats, endless displays of Ameri­can force around the world.

At home, polling data revealed that throughout his presidency Reagan was not an especially popular chief of state, and that the political views of most people had shifted, if anything, further left. This didn’t translate at the ballot box because more and more people stayed away from ballot boxes, perceiving no practical advantage in endorsing one or another spokesperson for the superrich and the defense industry.

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That year, Reagan announced his Star Wars vision. It had, it was said, come to him in a dream, screened through some vague memory of an army propaganda film he’d acted in during World War II: an ultrapowerful death ray, mounted on an ultrafuturistic multibillion-dollar orbiting space station full of special sensors and laser mirrors and stuff like that, could, with one press of a magic emergency button, zap intercontinental ballistic missiles in mid-­flight and turn them into butterflies. No one believed this, really, but it was an en­chanting fantasy, and Congress passed most of the money for it.

CDs hit the market for the first time.

The Cabbage Patch doll, with its cute computer-generated face, dominated the Christmas toy market. Two hundred and forty-one marines were blown to pieces in Lebanon by a kamikaze truck driver. Gre­nada, with its ominous stranglehold on the world’s nutmeg supply, was suddenly recog­nized as a threat to America’s national se­curity. An invasion was launched, resulting in the bombing of a mental hospital and the capture of four or five Cuban engineers who were rolling an airfield for the Minis­try of Tourism Eventually, 8612 medals for valor would be awarded for the Grena­da microwar. Fewer than 7000 people had participated.

The playwright slept with me for a while and then he stopped sleeping with me, which was fine, except that I missed him, not all the time, but regularly at three 1n the morning, when I had often kissed him in my sleep, or in his sleep, or wrapped my legs around his waist, or rubbed his back. or his feet, and quite often he spoke 10 me in his sleep, he called me Swee1ie. But of course, looking back on i1, he may not have been talking to me at all.

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There were wild men roaming the back hills of Idaho and Colorado, men with large, cultlike families, children with straight greasy hair who’d been yanked out of public schools to learn marksmanship at home, where a ten years’ supply of canned food was kept next to the AK-47s in the bomb shelter. They believed in skin color as the organizing principle of their particu­lar mammal clan. They believed that Ron­ald Reagan might himself be a socialist, a tool of the Trilateral Commission. or a dupe of the Kremlin. Every so often, these people shot a policeman, or clubbed an Asian to death, causing the media spotlight to settle, briefly, not on their alarming numbers, but on the special features of their delusional system. These included the concept of survival as a full-time obsession, tax revolt as a revolutionary tool, and old­-time patriarchy as the will of God. Which turned out to be not unlike the opinions aired on Crossfire, or printed in Commentary and The New Republic, except for the inside-the-beltway caveat that, of course, it was wrong to attack people, wrong to kill people one disagreed with, unless the vital economic interests of the country were at stake.

It must have been that winter that I fell, deeply and insensibly, in love with a junkie. I have always had a weak place for junkies, for semi-helpless people with Christ fixa­tions, people who believe, usually for good reasons, that they are doomed. Beautiful losers, debutantes gone awry. He could’ve done the cover of GQ without much effort, but he wanted, I think, someone with ex­travagant will to scoop him up and save him, and this is where, perhaps, Mark Da­vid Chapman’s favorite novel and I have something in common. I tried, and after he sold the entire contents of my apartment on the street, I gave up.

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At any given moment, you had an investi­gation or a set of hearings or a probe going on, often several at the same time, in the House or Senate or Justice Department or FBI, and along with these investigations, hearings, and probes, you got leaks, fol­lowed by denials, and eventually by confir­mations, followed by subpoenas and indict­ments. A chestnut from the Nixon period­ — “how much did he know, and when did he know it?” — became the favorite, irrelevant question of the White House press corps.

Language as a medium for describing re­ality underwent deconstruction. “I don’t re­call,” “I can’t remember,” “I have no recollection of that,” were considered acceptable euphemisms for “I’m not going to tell you.” If an embarrassing or litigable fact leaked, one could credibly claim to have been “out of the loop,” even if one happened to have been in the same room where the loop was.

The president was said to be a grandfa­therly type, naturally charming, genial, who never became ruffied by anything. And it was said, later, by people like Washington Post editor Ben Bradlee, that these ingrati­ating qualities, added to the fact that the press was always accused of excessive liber­alism and therefore felt obliged to be more than fair, accounted for the media allowing him a free ride, never clocking his mistakes, never finding him accountable.

The principle of unaccountability was an important nuance. It signaled that the Cap­tain really was just a Spokesperson, a com­fortingly wrinkled ventriloquist’s doll. The unaccountability thing became the Wash­ington drug of choice. When the White House chief of staff’s proximity to Iran-­contra fell under scrutiny, he asked, with a note of pique, “Does a bank president know whether a bank teller is fiddling around with the books?”

It was the year of Miami Vice and Bho­pal. Daniel Ortega won a free and fair elec­tion in Managua, an election heavily monitored by representatives of the previous U.S. government. The Reagan people im­mediately declared it null and void, and for years this election was treated by New York Times correspondent Stephen Kinzer and in most U.S. newspapers as if it had never occurred.

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Even though I did a fair amount of cultur­al reporting in 1985, it’s hard to remember in any detail what was going on. Words like simulacra, Other with a capital O, appropri­ation, and infotainment were in high vogue. The art world had already seeped past its usual coterie boundaries when national magazines discovered the East Village Art Scene, causing a flood of suburban trust­-fund bohemians and boutiques to inundate the neighborhood, displacing thousands of working-class stiffs. Now painters and sculptors and their newly decorated country homes were turning up in People, in Archi­tectural Digest, and on Page Six, their par­ties and benefits and plans for world domi­nation reported in gossip columns.

Real estate values were pushing through the roof. The Dow Jones average finished the year at 1546, an all-time high. Buying and owning were the art world things to do. Ditto the Wall Street thing to do. Buying, owning, getting married.

“We Are the World” went platinum.

General Dynamics was indicted for con­spiracy to defraud the army. Years later, General Dynamics would opt to lay off thousands of employees rather than retool for civilian industry. Capital Cities Com­munications seized ABC. General Electric seized RCA, which controlled NBC. Laur­ence A. Tisch, owner of Lorillard tobacco, seized CBS.

A volcanic eruption in Colombia killed 23,000. An 8.1 earthquake in Mexico City killed 7000. Mob boss Paul Castellano was shot outside Sparks Steak House on East 46th Street. A hole in the ozone layer was reported by British scientists.

The president had cancer, or, as the Rea­ganese du jour had it, a little, noncancerous thing inside the president had some cancer in it. Namely his colon. A few months be­fore the little thing inside the president had cancer, the president visited an SS ceme­tery in Bitburg, Germany. He declared that the soldiers of the SS were, in their way, victims, just like the Jews in Auschwitz. Because they were all, you know, kind of inside a little thing called World War II.

Rock Hudson died of AIDS, and it was felt that his death would bring the epidemic into focus for people who had so far ignored it. Rock Hudson had been, after all, a friend of the Reagans, beloved by millions, and, in private life, by all accounts, a sweet guy. But the focus settled a bit to the side of the larger issue: on Rock Hudson’s secret gay life, Rock Hudson’s ex-lover’s lawsuit, the actual size of Rock Hudson’s estate, and on whether or not Rock Hudson should have kissed Linda Evans on Dynasty. The lesson of Rock Hudson’s death became boilerplate for every celebrity AIDS death, i.e., “even a movie star can get AIDS,” as though it were widely assumed that fame immunized a person against physical misfortune.

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The next year, we retaliated for the bomb­ing of a disco in Germany by bombing Tripoli. In the absence of hard evidence that Libyans were actually involved in the German disco bombing, the State Depart­ment assured us, as did the president him­self, that the ruler of Libya was a “mad dog,” similar to Hitler, and therefore crazy enough to lash out at a vastly superior mili­tary foe.

The Senate approved $100 million in aid to the contras, an army of mercenaries left over from Somoza days in Nicaragua, most of them drug dealers with ties to what was traditionally referred to in Pentagon circles as the “disposal problem,” i.e., the old Bay of Pigs veterans who, with backup from jailbird flotsam from the Mariel boat lift, now ran the coke business in Miami. Ever since they may or may not have helped assassinate JFK, the anti-Castro Cubans had been on one or another federal payrol — of the CIA, FBI, NSC — biding their time, with scapulars of the Virgin Mary and Batista clasped to their chests along with the gold chains and the coke spoons.

Baby Doc fled Haiti with most of the national treasury. Years later, the Bush people would open a concentration camp for Haitian refugees at Guantánamo, re­minding many Americans who’d forgotten that throughout 30 years of economic blockade, the U.S. has maintained a mili­tary base on Cuba itself.

Ferdinand and Imelda Marcos fled the Philippines with billions. The space shuttle exploded. The Chernobyl reactor exploded. A lake in Cameroon exploded, killing 1700.

William Rehnquist became chief justice of the United States Supreme Court. An­thony Scalia was confirmed as associate justice.

Mergers in the airline industry. More mergers in communications.

The Iran-contra arms-for-hostages deal was reported in a Beirut newspaper.

Swedish prime minister Olof Palme was shot on the street in Stockholm.

Unemployment fell to 6.6 per cent.

In The World Almanac’s Sixth Annual Heroes of Young America poll, Eddie Mur­phy was chosen as Young America’s “Top Hero,” followed by Ronald Reagan, Bill Cosby, Prince, Sylvester Stallone, Clint Eastwood, Debbie Allen, Michael Jordan, Madonna, Mary Lou Retton, Bruce Spring­steen, Eddie Van Halen, and Harrison Ford.

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What do you call these things, I asked the psychiatrist, where you don’t sleep with the person, but become so involved with him that the two of you behave like people in the throes of passion? You have fights, you make scenes, you spend hours gazing like cows into each other’s eyes, and even the people you are sleeping with become secondary figures in the drama, extras you go home to, members of the chorus.

Well, the psychiatrist said, I’d call it barking up the wrong tree, frankly.

Everyone was under indictment. The principle of unaccountability was part of the mandate of surrealism. Unless you were caught, preferably on videotape, with your hand in the cookie jar, what you knew and when you knew it, or what you did and how you did it, were matters of pure conjecture I and speculation. Unless someone had actu­ally seen you hurl your wife out the win­dow, or shoot her up with an overdose of insulin, the beau monde would flock to your defense, throw cocktail parties and banquets in your honor, write profiles of you in Vanity Fair.

Nobody was responsible for anything bad. And if you had, in fact, been caught doing something terrible, your entertain­ment value shot up.

Wearing a green velvet Carolina Herrera dress, Nancy Reagan presided as guest of honor at a fund-raising dinner at the Met: pasta with lobster and roast veal with calva­dos sauce. In Managua, Times journalist Stephen Kinzer valiantly continued report­ing the horrors of Sandinista land reform and free day-care centers.

There was a stock market crash in 1987. The Dow ended the year at 1938, down from 2640 on October 5. Ivan Boesky pleaded guilty to insider trading.

In 1988, Panama’s General Noriega was indicted for drug dealing by a Florida grand jury.

The largest leveraged buyout in history occurred in 1988, when RJR Nabisco, which employed 12,000 people in its tobac­co division alone. was acquired by Kohl­berg, Kravis, Roberts & Co., an investment firm with 15 dealmakers. Thanks to Willie Horton and Read My Lips, the baton of shininess passed from Ronald Reagan to George Bush.

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We had, according to the papers, partially overcome “the Vietnam syndrome,” which meant, as far as I could tell, partially forget­ting the experience of losing a war. Reagan had sounded this theme and backed it up by bombing various backwaters where actu­al battle and troop loss were unlikely, though Lebanon was a miscalculation. Ever since Vietnam, Americans had displayed the petulance and pettiness of sore losers, stoking the issue of MIAs, which involved some satanic fantasy of GIs pressed into slave labor long after the war was finished. It did not matter to anyone that the Vietnamese had over a million dead to mourn, or that their landscape was still toxic from American chemicals. In Vietnam. it is com­mon for two men or two women to hold hands while walking in the street. Here it’s an incitement to murder, and we have an active lobby on our local school boards determined 10 keep it that way.

I suppose I fixated on him because of the rotten times we were living in, with more rotten times expected ahead, and we ended up clinging to each other like two wet rags stiffened by a sudden drop in temperature. He wouldn’t make love because he was scared, and I convinced myself, you see, that having him around would be enough, and then, in a tentative frightened way, he began to open up, began getting physical, and I thought, Well, there, he loves you after all. Months passed. He became more and more open, more available, more talk­ative, more passionate, more insistent about the convolutions of his psyche, the turmoil our relationship was stirring in his soul. I thought he was coming to love me, and actually he was having a nervous breakdown.

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George Bush was not loved by the peo­ple who simply lived in the country, the faceless thousands strung out on revolving credit and bad mortgages, the people who lost their jobs when their plants packed up for Mexico, the folks who found themselves without enough insurance when the inevita­ble neoplasm rolled around. He was not loved by people with HIV infection and AIDS or the people who cared about them. He was unloved by people of color.

The press enjoyed, especially at the end, telling us that Barbara Bush was, in fact, widely admired, but I despised her chicken­wattle face and that gleeful malice in her eyes — this phony grandmother who proba­bly carried on in private like Angela Lansbury in The Manchurian Candidate, cya­nide pellets hidden in the pearls — and a lot of people fell the same way.

George Bush was not loved, because he’d had the silver spoon thing going from Day One, and that Yale Skull & Bones thing, and everything he did, to cop a phrase from Robert Wilson, was just Instant Hitler. The deals with China, the April Glaspie cables, Clarence Thomas, Iran-contra, and that ghastly massacre in Iraq. The land of hope and glory thing didn’t work on him, not really, not for long. He’d climbed on the ticket in 1980 by renouncing abortion rights and endorsing what he’d previously called voodoo economics, and rode the coattails straight into a brick wall.

Everybody knew he had no principles except Me First. He epitomized hypocrisy. He had that whale Marlin Fitzwater blubbering in the briefing room, and that other horror Margaret Tutwiler, two dead ugly people who blinked so often you knew they were pulling one over, and it won’t surprise me, you know, if they’re all under indict­ment tomorrow morning, Tutwiler, Fitz­water, Mephistopheles Baker, the whole greasy crew with their High Episcopal pre­tentions, their sycophants from Fordham, that Kristol nightmare whom they brought in to teach Quayle the alphabet, the Council on Competitiveness, and all the other no-neck monsters who went that extra mile to make ordinary people’s lives a living hell.

George Bush was not loved by the people who own the country. He was jumped-up, not in a brash oil millionaire sort of way, or a Kennedy Mafia bootleg sort of way, but in a thin, simpering, obsequious way. He whined. He was obviously vindictive and mean-spirited. He believed, you see, in no­blesse oblige in New England, but he kept a hotel room in Texas as a phony sunbelt pedigree, and that showed you he was neither fish nor fowl. He was the American Andropov, with too many ugly things on his resumé. He had to go. David Rockefel­ler endorsed Clinton.

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As I write this, Channel 17 features, at certain hours, several seriously disturbed individuals posed in front of an Israeli flag, vowing vengeance for Rabbi Kahane. They refer to Arabs as “Jew-hating cockroaches on two legs.”

There is, still, years after the 1967 war, a widely held view of Israel as a victimized and embattled state, surrounded by hostile Arabs, when, in reality, the state of Israel is a heavily armed welfare client of the U.S., actively engaged in what would be called, in a different setting, ethnic cleansing. The Israelis deport and jail people arbitrarily, engage in torture, bulldoze houses belong­ing to Palestinians.

I’ve always believed that the state of Isra­el should have been established in Lower Bavaria, to keep things secular. The state of Israel was established like this: you are sit­ting in the living room of the house your family has lived in for several generations. Strangers smash down the front door and, using their gun butts, force everyone up to the attic, declaring that they owned your house a thousand years ago, it says so in some sacred book, and anyway, some other people threw them out of the place they were living in, etc., etc. Now they want the attic, too, since you have relatives living next door that you can move in with.

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We could do the Berlin Wall, or the mi­raculous Fall of Communism. The refugee populations pouring over the old borders, the Balkanization of the Balkans, the break­up of the Soviet Union into myriad nucle­ar-ready zones, the Exxon Valdez spill, the Time-Warner merger, Tiananmen Square, HUD, the $ 166 billion price tag on the S&Ls, Mitsubishi’s acquisition of Rockefel­ler Center, Sony’s buy-up of CBS and Co­lumbia Pictures. We could do the invasion of Panama, the execution of Ceauscescu. We could do the budget deficit. We could do the trade deficit.

Or the Quayle thing, which everyone said was impeachment insurance for George Bush, but it said something else to the country at large, and what it said was, We’ve had Charlie McCarthy for eight years as Number One, and now Number Two is going to be Howdy Doody.

A theory. It was something about taking things on faith for a little while, and some­thing, in the end, about exhaustion. Since the beginning of the Cold War, American governments had misidentified the Soviet Union as the enemy of the country, when the actual adversaries of American business and its partners in the Pentagon were Japan and Western Europe.

The false enemy was forever depicted as technologically inept, incapable of manu­facturing a working light bulb, yet dangerous, because of its state-of-the-art nuclear arsenal. The real enemies were persuaded to underwrite our budget deficit, with the false understanding that their markers would never be called in.

These fables worked long enough to dump a lion’s share of 40 years of public money into research and development for General Dynamics, McDonnell Douglas, Northrop, Boeing, General Electric, and other defense contractors, who were the true welfare queens of the era. As capital was diverted into increasingly pointless products like the 8-1 bomber and Star Wars, with no reinvest­ment in civilian enterprise and infrastruc­ture, our competitors were able to outstrip us in most areas of practical benefit and con­oern to the general population.

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A theory. It was something about the por­cine lack of inhibition that the newly rich displayed while celebrating their ascendan­cy: the $1000-a-plate fundraisers, the con­stant parading of patriotic symbols, the ero­ticization of contempt. It was about the pasta with lobster and roast veal with calva­dos sauce juxtaposed with three million homeless rooting around in garbage cans for bits of food. It was George Bush com­plaining to Florida hurricane victims that his own little shack in Kennebunkport had sustained a bit of damage, too, so he knew how they felt. It was George Bush telling Katie Courie on Today that he’d testified 450 times, under oath, about Iran-contra, when he in fact had testified exactly once. It was too many dubious foreign affairs, too many tin-pot dictators transformed into mad dogs and Hitlers whenever the presi­dent’s approval rating hit a slump, too many telegenic bombings of sleepy desert capitals. It was George Bush trying to win an election with a war everyone had forgot­ten, since hardly any of our own people were killed, and the Hitler du jour, re­mained in the saddle.

The Big Lie works great when you’ve just built the autobahn and invented the Volks­wagen. It doesn’t work at all when the auto­bahn’s falling apart and no one can afford a Volkswagen.

But it worked for 12 years, and the people it worked for aren’t the types to fade quietly into outer darkness. They’ll be around, some waiting to do a few months in a resort slam­mer, others blowing bubbles in their think tanks, ruminating on family values, the evil lifestyle of homosexuals, the glories of war, the absolute sanctity of money, and the mot­to of Republicans the world over. Admit Nothing, Blame Everybody, Be Bitter. ■

Research Assistance by David Lewis 

Categories
From The Archives NEW YORK CITY ARCHIVES NEWS & POLITICS ARCHIVES NYC ARCHIVES THE FRONT ARCHIVES

Why Did Rudy Giuliani Submarine a BCCI Probe?

The Ties That Blind

A specter that haunted Rudy Giuliani’s first run for mayor in 1989 — the associa­tion of his then law firm, White & Case, with the notorious international drug laun­derers and terrorist boosters at BCCI — is coming back to haunt him. The reason it’s returning is that much of what the former U.S. Attorney said back then to deflect me­dia attacks about the relationship was flat­-out wrong. A Voice reexamination of the issue raises new conflict-of-interest questions both about Giuliani’s late 1988–early 1989 job talks with the firm — whose ties to the world’s most corrupt bank were far more extensive than it has publicly claimed — and his office’s hitherto unre­ported, yet simultaneous, submarining of a BCCI probe.

Giuliani maintained then that he had only asked the firm, which had hired him just a couple of months before he formally announced his candidacy that May, if it represented any clients “under investiga­tion by my office when I served as U.S. Attorney,” not about clients “under investi­gation by other prosecutors.” Concluding that the BCCI prosecutions, which then appeared to be limited to the federal indict­ments in Tampa, had “nothing to do with my office” and “no connection to my work,” Giuliani declared the issue “irrele­vant.” He was so angered by the controver­sy, however, that he stormed off a WNBC­-TV set when asked about it, and, six days after the story surfaced, took a leave of absence from the firm.

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Contrary to Giuliani’s 1989 claims, how­ever, his office did receive a hand-deliv­ered, October 31, 1988, criminal referral about BCCI signed by top Federal Reserve and New York State Banking Department officials, as well as a November 8 follow-up letter listing suspected Panamanian and Colombian drug money deposits then flow­ing through BCCI’s New York office. These letters, as well as at least one November 4 meeting involving high-level Federal Re­serve, state banking, and Giuliani officials, were spurred by the findings of an emergen­cy joint examination of BCCI’s New York office conducted by both regulatory agen­cies immediately after the October 11 Tam­pa indictment of BCCI (surprising the bankers at a fake bachelor party orchestrat­ed by Customs agents made the bust a nationally televised news story). In addition to noting that the joint examination had uncovered apparent violations of the Bank Secrecy Act, the referral letter stated that “a money laundering scheme may be in prog­ress” at the New York branch — about as vivid a declaration as normally staid bank examiners are likely to make.

Giuliani’s office was also indirectly in­volved in the Tampa undercover opera­tion — indeed one of the prime launderers caught in the BCCI net, Robert “the Jewel­er” Alcaino, had been indicted by Giu­liani’s office that September. That is why the press statement issued by U.S. Customs Commissioner William Von Raab the day of the Tampa indictments listed his own and Giuliani’s press representatives as the only media contacts on the story. It is also why one of the Giuliani assistants who at­tended the November 4 meeting with the banking regulators, Steve Robinson, was handling not only the Alcaino case but that of another launderer, Colombian Pedro Charria, who also was charged with running drug money through BCCI.

Despite these many warnings about a bank already charged with $31 million in drug laundering, Giuliani’s office never got back to the bank regulators and never opened a grand jury inquiry. Several months later, a congressional investigator frustrated by Justice Department resistance to any broad-based BCCI investigation went to Manhattan District Attorney Robert Mor­genthau and convinced him to launch one. With the cooperation of the same state and federal banking officials mystified by the lack of response from Giuliani’s office, Mor­genthau indicted and convicted a host of BCCI officials in 1991 and 1992.

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His case included counts that flowed from the money-laundering charges de­scribed in the ignored 1988 referral, which was sent to top Giuliani aide Bruce Baird. Contacted by the Voice, Baird, a Washington lawyer who contributed to Giuliani’s campaign as recently as August, said he doesn’t “have a clue” about what happened in response to the letter, and can’t recall receiving it. Robinson said he was not aware a referral letter had been sent and was not involved in any action the office took after the meeting with the regulators.

The 1988 bulletins about BCCI were ar­riving at Giuliani’s office just as he and his top aide Denny Young, who remained at the U.S. Attorney’s office until the end of January 1989 and joined White & Case (W&C) on February 16, were having their initial discussions about possibly joining the firm. A headhunter long friendly with Giuliani who was the unofficial go-between in these negotiations, Wendeen Eolis, first talked to Giuliani about W&C’s interest in November. The Manhattan Lawyer report­ed at the time that formal Giuliani talks with the firm began in December after a lunch involving Young and a partner there. Eolis says: “In the fall of 1988, there were lots of law firms chomping at the bit to talk partnership to Rudy, but White & Case was one of the select few Rudy and Denny chose to consider.” A source close to the discussions says the early meetings with W&C preceded by weeks their consider­ation of the only other serious bidder, Pros­kauer, Rose, Goetz and Mendelsohn.

While W&C would later claim that its role with BCCI had “never been significant,” figures obtained by the Voice reveal that the firm earned at least $4 million in the fiscal year ending September 30, 1987, from a half dozen BCCI-related clients. Two of the partners who met with Giuliani early in the negotiations and who participated in the four-member management committee vote to offer Giuliani and Young a combined million-dollar package ($780,000 for Giu­liani and $300,000 for Young, with Giu­liani taking almost twice the draw of the average partner) were directly involved in the BCCI-related business — W&C chair James Hurlock, and Eugene Goodwillie Jr. Hurlock became a major Giuliani donor, raising $19,500 while contributing $2000 to the 1989 campaign himself; Goodwillie, the principal partner in charge of the BCCI work, gave $1000; W&C lawyers gave a total of $48,000.

