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Mario Cuomo: The Governor Looks the Other Way

It’s time we started taking Mario Cuomo seriously.

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

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

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

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

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

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

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

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

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

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

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

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

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Al Levine’s Thruway Dowry

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

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

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

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

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

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

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

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

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

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

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

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Betasoft Bombshells

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

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

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

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

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

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

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

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

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

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

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

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

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Second Time Around

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

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

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

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

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

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

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

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

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

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Loyalty for a Bagman

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

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

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

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

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

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

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

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

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

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Bersani Hangs On

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

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

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

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

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

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

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

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Highway to Heaven

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

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

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

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

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

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

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

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

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

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

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Goldstein’s Land Grab

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

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

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

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

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

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

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

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

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

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

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

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Andrew’s Answer

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

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

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

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

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

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

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Lease Lust

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

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

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

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

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

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

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

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

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

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A Sudden Reversal

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

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

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

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

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

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

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

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A Blast from the Past

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

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

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

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

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

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

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

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

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

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

The Rapid Rise of Andrew Cuomo’s Law Firm

Legal Eagle? 

The law firm that includes 28-year-old Andrew Cuomo, the governor’s son and top political adviser, and 33-year-old Lu­cille Falcone, who runs the governor’s campaign finance committee, is attract­ing top corporate clients that have major matters before state agencies.

Cuomo and Falcone, who have been dating since 1982, are partners in Blu­trich, Falcone and Miller, which has rep­resented Donald Trump, selected last December by the state’s Urban Develop­ment Corporation to build a new football stadium; William Zeckendorf Jr., devel­oper of several sites at the state’s Battery Fark City project; and Tishman/Speyer, a builder slated to supervise portions of the Times Square redevelopment proj­ect. The firm also represents a managing agent for George Klein, a prime develop­er selected by the state and city for the Times Square project. It is unusual for such developers to retain a five-partner, five-year-old law firm like Blutrich, Fal­cone and Miller, whose most senior partner is in his early forties. The firm’s representation of these clients has appar­ently never involved any interaction with state government, consistent with a deci­sion Andrew Cuomo says the firm volun­tarily imposed.

But sources close to the ongoing nego­tiation of a $123 million state-backed bond issue for Brooklyn Renaissance Plaza say that Falcone has represented Bear Stearns, the investment banking house that will float the bonds, in discus­sions concerning the proposed hotel and office project. Cuomo emphatically de­nied that the firm “appeared before any state agency” for Bear Stearns on this controversial project — which involves the state mortgage agency in a bond commit­ment five or six times larger than any it has ever made. But Cuomo pointedly would not deny that the firm represented Bear Stearns on the project. Though messages were left for Bear Stearns offi­cials Philip Cohen and John Giglio ask­ing about the Blutrich firm’s representa­tion on the hotel project, neither returned the calls.

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The Voice revealed earlier [“The Muss Fuss,” NYC, May 27, 1986] that the ho­tel’s developer, Joshua Muss, had re­tained Long Island assemblyman Arthur Kremer, chairman of the powerful Ways and Means Committee, to represent him in discussions with the state’s mortgage agency, and had also hired Eric Manes, son of the late Queens Borough Presi­dent, and Sid Davidoff, Donald Manes’s personal attorney. Another development firm, run by other members of the Muss family, employed the daughter of Brook­lyn Borough President Howard Golden. Golden and Manes supported the Brook­lyn Renaissance project.

The Blutrich firm, which recently relo­cated to a Park Avenue address, has been tied to the governor since its inception in 1981. One of the governor’s former top political aides and confidants, Jerry Weiss, formed the firm, but left it suddenly in December 1984, when his name surfaced in a state Investigation Commission probe of alleged influence peddling in connection with a state lease. Lucille Falcone joined the firm in 1983 while Andrew and her brother Neil joined it last year. A graduate of Albany Law School, Andrew’s only prior legal experience was a one-year stint in the Manhattan District Attorney’s office, where he did appeals work in robbery, rape, and larceny cases. He left in the spring of 1985 to become a partner at Blutrich, where he specializes in real estate and banking.