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W&C’s 1987 client billings list $624,302 directly from BCCI and another $429,675 from the booming BCC affiliate in Colom­bia, which had two branches in Medellín, was closely tied to the drug trade and even became the multimillion-dollar depository for druglord Jose Gonzalo Rodriguez. It earned a mere $16,000 from the Republic of Panama that year, but that was a sharp dip from the 1986 total of $109,000, and was on top of the $300,000 Giuliani associates acknowledged in 1989 that W&C had earned over a period of a few years from the Panamanian national bank (BCCI and the Panama bank combined to hide $23 million of Noriega loot). The firm was so deeply involved with Ghaith Pharaon, the now fugitive Saudi tycoon and BCCI share­holder eventually indicted for illegally fronting for BCCI in the acquisition of three American banks, that in 1987 it listed $1.1 million in fees from Pharaon’s holding companies, Redec and Interredec; $643,000 from his oil company Attock; and $98,000 from the Pharaon Group.

W&C also reportedly earned substantial fees over the years involving Pharaon’s bank transactions, including two much-in­vestigated ventures: his sale of the National Bank of Georgia to Clark Clifford’s First American, and the purchase of the Califor­nia-based Independence Bank. Fueled by over $300 million in sometimes secret loans from BCCI, Pharaon spent years scouting and occasionally buying American banks as an apparent agent of BCCI, which was effectively barred by federal regulators from directly taking over one.

A few weeks after Pharaon’s principal representative here, Amer Lodhi, began co­operating with investigators in March 1989, he was told by W&C brass that Pharaon had issued an ultimatum: either it dropped Lodhi, who had recently taken a counsel position at W&C, or Pharaon would walk away from the firm. Lodhi, who was first involved with W&C as a young associate back in the ’70s, was shown the door within weeks of Giuliani’s ironic arrival.

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When Clifford, the legendary Washing­ton lawyer still under indictment with Mor­genthau, appeared before a Senate commit­tee probing BCCI in October 1991, he was asked about his billings to the bank. Distin­guishing it from the mountain of fees he’d collected from the BCCI-backed First American, Clifford said his direct work for the bank was “an occasional matter because they used White & Case.” (Clifford added that BCCI also “sometimes used Sullivan & Cromwell” as well as one California and Florida firm.) “I think, as a matter of fact,” he concluded, “they used them a good deal more than they used us.”

The association was so strong that Assis­tant U.S. Attorney Thomas Zaccaro says it was W&C’s actions in the 1985 Indepen­dence deal that have become the legal hook giving federal prosecutors jurisdiction to bring a still-pending $37 million civil claim against Pharaon in New York courts. Zac­caro also says that W&C is “probably con­flicted out” of the ongoing case because of the role the firm played in the BCCI-con­nected acquisition. A Federal Reserve affidavit in the case spells out two aspects of W&C’s involvement — indicating first that W&C “drafted an investment advisory agreement” naming BCCI as Pharaon’s in­vestment adviser on the deal (a device that concealed the fact that BCCI was actually buying the bank); and second, that W&C then participated in discussions surround­ing Pharaon’s repayment of a loan that had partially financed the “Independence ac­quisition” (the $12 million Pharaon used to repay this loan came from BCCI). The Fed document does not say that W&C had any knowledge of the full scope of BCCI’s hand in this acquisition.

Since W&C represented both Pharaon and BCCI, as well as other apparent fronts for BCCI like the First American Bank of New York (FABNY), investigators have also pondered the question of whether part­ners in the firm were aware of the bank’s or Pharaon’s deceptive practices with regula­tory agencies. These questions have in­volved practices reaching back to the early ’80s when W&C, knowingly or not, helped pave the way for BCCI’s covert entry in the New York market by assisting in the sale of over 35 Bankers Trust branches to FABNY — the key to establishing the new bank as a force in this region (BCCI could only run an office, not a real branch in New York, and was thus barred by regulators from taking domestic deposits here in its own name). Bankers Trust was W&C’s larg­est and oldest client, and FABNY became a client too, paying the firm over $330,000 in fees from 1984 through 1986.

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It was difficult for any observer not to notice the stark signs of BCCI’s involve­ment with FABNY since it was BCCI offi­cials, not First American, who initiated the Bankers Trust purchase, and BCCI that ran a yearly average of $10.6 million through FABNY (more than any other American bank), with 47 BCCI affiliates maintaining accounts there. FABNY was even head­quartered virtually next door to the BCCI agency on Park Avenue and took its top executives from BCCI ranks and recommendations.

No proof of any W&C misconduct in all of these dealings, however, has ever been alleged, and the firm has never even been legally targeted. When The American Law­yer reported in 1991 that Morgenthau and the Fed had subpoenaed documents related to Pharaon from W&C, a W&C spokesman said: “None of the services we have ren­dered to Dr. Pharaon have been called into question, nor do we expect them to be.” He has so far been proven correct. (As some measure of the depth of W&C involvement with FABNY, the firm billed the First American trustee $30,000 for gathering its extensive files related to Morgenthau’s sub­poena, with Hurlock and Goodwillie’s names appearing on the bill.)

But, in view of Pharaon’s still-pending New York and federal indictments, Federal Reserve orders permanently barring him from participating in the banking business in the U.S., and the continuing civil pro­ceedings that involve W&C, it is certainly possible that the firm was concerned in 1989, when it hired Giuliani, that the al­ready spreading BCCI scandal might turn in Pharaon’s direction. Since Hurlock, Goodwillie, the firm’s spokesman, and the Giuliani campaign declined to answer Voice questions about these issues, it is unclear whether any of W&C’s attraction to Giuliani might’ve been connected to con­cerns about the expanding BCCI case.

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It’s also unclear if Giuliani himself knew about the 1988 BCCI referral, follow-up letter, meeting, and other discussions that involved his office. The then deputy attor­ney general at Justice in Washington, Rob­ert Mueller, did a retrospective review in August 1991, though he could not recall how his review began (“I know we had some allegation that a referral wasn’t fol­lowed through on,” he said). The Mueller review came on the heels of several events that presumably embarrassed the Justice Department into trying to come up with some explanation for how it managed to miss the biggest international bank robbery in history. The U.S. Attorney for the South­ern District of New York — under Giuliani or in the years after his departure — was hardly the only federal law enforcement agency in the Reagan/Bush era to look the other way when BCCI appeared on its ra­dar screen.

One event that may have prodded Mueller’s review was Morgenthau’s sweep­ing indictments, virtually all of which have led to convictions, on July 29, 1991, and the D.A.’s press statement at the time, which pointedly thanked the Federal Re­serve and state banking officials who’d met with Giuliani’s staff but never said a word about any cooperation from Justice. Anoth­er was the August 1, 1991, hearing of Sena­tor John Kerry’s Subcommittee on Terror­ism, Narcotics, and International Operations, when Customs chief Von Rabb and Kerry counsel Jack Blum took turns blasting the Justice stonewall on BCCI, and when Federal Reserve counsel Virgil Mat­tingly mentioned for the first time that the 1988 New York referral had been sent.

Newly assigned to oversee Justice’s BCCI investigations, Mueller may have been pushed as well by two House probes. On September 5, New York congressman Charles Schumer released a report that, af­ter several discussions with Mueller, faulted federal efforts, concluding “more could and should have been done to put BCCI out of business, sooner rather than later.” (A year later Schumer issued a much tougher re­view, saying law enforcement secrecy made it impossible to determine if the reason for what he described as pervasive governmen­tal inaction on BCCI was a lack of coordi­nation “or something more ominous, such as the possibility that criminal prosecutions may have been deflected or interfered with for illegal or nonlegitimate purposes.”)

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On September 11, when Clifford testified for the first time in a much-ballyhooed public appearance, House Banking Com­mittee staff distributed a Federal Reserve chronology that spelled out the details of the 1988 referral, as well as a committee minority report that revealed that Fed offi­cials had “briefed Assistant U.S. Attorneys, FBI agents and IRS agents in the Southern District of New York concerning BCCI money laundering” in November of 1988.

In response to Mueller’s 1991 questions, the two Giuliani assistants, Robinson and Mary Lee Warren, who attended the 1988 meeting with the regulators began to put together their own explanation of what hap­pened. Both of them, to varying degrees, tried to minimize what the Fed and state officials told them. Robinson prepared a letter contending that the meeting was a getting-to-know-you session in which gener­al information was exchanged, with BCCI discussed only intermittently and without apparent purpose. “They clearly thought there were irregularities at the bank,” Rob­inson told the Voice, “but they did not suggest we open an investigation.” Un­aware of the referral letter to Baird, Robin­son could not quite figure out what the Fed wanted his office to do, though he says they did make it clear that they could not legally provide the prosecutors with detailed infor­mation on suspect BCCI accounts unless the Southern District “opened a formal in­vestigation” and “issued a grand jury subpoena for the documents.” He said maybe that was a “cryptic suggestion” Giuliani’s office should’ve taken. Insisting that the meeting and the bank were “no big deal” to him at the time, Robinson says that the whole issue just “fell off my map” after the session. He wrote the memo about it at the request of Warren, who was the narcotics chief in Giuliani’s office in 1988 but had become the head of the narcotics division in Washington, working under Mueller, by the time she called Robinson in 1991.

Warren, who is still at Justice and who also talked to Mueller, dismissed the meet­ing as a “hospitality session,” adding that the regulators “might have mentioned a bank” and that it “might have been BCCI” (though she could not recall what, if any­thing was said about any bank, she did remember that the group “ate cold cuts” and that she and Robinson had “a hard time finding” the Federal Reserve office). Angrily declaring that there “absolutely was not” any referral letter sent to Giuliani’s office, and refusing to listen to the three references to it in congressional documents, Warren also claimed to have “no recollec­tion” of the follow-up memo sent to her by the Fed four days after the meeting, which sources say listed specific bank customers who may have committed criminal violations.

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While a Fed participant indicated later that the session was arranged at the request of Giuliani’s office, Warren says it “certain­ly wasn’t us who asked for it” and that the meeting “came out of the blue” — coinci­dentally, just five days after the referral letter. Robinson suggested that the meeting occurred because their Charria and Alcaino probes had resulted in subpoenas for BCCI records that the regulators were aware of, though Warren says she knew nothing at the time about either drug launderers’ use of the bank.

The only aspect of this disputed meeting that both sides agree on is that “nothing ever came of it,” as Warren puts it. Fed officials later told Morgenthau’s office they could not explain why the Southern District never followed through, but Mueller did not question the regulators, nor did he re­view their detailed notes of the meeting. Indeed, he has no recollection of ever see­ing the Fed referral letter or Robinson’s memo. “I can’t tell you I did a thorough investigation,” says Mueller, who nonethe­less says he was “satisifed” that whatever was done was appropriate. “I do recall the question coming up generally why Morgen­thau was doing such a good, aggressive job and yet there was no Southern District in­volvement. Ultimately the answer was that the case was being driven by the Federal Reserve and I don’t know why they weren’t working more closely with the Southern District.” He added that he knew none of the details of the Fed’s early efforts to enlist the Southern District in the probe, but said that he vaguely recalled that whatever was referred to Giuliani’s office “fell within the ambit of the Tampa money laundering probe” and “perhaps” wound up passed along to Florida officials. There is no evi­dence, in fact, that it ever was.

Baird’s memory lapse, Warren’s state­ment that she doesn’t know if she discussed the Fed meeting with any superiors, and Robinson’s fleeting acquaintance with the case leave no one who was associated with it who can answer questions about Giu­liani’s knowledge. Giuliani won’t get on the phone either, but it is hard to imagine that this hands-on prosecutor, with his own press officer listed as fielding questions about BCCI defendants associated with the Tampa operation, had no idea that these BCCI red flags were being waved in his direction. His simple disavowal of any knowledge about the actions of his own top investigator — revealed in last week’s Voice — seemed to be enough to silence any further assessment or exploration in the media.

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Curiously, the press had no such re­sponse in 1989, continuing a drumbeat of stories about W&C clients and internal practices even when Giuliani adamantly denied any knowledge of them. Giuliani was particularly tarred with a Noriega brush in that campaign, though he insisted he had no way to know the firm represent­ed the druglord dictator prior to press revelations. However, the Voice has obtained a W&C prospectus then used to attract new lawyers that specifically said the firm repre­sented “foreign sovereigns” on an array of banking issues and listed Panama as one of 10 such clients. (Indeed the press had no such tolerance in the Liz Holtzman affair this year, hammering away at her though she swore under oath she had no idea her office had selected Fleet Bank as an under­writer, and all that countered her denial were reasonable inferences.)

With Giuliani’s extraordinary record as one of the country’s most effective federal prosecutors, he is certainly due the benefit of the doubt on issues involving his old office. But his service as U.S. attorney is all the public has to evaluate when it considers Giuliani, and, if he is running on that record, it is the press’s job to take a look at its possible underside. His office’s apparent mishandling of solid BCCI leads is fair crit­icism of him whether he did or did not know about it; he missed a golden opportu­nity to examine the so-called Bank of Crooks and Criminals that even loaned $9.5 million to the most ruthless Arab ter­rorist, Abu Nidal, who maintained a $60 million account at BCCI’s fashionable Sloane Street branch in London.

It cannot be emphasized too strongly that no one knew in 1988 when Giuliani’s top staff passed on these BCCI leads that Morgenthau would manage to put the BCCI pieces together inch by inch over a period of years, ultimately bringing this corrupt colossus down. The congressional investiga­tor who came to Morgenthau — just six months after the federal referral to Giu­liani — convinced him to take on this hunt by pointing to all the allegations in his own backyard, from the Fed laundering to the possible false filings involving FABNY. Had Morgenthau not responded, the Southern District stonewall could very well have resulted in protecting BCCI from the death­blow it deserved, leaving the investigation in the hands of the Justice officials else­where who had stopped short.

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Giuliani is also responsible for his choice of a law firm. His deal with W&C was widely assailed in the legal press at the time, which found its price tag inexplicable, especially for a lawyer who was hired to run for mayor by a firm that did no real munic­ipal work (The American Lawyer‘s Steve Brill said Giuliani was using the firm as “a meal ticket and a mail drop”).

It hardly looks now like this potential mayor did the requisite due diligence be­fore going there, and though no one in the media has reminded the public, he went back to the firm — despite all the hard ques­tions — when he lost. He stayed there for half a year, finally drifting away in 1990. All those W&C partners who believed so deeply in his 1989 candidacy that they dug in their pockets for dough have stopped contributing, adding to the curiosity of this temporary marriage.

As Erwin Cherovsky notes in his “Guide to New York Law Firms,” W&C “scarcely resembles the prototypically white shoe law firm which went by that name 15 years ago,” with “business connections and a gentlemen’s club atmosphere” having given way “to the hustle and bustle of a firm on the cutting edge.” Cherovsky concluded that while the firm has been on the upswing in recent years, “it still has not regained the standing it once enjoyed.” The collection of clients detailed here for the first time does little to enrich that reputation; and the vigi­lant Giuliani should’ve noticed.

David Dinkins has a four-year record as mayor to defend; it merits much of the criticism Giuliani has leveled. All Giuliani has is his legal practice — as a public and private advocate. Before we make him mayor, we are entitled to know as much as possible about that record. ■

Research: Jon Bowles, David Carnoy, and Adam Macy  

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From The Archives NYC ARCHIVES THE FRONT ARCHIVES

Rogue Police Union: The PBA’s Bloated Overhead

The PBA’s Bloated Overhead
December 7, 1993

THROUGHOUT THE Watergate scandal, the operative phrase was follow the money, an axiom that also serves the PBA story.

In 1991, the PBA raised more than $7 million in dues from its members, while four distinct but affiliated PBA funds took in many millions more from New York City taxpayers. Although the main pen­sion fund for the NYPD — worth $7.5 bil­lion — is mercifully controlled by the city itself (PBA trustees sit on the board), a smaller annuity fund is maintained to pro­vide additional benefits. The city pays in $2 for each police officer each working day (261 a year). Between total contribu­tions from the city and income on invest­ments, this fund received more than $14 million in 1991. A health and welfare fund for cops on active duty took in an­other $22 million; and a comparable fund for retired cops another $20 million. For 1991 alone, total revenues coming in to the PBA, including $7 million in union dues, came to $63 million. The cop on the beat might well ask, “Where did it all go?”

Much of it went where it should have, into services for PBA members — supple­mental dental and optical coverage, death benefits, legal representation, and the like. In 1991 the PBA paid out to members $26.2 million in direct benefits. But in order to provide these services, the PBA spent $23 million, an overhead that should raise the eyelids of the sleepiest IRS or department of labor official. In fact, when the Voice presented this benefit-to-expense ratio to Bob Kobel, an IRS regional spokesman, he replied: “Given that scenario, I feel certain it would cause us to take a closer look, at least to deter­mine why administration costs are so high.”

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A close look at individual expense items raises even more questions. Of the PBA’s total overhead for 1991, a large bite — $4.5 million — was paid out for legal work, la­bor negotiating, and lobbying. If you add in the $2.7 million paid for the legal repre­sentation for members, the total legal bill comes to more than $7 million. Virtually every penny of that amount went to Ly­saght, Lysaght & Kramer, the law firm that took over the PBA’s account from attorney Richard Hartman. In prior years, comparable amounts had been paid to Hartman’s firm, to cover his fees for legal work and labor negotiating.

A police officer might well ask why over the last 15 years the union has paid so dearly for labor negotiating. Hartman joined the PBA in 1978, when the base salary for police officers was $17,458 — hardly generous. Despite his skills, the base police salary has remained constant with inflation ever since. In today’s dollars, the $17,458 of 1977 would be worth $40,415. After being paid millions in the interven­ing years, Hartman has managed to negoti­ate a base salary of $40,700 — a $300 gain, not counting fringe benefits. That annual raise does not compare favorably to the ever-growing fees the PBA and Phil Caruso were granting Hartman. In 1977, the PBA paid Hartman’s predecessor $141,467 for “labor negotiating.” In 1978, Hartman’s first full year, the PBA paid him $750,000. By 1990, Hartman’s last year as the union’s negotiator of record, the PBA was paying him $165,000 a month, for a grand annual total of $1,980,000, as a labor “consultant.”

Another large bite of the PBA revenue pie — $8 million — was taken in 1991 by insurance companies. Obviously the PBA has to pay heavily for insurance to pro­vide the benefits it must. But does it need to pay as much as it does? And the ques­tion would not even be raised were it not for the fact that the year after Richard Hartman surrendered his law license, and thereby a great deal of income, PBA suddenly discovered that its members needed a new Met Life policy, the $2.2 million commission on which went to a new insurance agent named … Richard Hartman. (By 1991, the Met Life insur­ance business was transferred to the wives of James Lysaght and Peter Kramer, part­ners of the law firm that was already get­ting all the legal fees mentioned above.)

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Instead of enriching cops directly, Caru­so has concentrated the PBA’s efforts on increasing fringe benefits. He argues in the Annual Report for the Annuity Fund: “The doubling of our annual annuity con­tribution by the city, won in our last round of contract talks, was significant, particularly for newer members.” But one is tempted to question both the priorities and the motives of the PBA and its negoti­ators. Unlike salaries, which flow directly from the city to the cops, the “soft” mon­ey flows from the city to the PBA, where it can be siphoned off for the benefit of a handful of friends and associates. The only significant fringe benefit negotiated by Caruso and Hartman that flows direct­ly to police members is the uniform allow­ance, which jumped from $265 in 1977 to $1000 in 1991.

The soft money has permitted the PBA the luxury of a huge overhead. In 1991, for example, the union spent $2.2 million on salaries, $900,000 for printing and publications, $650,000 on delegate ex­penses, and $340,000 for conferences and conventions. Even the relatively smaller expenses raise serious questions. For ex­ample, was the $208,000 fee paid to ac­countants Mendelsohn Kary Bell & Natoli to prepare the PBA’s various 1991 filings much of a bargain? The PBA’s 5500 forms invariably communicate as little as possi­ble. On the PBA’s 1991 filing for the an­nuity fund, for instance, MKBN lumped all assets under the familiar rubric of “other.” Yet a glimpse of the PBA’s annu­al report for the fund in the same year reveals that these assets are all invested in financial instruments for which the IRS provides line items on its 5500 forms: government securities, commercial paper, money market funds.

Indeed, the word “other” often covers some of the largest sums charged against the various PBA accounts. By the Voice’s count, in 1991 the PBA buried $6.6 mil­lion in expenses for its various funds un­der the word “other.” That, of course, would be fine if “other” were explained elsewhere. Conscientious accountants wishing to avoid audits provide supple­mental sheets where such large sums are broken down and detailed. Not so the PBA’s accountants. Two outside CPAs who reviewed PBA returns with the Voice commented that it appeared the union was not concerned about audits, almost as if it thought itself untouchable. They pointed out that several basic accounting rules had been flouted.

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For example, although the PBA submits 5500 forms for each benefit plan it oper­ates, those submissions do not include re­quired Schedule P’s, which must list trust­ees and to which the trustees must affix their signatures by way of accepting liabil­ity. Also missing are Schedule A’s, which show where an organization bought its insurance, how much commission was paid, and the names of brokers. Given the amount that the PBA pays out in insur­ance premiums and the name of the bro­ker who received many of these commis­sions — Richard Hartman — the oversight is strange indeed.

Finally, there is the sheer sloppiness of the filings. The PBA’s 5500 forms for 1991 were prepared on IRS forms from the prior year. In its 1989 annuity fund filing, MKBN reported a transfer of $9.9 million into the fund. It is only when one does the math that it becomes clear that the $9.9 million was transferred out of the fund. (The money went to smaller PBAs, the Superior Officers Council, and the Detectives’ Endowment Association, for reasons that are not altogether clear). In this instance, the difference between in and out is almost $20 million. Calls to the PBA accounting firm to get clarification on this and other matters went unanswered.

The various PBA filings yield a number of other issues and questions as well. In addition to the Legal Services Fund, de­signed to represent police in various mat­ters, including house closings, the PBA maintains a separate legal assistance plan within its Health & Welfare Fund. The city gives the union $75 per police officer each year to fund this service, designed to provide legal representation in civil suits brought against police officers whom the city, for whatever reason, does not want to represent (the funds also cover “pension counseling”). According to the PBA con­tract with the city, “These funds shall be maintained in a separate account and shall not be commingled with the other monies received by the Welfare Fund.”

But is that what happened to the $1.4 million taken in by the welfare fund in 1991 for this purpose? The PBA appears to have paid the entire amount to the Lysaght firm. Perhaps Lysaght has the money tucked safely away in an escrow account, But the public filings of the PBA offer no such assurance, and given the PBA’s “fact pattern” — as it’s put in law­-enforcement parlance — of raided escrow accounts and huge fees to lawyers, the transfer to Lysaght is disturbing. Did rank­-and-file police officers really need $1.4 million worth of legal representation for civil matters and pension counseling dur­ing the year? And if not, what is happen­ing to the accumulating funds? Does the city need to continue to fund this account at this level?

The biggest PBA account is the annuity fund, and the natural question is, how is all this money being invested? It is a question Caruso himself addresses in the annuity’s 199 l annual report to members. “The interest yield on An­nuity Fund investments last year was far from awesome,” he wrote, “but nonetheless strictly in keeping with prevailing rates.” In 1991, the annuity fund earned just under 6 per cent.

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Interests rates are, without question, down among all varieties of pension plans. But 6 per cent or under is not the prevailing rate. And there is a larg­er question about the PBA’s annuity fund that centers on the pattern of investing. With a stream of city reve­nues large enough to cover the antici­pated direct benefits to members, the annuity fund would seem to have very little need for liquidity. Yet over $40 million of its $55 million worth of assets are held in short-term financial instruments, with only $15 million in long-term. Had more long-term invest­ments been made years ago, they would still be yielding 8 per cent or better. Even long-term assets purchased today’s markets could yield as much as 7 per cent. Those numbers suggest that the PBA annuity fund could have fared much better. Com­ments James Hanley, the director of the city’s Office of Labor Relations: “I know other uniformed service heads boast they’re still doing 11 per cent and 12 per cent.” While Hanley’s numbers seem over the top, The New York Times reported this week that more than 80 per cent of U.S. corpora­tions interviewed recently about their pension funds base their decisions on an annual return of better than 8 per cent. Only 2 per cent anticipated inter­est rates below 7 per cent.

Who is really paying attention to these PBA accounts? According to Hanley, it should be Comptroller Eliz­abeth Holtzman’s office. Yet the comptroller’s office has yet to com­plete its only PBA audit during Holtz­man’s tenure, and it is not looking at the annuity fund. Indeed, Holtzman’s office took two months to confum for the Voice that it still had the authority to monitor the PBA following changes in the 1989 city charter.

The good news in reviewing the po­lice union’s public filings is this: be­cause neither the organization nor its accountants seem to have filed the proper Schedule P’s bearing the signa­tures of the trustees, the statute of limitations is thereby waived. The first auditor to have an extensive go at these books — perhaps incoming comp­troller Alan Hevesi — should have a field day. And he can take all the time he wants. ■

1993 Village Voice article by Russ Baker exposing corruption in the Patrolman's Benevolent Association

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From The Archives NEWS & POLITICS ARCHIVES NYC ARCHIVES THE FRONT ARCHIVES

Rogue Police Union: Nassau’s GOP Affirmative Action Machine

Nassau’s GOP Affirmative Action Machine
December 7, 1988

NASSAU COUNTY abounds in poor role models, and Richard Hartman, a lawyer on the make, found more than his fair share. Take his first two bosses, for instance.

Fresh out of law school, Hartman clerked for Judge Floyd Sarisohn. A few years after Hartman left that job, Sarisohn was removed from office for improperly handling a speeding ticket and for giving a prostitute tips on how to deceive her pro­bation officer. Between 1965 and 1968, Hartman worked for Nassau district attor­ney William Cahn, who would go to jail for padding his expenses and for mail fraud. In 1968 Hartman entered private practice and, like Judge Sarisohn, special­ized in traffic matters. His first partner, Jack Solerwitz, would later, after separat­ing from Hartman, be convicted of steal­ing $5 million from clients.

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Hartman cultivated a reputation for helping influential people beat their raps, often at no charge. “If I had friends who got tickets, I sent them to Richie,” said a former city official in Nassau. “If Richie was your attorney, the cop who handled the ticket didn’t show up to testify.”

Meanwhile, as Hartman became famous for getting things done, lawyer Harold Foner was deciding he had too much to do. Foner represented two police unions, the Nassau and New York City PBAs. In 1969, weighed down by his New York City responsibilities, he resigned his Nas­sau position. As his successor, Foner sug­gested the up-and-comer Hartman, who had strong connections to the county’s Republican machine. Foner was neverthe­less surprised when Hartman consented, since the young man’s practice was yield­ing far more than Foner’s salary, which approximated the pay of a police captain. But Hartman correctly bet that handling police labor relations and legal matters could be spectacularly lucrative.

Police officials had taken note of Hart­man. “He lit up the courtroom,” said Wil­liam Rupp, a former state police officer (and later president of the Metropolitan Police Conference) who helped introduce Hartman to police unions. “I thought he could help us with our plight.” And he did. “Before him,” Rupp said, “we used to go to Albany or City Hall on bended knee and beg.”

Thanks to concessions won by Hart­man, within a few years Long Island cops would take it for granted that they earned more than FBI agents. After the Nassau police, Hartman added the Long Island State Parkway Police, then the Suffolk County police, and soon was the super­-lawyer for practically every cop in every city, town, and village on Long Island and in Westchester. At one point, by Hart­man’s own count, he represented 300 unions, mostly in law enforcement.

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A mystique built up. If you called Hart­man at 3 p.m., he might return the call at 3 a.m. and act like there was nothing unusual about doing so. People said he slept in his car; indeed, he was rumpled, his shirttails always hanging out. “I don’t think he hit his bed three times a week,” recalled Bob Pick, formerly of New York City’s Office of Labor Relations.

The marathon must have taken its toll, because one night in 1973 Hartman’s car jumped a divider, flipped, and landed on another car. Hartman suffered massive in­ternal injuries, and concerned cops mobbed the hospital. After that, Hartman had himself chauffeured around in a Cad­illac limousine. Always in a hurry, going 90 miles an hour, the limo would hit a bump, scattering his papers about the pas­senger compartment. The car got pulled over on numerous occasions, but was nev­er ticketed, unless it was in New Jersey, where troopers didn’t recognize him.

The high-speed legal practice, mean­while, didn’t stop with cops. Hartman vir­tually locked up the Nassau justice system, representing clerks and court officers, throwing Christmas parties for judges. Hartman’s generosity helped him prevail; aides routinely delivered gifts, ranging over the years from apple-shaped gold baubles to booze, VCRs, and a big­screen TV.

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Hartman’s New Year’s party guest list was a Long Island who’s who. One table was invariably heaped with honorary PBA shields, which could be pinned in a wallet and flashed if an officer asked to see a license. “Richie was great at networking,” recalled Daniel Guido, a Nassau police commissioner in the ’70s and now a crim­inal justice professor at John Jay College. “He had the judges in his hip pocket.”

Apparently, there were not enough cops and clerks to keep Hartman busy. He built a long list of criminal clients, which bothered some people, among them Guido: “I suggested to Hartman that it was inappro­priate for him to be repping our 4000 police officers while also … representing people his clients were arresting.”

But no mere police commissioner was going to tell Hartman what to do. The lawyer hit Guido with two $10 million lawsuits accusing him of slander. Hartman eventually withdrew the suit, yet he won the war. Nassau County supervisors did not renew Guido’s contract.

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

BESIDES HIS ENERGY and his open wal­let, Hartman had deep roots in the Repub­lican organization that ran and still runs Nassau County. So did two brothers, Ar­mand and Alfonse D’Amato. All grew up in the same time, the D’Amato household a few miles from Hartman’s. During the 1960s, Hartman’s father, Bill, nominally a grocer but more significantly a GOP committee man, worked for Joseph Carlino, then the powerful assembly speaker and former law partner of Armand. Early in his career, a young Richard passed the machine’s admissions test, offering himself as the sacrificial lamb for the GOP in a futile 1969 city council race in Demo­cratic-controlled Long Beach.

These connections would become useful to Hartman when he began to negotiate police contracts. His bargaining table suc­cess, insiders said, was not just a matter of caffeine and number-crunching. “The un­spoken thing was that Hartman had such a friendship with [longtime supervisor] Al D’Amato,” a Nassau political operative explained, “that D’Amato went out of his way to get him good contracts.”

Small wonder. D’Amato and fellow su­pervisors — even a Democrat or two — won their seats with the Nassau PBA endorsement and contributions rounded up by Hartman. “Almost anybody from either political party could ask Richie for a contribution,” said John Matthews, until re­cently the Nassau Democratic chairman.

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So staunch was that solidarity that even independent-thinking Republicans were banished. Ralph Caso, a Nassau county executive until 1978, told the Voice that when finances tightened and he began op­posing big police wage increases, fellow Republicans, including D’Amato, turned against him and ensured his defeat.

It often seemed many figures in the la­bor-bargaining process, from negotiators to the county executive, were either politi­cal allies or accepting Hartman’s gifts. Hartman began bargaining sessions by sending out for lavish spreads of food and drink, even beer, for both sides of the table. Then he went to work, putting on the appearance of sweating out the details. One observer recalled the lawyer’s tactical devices, as demonstrated at a late-’70s bargaining session. Hartman was leafing through a thick book, and gesticulating: “Now if you look at page 1385, subsection C, paragraph 4, you’ll see that it says, ‘Differential, blah, blah, blah.’ Now if you’ll go back to page 943, you’ll see in subsection … blah, blah, blah.”

“The poor suckers across from him,” the observer said, “just couldn’t keep up.”

Another Hartman tactic was to make excessive demands at the table, which would put the decision into the hands of presumably neutral arbitrators, such as Jo­seph French. In a 1978 settlement, French awarded Hartman’s client, the Nassau PBA, interest on retroactive pay increases, a highly unusual concession. He also doled out a three-year, 24.5 per cent raise. “There were strange aspects of the deci­sion, a strange rationale,” said Bruce Lambert, who covered the talks for News­day. It was noted that French had a few conflicts of interest. He was not only a police buff (a brother and brother-in-law were cops who would benefit from the settlement), but his divorce had been han­dled by Hartman’s firm. (French did not respond to messages left by the Voice.)

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In 1979, Al D’Amato himself inter­vened directly in favor of a record salary increase for Nassau Community College’s adjunct faculty, which was represented by Richard Hartman. The lawyer won ex­traordinary labor gains for the adjunct faculty. The contract was written in such a way that it allowed a high percentage of new teaching positions to be filled via the Nassau GOP patronage network — run by the very people negotiating police contracts.

The agreements were so exceptional that they infuriated the full-time faculty, which would reap outsize gains as well. The faculty, whose salaries currently aver­age $72,918, includes D’Amato’s wife Pe­nelope (math) and Hartman’s brother El­liott (math). In turn, the faculty unions gave cash and material support to the campaign of Nassau County Executive Thomas Gulotta, whose wife Elizabeth teaches biology at the school. The most recent faculty contract, in the words of college trustee Richard Kessel, a Demo­crat, “is one of richest municipal labor contracts I’ve ever seen.”

When Al D’Amato intervened in the Nassau Community College negotiations, the math department was headed by Abe Weinstein, a close D’Amato and Hartman pal who has since become a vice-president at the school. Al D’Amato himself has been a Nassau Community College trust­ee, as has Jeffrey Forchelli. Until recently, Forchelli was a law partner of Armand D’Amato — sentenced in November to five months house arrest and 19 months of supervised release (with disbarment proceedings pending) for mail fraud. John Cornachio, who monitors the college’s construction contracts, is the brother of a former Hartman law associate who now represents the Nassau PBA. In 1966 and 1971, Richard Hartman himself taught math classes at Nassau.

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The relationship of the college to police labor negotiations is critical to under­standing the quid pro quo nature of Nas­sau County contracts. Regional officials who got themselves or their relatives ad­junct teaching positions at the college were in many cases the same people approving nice contracts for Hartman’s oth­er clients, like the Nassau Police union.

The Nassau County cops became the highest-paid police in the country; their base pay is currently $52,229. With over­time, some officers earn as much as $90,000 annually. Nassau police also re­ceive the best benefits ± days off and va­cation account for half the calendar year. And though police routinely cite the dan­gerous nature of their work as a basis for raises, Nassau officers have a relatively low casualty rate.

When Hartman moved on to New York City, he did not do nearly so well for its police officers, who have a far more peril­ous job. But the concessions he won proved incredibly lucrative to executives at the PBA, its staff, and its small circle of service providers. ■

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

Categories
From The Archives NEWS & POLITICS ARCHIVES NYC ARCHIVES THE FRONT ARCHIVES

The Rogue Police Union

Corruption is the tone you set at the top. — Rudolph Giuliani, September 9, policy speech

THE MOLLEN Commission hearings that concluded October 7 filled pages of newsprint and hours of TV, forcing New Yorkers once again to wonder just how high up police corruption might reach. Cocaine-riddled cops, blue-uniformed sadists, and see-no-evil superiors confessed crimes and shortcomings in excruciating detail. Reformers described lonely, futile efforts. Yet for all the candor, there was a dramatic silence — a dog that did not bark. 

Somehow, not a single person on the Mollen panel or at the witness table addressed the one institution that routinely defends cops accused of malfeasance and that blocks serious reform programs: the Patrolmen’s Benevolent Association. The Mollen Commission report, due this month, is expected to be equally silent on the role of the PBA in police corruption.

The 20,000 member union is so dominant and so brazen it can hold the city hostage if it sees fit, as it did last year when a PBA rally turned into a drunken riot, with thousands of police officers storming the steps of City Hall and blocking traffic on the Brooklyn Bridge. Mayor-elect Rudolph Giuliani’s proposed anticorruption endeavors won’t mean a thing if they don’t include the PBA’s influence in police affairs and in New York politics.

For the PBA, life is mostly a one-way street. Politicians kowtow to it, and taxpayer dollars provide most of its financing, yet PBA officials operate with virtually no accountability to the public, the police brass, or the union’s own rank and file. Meanwhile, inside the New York Police Department little gets done without tacit PBA approval — which is to say without the consent of its president, Phil Caruso, who refused to meet with the Mollen Commission. Now in his fourth four-year term and with no challenger in sight, Caruso has outlasted five police commissioners and two mayors. On January 1, president Caruso will see the inauguration of a third mayor, one the PBA strongly backed over incumbent David Dinkins, a man the union leadership despised and publicly challenged.

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Since 1980, when Caruso became the union’s head, the PBA has evolved into an all-but-invincible network. Much of the credit for the union’s ascent, and perhaps most of the blame for its worst impulses, goes to Richard Hartman, who from 1978 to 1991 served variously as the PBA’s lawyer, labor consultant, and insurance broker, and who continues to this day to have ties to the PBA’s law firm. Together, Caruso and Hartman shaped the once-complacent PBA, formed in 1894 to assist widows and orphans of slain police officers, into a potent, feared, and secretive organization. 

A year-long Voice investigation has uncovered a shameful history within the PBA, a litany of misdeeds and disturbing associations that raises fundamental questions about the values of the city’s police union leadership. Both Caruso and Hartman developed a practice of blatantly favoring their friends and punishing their enemies. The Caruso Hartman team has also demonstrated a willingness to associate with, and often act like, the very crooks police are supposed to arrest.

The Voice has learned:

  • Since Caruso and Hartman attained power in the PBA, law enforcement wiretaps have caught La Cosa Nostra figures bragging about their relationships with the two men. These gangsters included soldiers and associates of the Genovese and Luchese families. In addition, former Hartman associates told the Voice that Frank “Kiki” Testa, a retired sanitation worker who appeared to have ties to the Philadelphia mob, was for a period of time a menacing presence around the office where PBA legal matters were handled.
  • Caruso stood by as a gambling addiction engulfed Hartman and compromised the integrity of the union. Like so many compulsive gamblers, Hartman became both liar and thief as he piled up enormous losses in Atlantic City casinos. Besides improperly taking funds from a police officers’ escrow account — i.e. the officers’ own money — to feed his habit, Hartman turned to a loan shark and to clients who agreed to pay their bills in cash. In one instance, an associate with a criminal record delivered $250,000 in cash to Hartman’s Atlantic City hotel room, so the lawyer could get back to the craps tables. Many sources for this story believe that the millions Hartman blew at the gaming tables came mostly from the grossly inflated retainers, fees, and consulting contracts he received from Phil Caruso’s PBA.
  • Hartman relied on his close relationship with Senator Alfonse D’Amato and other friends in the Nassau County Republican machine to aid him in winning extremely generous contracts for clients. As a Nassau County supervisor, D’Amato intervened in labor talks on behalf of the Nassau Community College adjunct faculty. Hartman reciprocated by playing a vital role in D’Amato’s first successful race for the U.S. Senate. Among other things, Hartman allegedly funneled contributions through his staff. D’Amato later hired Hartman’s brother-in-law and eventually helped the man attain a judgeship, despite his lack of significant courtroom experience. The senator also assisted Hartman clients, including a felon, in efforts to get gun permits.

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  • By massaging the labor negotiating process in Nassau County, Hartman racked up huge salary gains for cops there. He then cited the Nassau contracts as fair precedents in getting concessions from New York City, concessions that benefited the PBA bureaucracy far more than New York’s police officers. Although Hartman had previously seen numerous associates charged with legal improprieties including two bosses, a coworker, and a law partner, he greased this process by providing gifts and favors to officials in Nassau county. Among other plums, certain county officials who favored Hartman were rewarded with well paid teaching jobs on the Nassau Community College adjunct faculty, a client of Hartman’s and a patronage pit.
  • Caruso transformed the modestly paid position of PBA counsel into a gold mine, paying Hartman millions of dollars a year and sending him millions more in referral business. Prior to Caruso’s election to president, the PBA spent a little above $1 million a year for legal representation, labor negotiations, and lobbying. By 1991, the PBA was spending more than $7.2 million for the same services. The huge bargaining budget had virtually no effect on the basic police officer’s salary, which at best has only kept pace with inflation. Others benefited greatly, however; Hartman poured contributions into Caruso’s campaigns for the PBA presidency and in 1981 gave Caruso a Jeep. According to investigative sources familiar with a 1988 Manhattan grand jury, convened to examine embezzlement in the union, the topic of cash kickbacks to a PBA official was also explored.
  • The PBA foiled investigations of police corruption. Before going to jail in 1985 for bribing witnesses not to testify against cops, Walter Cox, the PBA’s private investigator, recounted that he had been operating under explicit orders from superiors. More recently, a PBA precinct official tried to sidetrack initial police probes of renegade cop Michael Dowd. And law enforcement sources say the PBA also recently ruined a Bronx D.A./NYPD sting set up to snare crooked cops.

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  • After the Manhattan D.A. discovered that Hartman had raided the PBA members’ escrow fund to pay for gambling binges and got him to surrender his law license, Hartman turned right around and set up a cozy relationship with the PBA’s successor firm, Lysaght, Lysaght & Kramer. The new outfit, headed by Hartman’s former roommate, an ex-cop named James Lysaght, seamlessly took over the lucrative PBA account, moving into Hartman’s offices and retaining his staff. Several Hartman relatives are on the Lysaght payroll and his brother Elliott until recently has handled the firm’s bookkeeping, just as he did before the transition.  Furthermore, the Voice observed Lysaght holding a clandestine meeting with Hartman during the past year, one of a string of business discussions Hartman held in near empty parks on cold winter days. If legal matters were discussed, such a meeting would seem to violate Hartman’s agreement with the district attorney to get out of the PBA’s legal affairs.
  • Instead of firing Hartman for dipping into the escrow funds, Caruso continued to reward him. After Hartman gave up his law license, Caruso granted him another multi-million dollar compensation arrangement. Hartman became both a “labor consultant” to the PBA and the broker on an expensive new life insurance policy sold to PBA members, before handing the account off to the wives of PBA lawyers James Lysaght and Peter Kramer.
  • Caruso, his staff, and PBA accountants are decidedly cavalier in the way they handle the PBA’s huge cash flow — $63 million in annual contributions from the city, dues from PBA members, and income on assets. In every document filed with the government, one of the biggest line items is always “other,” which is rarely explained on supplemental sheets. In 1991, a whopping $6.6 million in expenses was lumped under “other.” That figure only hints at the overhead that the PBA carries today. Because of its extravagant administrative costs, and huge payouts to lawyers, lobbyists, and labor negotiators, the PBA’s expenses nearly equal the benefits it disburses to members—approximately $26 million. (See “The PBA’s Bloated Overhead,” page 28.) For United Way and other tax-exempt organizations, such spendthrift practices have recently triggered public outrage and forced resignations. So far, the PBA has successfully avoided virtually all inquiry and criticism.

WEARING EXPENSIVE tailored suits and a withering scowl, Phil Caruso is the face of the PBA, and to a large degree of the New York Police Department itself. Commuting from his home in Sayville Suffolk County, he encourages a hostile view of New York City, the notion that it’s nothing but an armed camp that issues nice paychecks. The same outlook informs the PBA’s 19 other executive board members, most of whom live in the suburbs. They’re all white, all male, and, though they don’t perform any police work, all collect taxpayer financed NYPD salaries and have generous PBA expense accounts. The next level down on the PBA hierarchy contains 364 delegates — virtually all white and male, most of them living in the suburbs.

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

Despite the PBA’s fundamental alienation from the city, the organization has become an increasingly potent local political force. Although it made no formal endorsement in the mayor’s race, its sympathies were obvious: Rudy Giuliani was the man. Giuliani joined Caruso at the infamous September 1992 City Hall police rally. The candidate screamed out one “Bullshit!” after another in his critique of Mayor David Dinkins, and Caruso told the mob, “The forces of evil are all around. They are trying to surround us. They are trying to defeat us.”

Ever since that rally-cum-mutiny, the PBA has championed Giuliani. As tallied by Shaun Assael and Wayne Barrett in the November 2 Voice, PBA-connected sources contributed $20,500 through a single bundler to Giuliani’s campaign, and many police officers worked as volunteers. Yet now that he’s moving into Gracie Mansion, the former prosecutor has to decide if he is willing to stand up to his PBA supporters. He’s sent out mixed signals so far: he pledged that, for the time being, he will leave alone the Dinkins-mandated civilian police review board, which the PBA is staunchly against.  But in a year, Giuliani warned, he will review the board’s performance “to see if officers are being treated fairly.”

More encouragingly, Giuliani has also called for the return of an independent special prosecutor to investigate police misconduct, a post Governor Mario Cuomo abolished in 1990. With the Mollen commission ready to issue its report and with Giuliani about to name his police commissioner, there has perhaps never been a better time for an independent prosecutor to look into police affairs, especially the inner workings of the PBA.

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Not that it will be easy. Almost every source the Voice approached in preparing this article was reluctant to speak. People intimately familiar with the PBA said they feared for their lives and those of their families if they talked.  As one person put it: “It would be suicidal for a police officer to speak out.”

After months of building trust and cultivating leads, however, the Voice persuaded many knowledgeable sources to reveal what they know. Interviewed were more than 100 people — many of them several times — including PBA employees and other law enforcement sources from New York City, Nassau County, New York State, New Jersey, and the federal government. Along with details drawn from stacks of documents and files, the insights of these administrators, investigators, police officers, attorneys, and other professionals enabled the Voice to piece together a portrait of an organization that operates above the law and without review.

Caruso himself refused to comment, declining repeated requests for an interview and saying  through a spokesman, “The Village Voice is anti-cop, anti-PBA, and anti-Phil Caruso.”

Attempts to contact Hartman were ignored or rebuffed. A prominent criminal defense attorney who has represented Hartman promised to relay the query, but no answer came back, and a phone message left with a woman at Hartman’s west side apartment was not returned. Neither did Hartman respond to letters mailed to him at all known addresses. As for the firm Lysaght, Lysaght & Kramer, which has taken over Hartman’s enormously profitable PBA work, both James Lysaght and Peter Kramer abruptly hung up the phone when the Voice called to request an interview. 

When the Voice telephoned the PBA office to ask how to get in touch with Hartman, a woman who refused to identify herself said, “He’s retired.” Then how do you reach him? “You don’t,” she snapped, ending the conversation. Hartman’s formal ties with the union may indeed have been severed, but a network of friends, relatives, and legal and business allies remains firmly in place.

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PHIL FOR PRESIDENT

FOR CLOSE TO A DECADE and a half, Phil Caruso and Richard Hartman have been the odd couple of police organizations.  Disheveled, charming, and compulsive, Hartman was the Nassau County conjurer who brought to the union political muscle, negotiating savvy and dubious associates. Manicured, reserved, and willful, Caruso was Hartman’s sponsor, bankroller, and enabler, feeding him larger and larger retainers and contract, and backing him with the unqualified, unquestioning support of the PBA. Together, using tax revenues they bargained for in the name of the cops on the street, Hartman and Caruso built a powerful, wired institution that stands virtually beyond scrutiny. 

The unlikely partnership began in 1977, with Hartman making a pitch for the New York PBA’s legal work and Caruso a bid for the PBA presidency. Hartman had just come from the patronage pit of Nassau County politics. A bright, energetic student at Long Beach High, he had scored in the top percentile on his college board exams. At New York Law School, he had been taught by none other than the notorious Roy Cohn, the Joe McCarthy aide whom Hartman would cite as a role model and who would be disbarred for improperly handling a client’s funds. Hartman went on to ace the bar exam, and presumably could have aimed high in the legal field, perhaps for a clerkship for the U.S. Supreme Court justice or a career in corporate law. Instead he descended into the mercenary, brawling world of Nassau County law and government. (See “Nassau’s GOP Affirmative action Machine”

Then, as now, Nassau politics had little to do with issues or ideas; it was all about power, getting ahead, and helping yourself, your family, and your friends. Throughout these early years, Hartman played protégé to a string of ethically challenged mentors. A Nassau D.A. he worked for went to jail for padding his expenses; a Suffolk district court judge for whom he worked was removed from the bench for improprieties ranging from fixing traffic tickets to advising a prostitute on how to avoid prosecution. 

Besides his intelligence, energy, and colorful presentation, Hartman could rely on the Nassau GOP machine, in which his father, a grocer and bookie, had been a party committeeman. Richard established early relations with the D’Amato brothers, Alfonse and Armand, friendships that later proved fruitful for all concerned. After taking over representation of the Nassau PBA, he began adding other police unions, including the Suffolk County PBA, and before long had an incredible stable of 300 client unions, most in law enforcement. Hartman’s connections, combined with his penchant for handing out tokens of his esteem to county officials, helped make the Nassau and Suffolk police the best paid in the country. Nassau officers currently earn a base pay of $52,229 after seven years of service. With overtime, some officers earn as much as $90,000 annually.

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While Hartman was first making a name for himself in suburban police labor negotiations, Philip Caruso was rising fast in New York City politics. After two years in the army and two years installing telephones, the young Brooklyn native had joined the NYPD in 1958 and served as a patrolman and plainclothes officer working 42nd Street. Caruso began his climb through the PBA hierarchy as a delegate, a sort of shop steward who represents the union in his precinct. In 1971, the PBA president elevated Caruso to sergeant-at-arms, the first rung of PBA leadership. 

Caruso stood out from day one. He spoke more eloquently than others. “The guys were hail fellows well met,” said Stuart Linnick, a former PBA attorney. “Phil was more dignified.” And he polished his resume by picking up a bachelor’s degree and a master’s in public administration from Pace University. Former colleagues recall that Caruso considered himself above, and was even embarrassed by, uneducated, inarticulate officers. 

In 1974, a slate of young policemen, including Caruso, ran unopposed, and were elected to slots on the executive board. In a typical display of bravado, Caruso immediately announced that in the 1977 election he would take on president Ken McFeeley. When ‘77 rolled around, Caruso’s platform included a promise: If elected, he would hire Long Island wunderkind Richard Hartman as the PBA’s attorney and negotiator. Hartman reciprocated by helping to finance Caruso’s run.

Though Caruso lost, narrowly, the rest of the slate prevailed. The top four officers below president Samuel DeMilia were Caruso allies. The group quickly staged a confrontation, hoping to force DeMilia to hire Hartman.

On December 30, 1977, DeMilia and the board met at his home. According to a contemporaneous memo written by DeMilia’s counsel, Harold Foner, “DeMilia stated that the opposition members of the Board led by [first vice president Charles] Peterson wanted Hartman retained… [I] emphatically told DeMilia not even to consider Hartman, that it was rationally stupid and untenable to retain a man who gave large sums of money to defeat him and who had actually campaigned against him.”