Avery Seavey, the son of Governor Cuomo’s handpicked chairman of the Battery Park Authority, also became partner a few months ago. Seavey’s father Robert and his mother Phyllis Mehler are now of counsel to Blutrich which once represented William Zeckendorf Jr. Officials at the authority point out that Zeckendorf was selected before Seavey was appointed in 1984, though Seavey’s board has approved four Zeckendorf leases since his appointment. (Seavey is reportedly planning to resign his Battery Park post.) Though Andrew Cuomo contended that the senior Seavey was not yet officially associated with Blutrich, Seavey’s old firm said he’d relocated there months ago, and he is now listed both on the Blutrich letterhead and the building’s directory. Lucille Falcone and the governor’s daughter Maria live in an apartment building at 401 Second Avenue, leased in 1973 for 75 years by Seavey from the New York City Educational Construction Fund.

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Governor Cuomo ended his own legal practice more than 10 years ago, when he was first appointed to public office, and has personally spearheaded unsuccessful reform legislation this year targeted at forcing legislators to disclose any representation by their law firms before state agencies. In recent weeks the Cuomo campaign has attempted to force the gov­ernor’s Republican opponent, Andrew O’Rourke, to disclose his client list going back more than a decade because of al­leged conflicts between O’Rourke’s pri­vate practice and his prior post as the Westchester county legislative leader.

While refusing to make a similar full disclosure of his own clients, Andrew Cuomo, who is managing the campaign against O’Rourke, insisted that he had not even told the governor who his clients were. Cuomo argued that if he were to reveal in a newspaper story who his clients were, that list would be seen by state commissioners, who might then feel pressured to give those clients preferen­tial treatment. (Two top state develop­ment officials who have dealt with Blu­trich clients told the Voice they had no idea that the firm represented the devel­opers they were negotiating with.)

Cuomo also argued that he could not rule out representation by his firm of all clients who have any kind of state busi­ness because such a bar would eliminate most potential clients. Cuomo said that any story about his firm’s clients would be “malicious” and would demean the legal ability of his partners and himself by suggesting that clients come to it only because he is the governor’s son.

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William Stern, who has become a sharp critic of the governor after running Cuo­mo’s 1982 campaign finance committee and serving as the administration’s first president of the Urban Development Corporation, says that he repeatedly ran into questions about the relationship of the Blutrich firm to state government. When Stern resigned from UDC in March 1985 — shortly before Andrew joined Blutrich — he went to the governor to the complain about the firm. “I expressed my concern,” says Stern. ”I told him that I had gone into UDC to clean it up and that people had said then that I was just forcing out the old people to put in our friends. I told him that I did not come into government to shill for a law firm.” Stern says the governor reacted with “great anger” to his charge and asked: “How dare you say something like that?” Governor Cuomo was not avail­able for comment about Stern’s recollec­tions, though Cuomo aides have depicted Stern as an embittered enemy now tied to the Republican right.

(Ironically, the chief target of the Cuo­mo/Stern clean-up campaign at UDC, its former president Richard Kahan, now works for developer Martin Raynes, an­other Blutrich client. Raynes is managing a Park Avenue building for developer George Klein and retained the Blutrich firm to handle the coop conversion.)

Stern cited three instances of the firm’s intrusion in state matters. He said that Falcone called him in 1984 to ask “why I was pushing Zeckendorf out of the 42nd Street project.” Stern says he favored selecting an experienced hotel de­veloper and operator rather than Zecken­dorf and explained that to Falcone. Sources close to the Zeckendorf organiza­tion confirmed that the company had re­tained the Blutrich firm sometime in 1984 to work on subsidized housing proj­ects and that the representation ended in September 1985. According to Stern, Jerry Weiss called him to push a client interested in a contract to build an up­state UDC project. Neither Falcone nor Weiss, who has moved upstate and no longer practices law, returned Voice calls.

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The third episode involved a call in December 1984 from Donald Trump, who allegedly asked Stern if he ought to re­tain Falcone. Trump said he had met Falcone because she was running the gov­ernor’s fundraising dinner dance and Trump was a member of the dinner com­mittee. “Judging from the things Trump said in the conversation, he was asking if he should retain the firm based on their influence, not their legal capacity. I told Trump that I don’t recommend lawyers,” Stern claimed, but he did recall praising Falcone’s legal ability. According to Stern, “he didn’t seem interested in that.”