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On February 15, 1978, in a meeting at the PBA’s offices, Caruso’s executive board allies, including Charles Peterson, plus Hartman, met with Carmine Perrotta, the man who had been hired the previous August to handle the legal assistance plan. The group presented Perrotta with an ultimatum: step down. His back to the wall, Perrotta, whom the PBA was paying $47,500 a year, reluctantly agreed to a $100,000 buyout. The following day, at age 37, Richard Hartman became attorney and chief negotiator for the PBA, with an annual retainer of $750,000.

Two years later, in March 1980, DeMilia, suffering from eye cancer, resigned, elevating Charles Peterson to the position of acting PBA president. Hartman maintained a friendly demeanor with his ally Peterson, yet behind the scenes he was plotting the new president’s downfall in the June election. Sources said that between 1977 and 1980, Hartman pumped large sums into the PBA presidential elections, and though some of it went to Peterson, the bulk flowed secretly to Caruso. “Richie was smart enough to realize that Peterson wasn’t the politician Phil is,” a former Hartman staffer recalled. Hartman was not only observed as a Caruso bankroller but according to sources close to the elections, also fed Caruso information straight out of the Charlie Peterson camp. 

“Everything Peterson told Hartman, Hartman told Caruso,” according to former PBA spokesman George Douris, who was dismissed by Caruso in late 1980. In other words, to insure that Caruso would win, Hartman sucker punched Peterson. (In an odd twist, years later, after Peterson himself died of cancer, Hartman would wed the man’s daughter.)

The pattern of overthrowing friendships was hardly unique to Hartman. Caruso, too, saw pals as expendable if they got in his way. PBA vice president Nick Chiarkas, a man responsible for Caruso’s rise through the PBA ranks and one who urged him to pursue degrees at Pace University, paid dearly for his encouragement. Once Caruso secured the presidency, he dispensed with the older Chiarkas, who was known for his integrity. At the time, Chiarkas was retired from the force and working at the PBA as a civilian. When Chiarkas left the PBA, Caruso refused to allow Chiarkas to continue his medical insurance at his own expense.  When Chiarkas died of cancer in 1985, his wife and daughter were left to fend for themselves.

“That son of a bitch double-crossed me,” Chiarkas told a friend after being cut loose by Caruso. 

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FAVORS AND APPEARANCES 

IN 1980, WHEN Phil Caruso took the PBA helm — as its eighth president in 10 years — the triennial labor negotiations were already underway. Hartman and Caruso were so confident of doing well that the PBA team bragged before bargaining began about exactly what gains they would be attaining. They even discussed the need to drag the discussions on for the sake of appearance. During negotiations, PBA officials were upstairs in a hotel room partying. To help pass the time, a couple of them even enjoyed the favors of prostitutes, according to a source who said he personally brought the women to the hotel. 

Hartman was able to engineer increases in the form of complex benefit packages, which often benefited the union more than its members. But he was less successful in his efforts to force salary gains in the NYPD by pointing at rates he’d won on Long Island. Today, the base pay for a Nassau police officer stands almost $12,000 over that of a New York City officer. 

Still, Hartman couldn’t resist using unorthodox methods that had worked well on Long Island. A favorite ploy was developing warm relations with negotiators on the other side of the table. For example, former assistant labor relations commissioner Bob Pick told the Voice earlier this year that Hartman had come to Pick’s house to tutor his wife in math, and when he got too busy, sent over the head of Nassau Community College’s math department, Abe Weinstein. Asked about this, Weinstein said that he could not recall a Bob Pick, and that he did not do tutoring. Accepting such favors or gifts would be improper, according to Bruce McIver, the Office of Labor Relations director and the superior of these negotiators from 1980 to 1985: “You can’t let them buy you lunch, you can’t let them buy you tickets to the theater.” 

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If warming up bargaining opponents weren’t enough, Hartman also befriended neutral arbitrators. In 1976, while Hartman was unofficially advising the New York City firefighters union, arbitrator Eric Schmertz awarded a controversial, generous settlement. “My feeling was he had lost some of his impartiality,” said McIver. “My impression was he was favoring the fire union.” 

Schmertz nevertheless moved on to more prestigious posts, including that of dean of Hofstra Law School. One student who enrolled at Hofstra during that period was Phil Caruso’s daughter Lynda, who has since become a lawyer at the PBA’s law firm. (Schmertz later served as director of Mayor Dinkins’ Office of Labor Relations. In October he was nominated to the National Labor Relations Board, but told the Voice last week he had just withdrawn his name for “political considerations.”)

Right after winning the 1980 police contract, Caruso and Hartman faced another pressing task: moving Al D’Amato onto the national stage. The Nassau County supervisor, already close with law enforcement, bonded anew with police that August when he called a press conference to denounce a Nassau police department affirmative action plan, designed to answer a lawsuit that challenged the makeup of the force, 97 per cent white and male. Immediately thereafter, the Nassau PBA endorsed D’Amato’s Senate bid, in which he was contesting the seat of fellow Republican Jacob Javits.

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Hartman and his associates went into high gear.  “His election came up. We dropped everything,” a Hartman staffer remembered. Hartman called his clients for donations to D’Amato’s campaign. He also, according to a onetime employee, gave cash to some staffers to donate in order to circumvent contribution limits. 

“Richie was pulling [D’Amato’s] strings,” said a former associate. “Al knew he needed Richie for the campaign contributions and all the clout Richie had. He represented 200 police organizations at the time. D’Amato got every single police department endorsement when he ran. That’s a hell of a base to start with.” 

So close were the two that Hartman loaned his driver to the supervisor to ferry his family to the 1980 Conservative Party convention at the Diplomat Hotel in Manhattan. Hartman’s driver did other errands for D’Amato during the campaign, even babysitting his kids during the victory celebration at the Hempstead Marriott. 

After D’Amato won, he gave a job on his Senate staff to Hartman’s brother-in-law, Bruce Alpert, who was married to Hartman’s sister Lynn and worked as Hartman’s office manager. Alpert’s job largely involved fund raising. With D’Amato’s assistance, Alpert later won a judgeship, which raised a few eyebrows. “You should have a little trial experience, a day or two at least,” joked a former cop who knew Alpert. Reached by the Voice, Alpert said that he had tried cases as a lawyer, but could cite no specifics. 

In 1987, D’Amato also sought judicial robes for Robert Roberto, a former colleague of Hartman’s in the Nassau D.A.’s office, recommending him for a federal judgeship. Roberto’s confirmation was sunk when it was revealed during hearings that he had once carried out his own sting on a prostitute in which he arrested the 16-year-old after she masturbated him. He voluntarily withdrew his nomination. Roberto nevertheless went on to win an appointment to the state supreme court, with D’Amato’s backing.

D’Amato’s image as Senator Pothole extended beyond judgeships to small but potentially deadly favors. For instance, D’Amato helped get a pistol license for Raymond David Tse, a controversial Chinatown businessman, restaurateur, and Hartman client who in 1988 would kill a young gang member in his office. At his 1991 trial, where he was represented by a non-Hartman lawyer, Tse argued that he fired 18 shots in self defense. He was acquitted. 

And when Hartman was representing boxing promoter Don King, D’Amato intervened in an effort to get King a pistol permit, despite the fact that he had served four years for manslaughter after he beat a man to death. Felons are generally prohibited from owning weapons, and the police denied the permit.

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THE PBA’S FINEST

THE CARUSO HARTMAN ERA ushered in some new faces at the PBA. One figure with a troubled past was Gary Melius. As a young thug, he’d met Hartman and gone on to work his way into the union’s circle of friends.

In 1963, the teenaged Melius and three friends had offered a ride to a young man who had been waiting for a bus, then choked him and robbed him of $40. The following year, Melius was convicted of malicious mischief — six months, suspended sentence. In 1971, he and James C. Mileo, a 40-year-old Nassau County patrolman, were arrested in an attempted $1000 shakedown of a narcotics courier, a young woman caught with a pound of heroin in her car. She said she didn’t have the money, so the patrolman ordered her to go get it. When she returned, Melius, who worked as a general contractor, was there to receive it. Perhaps the scheme would have been successful if the woman had not been an undercover police officer.

When Melius was arrested after driving off with the money, attorney Richard Hartman represented him. He had Melius plea bargain to third degree grand larceny, and to the great relief of the young builder, Hartman turned a potential 15-year sentence into three years probation and a $1000 fine. “[Hartman] always inferred he was a connected guy,” Melius said in a Voice interview.

Melius was later arrested for his role in a “steal to order” business that delivered hot tractor trailers and construction equipment on request. The ringleader was a young woman connected with organized crime figures. Melius was charged with grand larceny, and Hartman again got the charge reduced to a misdemeanor and probation.

Subsequently, Melius moved the office of his small construction company into the ground floor of Hartman’s dumpy two story building at 300 Old Country Road in Mineola; Hartman’s law firm occupied the upstairs. Melius began chumming around with the attorney and before long was both a personal aide and social pal.

“I just hung out with him,” Melius said. “We went to the movies. We went to the racetrack, to Roosevelt, to Nathan’s.”

By 1975, the two had become such fast friends that Hartman sold 300 Old Country Road to Melius for $250,000. Melius said he paid the entire sum two years later. Subsequently, Melius demolished the building and constructed a sleek three story professional office condominium complex, which he sold for a huge profit.

In 1979, law enforcement officials again took an interest in Melius. This time, investigators for the Manhattan D.A.’s office came upon his name while following checks written by loan shark Teddy Moss, operating from the garment district. One such check, for $25,000, had gone to Gary Melius

When the $25,000 check surfaced, investigators summoned Melius to their offices. “Once he saw that check he literally took off,” one investigator said. “He fled out the door.” Ten minutes later, Richard Hartman called the investigator to quiz him as to what he wanted with his friend. Melius, who does not recall the meeting in the D.A.’s office, but does remember a phone call, said he told the investigator that the money from Moss was a loan.

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The loan shark was a familiar figure: back in the ’60s, Moss had been a principal prosecution witness in the Crazy Joey Gallo trial. He’d worn a wire and gotten protection from the D.A. because Gallo wanted to kill him. But by this time, Moss’s days of cooperation with law enforcement officials seemed long over.

Prosecutors suspected Moss’s check to Melius was a means of laundering illicit profits. And though Moss pled guilty to criminal usury (charging 69 per cent interest) and paid a $45,000 fine in 1980, an investigator on the case feels it was not Moss’s idea: “Somebody told him, ‘You better plead or this thing is going blow up in people’s faces.'”

Soon after Phil Caruso’s election to the PBA presidency, the ubiquitous Melius entertained the policeman and his family on Hartman’s yacht Big Bart. (The name was Melius’s moniker for Hartman, drawn from a dirty joke about a pig.) “Richard bought the boat for entertaining, especially to take Phil out,” Melius recalled.

The PBA boss put Melius to work handling production of the union’s magazine, New York’s Finest. “That was Phil’s idea,” said Melius, who coordinated ad sales and got to keep some of the revenues. Prodigious spending on printing and advertising was a pre-Caruso PBA tradition; hiring publishing consultants with criminal records was something new. Though it is not clear whether Caruso knew of Melius’s history, one would assume he hadn’t checked. And Melius and the Carusos were decidedly friendly, even attending a Lincoln Center concert together.

“Phil was sickeningly obsequious with Gary,” said one associate. 

CRAPPING OUT

Most people who gamble don’t really want anyone to know what they are doing. Most of them will lie about what they had for breakfast. Compulsive gamblers who are down on their luck steal 90, 95 per cent of the time.
— Bill, Gamblers Anonymous

OUTSIDE OF WORK, Hartman had only one pleasure: dice. His father, the grocer and politico, had tripled as a bookie, so Richard’s obsession with gambling was not entirely surprising. Early in his career, according to acquaintances, Hartman had wagered heavily, then eased off. But in September 1980, only a few months after Phil Caruso won the PBA presidency, Hartman opened what appears to be his first line of credit in Atlantic City, at Caesars. Over the next several years, he opened credit lines at eight different casinos. 

Hartman was enthralled by the craps tables and would stay at them far too long. In one night in 1983 at Bally’s Park Place, for example, he lost $667,500. “It irritated the hell out of him that he couldn’t beat the system,” a former associate said. 

As a man who rarely bothered with a good night’s sleep, Hartman was a natural for the casino environment. He was also the ideal casino client. One night in Atlantic City, Hartman had $5000 on the table. He turned to a companion and asked him to roll the dice. “I kept rolling sevens and elevens, and the stack of chips kept getting bigger and bigger,” the companion recalled. When the winnings began to pile up, he suggested stopping, but Hartman urged him on. The next toss crapped out — one roll, $148,000. “Typical degenerate crapshooter,” a high ranking casino official recalled when asked about Hartman. 

As they commonly do, casinos tripped over themselves to offer the big time spender loads of perks, beginning with complimentary rooms, even ones he could pass on to friends. In the mid ’80s, when his former PBA cohort Charlie Peterson was being treated for cancer near Philadelphia, Hartman suggested to the ailing cop’s daughter, Patricia, that during her hospital visits she stay in one of his comps in Atlantic City, not far from Philly. Patricia, a Long Island Rail Road cop, seemingly unaware that the lawyer had betrayed her father in the 1980 PBA presidency campaign, started seeing Hartman in October 1986. He lavished her with expensive gifts. Within a month, she asked her husband, a New York City police officer with whom she had a rocky marriage, for a divorce. 

Hartman’s cash flow was like a torrent. It came in fast and went out faster. Like most obsessive gamblers, Hartman was always short of funds. 

Often, sidekick Gary Melius was with him in Atlantic City, but even when he wasn’t, Hartman might desperately summon him. An acquaintance remembered overhearing an imploring call: “Richie kept saying, ‘C’mon Gary, c’mon’ like, jokingly, but he was really begging for money.” 

A couple of hours after one such plea, Melius arrived in Atlantic City, having been flown down on a private plane from Nassau County’s Republic Airport. He came directly to Hartman’s casino penthouse carrying a bag crammed with cash. “He opened it up and emptied the money onto the bed,” recalled another person in the room. “Two hundred fifty grand. I had never seen that much fuckin’ money.” 

Melius, who confirmed the incident and the amount, said he got the money out of Hartman’s bank, Irving Trust, where he routinely cashed sizable checks, made out to “Cash,” from the attorney’s business account. (Hartman, always preferring cash, apparently did not maintain a personal bank account.) Melius also made deposits there, as much as $300,000 at a time. An Irving Trust vice president personally fussed over Hartman’s account. 

Much of Hartman’s gambling money was, of course, New York City tax revenue that had gone to the PBA and out to Hartman. His PBA retainer had grown to $1.2 million, but even that was not enough. Some funds apparently came from the aforementioned Teddy Moss, who Melius says he has known for many years. Besides his loan sharking enterprise, Moss is said to own pizza parlors, a Chinese restaurant, movie theaters, bowling alleys, and a First Avenue card shop. 

During Hartman’s casino meltdown, according to a former Hartman associate, a courier picked up sizable amounts of cash several times over a two month period, sometimes from Teddy Moss’s Chinese restaurant. Reached by phone recently, Moss volunteered that he had accompanied Hartman on several visits to Atlantic City, but denied ever loaning him money, beyond what he described as “car fare” for the millionaire lawyer to get back to New York.

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Hartman was close enough with Moss to have his driver pick up Moss’s daughters and take them to the airport for a trip to Europe and one to Israel. Even when the driver began working for Phil Caruso, if Melius or Hartman asked that the chauffeur handle airport runs for Moss, he would do so. Moss said he met Caruso on one or two occasions. 

Clearly, Hartman had lost control of himself. He even started lying to those who had previously accompanied him to Atlantic City, denying where he was headed. Instead of summoning his driver, he began taking private flights from Republic Airport. Eventually, morale in his Queens office deteriorated, along with its finances. One week in 1983, the paychecks actually bounced. 

Eventually, Hartman finances fell into such disarray that he ceded Melius almost total control over his monetary affairs. For a short period during the early ’80s, Melius controlled all of Hartman’s business bank accounts, personally handling the money himself. 

By early 1984, following a three-month craps binge, Hartman had defaulted on $700,000 in gambling debts. At Hartman’s prompting, Melius wrote a letter to casinos urging them to allow Hartman to settle. The attorney ended up paying just 42 cents on the dollar to Bally’s, the Golden Nugget, Caesars, the Sands, and Resorts International. 

Why was Melius doing Hartman’s deals? “Richard couldn’t negotiate his own deals,” Melius said, insisting Hartman’s publicly acclaimed bargaining prowess is much exaggerated. 

It was around this time, when Hartman’s gambling put him into a financial tailspin, that Frank “Kiki” Testa, a retired West Hempstead sanitation worker, began hanging out in Hartman’s office. Testa, the father-in-law of a Melius high school chum, was a man with a menacing aura. 

A staffer in Hartman’s office got the impression that Testa was there to keep watch over the operation. One former associate recalled seeing Testa in Atlantic City with Hartman on several occasions. Testa had confided to a handful of Hartman associates that he was a member of the Angelo Bruno organization in Philadelphia — a Philip Testa ran that family for several years — and that he had killed quite a few people. Melius, for his part, had told an associate that he himself was connected with the mob.

In an early Voice interview, Melius said his claims about being in the mob were inventions intended to impress people. In a subsequent conversation, he denied ever making the claim: “That is very inaccurate.” Such a boast would indeed seem particularly misplaced since he was hanging out at the office of a police union. He couldn’t provide a satisfactory explanation of why Testa would have been spending time with Hartman, though he did allow that Testa could have had mob ties: “I’d believe that he knew people.”

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While Testa was around, “Gary didn’t say so much as boo,” said a Hartman associate. “When Kiki came into the office people were very uncomfortable. Very uncomfortable.” One young Hartman assistant remembers Testa offering him a word of advice, drawled out with exquisite meaning: “You know, working with Richie, you’re in a verrrry sensitive position.” 

That was a lesson Melius himself soon learned. Hartman had come to believe that Melius, having access to Caruso, had become such a presence that he was a threat. Also, as Hartman’s gambling made him more dependent on Melius, the contractor appeared to lose respect for his onetime mentor. Hartman quietly began working to oust him, making sure that all the top PBA officers knew the full extent of Melius’s criminal record. The conspiracy did its work. By mid-1984, Melius had been eased out the door, never realizing that it was his growing clout in the office that had done him in. 

Yet even after Melius was pushed away from the PBA, Hartman had one more request. By 1985, the lawyer was so desperate for cash that he decided to ask former associates to rejoin his ranks in order to recapture clients that he had voluntarily relinquished years before. 

“He wanted me to talk to them, and I wouldn’t do it,” said Melius, explaining that he had tired of serving as Hartman’s point man on such assignments and that this refusal was the last  time he spoke to Hartman. 

In his interview with the Voice, Melius confirmed his crimes prior to his friendship with Hartman. But he argued that for quite a few years now he has been a decent family man, with a respectable reputation. In a November 23 letter to the Voice, Melius writes, “I have spent my adult life establishing myself as a business man whose word is his bond and a responsible member of the community.”

Indeed, Melius was featured on Lifestyles of the Rich and Famous in 1986 as the owner of an estate in Cold Spring Hills, Long Island, a 120,000-square-foot palace, the second largest private residence in America. Formerly known as the Otto Kahn Castle (or Oheka), it had been built in 1917. Melius purchased it in 1984, fixed it up, and sold it in 1988 for $22 million to a Japanese businessman who insisted on a no-publicity clause. Today, Melius has sizable developments throughout Long Island. 

Of his earlier activities, including his association with Hartman and the PBA, the 49-year-old Melius has regrets: “I was trying to hang out with what I thought were the good guys — lawyers, law enforcement. I would have done better with the bad guys.” 

Without Melius, Hartman still managed to finance new excursions to Atlantic City, judging by a civil suit the state of New Jersey filed against Trump’s Castle for having allegedly violated state gaming laws in authorizing Hartman credit. On September 17, 18, and 19, 1987, Hartman cashed three separate checks at the casino, each for $500,000. Then, on September 22, he arrived at Trump’s Castle with a certified check for $817,000 later identified as the money from the New York City police officers’ housing escrow fund. He went on to lose much of this money shooting craps. From October 12 to October 14, 1987, also at Trump’s Castle, he would blow $475,000. A few days later, on October 17, the Castle raised the high roller’s nearly exhausted $500,000 credit line to $1 million, approved by Ivana Trump via a phone consultation. That day he lost another $541,000. This pattern was typical: he’d bet a couple million dollars, some of it his own money, some not. Apparently, he always knew there was more to be had. 

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Given Hartman’s gambling fever and the presence of Melius and Testa, perhaps mob connected figures could be forgiven for thinking they had a friend at the union. On two occasions, law enforcement officials listening to wiretaps heard the names of the PBA president and counsel being bandied about by organized crime figures. While listening to a September 3, 1985, phone conversation between Genovese soldier Federico “Fritzy” Giovanelli and Harry Dickran, a friend and associate, FBI agents and city detectives were startled to hear the PBA president referred to with great familiarity. (See Streetbeat, William Bastone, Voice, October 13, 1992.) 

Dickran told Giovanelli he was worried about having been followed and surveilled on Friday afternoons as he met with associates in a Long Island restaurant. According to the FBI audio tape, Giovanelli then asked, “What kind of car? Take the plate number.” Dickran responded with the number. “I’m gonna give it to the PBA to track it down. You know, I’ll get it from Phil, Phil Caruso. He’ll take care of that for me.” 

Caruso wasn’t unique in this respect. Starting around 1983, Hartman reportedly spent time at Roosevelt Raceway with Jerry Corallo, the son of mob heavy Antonio “Tony Ducks” Corallo (now in jail). A law enforcement bug, placed in a Jaguar, picked up a conversation between Tony Ducks, former boss of the Luchese family, and Sal Avellino, a Luchese soldier. The two were worried about being watched. 

Corallo: “I’m going to have Jerry check with that guy.” 

Avellino: “You mean Richie, Richie Hartman?”

Corallo: “Yeah. He hangs out with Jerry at Roosevelt racetrack.” 

According to Melius, the relationship didn’t end with the son. He claimed Hartman personally knew Tony Ducks and was in fact Tony Ducks’s attorney. 

That the PBA’s president and lawyer would be cited as helpful contacts by organized crime figures seems especially noteworthy in light of the access the PBA has always enjoyed at police headquarters. Corruption investigators confirm that any information from the police would be extremely useful for criminals, especially those involved in the numbers racket, an activity that the department closely monitors. Requests from PBA officials for sensitive NYPD files could be couched as PBA business. According to one former PBA official, “We could pull out any piece of paper in the police department and look at it.” 

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HARTMAN FALLS, HARTMAN RISES 

IN SPRING 1988, Phil Caruso and Richard Hartman were at the top of their professions. Caruso was king of the cops, and Hartman his legal magician, racing hither and yon, negotiating contracts, getting cops out of trouble. The previous year, Hartman himself had filled out a form declaring estimated annual earnings of $6 million; a highly placed prosecutorial source told the Voice that his actual income, including referrals, probably topped $10 million and may even have approached $20 million in some years. A large chunk of his money came from his PBA work and related referrals, and the rest primarily from other unions representing housing and corrections officers. 

Suddenly, though, the two men found themselves on the defensive. A Manhattan grand jury wanted to know why Hartman had withdrawn $817,000 in 1987 from a police officers’ real estate escrow account — which held for safekeeping the payments PBA members made in the process of buying a home — and cashed a check for that exact amount at Trump Castle in Atlantic City. 

Hartman explained, in testimony to insurance investigators two years later, that “to avoid the embarrassment with all the attorneys in the office, of taking funds out of the regular operating account and making it out to a casino, I would take it from the escrow account, which was in my sole province…”

Caruso, called to testify, backed his friend, insisting that Hartman’s unorthodox dipping was okay because the PBA owed him money anyway. Caruso even said he had authorized the “advance,” and other ranking trustees testifying before the grand jury said they, too, had known about and approved the invasion of the escrow account. 

Investigators told the Voice they were amazed that Caruso had authorized the withdrawal from the escrow account; it was even more startling that a number of ranking PBA officers would condone the removal. In any event, it was surprising that Caruso, who had turned the PBA into a virtual fiefdom and was privately referred to as the “dictator,” would feel the need to consult with his board members on the sensitive matter. 

Although District Attorney Robert Morgenthau’s office believed that the PBA charter did not permit Caruso’s authorization for Hartman’s withdrawals, Morgenthau felt he had no choice but to abandon the prosecution. “All funds removed from escrow accounts by Mr. Hartman were repaid before the investigation began,” Morgenthau announced, “and there is no evidence of any harm to any client. The investigation is now closed.” Instead, Morgenthau settled for the forfeiture of Hartman’s law license.

Hartman later told department of insurance examiners, “I resigned [my legal license] because after one year of investigation and making the newspapers I thought I embarrassed everybody enough…”

In deciding not to press for an indictment, Morgenthau was following New York State law pertaining to embezzlement, requiring the existence of a “victim” and either the intent not to repay the lifted funds or the inability to do so. Apparently, when the D.A.’s office launched its investigation, senior staffers had no idea how much money Hartman was earning. In fact, they were stunned to learn his income.

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Notwithstanding the D.A.’s rationale, some law enforcement figures found the whole affair curious. “What made it unusual was that Hartman was able to plea bargain before the grand jury could issue an indictment,” New Jersey deputy attorney general Kevin O’Toole told the Voice.

It didn’t hurt that Hartman’s negotiator was Michael Armstrong. After serving in the early ’70s as counsel to the Knapp Commission on police corruption, Armstrong had built a lucrative practice handling high profile white collar criminal defenses, like that of disgraced Queens borough president Donald Manes. Armstrong had also become a close personal friend and adviser to Hartman’s ally, Senator D’Amato, and would later serve as his counsel during Senate ethics investigations. 

Although the D.A. decided he couldn’t bring criminal charges against Hartman, Armstrong, who had worked under Morgenthau when Morgenthau ran the U.S. Attorney’s office, presumably couldn’t save Hartman’s law license. Under the lawyer’s code of professional ethics, dipping into escrow accounts is grounds for disbarment, even without an indictment. So by conceding the license without a fight, perhaps Armstrong (who wouldn’t comment on the case) was foreclosing the possibility that the D.A. would develop something more serious on his client. Information from sources close to the grand jury indicates that prosecutors were probing the broader nature of Hartman and Caruso’s relationship, including the possibility that Hartman had improperly channeled gifts to Caruso — such as the Jeep that undeniably ended up in the PBA president’s driveway, wrapped in a red bow. Prosecutors were also said to have quizzed witnesses on a variety of names associated with organized crime. 

One thing was certain: Hartman came out of the proceedings with his reputation sullied. But no sooner had Hartman’s resignation from the bar been announced than a PBA spokesman rushed to his defense, declaring: “Richie will always have a role with the New York City PBA.” 

In short order, the PBA awarded Hartman a labor consulting contract worth a staggering $2 million a year. As if that weren’t enough, three months later Hartman decided on an insurance career, selling the PBA supplemental term life policies and earning himself a fat $2.2 million commission. The extravagant brokerage deal would be virtually concealed from the public and PBA members until 1992, when an accountant working for Hartman sued him and the dispute opened previously hidden financial papers. 

In other words, Caruso had presented Hartman with a magnificent golden parachute. But where was the money going? It seemed a fair question, because shortly after winning his new contract, Hartman began to pass cash around as lavishly as ever. In a single day, for example, Hartman wrote out eight different checks to “Cash” for a total of $20,000.

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THE HARTMAN HAND OFF

BY FALL 1988, Richard Hartman had become a huge embarrassment to the PBA. To be sure, he had won concessions from Ed Koch’s city hall; he had helped Phil Caruso build one of the most powerful and intimidating organizations in the city; and he had made them all a great deal of money. But the public gambling, the bad debts, the indiscreet cash payments, and the open associations with the likes of Teddy Moss, Gary Melius, “Kiki” Testa, and Jerry Corallo was getting to be too much, even for Hartman’s friend Phil Caruso. 

But what exactly could Caruso do? What could any PBA official do? When Robert Morgenthau’s grand jury began to investigate Hartman’s looting of the police escrow account, the union president and his lieutenants had little choice but to back him. Whatever had really gone down around the missing $817,000, Caruso (testifying under immunity) and his officers trooped before the grand jurors and backed their wunderkind attorney. They knew what Hartman had done, they testified, and they had approved it. 

“There’s no question Phil told the trustees to say they had authorized it,” said an investigative source familiar with the grand jury. If they had, it would have been an extraordinary betrayal of their membership.

“At the point Hartman got fucked up on the gambling, do you think they could throw him to the wolves?” asked former police sergeant Robert Hughes, who headed the NYPD’s 1980 sick leave abuse prevention operation and therefore became a PBA nemesis. “Hartman knew everything,” Hughes told the Voice. “It was the same concept as J. Edgar Hoover: ‘I have so much on everybody, all you can do is pay me.’ ” 

When Caruso did just that, naming Hartman upon his resignation from the bar to the highly paid labor consultant position, the question became: What would happen to Hartman’s lucrative PBA legal business? The solution was simple: Caruso hired Hartman’s good friends at Lysaght, Lysaght & Kramer. In a remarkably smooth transfer, the small Lysaght firm moved into Hartman’s office on Horace Harding Expressway, in Queens (to which he had moved from Mineola years earlier). The name plates were changed, but Hartman’s staff of attorneys and secretaries remained virtually intact. Over time, the Lysaght firm’s payroll would include Hartman’s mother-in-law Mary Peterson, his sister Lynn, and his brother Elliott, who has done the firm’s bookkeeping. Phil Caruso’s daughter Lynda Caruso Nicolino is currently an attorney at the Lysaght firm. 

The firm had been founded by James I. Lysaght, who went on to become a village judge. When the firm took over the PBA account, it had two senior partners. One was former Nassau cop James J. Lysaght. The younger Lysaght had shared an apartment with Hartman and was widely considered the office’s public face. The other partner was Peter Kramer, whom most people regard as the firm’s workhorse. 

Hartman had been dealing with Lysaght, Lysaght & Kramer long before 1988. For years, he had been referring personal injury cases to the firm, in return for referral commissions. Many of the cases came via his work representing the PBA. These were among the referrals that the prosecutorial source included while estimating that Hartman’s annual income could have been as high as $20 million.

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A TALK IN THE PARK 

IN AUDITS OF the New York City housing police PBA, which was headed by Caruso buddy Jack Jordan, city officials discovered that Richard Hartman had received $60,000 in improper advance payments.  

In 1991, after 16 years in office, Jordan was decisively trounced by a reform slate. The new president, Timothy Nickels, accused Jordan of making another unauthorized payment, this one for $50,000 to Lysaght, Lysaght & Kramer, issued on Jordan’s last day in office. No paperwork could be found to explain the expense.

Upon taking over the housing PBA presidency, one of Nickels’s first actions was to drop Lysaght as the union’s law firm and fire Hartman as its bargaining adviser. The union has confirmed that its annual legal costs immediately dropped 50 percent. 

In rejecting Hartman, the housing police were the exception. While that union’s reformers were moving away from the Lysaght firm and Hartman, other police groups were cozying up. One example is the 1500 member New York City Sergeants Benevolent Association, the bargaining unit that recently pulled out of the Superior Officers Council, which represents ranks above patrolman. The SBA, which controlled most of the council’s money, is being wooed by Caruso and represented by Lysaght, Lysaght & Kramer. Over at the transit police union, for the first couple of years after the surrender of his law license, Hartman served as labor consultant. Lysaght provided, and still provides, legal services there. 

Indeed, Lysaght, Lysaght & Kramer is the dominant law firm in the world of police unions, a status it clearly owes to Hartman. “I believe they are out to monopolize all business from all unions in this city,” said a high ranking union official. 

During the past two years Hartman’s formal role with these organizations has been almost entirely ceded to Lysaght, yet the link has apparently not been broken. In March, the Voice observed Hartman leave his temporary home at the Gramercy Park Hotel and approach a car registered to James Lysaght. He asked its driver and sole occupant, “We’re going to the park?” They then drove to Stuyvesant Park, which was nearly empty on an extremely cold, damp day. There, the two pulled out a cellular phone and engaged in lengthy consultations. “How many files in the account? … How much volume are we talking about?” Hartman was overheard asking. 

Since his supposed retirement from working with the PBA and other unions, Hartman has developed a fondness for meetings in parks, even in the poorest weather. And on occasion, Hartman has been seen leaving his home and walking a number of blocks, then suddenly getting into a waiting car. In August he was observed climbing into a vehicle registered to Teamsters Local 237. Until recently, Local 237 was run by Hartman’s good friend Barry Feinstein, who was forced to resign in April when federal investigators found that he had misused more than $500,000 in union funds. Recently, Feinstein has been under investigation by the state for his own insurance brokering arrangement. 

If Hartman’s new career in labor consulting was designed to be profitable, selling insurance would be equally so. Affiliating with Met Life in 1989, Hartman became the PBA’s broker and agent for a new insurance plan to supplement coverage that members already had. Hartman, and later James Lysaght, were also instrumental in passing special legislation in Albany that made it easy for tens of thousands of PBA retirees to buy such extra insurance as well. By signing up once, members could have premiums automatically deducted from their pension checks. 

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Hartman handled his Met Life commissions in a curious way; he immediately wrote a series of small checks to “Cash.” Over the course of two days, upon receiving a check for $550,000 from Met Life, he wrote out three checks to “Cash” for $9500 and 16 more for $2500. This pattern of keeping transactions below $10,000 would be repeated when Hartman received checks from his Chicago commodities broker, Gerald Inc. On October 12, 1990, Gerald issued Hartman three checks, each for $9500. In the final week of that month, the firm issued four more checks, again for $9500 each. And two months later, one more for the same amount. 

The suspicion, which would be raised by Hartman’s own accountant in the course of a bitter, still pending civil suit (the accountant argued that Hartman did not repay him loans he had extended Hartman to cover his escrow pilferage), was that Hartman was trying to hide his income, and specifically to avoid the Bank Secrecy Act, which requires the reporting of all cash transactions of 6,000 or more. The law also bars the intent of getting around the limit by exactly such devices as Hartman seemed to employ. (By way of response, Hartman in his affidavit did not explain his writing checks to “Cash” that slip in just under the reporting limit, other than to say: “There is nothing illegal per se about making withdrawals in amounts under $10,000… I categorically deny ever having violated or intending to violate the said federal regulation.”) 

Hartman would stay with Met Life into 1991. Then the PBA’s insurance work was transferred to an insurance brokerage called Deblin Planners, which had gotten its license shortly before. The firm, interestingly, is a partnership between Deborah Martz Lysaght, wife of James Lysaght, and Linda Nunziato, wife of Peter Kramer. Met Life currently lists Deblin as the PBA’s broker. The Voice has obtained a copy of a $100,000 check that Linda Nunziato Kramer wrote to Hartman on March 12, 1991. In the check’s memo space is the word “Installment,” though it is not clear what the compensation was for. Around the same time, Nunziato’s partner Deborah Martz Lysaght also made a $50,000 payment to Hartman. 

Currently, according to Met Life, Deblin represents the New York City Sergeants Benevolent Association; the New York City Superior Officers Association; the New York City Transit PBA; the New York City Housing PBA; the Stamford, Connecticut, Police Association; and Barry Feinstein’s old union, Teamsters Local 237 — all former Hartman insurance clients. 

In 1992, the state department of insurance began its second of two examinations of Hartman’s fitness as a broker in light of his dicey financial background. The state took no action against Hartman. In the previous year Hartman’s labor consultancies had started expiring, including the $165,000-a-month agreement with Caruso’s PBA and a $12,500-a-month agreement with the New York Transit PBA. Now some of his insurance contracts were winding down. Several presidents of police unions, including Caruso, wrote letters to assure the state that Hartman’s commissions were deserved and, moreover, wholly unrelated to his former legal and labor relations work. A few noted that Hartman had even waived commissions so that the unions could offer rebates to their memberships. Assuming this was true, Hartman’s generosity began after he had pocketed millions of front loaded commissions that could also have gone toward substantially reducing PBA members’ premiums. 

Hartman’s apparent relinquishment of those accounts would conform to his pattern of establishing business relationships, then passing them on to friends and associates. While it’s unclear exactly what compensation, if any, Hartman continues to receive from the accounts he has handed off, the insurance business did enable him to get back to the craps table, despite a 1988 assurance from his lawyer to the D.A. that Hartman was seeking help for his gaming addiction. 

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In February of 1990 Hartman told a state examiner from the department of insurance that he had put his gambling problems behind him. He said he had been attending Gamblers Anonymous meetings two or three times a week for two years and had also sought psychiatric help. “I haven’t bought a lottery ticket since [the escrow account invasion] either.” 

Before the year was out, however, Hartman suffered a relapse. In the final weekend of 1990, according to a Philadelphia Inquirer article on casino profits, he arrived in Atlantic City with a cashier’s check for more than half a million dollars. That month, other financial papers of Hartman’s confirm, he received a $550,000 commission check from Met Life. Caesars and Harrah’s allowed Hartman to wager the proceeds, despite his outstanding $2 million debt to Trump Plaza and Trump Castle. (Merv Griffin’s Resorts Casino had already written off $500,000.) Shooting craps at Harrah’s over four days, Hartman won $600,000. 

Perhaps that marked a shift for the better in Hartman’s luck. If so, he needed it. By 1990, Harman was paying the IRS $105,000 a month to settle outstanding unpaid taxes; in October 1991, the payments dropped to $100,000 a month. Apparently he kept current on these payments, and even somehow managed to have more than a half a million dollars left over to risk in Atlantic City. 

As he has done in the past, much in the mold of the late Roy Cohn, Hartman continues to live on a cash basis despite his substantial income, with practically no credit trail or attachable assets. He and his wife, Patricia, have no personal checking or savings accounts, no credit cards, no vehicles, and no listed property ownership. Alimony checks from Patricia’s ex-husband are deposited by Hartman’s sister, mother-in-law, or by the Lysaght firm. Hartman’s mail goes to a house in Merrick, Long Island, inhabited by his sister Lynn and aforementioned brother-in-law, Bruce Alpert, a state supreme court judge. Reached at his office, Alpert said he could not confirm the arrangement because both the mail and family finances are handled exclusively by his wife. Despite a promise from Alpert to ask his wife to call the Voice, she did not. The Alperts’ home number is unlisted and the judge would not provide it. He did, however, confirm that for a time Lynn had a job at the Lysaght firm. “She was a paralegal, I guess you could call it.”

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 PRESIDENT FOR LIFE?

 Phil Caruso is more difficult to get to than the mayor or the president.
— Eric Adams, president of the black officers’ association, the Guardians

IF THE CARUSO REIGN has been longstanding and omnipotent, the police commissionership has been ephemeral and constricted. “The turnover in the police department administration is so rapid, that nobody knows the whole story,” former NYPD investigator Robert Hughes said. “And nobody wants to know. They are afraid of them.”

Even within the union, Caruso’s only rival was J. Patrick “Paddy” Burns, until recently the first vice president and a man known for his expensive tastes. For whatever reason, however, Burns didn’t challenge Caruso. Perhaps he merely lost his ambition. “Paddy Burns didn’t do any work while I was there,” Gary Melius said. “He played golf.” (Efforts to interview Burns were unsuccessful, though on one occasion he returned a call but left no number.) 

In 1991, when Burns was replaced as second in command by Caruso aide decamp Thomas Velotti, Burns was transferred to Albany as the PBA’s principal lobbyist. As lobbyist, he received $50,000 a year, which, combined with his patrolman’s salary, put his earnings at about $90,000 a year. 

For 1993, PBA filings list lawyer James Lysaght as the principal lobbyist. Burns, who has reached the mandatory retirement age of 62, nevertheless has a contract with the PBA through 1995 at $50,000 a year. “The PBA has enormous influence in Albany, particularly through its campaign contributions and through providing help in campaigns,” said New York City lobbyist John Bozella. “I’m not convinced they’re successful because they’re discussing issues on their merits with the rank and file members of the legislature.” In 1991 the PBA political action committee dispensed S140,000 in campaign contributions, largely to state legislators. 

Ironically, it is not legislators from the city itself who are the most responsive. “Those little legislators from outside the city are totally intimidated by them,” said one lobbyist, referring in particular to representatives of suburban communities in which so many New York City cops live. 

The favorable legislation just keeps on coming. In 1991, PBA allies in the legislature passed a law that allowed injured cops to sue the city as individuals. This gave them the opportunity to earn bigger settlements than what the city already provided. 

Last summer Albany nearly handed the PBA a weapon that would have dramatically strengthened Caruso’s hand, a bill with staggering consequences for the battle against police corruption. On July 7, the senate and assembly — the latter by a vote of 135-3 — passed the Confidential Communications bill. This ominous law, sponsored in the assembly by Harvey Weisenberg, a Democrat from Long Beach, Hartman’s home town, would have shielded conversations between police union officials and their members, even criminal admissions. In other words, a delegate couldn’t report, or be forced to disclose, a patrolman’s confession of taking a bribe, selling stolen drugs, or killing somebody. 

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The law would have made investigating the PBA impossible. “It was a pro-police corruption bill,” lobbyist John Bozella said. Alarmed by the implications, Governor Cuomo vetoed the bill when it reached his desk in August. Yet the audacity of the legislation is a PBA trademark, and if a PBA or D’Amato ally were sitting in the governor’s seat, it is likely that it would have been signed. 

Even without such a barrier, apparently no agency wants to probe the activities of the PBA. “Morgenthau went after them in 1988 and fell flat on his face because he let a deal be cut,” noted one knowledgeable observer, referring to the grand jury and Hartman giving up his law license. “He is politically afraid to try to go after them again.” Asked by the Voice to respond to this, Morgenthau said, “Nobody has come to our office and said that Hartman, Caruso, and the PBA warrant a deeper look.” 

Although the D.A. does prosecute individual officers, taking on police institutions presents special problems. For example, district attorneys cannot successfully try criminal cases without cooperation from the officers who made the arrest. So excessive zeal in rooting out police corruption can make life difficult for prosecutors.  

Sometimes only the press can ask the tough questions. Among the dailies, New York Newsday is easily the most aggressive in covering the union. Its reporters and columnists — Jimmy Breslin, Jim Dwyer, Leonard Levitt, and Kevin McCoy, to name a few — give Caruso fits, and he no longer grants the paper interviews. The PBA seemingly doesn’t appreciate the right of the press to ask questions, a lesson learned by Bruce Lambert, a New York Times reporter who looked under a few rocks when he was at Newsday. In the ’70s, Lambert wrote a series of articles critical of PBA negotiations. Governor Hugh Carey, outraged by the generous contract terms, called to compliment Lambert on the work. Later, the reporter would be told by the PBA’s private investigator, Walter Cox, that he’d probed Lambert’s personal life on behalf of the PBA. In particular, Hartman wanted to know if Lambert was gay (he isn’t) — information that could not have possibly served any legitimate purpose. 

In its investigation, the Voice has continually encountered PBA insiders and associates who express fear of reprisals. As one ex-PBA staffer put it, “Keep me out of it. I would like to live a little longer. I have a family.” Two people with intimate knowledge of the PBA said they would consider granting an interview, then had their telephone numbers changed and unlisted. Another PBA employee described the union’s environment this way: “It’s like the Mafia. Once you’re in, you’re never out.”

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“A cop knows from day one, you do what the union tells you,” said a former police officer. At monthly delegate meetings, a member or two occasionally got up to complain about Hartman or his staff. Sitting on the dais, Hartman would laugh, while other members shouted down the dissenter. Some delegates would try to make the maverick’s life miserable. As an investigator put it, “Members will always support someone with clout over someone trying to reform the system.” 

That clout allows the PBA to stymie corruption probes targeting its members. Leading this effort for a number of years was the PBA’s investigator, Walter Cox. A Nassau County Republican committeeman, Cox had retained Hartman to represent him in 1971 after he got drunk and robbed a Massapequa supermarket. In 1974, Cox was convicted of impersonating a federal officer. Hartman put Cox, who had no private investigator’s license, on his payroll and assigned him to look into cases in which PBA members were accused of wrongdoing. 

In 1984, Cox was arrested in Florida, where he had been tape-recorded in a Fort Lauderdale disco attempting to bribe a potential witness in a police corruption case. Shipped to New York to face charges, Cox had legal representation, courtesy of Hartman; nevertheless, he was convicted of bribery. But before going to jail he turned on his PBA bosses, giving a crucial deposition in another case, backing up former NYPD investigator Robert Hughes, who had been fired by the department under pressure from the PBA. As head of the NYPD’s sick-leave-abuse-prevention operation, Hughes discovered that 2 per cent of police officers were responsible for 51 per cent of the absences, and he saved the department $3.25 million. (One officer was running an insulation business while out with a proclaimed bad back.) In 1987, Hughes sued the PBA and its first vice-president, J. Patrick Burns, for harassment. Eventually, he was vindicated when a judge granted him two $400,000 court settlements, one from the PBA and one from Burns. (The PBA paid Burn’s share.) Cox testified that Burns instructed him to “get Bob Hughes.” But Cox was unwilling to elaborate further, and shortly thereafter suffered a heart attack in jail and died. 

The PBA’s blocking actions against corruption probes were more recently evident in the case of patrolman Michael Dowd, the leading villain in the Mollen Commission hearings. Dowd would not have been able to run his cocaine ring for years without an active PBA enforcing the code of silence. When Dowd got into trouble in 1992, according to New York Newsday, Jack Fitzgerald, the PBA delegate in the 94th Precinct in Greenpoint, called high department officials and got them to back off. Hardly a role model himself, Fitzgerald was known as “the mayor” for his ability to fix schedules and assignments for his buddies. One of Dowd’s partying pals, Fitzgerald ran a Monte Carlo club in the precinct’s basement kitchen, where cops bet and boozed. 

In recent years, the PBA has gone even further in undermining efforts to clean up the department. In one instance, according to a law enforcement source, it sent people over to a Marriott hotel, where they apparently compromised a joint Bronx D.A./NYPD sting set up to snare dirty cops. (The Bronx D.A. refused to comment.) 

Although Hartman himself has been tripped up by the IRS, PBA finances apparently escape scrutiny. The last city audit, by then comptroller Harrison Goldin, was in 1986. Comptroller Elizabeth Holtzman’s office recently completed field work on its only audit of a PBA account. The examination covers the 1991 tax return for the union’s health and welfare benefits fund for active members — just one of five benefits accounts the PBA maintains. Press secretary Maerwydd McFarland said the final report will likely be completed in January, when Alan Hevesi assumes the office. “There are no significant findings,” McFarland said. 

Two accountants, asked by the Voice to review a stack of federal 5500 forms (enumerating employee benefits and charitable trusts) and 990 tax forms going back to 1977, were shocked at how poorly they were prepared and how vague they were in their details. They noted many unusual characteristics. Particularly troubling was the sloppy preparation, which would be a certain invitation to an audit, a rigor federal tax authorities have seemingly spared the PBA. 

No one is better qualified to explain these apparent irregularities than Richard Hartman, and someday maybe he will. In January 1995, Hartman will be eligible to reclaim his law license. He could join the Lysaght firm and even become the PBA’s attorney again. 

Caruso’s term ends in three years, when he will be 62, the mandatory retirement age for a police officer. The PBA constitution and bylaws, substantially revised during Caruso’s tenure, leave open the possibility that he may stay in office as long as the membership continues to reelect him. 

The coming months could be decisive for the union. An announcement on a new police commissioner is expected any day. The Mollen Commission report is due within the month, and Governor Cuomo will have to decide whether to appoint an independent prosecutor to investigate police corruption. Like most other municipal bargaining units, the PBA has been operating for two years without a contract, and the new city administration will soon have to begin bargaining. More importantly, mayor elect Rudolph Giuliani will have to decide how to deal politically with the police union that was instrumental in getting him elected. ♦

Research assistance: Jeremy Bogaisky, Lea Carnevali, Malene Jensen, Kate King, Julie Lang, Carlo Martino, Jodi Melamed, Adam I. Rich, and Mark Stamey

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ADDRESS FOR SUCCESS

TODAY 300 Old Country Road is a sleek office condo complex, but it once was the address of a seedy two-story building owned by PBA attorney Richard Hart­man. In 1975, Hartman sold the run­down property to his crony Gary Melius.

Nonetheless, 300 Old Country Road continued to be a repository of opportun­ism. Hartman ran his law business upstairs. The downstairs was occupied by Davis Optical, a small firm that grew rapidly after getting the PBA contract to supply eyeglasses to police officers and their families. Squeezed into the tiny storefront next t0 Davis was a branch of the Money Store. Famous for its ads fea­turing retired Yankee great Phil Rizzuto, the business would come to be criticized for its extremely high-interest loans to the poor. The Money Store co-owner was Steven Gurian, also president of Long Island Development Corporation. At the time, Gurian was allegedly under investi­gation for mob connections.

Gurian prospered on deals backed by the Small Business Administration. It was Senator Alfonse D’Amato who had pushed vigorously to broaden the SBA program under which Gurian and his Long Island Development Corporation/ Money Store operated.

In addition to the construction, optics, and finance firms, 300 Old Country Road served as a hangout for a clique that included Philip Basile, a music pro­moter, club owner, and alleged front for mobster Paul Vario. The D’Amato brothers helped Basile obtain his nightclub permits; Armand P. D’Amato was Ba­sile’s lawyer. ln 1983, just hours before a jury would convict Basile of conspiracy to defraud (he gave renowned goodfella Henry Hill a no-show job after Hill got out of jail), Senator D’Amato would tes­tify that Basile was “an honest, truthful, hardworking man, a man of integrity.” To the amazement of the jury, he then kissed Basile on both cheeks.

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

1993 Village Voice article by Russ Baker about corruption in the NYPD's Patrolman's Benevolent Association

Categories
From The Archives NEWS & POLITICS ARCHIVES NYC ARCHIVES THE FRONT ARCHIVES Uncategorized

Rudy Guiliani: The Friend Within

The Friend Within
October 12, 1993

The 1989 mayoral race was one of the dirtiest in New York history. What ap­peared in print was bad enough — age-old tax matters, race- and red-baiting — but the gossip floating around political circles was far worse: speculation about Ed Koch’s sex life, rumors that a stack of love letters to David Dinkins was sitting on the desk of former Post owner Peter Kalikow, whispers about a Dinkins affair and how it compro­mised the then Manhattan borough president.