[Unclear] sole source deal with Trump to develop a new football stadium, which would ulti­mately be approved despite costing the city and state $150 million. While An­drew Cuomo claimed in one interview to know nothing about Stern’s conversation with Trump, Stern says that Andrew called him shortly after the talk with Trump and thanked him for compliment­ing Falcone. In a later interview, Cuomo refused to respond to any of Stern’s alle­gations, insisting that Stern put the charges in writing.

Sources close to Trump confirmed that he began what they called “a continuing relationship” with the Blutrich firm shortly after this call — sometime before Andrew joined it. While it is unclear what Blutrich et al. have done for Trump, and whether any of the work occurred while Cuomo has been with the firm, the repre­sentation has apparently not involved state business. The firm is currently slat­ed to work on Trump’s grand scheme for the West Side — Television City — which will require a number of state transporta­tion and environmental decisions.

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While head of UDC, Stern appointed Trump to the state’s Sportsplex board and then designated him, without any competitive bidding, to build the sta­dium. This was reversed by Stern’s successor, Vincent Tese, who is now the governor’s economic development czar, UDC president, and a close political sup­porter and adviser. Tese, however, did approve Trump’s stadium project after receiving competing proposals. He also executed a plan with Trump that Stern says he would never have approved — giv­ing Trump eventual ownership of the land acquired in the state’s condemna­tion proceedings for the stadium.

But, most importantly, Tese and the state Sportsplex director William Matti­son testified for Trump during the recent antitrust suit brought by Trump’s United States Football League against the Na­tional Football League (the governor himself was listed as a potential witness, but did not testify). Stern charges that the state “joined Trump’s lawsuit strate­gy,” designed to force a merger of the USFL and the NFL so that Trump’s New Jersey Generals would become the NFL franchise in the stadium he would build in New York. Tese’s extraordinary testi­mony, combined with that of other wit­nesses at the trial, revealed that the state met virtually none of the conditions laid down by New York Jets owner Leon Hess that would have enabled the team to return to New York. The permanent depar­ture of the Jets created the opportunity for a Trump NFL franchise in the new stadium.

Tese, who says he had no idea that Trump or any other developer doing business with his agency used the Blu­trich firm, told the Voice that he “would have been happier than a pig in Manila” if Trump’s team had gotten an NFL franchise and moved to a New York stadium, just that it was not a planned [unclear].

[Note: the bottom line — above — was cut off]

Categories
From The Archives IMPEACHMENT ARCHIVES

Donald Trump’s Seduction of Mario Cuomo

The Seduction of Mario Cuomo
January 14, 1992

The most disturbing mystery surrounding the saga of Donald’s brief career as a football phenom was the questions it raised about his curious, yet unmistakably compelling, influence at the highest levels of the Cuomo administration. Vincent Tese was no renegade commissioner, in fact no one in Mario Cuomo’s government was in closer touch with him. And the Urban Development Corporation’s supine performance for Trump had its equivalents in other state agencies on matters wholly unrelated to the stadium, especially at the State Transportation Department, which championed Trump’s agenda in planning improvements on the West Side Highway, adjacent to Donald’s 60th Street yards.

Donald had long had a special knack for ingratiating himself with public officials, but Mario Cuomo was not just another inviting political target. Donald’s penetration of the Cuomo inner circle was a textbook case in seduction, and his compromising relationship with the administration would last even into the months of Trump’s collapse in 1990. Other than Tese’s golf dates with Donald in Florida and New York, there was little of a personal touch to the mutually beneficial Cuomo/Trump arrangement. It was all business.

What made Cuomo such an unusual government target for Trump was that when he defeated Ed Koch for governor in 1982, he ran against virtually every monied interest in New York politics, most of whom, like Donald, rallied to Koch because of his 30- to 40-point lead in the early polls. And almost from the moment he became governor, there was an extraordinary undercurrent about the dignified and brilliant Cuomo that marked him as a man who might be President. His speech at the 1984 Democratic Convention transformed this onetime unarticulated presidential murmur into so persistent a question it became, both at home and occasionally across the country, a Democratic preoccupation. This national fascination helped Cuomo become, through the eighties and into the nineties, the master of New York politics, isolated from the pack by his deliberate hermetic style, a recluse in Albany whose intelligence and rhetorical passion were seen only in glimpses.