None other than Giuliani’s former, and current, campaign manager Peter Powers was involved in peddling the purloined Dinkins love letters to the press, the Voice has learned. Yet Powers was not the only Giuliani supporter to engage in CREEP­-style tactics on behalf of the Republican candidate. A Voice examination of the ’89 bloodbath has revealed that some of this mudslinging can be traced to a close asso­ciate of Rudolph Giuliani’s, an IRS agent named Anthony J. Lombardi, who sources said worked in the shadows of the mayoral campaign.

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Giuliani has declined to be interviewed about Lombardi and other aspects of the ’89 campaign. In fact, there is no proof that Giuliani himself was aware of his asso­ciate’s efforts. But Lombardi, while claim­ing that all his investigations were geared toward legitimate criminal prosecutions, told the Voice that both Giuliani and his top assistants in the U.S. Attorney’s office were aware of his activities. “There was nothing I did there that they didn’t know about. I followed their direction on everything. There is not one thing I did, one report that I wrote, that they didn’t know about. One way or another, they would know about it.”

Lombardi was assigned to the political corruption unit inside the Manhattan U.S. Attorney’s office in early 1986, and remained there until his retirement last year at age 50. His departure coincided with the latter stages of a lengthy IRS investigation, a probe that, according to a federal prose­cutor, turned up evidence that Lombardi had engaged in “improper conduct” and was “providing inside information” to the target of an IRS criminal probe. That inves­tigation resulted in the felony convictions this year of two longtime Lombardi associates.

One law enforcement source said that the office of Newark U.S. Attorney Michael Chertoff, which prosecuted the two men, judged a possible indictment of Lombardi as a “close case,” and eventually declined a prosecution. Chertoff, himself a former Giuliani assistant, declined to comment on the case.

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The IRS investigation of Lombardi com­menced in mid 1987, and roughly covered the same period during which the ex­-agent’s suspect political practices occurred. Those activities included:

  • Lombardi participated in interviews with at least three men during which the subject of Ed Koch’s sex life was broached. One witness was summoned by Lombardi from California, but declined to provide in­formation about his personal relationship with Koch. Another purported “government witness,” writer and gay activist Larry Kra­mer — who at the time had begun a cam­paign to “out” Koch — was contacted by Lombardi and gladly agreed to an interview. During that meeting, Kramer provided a graphic description of what he claimed were details of the former mayor’s private life.
  • Weeks before the ’89 general election, Lombardi peddled the rap sheet of Dinkins adviser and union leader Jim Bell, who had been arrested in 1971 for slugging a cop who called him “nigger.” The story about Bell’s minor criminal record broke on TV and was attributed to “law enforcement sources.” The report included a denuncia­tion from Giuliani, who questioned “the kinds of people” Dinkins “surrounds him­self with.”
  • The former IRS agent once bragged that, on occasion, he had tailed Dinkins campaign manager Bill Lynch home at night. Asked only whether he recalled any strange occurrences during the last mayoral race — and not specifically about being tailed — Lynch said in an interview that on four or five occasions, he was followed by car after leaving Dinkins’s Manhattan cam­paign headquarters late at night.

In addition to the surveillance, the Voice has learned that, during the ’89 election, an inquiry was begun into the tax status of Lynch, Dinkins’s chief political adviser. Ac­cording to a well-placed IRS source, there was an allegation that Lynch “had not filed his tax returns.” The source recalled that a request was made for copies of Lynch’s tax returns, but the source could not remember where the request emanated from. “I re­member saying, ‘This is pretty hot shit,’ ” the source said, because of the ongoing mayoral campaign.

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Though the bulk of the IRS’s internal probe of Lombardi focused on his involve­ment in the case handled by Newark federal prosecutors, there apparently was one polit­ical facet to the agency’s inquiry.

According to the notes of one Voice source who examined IRS documents relat­ing to the agency’s Lombardi probe, investigators determined that the ex-agent “did engage in prohibited political fundraising activities on behalf of former New York City mayoral candidate Rudolph Giuliani” in 1989. A federal law enforcement source, who is familiar with the IRS inquiry, could not confirm that the agency had reached such a conclusion. Lombardi denied last week that he engaged in any fundraising activities — which would be a violation of the agency’s conduct codes — but did say that he attended Giuliani’s election night “victory party” in November and that a close friend of his organized a “Democrats for Giuliani” fundraiser in 1989, which he did not attend.

Last week, the Voice asked for an inter­view with Giuliani to discuss aspects of the the ’89 mayoral race, but the request was flatly turned down by campaign spokesman Richard Bryers in a telephone conversation Thursday morning. “We’re declining to talk with you” was all Bryers would say. Earlier in the week, at an Al D’Amato fundraiser, Giuliani approached another Voice reporter and indicated that he wanted to talk about matters he heard the newspaper was exam­ining. During a short conversation, Giu­liani denied that while he was U.S. Attor­ney inquiries were conducted into anyone’s sex life. He also said that he was unaware that Lombardi had been accused of wrong­doing in connection with the New Jersey IRS investigation, saying that he had not spoken with the former agent in more than a year. According to two sources, Giuliani has cut off contact with Lombardi because he believes the ex-agent “was going with a Finkelstein agenda,” a reference to busi­nessman Jerry Finkelstein, a Lombardi friend and the father of Andrew Stein, him­self a mayoral candidate until last May.

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By his own account, Tony Lombardi be­lieves he was “in the forefront of law en­forcement,” a “high-powered guy.”

As a young Treasury agent, he was de­tailed in 1968 to assist the U.S. Secret Ser­vice in its protection of then presidential candidate Richard Nixon. Lombardi even­tually landed in the agency’s Criminal In­vestigation Division (CID), where he became a supervisor and worked cases involving organized crime figures, white collar criminals, and corrupt politicians.

Lombardi helped nail mobsters and mu­nicipal crooks like former Bronx Democrat­ic boss Pat Cunningham, but he is probably best known as the agent who helped trans­form Sukhreet Gabel — the ditsy diva of the Koch-era corruption scandals — into a pros­ecution witness against her own mother, 76 years old and nearly blind.

Lombardi’s career intersected with Giu­liani’s in 1986, when the agent began work­ing for the prosecutor as a special investigator attached to the U.S. Attorney’s office. Lombardi had previously been assigned to the President’s Commission on Organized Crime and, directly preceding his assign­ment with Giuliani, worked for a short time as chief investigator for the Martin Commission, which was charged with ex­amining aspects of the city scandal then enveloping the Koch administration.

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Working with public corruption prosecu­tors, Lombardi helped build a successful case against sewer contractor Andy Capasso that eventually segued into a probe of Ca­passo’s then girlfriend, Bess Myerson. At the same time, Lombardi was also involved in the early stages of Giuliani’s probe into the Parking Violations Bureau and late Queens borough president Donald Manes’s corrupt dealings. It was during the PVB preliminaries that Lombardi’s investigative style first raised concerns among some Giu­liani assistants.

One former prosecutor recalled that Lombardi had to be “constantly admon­ished” to refrain from contacting a prime target of the PVB investigation in an effort to “flip” him, or secure his cooperation. Lombardi had visited the target at home over the weekend, a practice that stopped only when the target’s attorney lodged a complaint with prosecutors. From that point, according to the source, “as well as other things that people saw, there were a number of assistants in the U.S. Attorney’s office who had a real unease about him.”

“He was a big, bluff, gruff, big-mouth agent,” another former prosecutor recalled. “Guys like that can be the most effective or the most dangerous type of agent. He lived in the Southern District, worked like a dog and was extremely trusted.” A third ex­prosecutor, who worked directly with Lom­bardi, said the agent “had access to the throne while Rudy was there,” a recognition of both Lombardi’s work on high-pro­file cases as well as his close relationship with Giuliani. Another prosecutor familiar with Lombardi said that it was “common knowledge” that Lombardi was one of the people Giuliani relied on to handle “things that the boss wants done.”

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In a series of lengthy interviews with the Voice, Lombardi said that because of the “sensitive nature” of many of his investigations, he “worked closely with” Giuliani and his top advisers, including Deputy U.S. Attorney Dennison Young. Lombardi con­firmed that he sometimes chauffeured Giu­liani and regularly attended end-of-the­-workday sessions in Giuliani’s private office during which cases and strategy were discussed. “I really held a position of im­portance,” Lombardi recalled. “My posi­tion was to do big cases.”

“Tony had free access to anyone” in Giu­liani’s office, one former IRS agent said, noting that the agent was close to now FBI director Louis Freeh, who had prosecuted the Pizza Connection heroin case and who served as head of the office’s organized crime unit from 1987 to 1990. Another former IRS investigator noted that Lom­bardi rarely appeared at the IRS’s Manhat­tan office, but when he did, it was clear that “he was some type of big shot. People jumped when he spoke. He got anything he wanted.”

Kevin Ford, a prosecutor who worked with Lombardi and said the investigator was “one of the best people I’ve ever worked with,” recalled that “Tony had a strange and difficult job to do. He was the point man for the IRS in dealing with a lot of very wealthy people who were in a posi­tion to provide … very valuable informa­tion, often about one another, that the gov­ernment was able to capitalize on in making civil and criminal cases.” Lombar­di’s vast array of contacts — he said 163 individuals had served as informants for him during his career — made the agent a well-known source of information for fel­low investigators, prosecutors, and journal­ists alike.

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Ford, in fact, believes that Giuliani him­self benefited from Lombardi’s network. “It was my perception, for what it’s worth, that Rudy took advantage, to be quite frank, of some of Tony’s contacts. Because Tony was, and is, friends with a lot of powerful people … ” Ford noted that because of Lombardi’s close relationship with former U.S. Attorney Andrew Maloney, Giuliani’s Brooklyn counterpart, Giuliani employed him as “sort of a mediator” in disputes between the two offices, using the IRS agent to take “messages back from one to the other, since they wouldn’t speak to one another.”

In addition to Maloney and Jerry Finkel­stein, Lombardi is close friends with insur­ance executive Neil Walsh — a former Roy Cohn crony — who has regularly accompa­nied Lombardi to prizefights, Yankee games, and entertained the former IRS agent in his luxury box at Giants Stadium. Walsh, one of the more shadowy members of the city’s Permanent Government, has been described by Department of Justice officials as having a “business relationship with the FBI. Disclosure of the nature and details of this relationship could cause seri­ous damage to the national security.”

Lombardi, Ford, and ex-prosecutor Da­vid Lawrence worked together on the Myer­son investigation, though it was Lombardi who played the central role in helping to orchestrate one of Giuliani’s major fiascos.

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Lombardi’s “wacky relationship” with Sukhreet — who would testify at the Myer­son trial that she “adored” Lombardi­ — worried many prosecutors in Giuliani’s of­fice, according to an ex-Giuliani assistant. “First of all, she was another one who was represented by counsel … he [Lombardi] came in and said, ‘You know, she wants to talk to us, she wants to rat out her mother. She’s disgusted by this, she feels used and abused and betrayed.’ ” The ex-prosecutor added that “there were a lot of assistants in the office who were very much afraid that Tony was approaching her and preying upon her psychological imbalances. And that this [Gabel’s story] wasn’t coming from her, that this was coming from him. Now this is obviously very serious stuff to (a) be talking to somebody who is repre­sented by counsel, but (b) to be talking, trying to talk a daughter into flipping against her mother.”

The Myerson case, with Gabel as the star witness, became “a disaster from the get­-go,” according to one former prosecutor who viewed Lombardi as a “zealot” who could not understand “why people would have reservations” about a witness taking the stand and mugging her mother for nine days.

What could have been the final piece in Giuliani’s anticorruption crusade — an ef­fort that helped cripple Ed Koch politically and set the stage for Giuliani’s mayoral bid — became an embarrassment. Instead of leaving office in January 1989 with the freshly mounted head of yet another Koch crony tucked under his arm, Giuliani de­parted Bess-less.

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While he was still working on the Myer­son case, during 1987-88, Lombardi told the Voice he conducted a number of other municipal-corruption investigations, though he declined to discuss the nature of these probes, which did not result in the development of criminal cases. It was during the time of these inquiries that three men were queried about their knowledge of details of Ed Koch’s love life.

Playwright and AIDS activist Larry Kra­mer told the Voice that he was first contact­ed by Lombardi in 1987 and asked to come into the U.S. Attorney’s office for an inter­view, which took place on September 25.

At the time Lombardi contacted him, Kramer was in the midst of trying to “out” Koch and was focusing on the politician’s late-’70s relationship with a health care consultant named Richard Nathan. The thrust of Kramer’s story was that Nathan had admitted to him and others that he had once been Koch’s lover. Kramer’s agitating, he said, was to call attention to what he believed was Koch’s delay in dealing with the epidemic.

Kramer said last week that he was also aware, at the time, that after Nathan had moved to Los Angeles in 1978, he had received a small city contract — totaling less than $13,000 — from the Health and Hospi­tals Corporation. Aware that his informa­tion consisted entirely of hearsay accounts of Koch’s private life, Kramer said he met Lombardi anyway because he believed it was “very much two guys trying to help each other.”

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Asked why he called in Kramer, Lombardi said it was not he who contacted the writer, but did assert that Kramer was a “witness” in a confidential investigation that the ex-agent could not discuss. When Lombardi was told that Kramer recalled speaking extensively about Koch’s love life, he responded, “that’s absolute bullshit. No­body called Larry Kramer in to provide any information about his love life or any of that crap. He was an important witness.”

Ford, though, also attended the Kramer interview and contradicts Lombardi, saying the activist described “in gross detail” what he claimed to be first- and second-hand accounts of “Ed Koch’s sex life.” Ford said that it had been his belief that Kramer had approached the U.S. Attorney’s office and requested the meeting. Kramer, however, was adamant that Lombardi initiated the contact and said he was never a witness in any investigation, as Lombardi claimed.

Nathan told the Voice that he, too, was contacted by Lombardi at his home in Los Angeles. Asked last week if Nathan — and his paltry HHC contract — were ever the subject of a criminal investigation, Lom­bardi said, “No, never.” As with Kramer, Lombardi said that Nathan was also a gov­ernment witness, but “I don’t believe I worked on the investigation.” Nathan has a markedly different recollection.

Contacted last week, he said that Lom­bardi telephoned him, apparently in late 1987, and “invited” him to come in for an interview. Nathan, who traveled to New York occasionally, readily agreed to meet with Lombardi when he was in town next, believing that otherwise he would be sub­poenaed to appear.

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Nathan said that his meeting with Lom­bardi had a “two-part agenda: there were the [HHC] contracts, which is the above­-the-ground agenda, and the private life, which is the below-the-ground agenda.” He added, “It was an open secret what he was chasing. You don’t get summoned to New York to discuss your love life. They don’t put that on a subpoena.”

Lombardi, said Nathan, was “a hired gun looking for dirt” and that “I never recall it being suggested that I violated anything. It was, rather, gathering information.” Na­than added that Lombardi “really wanted to probe into things that I told him were of a personal nature. My private life is pri­vate.” Nathan, who said he has not been in contact with Koch for years, said that he did not know “whether Koch was aware of Lombardi particularly, but he sure as hell must have been aware that people were out looking over his bedtime activities.”

Though he initially denied working on the “investigation” in which Nathan sup­posedly was a “witness,” Lombardi claimed that the consultant was the one who wanted to talk about sex. “The guy wanted to get on a soapbox. We had to restrain this guy. [He] talked about Mr. A, B, C, D, and E.”

The third person queried about Koch’s private life was former mayoral aide Herb Rickman, who was a government witness during the Myerson trial. In preparation for his testimony in that trial, according to sources, Rickman was questioned on five or six occasions, with lead prosecutor David Lawrence conducting the interview. Infor­mation about Koch’s sex life came up dur­ing these meetings, sources said, but always in the context of preparing Rickman for any possible cross-examination.

Lombardi attended the Rickman sessions, but said he did not recall anything about Koch’s per­sonal life being discussed, though Ford remem­bered the subject being brought up by the may­or’s former ally. Other source says Rickman was ‘bothered’ by how often open ended questions about Koch’s personal life were raised.

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Lombardi said that in the course of his corrup­tion investigations, “We called in a number of people … and we would do the best not even to talk about it. Who the hell cares what their sexu­al persuasion was?” However, one ex-prosecutor who worked with the farmer IRS agent said, “Tony is such a gossip. He used to tell stories about Koch and gay liaisons,” complete with details of “Westhampton trysts.”

A federal criminal trial in Trenton, New Jersey, just this summer offers another in­sight into Lombardi’s focus on Koch’s sex life — as well as his newfound disdain for the very people and institutions that were hallmarks of his career.

In the Trenton trial, Manhattan attorney Michael Pollack was accused of devising a scheme to help a client, businessman Arnold Herman, avoid paying federal income taxes. Both Pollack and Herman were the targets of a three-year IRS investigation, which was driven by the cooperation of a third man who secretly recorded meetings and telephone calls for investigators.

Presented with evidence of his role in the scheme, Herman pleaded guilty and agreed to cooperate in the government’s case against Pollack, who was eventually con­victed on two felony counts. Herman, a friend of Lombardi’s for almost 20 years, was caught talking about his pal in a secret­ly recorded conversation on November 30, 1988.

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Discussing Lombardi’s work on the Myerson case, which was then under way, Herman said, “There’s more to it than Bess Myerson. They’re trying to nail Koch.” Lat­er in the conversation, in an apparent refer­ence to Lombardi, Herman said, “So now they’re saying, ‘Well, he’s gay, he’s got a lover.’ Oh, so what? Who gives a shit?” Then, Herman added, “I say this very hon­estly, I say, ‘Lombardi, what’s the big deal?’ But 0n the other-hand, you kn0w he looks at it like, this is his job.” Herman conclud­ed by saying that “If they don’t want to let him [Koch] alone and go to work, they want to hock him to death so that they will find out that he was in the sack with some guy.”

In his initial Voice interview, Lombardi described Herman, 63, as “an incredible guy” who worked for years as an informant. “He never was paid, he never got anything of any consequence, he was never in trou­ble. This was a rare example of a guy who did it because I think there was a thrill involved.” However, in subsequent inter­views, as Lombardi learned that Herman’s testimony — and his tape-recorded com­ments — implicated Lombardi in the tax-­avoidance scheme, he excoriated his former friend — who he earlier said provided him with “pretty solid information” — as a “rat,” “squealer,” “liar,” “greedy felon,” “scuzzbag,” “shithead,” “scum,” and as­serted that his former associate “should have been crucified.” As he raged against Herman, Lombardi also revealed specific details of what he said was Herman’s coop­eration in investigations against two orga­nized crime figures and one New York­-based billionaire.

Lombardi also had some choice words for the prosecutor in the Trenton case, Mark Rufolo, who blasted Lombardi’s conduct, charging that his, behavior was clearly “improper … probably a lot more than im­proper.” Rufolo, Lombardi said, was a “piece of shit” who “should be hung.” He added that one IRS agent who participated in the agency’s internal probe of him was a “drunk” who “doesn’t remember one day from another.”

Lombardi claimed that the IRS investiga­tion did not turn up “a goddamned shred of evidence” against him, claiming that the probe was “an attempt, for some reason, to defame me, to hurt me and my family, to hurt my earning capacity.” He added, “If I did something that was illegal, they would have indicted me.”

Stung by having a prosecutor point the finger at him, Lombardi, who spent 25 years building cases with just such attor­neys, said, “You know how prosecutors are. They will do whatever they have to do in order to solidify their case.” Reminded that this was a U.S. Attorney who had accused him, not a “scuzzbag” informant, Lom­bardi answered, “And what does that mean? That everything he says … is factual?”

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Like most astute followers of mayoral politics, Tony Lombardi’s focus on Ed Koch ended the night David Dinkins was elected mayor. In interviews, Lombardi denied investi­gating Dinkins campaign officials, and claimed the only Dinkins-related matter he was ever involved in “was given to me to handle in a very, very, delicate way.” That probe of the new mayor, not surprisingly, involved an alleged “love liaison,” as Lom­bardi phrased it. In a new twist, this one involved a woman.

Lombardi’s memory was less clear about one figure involved with the ’89 Dinkins operation, Jim Bell, a late union official who was at Dinkins’s side throughout the campaign. The Voice asked Lombardi if he remembered Bell. “Never heard of him,” Lombardi said, apparently forgetting that he tried to smear Bell, Dinkins’s police liai­son, with the story about his 1971 arrest for slugging a cop.

Armed with Bell’s rap sheet, Lombardi peddled a nice, neat political hit. Because of the nature and dates of Bell’s arrests, a check of the National Crime Information Center (NCIC) computer — or New York State’s equivalent — would be the only way, according to knowledgeable law enforce­ment sources, to generate a comprehensive criminal history, as it were, on Bell.

WNBC-TV crime reporter John Miller broke the Bell story, citing law enforcement sources in his exclusive, which ran 10 days before the November 2 general election. The following morning’s New York News­day carried a similar story and cited “criminal records” as the source for its story. Lombardi said that he knows Miller, but denied a hand in leaking the Bell story.

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Bell, who died last year, also figured in another intrigue that Lombardi took credit for. Lynch told the Voice that on several occasions before the November election he and Bell believed they were being followed as they left the Dinkins campaign head­quarters on West 43rd Street.

“We’d leave anywhere from midnight to 2 a.m. and pick the car up in a parking lot on 44th Street,” Lynch recalled. “We had the same routine: drive up Eighth Avenue then over to Broadway and 72nd Street,” where the pair would buy newspapers and hot dogs at Gray’s Papaya. “We’d go north on Central Park West or Amsterdam Ave­nue. At some point, we both were sure that we were being tailed by the same car each night. I didn’t really think about it that much until it happens for like the fourth or fifth time. So, we pulled over one night at 105th Street and jumped out of the car and ran back towards the guy behind us. That’s when he backed up and cut out.” Lynch said the tails ended that evening.

One Voice source said that Lombardi matter-of-factly mentioned the Lynch tails to him. Lombardi denied the surveillance, saying, “I don’t recall anybody ever coming to me to say that Bill Lynch has done any­thing wrong. I heard a story about his son. I heard some matters that I would think he would be pained about as a father.” Lombardi added, “I only knew of what little rumors that one might want to have floated about the guy …” Lombardi also denied knowing about whether officials in the U.S. Attorney’s office ever discussed Lynch’s tax history.

The Voice has learned, however, that at least one top official in the U.S. Attorney’s office — which was then headed by Benito Romano — was aware of the Lynch inquiry and believed the mayor’s political operative had “a problem.” Lynch, who was subject­ed to a detailed Department of Investiga­tion background check following his ap­pointment as a deputy mayor, told the Voice that he had always filed his taxes and “if I hadn’t, I would’ve gotten it between the eyes from someone.”

Lynch told the Voice, though, that in August 1989, he was contacted by the IRS with regard to his 1985 tax return — which Lynch said he had filed on time more than three years earlier — and that he eventually underwent a two-day audit in early 1990. Lynch said that when he received notice of the examination — which he said resulted in no additional tax or penalties — he believed that his “number had just come up” for a routine audit.

Informed of the timing of Lynch’s audit, a retired IRS agent told the Voice that, if Lynch had submitted his ’85 tax return in a “timely fashion,” it would be “absolutely out of the ordinary” that an examination of the return would take place more than three years later. Lynch said that he filed his returns on time, which the Voice has confirmed.

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Even without Lombardi’s help, the Giu­liani campaign was capable of slinging its own mud. In what was perhaps the sleaziest dirty trick of all, the campaign brass fever­ishly tried in the final days of the ’89 cam­paign — unsuccessfully as it turned out  — to convince the Post to run a story about pur­ported “love letters” that had supposedly been sent to Dinkins by women other than his wife.

The Giuliani team, according to sources in both campaigns, had obtained the letters from a disgruntled former employee of the Manhattan borough president’s office who, Dinkins aides said, walked off with the correspondence as well as the politician’s Rolodex after her demand for a promotion and raise was denied. The ex-employee, whose relative worked for the Giuliani campaign, served on Dinkins’s staff while he was Manhattan borough president and also worked for him when he was the city clerk.

The “love letters” wound up in the hands of Post political reporter Fred Dicker, who confronted Lynch with the correspondence. Lynch tried to dismiss the matter, but the Post parry triggered a series of high-level negotiations, with then Dinkins adviser An­drew Cuomo playing a critical role in help­ing to snuff the smear.

Since most of the Giuliani campaign’s upper echelon were lawyers — and many were ex-prosecutors — they must have known that they were in the possession of what appeared to be stolen property. Peter Powers, Giuliani’s close friend and cam­paign manager, was in the middle of the “love letters” operation. according to one well-placed Giuliani campaign source.

At one point, Powers tried to justify the attempted smear, the source said, by com­plaining that the Dinkins forces were working to plant stories about the annulment of Giuliani’s first marriage.

As the Republican team attempted to detonate its last-minute bomb — while ex­pecting the story of Giuliani’s marriage to a cousin to explode as well — Powers offered a telling analogy, according to one source: “This is like the Cuban Missile Crisis.”

The Giuliani “love letters” operation was the denouement of the tawdry ’89 mayoral race. Like most of the sleaziest intrigues of that campaign, the letters materialized in the shadow of Election Day. As Dinkins­-Giuliani II enters its final weeks — with combat veteran Powers heading the Giu­liani brigade — history indicates that New York may be in store for a number of October surprises. ♦

Categories
CULTURE ARCHIVES Dance Archives From The Archives MUSIC ARCHIVES NYC ARCHIVES Scene THE FRONT ARCHIVES

Lost in Music: An Oral History of Disco

The Dancing Machine: An Oral History
Rock & Roll Quarterly, Summer 1993

GLORIA GAYNOR: I started out singing jazz, singing top 40 in clubs, and between sets, disc jockeys would come in to play and I knew that was the next storm coming; I saw that we were going to be phased out. We saw disco coming and decided we were going to furnish music for that.

LOLEATTA HOLLOWAY: Disco was the greatest time ever, and I am happy that I experienced it. When they went out, they went out with one thing in mind, and that was to party. Today it seems like there’s always a lot of fights. People had no hard­ness or no bad thinking on their mind, and everything was free. And it seemed like the peak to me.

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BARRY WHITE: The ’70s was very glamor­ous — the very first time I ever saw regular jeans go from $5 to $250. The consumers dressed up like they were the stars.

FELIPE ROSE: Disco was like a sense of youthfulness and decadent innocence that the era had. It was just a hot, hot, hot time.

KATHY SLEDGE: I honestly saw it happening but I wasn’t allowed to go out dancing. We were minors at that time period.

BARRY WHITE: It was a freedom time­ — more people experienced things and tried new things, whether it was drugs or whatev­er. It wasn’t about sex but love and sensual­ity, communicating, relating. There’s a world of difference between making love and having sex, and the ’70s was ap­proached as if it was a woman being ro­manced and made love to.

FELIPE ROSE: You wanted to look your hottest, and damn if you forgot your tam­bourine when you got that hit of acid. (I stole that from David Hodo who says it in the show.) You were going to meet fabulous people and you were going to party not just for that night, you were going to party for days.

KATHY SLEDGE: Disco snowballed the way it did because it got to be not just music, it got to be peoples’ social lives. People got to be stars and shine on their own.

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FELIPE ROSE: Every night was a different club, one after another, and there were real­ly no barriers in the clubs. There were blacks and whites, gays and straights — it was really more a harmonic thing. You never felt threatened when you went to a club. It’s not like today when you have to wonder who’s carrying a gun or something.

AUGUST DARNELL: We were very fond of disco because every artist needs some sort of movement to make them larger than they really are, and disco did that for us. It sort of gave us a niche, if you will, and a place in history. Some radio stations were calling us Dr. Buzzard’s Original Disco Band, and we never had a problem with that because we were all disco children. We used to hang out at Studio 54 so much that we should have been paying rent.

KATHY SLEDGE: When our song “He’s the Greatest Dancer” came out, it was after the Saturday Night Fever trend and everybody thought they were the greatest dancer. We literally had people come backstage and say, “I am the person you’re singing about.” They were definitely not introverts.

RAY CAVIANO: With disco, you were not an observer, you were a participant. You weren’t going to the party, you were the party.

JUDY WEINSTEIN: In a word? Drama.

RICHIE RIVERA: Party.

AUGUST DARNELL: I’d describe it as pas­sion or, better, neopassion — a passion for the modern times.

BARRY WHITE: Explosive, mystical, magi­cal. Disco brought a lot of smiles to peo­ples’ faces and I saw it everywhere in the world.

RAY CAVIANO: A disco record doesn’t let you dance, it makes you dance.

LOLEATTA HOLLOWAY: The producers, like Norman Harris, took the music and stressed it in the studio; when they started playing they never stopped. When I put down the vocals on “Hit and Run,” they told me to come back the next day and just work out on the break and I thought, This is the longest song I ever sang in my life. The music just went on and on.

KATHY SLEDGE: Disco music to me was musical elation. I think people forgot who they were for a minute: it had a way of lifting you, making you forget about your worries or your problems — almost like mesmerizing you. It was another way of reaching out and feeling like you’re a part of or belonging to the crowd.

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AUGUST DARNELL: Hurrah’s was one of the first clubs I went to, but I frequented Danceteria, the Mudd Club, Studio 54, the Continental Baths, Electric Circus — and there were at least a dozen after-hours places that  we used to hang out at. I’d have to look into my diaries to find out their names.

JUDY WEINSTEIN: The first club I ever went to was in downtown Brooklyn, called COCP; it was all black and I snuck out there on the weekends. I was like 16. Then there was Salvation, Sanctuary, Tarot across from Max’s, and Max’s for a minute. The Loft, 12 West, Flamingo once or twice. The Gallery, the Garage, Better Days, Infinity, Le Jardin, Studio 54, but those were work-related — the other places I lived at. I was a Loft baby.

RAY CAVIANO: The first club I can remember going to was the Firehouse, early in the ’70s. It was the first place where gay people could get together in an uninhibited way away from the bar scene.

RICHIE RIVERA: The first club I played at was the GAA Firehouse, on Wooster Street. Then Footsteps, Buttermilk Bottom, the Anvil, the Sandpiper on Fire Island, Fla­mingo, the Cock Ring, the Underground, 12 West (which became the River Club after the Saint opened), Studio 54, and back to the Cock Ring.

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FELIPE ROSE: We were like G.I. Joe action dolls under the strobe lights. The intensity back then was stronger, the volume was bigger. We were one of the only groups to go live with a band into the clubs, and when we appeared in stadiums, we brought motorcycles, a tepee, a Jeep, and Portosans — for the construction worker — on stage.

AUGUST DARNELL: We were a band with a mission — to bring dance music back to the world — and we felt like the crowds almost lived by a credo that dance is everything. In England now they have all these rave par­ties, but when people say there’s nothing like a rave, I say I saw all this in 1976 at Studio 54. Studio 54 was like ritual escap­ism to the max.

RAY CAVIANO: There was no question about it: the DJ was in full control — almost mind control — of the dance floor, and he had the capacity to take you on a trip. In some cases people felt it was a religious experience of sorts. It was almost a physical thing too — quasi-sexual. The DJ was ma­nipulating the dance floor through a whole steeplechase of sounds. I wanna take you higher.

RICHIE RIVERA: People got to trust me and we bounced off one another. I had a feel for what they might like so I’d go two or three degrees further, and they usually went along.

DAVID MANCUSO: Rule number one: Don’t let the music stop.

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RICHIE RIVERA: It was difficult for me to accept [Donna Summer’s] “Last Dance” when it came out. It was such a drastic change. For years, everybody had been refining their style so the music flowed non­stop. And all of a sudden here came a song where it stopped — and people needed that. They’d been dancing nonstop for years at that point.

RAY CAVIANO: Never speak to a DJ when he’s got the earphones on and mixing. Know when to talk to the DJ, not to inter­rupt his artistic flow. You’re talking to him during his performance.

JUDY WEINSTEIN: A DJ should always pay attention to his dance floor and entertain­ — that’s his job, to read the audience and react to what they want. Make them scream when they’re good and punish them when they’re bad.

DAVID MANCUSO: A night at the Loft was like three bardos. There was the coming together, calmness. In the first two hours, it starts out very smoothly, gathering. Second bardo would be like the circus: music, lights going, the balloons. Third bardo would be the reentry — going back to where you came from, maybe not the same person, but you land back on your feet gently, a little wiser and a little more sociable.

RAY CAVIANO: Every club was different. At Flamingo the DJ was like the Svengali of the dance floor, the maestro. Funhouse was a little more casual; Jellybean was looser.

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RICHIE RIVERA: At Flamingo, it was like Moses in a scene from The Ten Command­ments. At the Anvil, the booth was right in the middle of everything and people’s faces were like three or four feet away from me, so it was really like being in the heart of the whole proceedings.

RAY CAVIANO: The most famous booth in the industry was at the Paradise Garage. It was literally a who’s who of the music business in New York — from Frankie Crocker to any number of record company promo people. If a hot new record got played, word would spread like a bullet from that booth and within 48 hours you’d have a hit.

JUDY WEINSTEIN: At the Garage, I was the godmother of the booth. As the evening progressed from midnight on, there was a pattern as to who showed up. Early on, it was members of the music industry who came to promote their records but not necessarily to dance. They’d try to set up the DJ, Larry Levan, with a test pressing. After two, those people would disappear and the serious record people would show up. That’s when the party would start. After four or five, the booth would be void of anybody who wasn’t there to seriously dance or listen to music, and those people stayed until closing, sometimes until noon the next day.

RAY CAVIANO: The Infinity booth was famous for DJ groupies. The booth was high above the floor at one end of the room and Jim Burgess ruled. But the groupies had a certain amount of influence; they could get the records they liked played when some promo person didn’t have a chance.

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AUGUST DARNELL: I’d have to say my favorite club was Studio 54, it was so deca­dent and so exciting in that period to be part of something you knew was a world movement. It was a bit magical and the music was devastatingly loud. I was never into the alcohol or the drugs, so the appeal of the club was different for me from its appeal to other members of Savannah Band who will go nameless here. I went primarily for the glamor of it — so many beautiful women hanging out in one place. Steve Rubell did make it ridiculous after a while. He could stagger around higher than any­one I ever saw and still be coherent.

RICHIE RIVERA: In the course of a night, the tempo would generally curve downward, but sometimes the manager thought it was too gradual. People needed a remind­er when it was time to take the downs. They told me, You’ve got to do something to make them realize it’s time to start com­ing down — something dramatic. Some peo­ple showed up at four because they wanted to hear all that down stuff, what came to be known as sleaze music. They didn’t blend in with the earlier crowd, who were like Saturday Night Fever and just wanted to take speed and fly.

JUDY WEINSTEIN: Leaving the club, we’d hit the streets looking terribly ugly because we were all very worn out and soiled and everybody out there was fresh. We’d go out to breakfast and talk over the records, the show, the dish of the night, then go home and try to sleep. Come Sunday night, you were fried but not ready to call it a week­end, so Better Days was the dessert when Larry Levan had been the appetizer and dinner.

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LOLEATTA HOLLOWAY: I was working this gay club, right? And I talk a lot before I start to sing. And I said I want a lady to come up onstage that don’t mind being a bitch. I told her to look around for whatev­er man she wanted and I’d bring him up. And then I brought a guy — he was gay — up and instructed him to call up whoever he wanted and put his tongue way down their throat. He looked around for a minute and then grabbed me and turned me way over — you know how you do — and kissed me! The audience went crazy, but I never did that again.

FELIPE ROSE: In different clubs they would throw different things on the stage. Girls would throw bras, and guys would jump on stage and take off their shirts and flex for “Macho Man.”

KATHY SLEDGE: We did the club circuit in New York, and during the Son of Sam period, I learned how much people looked forward to going out at night and when they couldn’t how much they missed it. I re­member so clearly Disco Sally was at one of our shows. I saw her in the bathroom with this long brown fall on. They said Son of Sam was preying on women with long brown hair, and when I told her that, she just whipped it off and put it in her bag.

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BARRY WHITE:  I loved the people, the attitude of the people. The consumer participated not only listening to the music but dressing to the music.

GLORIA GAYNOR: I kind of liked trendy and funky clothes. I don’t like women showing more of their body than is really necessary, but I like fun clothes — sparkle blouses and all.

AUGUST DARNELL: The thing about the style of disco, in retrospect it was quite ridiculous and laughable. To be quite hon­est, I didn’t think much of the clothing, but the Beautiful People who came to 54, they did have style. The good thing was it gave people a reason to say “Let’s get dressed up and go out.”

JUDY WEINSTEIN: The downside was monotony — how a certain style of music I would be totally driven into the ground before a change would come. Like the whole Eurodisco thing: no change, no growth.

RICHIE. RIVERA: It did get a little repetitious. It became so “in” that everybody did it, or thought they could. I mean, Ethel Merman doing a disco album?

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KATHY SLEDGE: There was less pressure then. People came out to dance and have a good time, but it was kind of a double­-edged sword. Especially when the hustle came out, you could feel the cohesiveness on the dance floor, but it was also a lonely time. Like the place would be crowded with people, but a lot of them would be dancing alone.

JUDY WEINSTEIN: My best memory is standing in the middle of Paradise Garage in the early evening before the club filled up. Larry Levan was playing the O’Jays’ “I Love Music” and I was totally straight and just about totally alone and dancing by my­self and actually got lost in the music, trav­eled with the music and within the sound system — just me and the club.

DAVID MANCUSO: The night of the black­out, people stayed over all night. We had candles and played radios and people were sleeping over, camping out. It was very peaceful, a little Woodstockish. The party still went on.

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GLORIA GAYNOR: Disco started out as a sound and unfortunately evolved into a lifestyle that Middle America found dis­tasteful — and that was the demise of disco. It got into sex and drugs that really had nothing to do with the music but that was the lifestyle that identified with disco.

AUGUST DARNELL: The most decadent I got was dancing with two girls simulta­neously, but the decadence of it was great to observe. In the bowels of Studio 54, there was a higher high. But I was like an observer more than a participant. I was like a journalist witnessing a national event.

DAVID MANCUSO: If people were using drugs, they were mild and recreational, where today it’s all about economics. But three-quarters was purely spontaneous energy.

RAY CAVIANO: In hindsight, the experience was exhausting and the lifestyle was obvi­ously way beyond the call of duty. We were going to have a good time even if it was going to kill us. We wanted to take the trip as far as we could take it.

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LOLEATTA HOLLOWAY: What killed disco? The people behind the desks. They do what they wanna do. They changed disco into dance and they changed dance into house. But when you listen to it, it’s still all the same.

AUGUST DARNELL: I would imagine what happened is the same thing that will kill every innovative form: greed — people who don’t have the heart and soul of the music but just want to cash in on it. They think they have the formula without realizing that disco was much more than that at the beginning.

JUDY WEINSTEIN: Disco killed disco. The word disco killed disco. Like pop will eat itself, disco ate itself. Anything that be­comes too popular is apt to be destroyed by the same people who gave it the name.

AUGUST DARNELL: The music today — I call it disco part five.

BARRY WHITE: Disco was a sexy smooth era, very chic era. Now things are mechani­cal, more raw, closer to the streets. The attitude in America is distrust and disillu­sion. Now it’s time to rip, take the money and run, sell the country, sell your mother.

AUGUST DARNELL: It was a good period to go through because it was exaggerated and there’s nothing wrong with that as long as you find your balance eventually. ♦

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THE PLAYERS

RAY CAVIANO: Parlayed his success as disco’s most persuasive promo man into a high-powered but short-lived deal for his own RFC label at Warner Bros. Al­though cocaine abuse left him broke and in jail (and landed him on the cover of the Voice in 1986), he bounced back to become a perennial promotion man of the year, most recently with MicMac, the New York freestyle indie, which let him go in March. Since then, Caviano’s dropped from sight.

AUGUST DARNELL: Cofounder of Dr. Buzzard’s Original Savannah Band, lead­er of Kid Creole & the Coconuts, whose 1992 album, You Shoulda Told Me You Were… was their last for Columbia; since being dropped by the label, the group’s been without a deal. Darnell spends much of his time these days in Manchester, England “playing daddy” to two children, Ashley and Dario.

GLORIA GAYNOR: Crowned the first Queen of Disco after “Honeybee” and “Never Can Say Goodbye,” Gaynor orig­inated one of the most imitated disco formulas but faded from the American scene after “I Will Survive.” Her recent work has been in Italy (where her Gloria Gaynor ’90 album went gold), the Middle East, and Asia, but she says,”I think I’m ready to come home.”

LOLEATTA HOLLOWAY: One of the clubs’ fiercest ruling divas with “Hit and Run” and her Dan Hartman duet “Re­light My Fire.” She still rules, both as sampled wail and featured vocalist, most famously on Marky Mark’s “Good Vi­brations.” She’s currently preparing a second single for the Select label, due early fall.

DAVID MANCUSO: Mancuso turned his lower Broadway loft into a balloon-filled private party once a week in 1973, play­ing both DJ and host. One of the earliest New York membership clubs, the Loft has moved twice and shut down periodi­cally since then but remains a fixture, with Mancuso in full effect.

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RICHIE RIVERA: One of New York’s most popular and powerful DJs during the disco boom, Rivera last played at a club in 1983. He’s currently working in the chart department at HMV’s Upper West Side branch.

FELIPE ROSE: Discovered dancing on platforms in New York clubs by French producer Jacques Morali, Rose, a Puerto Rican Native American, was recruited to play the Indian in the Village People. Still wearing a feathered headdress, still singing “Macho Man,” he’s among the original People celebrating the group’s 16th anniversary this year.

KATHY SLEDGE: Thirteen when Sister Sledge was formed, Sledge “grew up in the business.” “We Are Family” remains the group’s anthem, but Kathy, now mar­ried with children, went solo last year with the album Heart.

JUDY WEINSTEIN: The cofounder of New York’s influential For the Record DJ pool in 1978, Weinstein is partners with DJ/remixer/producer David Mo­rales in Def Mix Productions which rep­resents Frankie Knuckles and Danny Madden.

BARRY WHITE: His “Love’s Theme” was the first disco single to top the pop charts in 1974. White continues his reign as king-size pillow talker with a retrospective boxed set on the market to be joined by a new album, Love Is the Icon, in September.

Categories
ART ARCHIVES CULTURE ARCHIVES From The Archives

Dead Again: Who Is Killing Andy Warhol’s Legacy?

Dead Again: Will Lawyers Destroy Warhol’s Legacy?
July 20, 1993

IF THE SITUATION WEREN’T SO PATHETIC, it’d be funny. It is, at any rate, a joke within the art world and the New York legal communi­ty. So on May 14, 1993, at just past 10 in the morning in the courtroom of Judge Eve Preminger, Otto’s niece, when the bailiff calls out the name of the next case — “Andy Warhol” — the specta­tors in the elegant, rosewood-paneled room, mostly lawyers waiting for their cases to come up, moan audibly. One even laughs. For while the name Warhol has come to stand for many things — a masterful artist, a cutting-edge filmmaker, a perceptive social crit­ic — these days in the legal business, or at least in Surrogate’s Court, it’s come to stand for an estate that’s rife with conflict, confusion, and outright animosity.

To make matters worse, it looks like the drama may have begun to affect the Warhol art market. At the spring auctions at Sotheby’s and Christie’s, Frederick Hughes, Warhol’s business manager for 27 years, put up 10 of his Warhols. When only two sold, the art world was stunned. Was this the beginning of the end of the Warhol name? Was Warhol not as important as art historians have claimed? Was Warhol the victim of the infighting between his estate and the foundation that bears his name, the Andy Warhol Foundation for the Visual Arts? “I think the end result of all of this could be the destruction of everything Andy devoted his life to,” says Edward Hayes, the estate’s attorney. Paige Powell, a Warhol friend, is just as pessimistic about the future of the foundation, now the centerpiece of Warhol’s world. “I don’t know if it’s salvage­able,” she says. “A lot of people who had a passion for it have gone on with their lives.”

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Not the attorneys. Even though Warhol did his best to avoid lawyers — “Andy never sued people,” Powell says — today an army of them is running up bills against his estate and foundation. On May 14 in Surrogate’s Court, nine showed up. They were Ed Hayes and his personal attorney; three attorneys representing Fred Hughes, the estate’s executor; three representing the foundation; and one from the attorney general’s office. For this court appear­ance, which lasted 15 minutes, the total legal bill, since trust lawyers charge “door-to-door,” was probably $10,000. The legal bills are rising because the parties involved — the estate, the founda­tion, and Hayes — are locked in a bitter battle over exactly how much Andy Warhol was worth when he died. At this court date, they were arguing about whether the accounting of the estate, which will contain a list of all of Warhol’s artworks and the amount each piece is said to be worth, will be made available to the public through papers that may soon be filed in Surrogate’s Court. Because much of the business of the art world is done in secrecy, there’s fear that a public disclosure of this nature could destroy the Warhol art market for years. What’s more, since the art world is such a close­-knit society, insiders know about the feud between the foundation and the estate. Like the stock market, the art market is directly affected by these kinds of extraneous influences. That’s why almost no one was willing to buy Warhol at the spring sales. If the accounting becomes public information — and there’s a chance it will since the Warhol Foundation is a tax-free, not-for-profit organi­zation — the value of Warhol paintings would plummet. Smart buy­ers could pick up Warhols at bargain-basement prices. “This is a long, well-planned-out act of destruction,” says Hayes. “From day one, this has been a struggle for the assets of the foundation, which are enormous. By the time the struggle is over, there won’t be a foundation left.”

At the May court appearance, the lawyers were also arguing about, appropriately enough, legal bills. Donovan Leisure, a firm hired by Hughes to do some work for the estate, was petitioning the court to release the payment of, according to court papers, the “reasonable amount” of $148,646.31 and an additional $5537.18 for legal services and “to approve the prior payments to Donovan Leisure of $403,382.93 for legal services rendered to the Estate.” That’s a total of $557,566.42 for work that the firm did between May 2, 1991, and April 1, 1993. One attorney alone, Thomas Melfe, logged 472.75 hours of work he claimed to have done. To the horror of the Donovan Leisure lawyers in court that day, Judge Preminger, a woman as stern and authoritative as her uncle, denied their petition, preferring to deal with all claims for legal fees against the estate at a later date. Hayes, after all, is the attorney of record for the estate, not Donovan Leisure. Should they continue to work for Hughes? the Donovan Leisure lawyers wanted to know. “Do whatever you think is appropriate,” Judge Preminger said. From the tone of her voice, you could tell she’s fed up with the case, which should have been settled months ago.

To understand this “sick family drama,” as Powell calls it — to figure out why Hughes and Hayes have had a falling out and why each is fighting with the foundation — you have to go back to the day Warhol died, February 22, 1987. He had gone into New York Hospital for routine gallbladder surgery, and, following the opera­tion, he was allegedly not properly attended; his body retained liquid while he was unconscious, and he, in effect, drowned in his own body fluids. (A malpractice lawsuit against the hospital was settled out-of-court for, reportedly, several million dollars in 1991; the money went to Warhol’s two surviving brothers.) In his will, Warhol designated as his executor Fred Hughes, a man who was much more than Warhol’s business manag­er. In 1968, when Valerie Solanas shot Warhol five times in the chest at point­blank range in the Factory, it was Hughes who gave Warhol mouth-to-mouth resusci­tation, saving his life. As soon as he got the call about Warhol’s death (Warhol had listed him as his next-of-kin on hospital rec­ords), Hughes telephoned Ed Hayes, an ac­quaintance of Warhol who would soon become famous for being the inspiration behind Tommy Killian, the ingenious law­yer in Tom Wolfe’s Bonfire of the Vanities. Within days, Hughes had formally hired Hayes as attorney for the estate. For his fee Hayes eventually agreed to be paid a flat 2 per cent of the value of the estate at closing, an unusual arrangement but not totally un­common with estates that may be large or difficult to settle. Soon the two men went about carrying out the wishes Warhol had put forth in his will. Warhol left a quarter-­million dollars each to Hughes and to War­hol’s brothers (John and Paul Warhola, who had kept the family name’s original spell­ing), but the bulk of the estate was supposed to be used to establish “a foundation for the advancement of the visual arts… in accordance with and under the provi­sions of the New York Not-For-Profit Law.”

Over the next 20 months, working out of the Factory at 22 East 33rd Street, the old Con Ed building where Warhol ran his art business and other enterprises — like Interview magazine — Hughes and Hayes began liquidating Warhol’s estate. At first, Hayes estimated the estate to be worth as little as $10 million to $15 million. Before long, it became apparent it was worth much more. There were stocks, bonds, and other finan­cial investments; property in Manhattan and near Aspen; an estate in Montauk; a townhouse on the Upper East Side; a Rolls-Royce; an extensive jewelry and furniture collection; a vast array of collectibles; artwork by other artists; Interview, and, the single biggest asset, Warhol’s own artwork — paintings, sculptures, drawings, silk screens, films, videos, photographs, prints, and on and on. The main goal of Hughes and Hayes became clear enough: they had to maximize the liquidation of the various parts of the estate and set up what Hughes decided to call the Andy Warhol Foundation for the Visual Arts.

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In those two and a half years, Hughes and Hayes went about divesting the estate. They sold off property. They sold The Andy Warhol Diaries for $1.2 million. (Hughes now says much of that money went to Pat Hackett, to whom Warhol had dictated the diaries each morning on the telephone for years.) They sold Interview to Peter Brant for $12 million; he paid $5 million down, with the rest to come later. (In a separate piece of litigation, the estate is suing Brant for the remaining $7 million. Because the sale of the magazine was handled through a company that the estate eventually closed out, Brant contends he no longer owes the money.) Then in April 1988, in a sale that attracted unparalleled media attention, Hughes and Hayes sold off much of War­hol’s personal effects in an auction at Soth­eby’s that generated $25.3 million. This money was used to fund the Warhol Foun­dation, which had been incorporated on May 26, 1987, but did not start to function until after the estate began to transfer mon­ey into it.