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Part of Cuomo’s above-the-fray appeal was his religion. It wasn’t just that he was a Catholic; his predecessor, Hugh Carey, was Catholic enough to have twelve children, yet no one ever thought of him as a man to whom morality was a mission. Cuomo publicly wrestled with the Lord, weighing the heaviest questions of life and death as if it was the responsibility of a leader to help the people to understanding. He talked soaringly about values. He invoked Saint Thomas More as his guardian, a man who died for a principle. This spiritual quality, combined with the hometown presidential hopes that seemed to last forever, insulated him from inspection and criticism like no other public figure in the state.

From the beginning of the Cuomo reign, the insiders who bankrolled and benefited from the government game were studying the new Albany team, looking for weaknesses, waiting for messages, hunting for opportunities. They read every signal, interpreted every nuance, and none did it better than Donald. Figuring Cuomo out was a riddle for Donald, finding a path to him was a necessity.

Trump knew he had a bit of history going for him. In 1958, Mario Cuomo had joined his first law firm — Brooklyn’s Comer, Weisbrod, Froeb and Charles. Senior partner Richard Charles, who became Cuomo’s mentor at the small firm, had already been representing Fred Trump for decades, and Cuomo was assigned as a young associate to help with the Trump work. Fabian Palamino, then a young associate with Cuomo who became his counsel as governor, remembers their travels out to Fred Trump’s headquarters on Avenue Ζ for business lunches at which Trump dished out the cheese sandwiches himself.

When Cuomo became Hugh Carey’s running mate in 1978 and was elected lieutenant governor, Trump contributed $4000 to his minuscule campaign committee. While Trump had backed Koch in the 1982 race, he’d called Cuomo’s old friend and finance chairman, Bill Stern, on October 11, 1982, and made a $3500 donation for the general election.

Trump did not contribute again to the Cuomo committee until November 13, 1984, a month after the stadium project was approved and a month before he submitted his own plan. Several Trump business entities combined that day to give the Friends of Mario Cuomo $15,000 — making Trump one of the top donors at Cuomo’s annual fund-raiser. Cuomo had personally approved Trump’s invitation that August to serve on the campaign committee’s board of advisers. The board was formed as “a permanent finance committee” of thirty to fifty prestigious individuals, from every major region and industry in the state, to raise a minimum of $30,000 each at Cuomo’s dinner.

But the contributions were merely door openers. Donald was looking for the right insider who could get him beyond access. All he had to do, it turned out, was look at the top of the governor’s fund-raising apparatus, just as he had in 1975 when he recruited Carey’s finance chief, Louise Sunshine, as a lobbyist.

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Bill Stern had long since stepped down as the head of the Friends committee, which he’d formed way back in 1978 to help pay off the costs of Cuomo’s losing mayoral campaign the year before. Stern, who stopped fund-raising for Cuomo when he became head of UDC, was replaced at the campaign committee in 1983 by Lucille Falcone, a thirty-year-old lawyer so unknown in the circles that fund political campaigns that she was seen as merely an appendage of the governor’s office. Falcone had surfaced publicly in early 1983, when she was hired by Stern at UDC, a job she quickly resigned when news stories described her as the girlfriend of Cuomo’s twenty-five-year-old son, Andrew. She then scurried back to her law firm and took over the Friends committee. It was Falcone who recommended that Trump be named to the board of advisers in a letter to Cuomo.

Falcone was the only person to have worked at both of Mario Cuomo’s law firms. She was a young associate at the Charles firm in Brooklyn, recruited from law school in 1976 by Cuomo’s close friend, Pete Dwyer, the treasurer of his 1977 mayoral campaign. In early 1981, she was asked to join a new firm that had just been formed at Cuomo’s request by Jerry Weiss, who had been Cuomo’s special counsel as lieutenant governor. Cuomo encouraged Weiss to put the firm together so he would have something to fall back on if he lost the gubernatorial campaign.

The small firm that the thirty-eight-year-old Weiss assembled was intimately connected with Cuomo from the beginning — law student Andrew worked summers there, the campaign finance committee met there, and the firm’s biggest client became the campaign’s most generous donor.