At the same time Hughes and Hayes were selling Warhol’s actual property, they were working to establish his reputation as one of the major artists of the 20th century. By doing this, they would solidify the value of the estate’s main asset: Warhol’s artwork. Hughes and Hayes took two actions. They paved the way for the Museum of Modern Art in New York to put on a retrospective of Warhol’s work, which played to overflow crowds between February and May in 1989. Then in September 1989 they finalized plans for their most ambitious venture, the Andy Warhol Museum. Envisioned as a joint project of the Warhol Foundation, the Dia Foundation, and the Carnegie Institute, the museum, to be located in Warhol’s hometown of Pittsburgh, is set to open in May 1994. When it does — and it’s on schedule — it will be one of the few — and without question the largest — single artist museums in the United States.

As these events transpired, a different drama was unfolding. Specifically, it in­volved the Warhol Foundation. According to Warhol’s will, the foundation was to be overseen by a board of directors consisting of Fred Hughes, John Warhola, and Vin­cent Fremont, a Factory regular who worked for Warhol for years. But to run the foundation on a day-to-day basis, Hughes decided to hire a managing officer, a posi­tion that, after some thought, he called president. While he looked at candidates, Hughes interviewed, at Paige Powell’s sug­gestion, Archibald “Arch” Gillies, a man who had worked for several foundations, including the John Hay Whitney Founda­tion. In the summer of 1988, Hughes hired Gillies as a consultant. By November 1989, Hughes had offered Gillies the president position, a job he assumed in March 1990. But within months, Hughes, a flashy, stylish entrepreneur who played a key role in the creation of Warhol’s empire, and Gillies, a conservative foundation administra­tor who had little experience in the art world, began to disagree violently. At this time, the board decided to expand from three to five directors, so Agnes Gund, now president of MOMA, and Brendan Gill, the New Yorker writer, were added in October 1990. Meanwhile, Hughes had become so fed up with Gillies that he was ready to fire him. Before he could, a turn of events took place that left Hughes much less powerful on the board. In December 1990, Vincent Fremont resigned from the board to be­come the exclusive agent for Warhol’s art, a move that would bring him 10 per cent of all Warhol artwork sold by the foundation. That same month, Gillies asked to join the board, and over Hughes’s ardent objections three of the four board members — Gund, Gill, and Warhola — voted to make Gillies a director.

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With Gillies’s position at the foundation shored up, Hughes couldn’t fire him. Hughes now claims Gillies had in effect bought Fremont off. Hughes was so livid that in a New York magazine article I reported in January 1992 he described Fre­mont, who’d been a longtime friend, as Benedict Arnold. If Fremont had not re­signed, there would have been no place for Gillies on the board. Warhol insiders be­sides Hughes would speculate that it was no accident that, after resigning from the board, Fremont ended up in the lucrative position of agent for Warhol’s art. “Arch was desperate to get on the board,” says Hayes. Critical of the process by which Fremont was selected, Hayes says, “There’s a serious question as to whether Gillies followed prudent business procedures in awarding Fremont this contract.” Gillies says, “Everything was fully discussed with Vincent, Fred, and myself — and then with the board. Everything was out in the open. We’re dealing with tax-exempt dollars, so everyone has the right to know about our operation and about all the major decisions we make.”

Once Gillies assumed power, the whole tone of the Warhol operation changed. In the beginning the foundation supported a wide variety of organizations, among them the Brooklyn Academy of Music, the Cen­ter for African Art, the Cunningham Dance-Foundation, the Duke Ellington Memorial Fund, the Metropolitan Transit Authority (for an “arts for transit” program), the Pub­lic Art Fund, and the Raindance Founda­tion. A major beneficiary was the New York Academy of Art, one of the few insti­tutions Warhol supported while he was alive. He actually sat on the academy’s board. But under Gillies, the foundation has cut back drastically. This year it will give out the smallest number of grants ever. Also, it has stopped funding groups Warhol himself would have been sympathetic to, for example, the foundation no longer supports the New York Academy. “Andy had all kinds of spectacular plans for things to do,” says Stuart Pivar, Warhol’s close friend who is also on the academy’s board. “It’s a shame his foundation doesn’t seek to fulfill them.”

“It should have been more like Grace­land, but tastefully done,” Powell says. “The way the foundation is now, it’s the antithesis of Andy’s spirit. It’s so dark and secretive over there.” While the foundation was becoming more insular, it was soon obvious what much of the secrecy was about: money. The estate was in the process of placing a value on Warhol’s holdings, a sum that would establish what Hayes would receive as attorney, Hughes as executor. Under New York state law, Hughes is entitled to 2 per cent of the estate at closing. There was just one problem. The figure the estate had come up with differed radically with the value the foundation believed Warhol’s belongings were worth. Based on a “blockage discount” estimate provided by Christie’s in 1991, the foundation contend­ed that Warhol’s artwork was worth about $120 million. The estate’s estimate, based on an appraisal by art expert and private dealer Jeffrey Hoffeld, was more like $500 million to $550 million. When additional monies raised through selling non-artwork assets were added, Hughes and Hayes ar­gued that the estate of Andy Warhol was worth about $ 700 million. The foundation countered that it was worth a lot less, only about $220 million.

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Why are these sums important? Precisely because they will determine the fees paid to Hughes and Hayes. If, for example, the estate is worth $600 million, Hughes and Hayes are each due $12 million. Hughes has already collected an advance against fees of $2 million. Hayes $4.85 million. This would mean that when the estate is closed out, Hughes would be owed another $10 million, Hayes another $7.15 million­ — for a total of $17.15 million. Since Gillies took over, the foundation has been steadily spending its cash reserve. Starting with some $26 million, the foundation now has, according to Gillies, “$10 to $12 million.” Even with $7 million in cash that is still in the estate, should the value of the estate be established at $600 million, the court could look to the estate’s beneficiary, the founda­tion, to pay off Hayes and Hughes’s contracts. “It was one of the richest, most promising arts foundations in the world,” Powell says. “Now it seems to be heading toward going under.”

Why is the foundation in financial trou­ble? There are many reasons. First, over the last two years, as the feud between Hughes and Gillies has become a distraction for the board, the Warhol operation has lost its focus on raising money, which it could have done by licensing Warhol’s image or selling off’ selected pieces of Warhol’s artwork. It did not help that in 1989 Hughes, who had been diagnosed with multiple sclerosis in 1988, became extremely sick. Sometimes temperamental because of, some suggested, the medicine he has to take for his illness, he could be abrupt with colleagues. In fact, one person with whom he had a falling-out was Ed Hayes. Though they had formed a relationship so close that Hayes made Hughes his daughter’s godfather, the two men began to disagree on how best to pro­ceed with the estate. Their conflict came to a head in November 1989. Since then, Hayes has continued to serve as the attor­ney for the estate, but the men barely speak.

As Hughes distanced himself from the operation of the board and the foundation, Gillies began to play a more vital role: the focus of the organization shifted from plan­ning for the future to maintaining the status quo. Between the time the foundation was founded on May 26, 1987, until April 30, 1990, the estate generated and contributed $32 million, of which $26 million was in cash, to the foundation. For the fiscal year 1991, the foundation generated no receipts on its own, only $1.9 million in interest on investments. In fiscal 1992, the foundation produced a mere $175,000, plus $1.5 mil­lion in interest. During the year 1991, the foundation did receive Warhol’s artwork from the estate. It was given an estimated $78 million in paintings, sculptures, and collaborative works in February, another $21.5 million in films, videotapes, audio­tapes, photographs, drawings, and prints in May. (These are the numbers with which Hughes and Hayes disagree, arguing their total is less than a fourth of what the art is really worth.) Between April 1990 and April 1992, besides accepting these transfers of art, the foundation generation little income. It did not, however, stop spending money.

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From May 1987 to April 1990, the foun­dation spent $1.3 million in administrative expenses while it gave out $6.8 million in grants, more than fulfilling its requirements to donate 5 per cent of its worth annually to maintain its status as a not-for-profit organization. But between April 1990 and April 1991, with Gillies in charge, expenses increased enormously. In that 12-month peri­od, the foundation spent $2.2 million in administrative expenses, almost double what the foundation had spent in the previ­ous three years. “When people say ‘ex­penses’ I don’t know what they’re talking about,” replies Gilles. “All the expenses were approved by the board.” One expense, payroll, jumped from $619,555 for the peri­od between May 1987 and April 1990 to $937,832 for fiscal 1991. Included in that amount was $136,697 for a retirement plan for select employees. (Gillies, now 59, qual­ified to have an amount equal to 20 per cent of his $189,000 annual salary put into this account; he can collect that money when he retires or when his contract expires in 1997.) While the foundation’s expenses skyrocketed during fiscal 1991, the organi­zation also continued to give away huge sums in grant money. In that one year, it issued $6.8 million in grants, just over the same amount it had given away in the previous 36 months. Fiscal year 1992 saw no letup. Administrative expenses reached $4.65 million — more than doubling the 1991 expenses. By now, payroll hit $1.7 million (of which $221,093 went into a retirement account). In addition, the foun­dation paid over $600,000 in professional bills, mostly to Carter, Ledyard, the law firm that had represented Gillies personally before he was hired by the foundation and now represents the foundation itself. In fis­cal 1992, the grant allocation dropped to $2.5 million. Of that amount $1,103,378 went to the Carnegie Museum in Pittsburgh for its effort to establish the Andy Warhol Museum. “The fact,” says Pivar, “that the foundation spent almost $5 million one year to give away $2.5 million is something I can’t even begin to understand.” Gillies has a different view. “I could have had a great balance sheet by not giving out grants and leaving all of Andy’s art down in the basement.”

In the 24-month period between April 1990 and April 1992, the foundation spent some $7 million in administrative expenses and gave out some $9 million dollars in grants. That would have been fine if the foundation had produced revenue. But while the Warhol organization spent over $16 million in those two years, it generated relatively little cash. The foundation had been given Warhol’s art, yet it was not in a strong position to sell it. First, the foundation had committed a large portion of the art to the Warhol Museum. (Ironically, that one donation took care of the foundation’s requirement to give away 5 per cent of its worth annually for upward of a decade, so, technically, the foundation could have avoided giving away that $9 million in grants.) Second, what was to become a significant roadblock had, by then, been set up by Ed Hayes. In May, 1992, after he had decided that Gillies was, in his words, “go­ing to run the foundation into the ground,” Hayes took an action that would affect fun­damentally how the foundation could do business. At that time, he filed a SCPA 2110 petition in Surrogate’s Court to fix his legal fees. It may have appeared on the surface as if Hayes were trying to look out for himself, and no doubt he was, but his move also called into question the very way the foundation under Gillies was doing business.

Hayes filed a SCPA 2110 — technically not a lawsuit but a request for a payment of fees — not only because he disagreed with the 1991 Christie’s estimate of the value of Warhol’s artwork, because he could tell that the foundation was unwilling to accept the Hoffeld estimate, but mostly because he saw the foundation making moves that, he says, would end up delaying the estate being closed out — and him getting paid — for years. “It became clear to me,” Hayes says, “that Arch was going to drag this out until Fred died or became incapacitated. I told Fred. ‘This guy is going to drag this out forever so that you’re silent.’ ”

Hughes’s response to Hayes’s action was wishy-washy. The foundation’s was not. Carter, Ledyard, the foundation’s counsel, argued in court that Hayes’s percentage contract with Hughes was not valid and that the value of the estate should not be considered when determining Hayes’s fee. The attorney general’s office, which has consistently sided with the foundation, went so far as to allege that Hayes commit­ted fraud. According to papers filed in court by David Samuels of the attorney general’s office, Hayes “engaged in fraud and overreaching in inducing the Executor to enter into the Retainer Agreement by falsely representing to the Executor that an executor’s commission is the customary fee in the State of New York for legal services rendered in the administration of a sub­stantial estate.” Samuels took this tack even though Hughes himself hasn’t charged Hayes with fraud. Says Hayes, “I would describe the attorney general’s position as a courtroom tactic that has probably backfired on them.” Significantly, in the sum­mer of 1992 Judge Preminger said that percentage contracts may as well be used dur­ing the liquidation of an estate since most trust law firms end up billing out a number of hours equal to a percentage of the estate anyway and that of course the value of an estate has to be considered when determin­ing fees.

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At one particular hearing last summer, Preminger did something else. She told all sides that she wanted the conflict resolved within a week. This would have forced the foundation to pay off Hughes and Hayes. Since the foundation didn’t have the mon­ey, Carter, Ledyard came back into court after a week and, instead of offering to negotiate, demanded a full accounting of the estate, which the foundation is entitled to under the law. A year later, that account­ing, based on Hoffeld’s estimate, is ready. Now, the foundation, a tax-free, not-for­-profit organization, is arguing that the ac­counting should not be made public. Re­gardless of Preminger’s decision on this issue, should the foundation not agree with the accounting, Carter, Ledyard can ask for a full trial. That would drag the ordeal out another year or more and cost millions in legal bills and expert witness fees.

Had the foundation settled with Hughes and Hayes last summer, as Preminger sug­gested, it could have ended the conflict and gotten on with the business of funding the foundation for the future. This way, if pay­ing off Hughes and Hayes doesn’t bankrupt the foundation, the litigation to prevent that payoff probably will. The foundation’s one salvation is the Warhol artwork it owns. Selling some paintings could raise money. But buyers, aware of the feud be­tween the estate and the foundation, are not willing to pay top dollar for Warhol. At the spring auctions, most were not willing to buy Warhol at all. They seem to be waiting for the foundation to go under so they can pick up Warhols for a fraction of what they’re really worth.

Meanwhile, the lawyers will appear again in Surrogate’s Court in July — and the legal bills are mounting. “Can you imagine what Andy would think if he came back?” Hayes asks. “He’d vomit his guts out. No, I think he would cry, especially over what this is doing to Fred. If Andy had to do it all over again, I think he’d say, ‘Just forget the whole thing.’ ”

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It’s an early afternoon in mid May and I’m having lunch with Fred Hughes in a sitting room of his brownstone. A year and a half has passed since I last saw him and in that time his multiple sclerosis has pro­gressed considerably. MS is known for be­coming worse if the patient is under stress. The stress of the past few years has obvi­ously taken a toll on Hughes. He has much less control over his body’s muscles, which harden, and become weaker, as the disease progresses. Hughes’s speech is slower than I remember it, his diction more slurred. As we talk, I find myself lighting one cigarette after another for him. “Light me up a fag, butch,” he’ll say. I can’t help but notice the contrast between how he appears now com­pared to the very first time I saw him years ago. Dark, handsome, immaculately groomed, he looked like a European aristocrat as he walked across the auction floor at Sotheby’s. Today, confined to a wheelchair, he needs the help of an assistant just to move from his wheelchair to bed. But de­spite his physical deterioration, he has not lost any of his mental faculties. In many ways the architect of the Warhol empire, he is still as cunning, clear-thinking, and busi­ness-wise as ever. Many art-world insiders have blamed Hughes for the recent Warhol debacle at the spring sales. Gillies believes that Hughes made a mistake by flooding the market with Warhols. The Warhols didn’t sell, Gillies claims, because there were too many of them to buy. “It’s a collector’s market,” he says. “When 10 or 12 paintings are put up at once, it’s not hospitable to the serious collector. They get nervous.”

I ask Hughes about the spring sales. “Of course,” he says slowly, his tone thick with irony, “it was a big flop. I was selling my favorite paintings so that I could make ends meet. I needed money. But they didn’t sell. It was worth it, though. I let people know I’m still out there.” He pauses as he drinks his coffee. “So,” he then adds wryly, “do you want to buy a Warhol wholesale? You’ve come to the right place.”

“How much of a discount?” I ask.

“Well, quite a lot,” he says. “It depends on what you want. Seriously, they’re avail­able, but as soon as the auction was over I got lots of offers. I certainly don’t want to give the impression that I’m stuck with a Macy’s basement fire-sale thing. No way, Joseé. If necessary, I’ll get out and sell my body on the street. Do we hear any comers for that? You’re gonna have to pay for it.” Finally, he gets serious. “It was my gam­ble,” he says. “The fact is, yes, I was sur­prised they didn’t sell. Then again, so was Sotheby’s and Christie’s.”

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Why didn’t they sell? “Because,” he says, raising his voice in mock anger, “people didn’t bid on them.” He waits. “There’s an enormous amount of speculation as to why. People are looking for a discreditation. A lot of your average millionaires — and some below average — who didn’t buy Warhol are happy to see that they were right after all.”

Because he needs money, couldn’t he use his executor’s fee, which he’ll receive when the estate is closed out? “Well, every little bit helps,” he says. “I’ve got to somehow pay my creditors. Laundry is not what it used to be here on the fashionable Upper East Side. So, yes, if you want to do me any favors you’ll say that Frederick W. Hughes certainly wants this estate to be closed.”

What’s his opinion of Gillies, the person he hired to run the foundation he set up? “Surely the man must have some idea of something else to do for a living.” Then he goes on. “Well, he married well. She’s [Lin­da Gillies] the president of the Vincent Astor Foundation. You know, just about the time I was going to dismiss him he engineered a strategy — he convinced Fre­mont to retire from the board — to become a trustee over my very calm objections to the other trustees. I don’t know what hold he had over the trustees at the time. I know what he was trying with most people. I was the only person with an objection.”

Do you ever feel like you’ve built a foun­dation that other people are now living off of? “Y for Yosemite, E for Ecuador, and S for — in this case — it starts with S and ends in T. Okay?”

Do you ever think about Warhol? “Yes, and I’ll tell you this,” he says, his voice becoming softer. “I really miss the old bug­ger. Dominique de Menil told me once that there are certain people in life, they never leave. They’re there. I feel that way about Andy. He’s still here in a million ways. I’ll be at the office and I’ll say, ‘Wait till that sonuvabitch comes in here. Am I going to give him hell.’ Then I’ll realize he’s not going to come in.” Hughes stops. “Our lives are financially, spiritually, and men­tally intertwined. What can I say?” ■

Categories
CULTURE ARCHIVES From The Archives MUSIC ARCHIVES NYC ARCHIVES THE FRONT ARCHIVES

Keep Dope Alive: Why the Hip Hop Nation Is Getting High on “The Chronic”

Blunt Posse: Why the Hip Hop Nation Is Getting High on “The Chronic”
June 22, 1993

Something has happened. The spliff, the holy weed of devout Jamaican Rastas, has mesmerized a generation of Black Ameri­can wannabe “rude bwoys” who are now talking about naturalness, even going back to God when they “take a likkle whiff ’pon di sinsemilla.” No more “suckin’ on the glass dick” — Crack “slangin’,” ya duds, is wick-wicky-wickable wack.

The hip hop nation is getting high on “the Chronic.” I see them everywhere, with their bald heads and edge-of-the-ass baggies, slitting the sides of cheap Phillies Blunt cigars­ — gutting and stuffing the cavity with sticky California skunk grass, Indica, Afghan, even Africa’s exotic Durban Poison weed.

“Blunts have made it fashionable to smoke pot again,” says Ilchuk, 32, a cross­bred Latino and first generation B-boy who grew up on da Loisaida. “Just about no­body in hip hop circles smokes crack or cocaine anymore. In the last two years, I’ve seen ganja make a big difference in terms of less kids smoking crack, angel dust, and all the other dangerous drugs.” Since he over­came a serious crack addiction six years ago, pot has been his only high. “The spiri­tual side of ganja was definitely brought to me by Bob Marley and Peter Tosh. I learned the hard way that not all drugs are spiritual.”

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Used to be that Black American kids would see me (a Trinidadian) on the streets, check out my dreadlocks, laugh, and say, “Hey Rastaman, teach me to build a spliff?” Now they’re puffing on their own macho blunts, blowing smoke rings through Flavor Flav gold teeth.

I am surprised, though I shouldn’t be. After all, what did homies do in the mid ’70s, after Kool Herc and other Jamaican DJs in the South Bronx taught them the art of toasting, rhyming over a rhythm track? Brothers took it, reinterpreted it, and rein­vented it to a beat, rhythm, and style of their own bigger-than-life reality. They cre­ated hip hop, a music that is loud, impos­ing, impossible to ignore.

Though they borrowed the technique of the Jamaican DJs, few of the rappers and little of their audience took up the spiritual­ity. But by the early ’80s B-boys began heeding the message of marijuana carried in reggae music. In September 1980, Mar­ley initiated the bond at Madison Square Garden, headlining with the Commodores and Kurtis Blow, then the big hip hop star. It was Marley’s last New York perfor­mance, and he stole the show — introducing his music and his ganja to inner-city Black America.

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There began a vigorous intermarriage of the ghetto musics of Kingston and the South Bronx, a phenomenon best epito­mized by Shinehead, Yellowman, and now Shabba Ranks and Mad Cobra. In 1985, Run DMC’s “Together Forever” declared: “Cool chief rocker/don’t drink no vodka/I keep a bag of cheeba in my locker.” Now rap groups like Cypress Hill are in the news for sporting hemp clothing as part of their call for the legalization of marijuana.

It’s easy to forget that Pot Prohibition and its black market, has lasted 50 years — much longer than the other Prohibition­ — and that previously the forbidden plant had been a normal cash crop, with many uses. “Ganja is from the earth, it’s natural, God made it. I can’t question it the way I question all these other man-made highs,” says Ilchuk. Reggae turned B-boys on to the natural high. Now they’ve pumped up the volume and taken it to another level — ­blunts, the Chronic.

But what else is to be expected of the B-­boy, ambitious, restless, eager to be recog­nized, screaming, “I am! I am!”?

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He licks and rolls a bigger, more formidable-looking bazooka than anything Marley, Tosh, or any rude bwoy ever devised. Ras­tamen have always built their joints like ice cream cones: Women stay in the other room while their lions gather to pass spliffs or cutchie pipes, and reason.

Now see the B-boys building their blunts, bigger and longer, and brown too, like a big Black dick. That’s macho, that’s rebellious, that says fuck you in a big way.

Watching them pass blunts around to each other, enjoying the same potent, male bonding Rastas share when they drum round a fire at a Nyabinghi ritual, I’m hav­ing flashbacks. I’m sitting with Bob Marley on a bed in his Essex House suite. He grins, passes me the fat end of a big spliff, and says, “Di herb mek I see with a clear inner eye.” I remember Peter Tosh, after his ar­rest for smoking a spliff on a Kingston-Kennedy flight, standing in a Queens court­room, bellowing, “I am the Prime Minister of Marijuana, brought here by Jimmy Car­ter to legalize the herb!”

“The turn to blunts was definitely influ­enced by rasta and reggae,” says Hershey, a 24-year-old nonsmoking B-boy from a Trinidadian family, who’s an A&R man for Freeze Records. “If it’s keeping kids away from harder drugs, it’s definitely a positive thing.” The next record his company will put out? A tune called “Who’s at the Door, the Buddha Man,” by Sham and the Profes­sor.

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I’m standing in front of Jah Life’s record shop on bustling Utica Avenue, in East Flatbush. Jah is a big Rastaman, his dread­locks stuffed into a big round wool cap like a soccer ball concealed on top of his head. He’s a venerated reggae producer with a 20-year track record of developing artists like Sister Carol, Barrington Levi, and Mikey Jarrell. I look him in the eye and throw him the hard ball: Do you agree that rasta and reggae music are responsible for the popu­lar resurgence of marijuana as the drug of choice for urban America?

I could have said “partly responsible,” but I wanted him to hear it the way he is bound to hear it, when pop culture’s cur­rent romance with rude bwoys and spliffs, B-boys and blunts — marijuana, sinsemilla, hemp, cannabis, ganja, kaya, weed, cheeba, Chronic — runs its course, or is extinguished; when the time comes, as it always does, to hang the prophets.

Like me, Life is street-bred, ghetto, a survivor. He senses danger and is on his guard. He recoils and looks away. When again he meets my eye, the atmosphere has changed between us. His is a calm and studied stare.

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I half expect him to say, Who the fuck are you, asking me some shit like that? The CIA? The FBI? Are you trying to stab me in my back, brotherrr?

But instead, he studiously says, “Me no really feel Marley and reggae have so much to do with it, cause nuff youth who never even heard of Bob Marley are now smoking blunts. Me have fi say television, news, and the movies contribute even more than Mar­ley and reggae music.”

Yes, there have been high-volume warn­ings about drugs over the past decade­ — warnings that double as advertisements. Nancy Reagan’s JUST SAY NO!!! The co­caine death of Len Bias. Surgeon General C. Everett Koop’s proclamations against cigarette smoking. Reverend Calvin Butts painting over cigarette ads. Heavy D, Pub­lic Enemy, and other rappers railing against malt liquors and other mind-altering ghetto intoxicants. B-boys, their minds blown from crack and angel dust, running crazed and naked through the ghetto. Such apoca­lyptic admonitions and examples did help drag B-boys away from cigarettes, malt li­quor, angel dust, freebasing, crack, cocaine, methamphetamines. Was there nothing left but those primitive earth men and their natural high?

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Still, people with dreadlocks want none of the praise and none of the blame. Life hesitates, then admits that he smokes, though much less frequently than he used to.

“All smoking, including ganja, ‘the holy herb,’ can be bad for the body,” the Dread explains. “It is better to boil it and drink it as tea. Don’t keep a blunt on you all the time, draw it and draw it until you lose the feeling, the enjoyment of it. Whatever you do, don’t abuse it.”