Shortly after Cuomo won his astonishing victory, the firm was recast with two new partners as Weiss, Blutrich, Falcone & Miller and began to prosper quietly, though every one of its partners was only “30 something.” Andrew joined the Cuomo administration as a $l-a-year special assistant and soon became the second most powerful state official, but Cuomo insiders openly anticipated that he would soon wind up at the family firm, and he never denied it. He’d begun dating Falcone in 1982 and worked closely with her on the annual dinner dances in 1983 and 1984. Though she frequently worked round the clock on the committee’s activities, the struggling new firm was generously understanding about her unpaid efforts.

A few days after Trump’s December 1984 meeting with Cuomo about the stadium, Bill Stern got a surprising call from Donald about Lucille Falcone’s little law firm.

“Bill, I saw Lucille Falcone at this fund-raising meeting and I got the feeling I should retain her law firm,” Donald told him. “What do you think?”

It was an awkward moment for Stern, who had been bickering with Andrew and Mario Cuomo for months, complaining, among other things, about what he saw as the increasingly disturbing signs of the Weiss firm’s attempts to influence state agencies. He had informed them about Weiss’s call to him raising questions about the propriety of a UDC bid process on an upstate job where Weiss represented a client who’d lost the contract to another builder by more than a million dollars. Stern had also told the Cuomos about Falcone’s call to him claiming that he was excluding big-time developer Bill Zeckendorf from UDC’s gigantic 42nd Street development project. Zeckendorf had retained the Weiss firm in 1984, the developer later conceded, on the recommendation “of somebody who knew their way around the Democratic side of state politics” because “we thought they could help us politically.”

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Stern also recounted to the Cuomos the insight of another 42nd Street developer, frustrated at the small slice of the project he was getting. “I know a way I can get a bigger cut,” the developer told Stern. “Hire Jerry Weiss’s law firm.”

As Stern saw it, Trump was hardly alone in picking up the Cuomo signal. “I don’t recommend law firms,” Stern told Trump. “But Lucille Falcone is a good person and a fine lawyer.” It was the best compromise Stern could work out in his head, but it still troubled him, He had already had one bitter scene with Mario Cuomo about the firm, back in November, with Stern demanding that Cuomo distance himself from it and Cuomo responding: “You’re holier than everyone else, Bill. You judge souls; I don’t.” Stern had been shocked at the personal attacks Cuomo had heaped on him that day — related and unrelated to the law firm controversy. He decided to get out of the administration, but he wanted to get out cleanly, without a war with Cuomo.

Forty-five minutes after Stern’s conversation with Trump, Andrew Cuomo called him. He said that he’d heard Trump had called about the firm and asked Stern what he’d said. When Stern told Andrew that he had praised Lucille’s legal ability, the young Cuomo said, “Lucille told me you said that.” Andrew thanked him, and said: “I respect you very much.”

Unbeknownst to Stern, a storm was stirring inside the firm. Not only would Andrew soon become a partner, he would replace Weiss himself. Stern first learned about Weiss’s departure from the governor himself, who in late December casually mentioned to him: “Jerry’s leaving. Did you know he made $800,000 this year?” When Weiss left, the State Investigations Commission was examining some of his activities on behalf of upstate developer Shelly Goldstein. The allegation was that Weiss had used his influence to dramatically reduce the value of a state lease in a building that Goldstein was trying to buy. The state official who ordered the lease reduction — which was theoretically done to force the owner to sell to Goldstein — was Andrew Cuomo. After Andrew joined the firm in May of 1985, Goldstein would become his principal client and partner in real estate and banking ventures. (The investigation closed without any findings against Weiss or Andrew.)

Shortly before twenty-five-year-old Andrew became the young firm’s youngest partner, Trump quietly retained it. His relationship with the firm would last for almost two years, though it did not surface publicly until August of 1986. The legal work it did for Trump remains unclear, apart from Andrew Cuomo’s concession that it represented Trump in lease negotiations involving possible commercial tenants in the stores planned for his West Side yards project. When Trump’s retention of the firm did hit the newspapers in 1986, Trump’s response was: “They are now representing us in a very significant transaction.”

Though Andrew insisted in later interviews that the firm did not interact with state officials on behalf of clients, Falcone did just that for Trump on another project. She arranged and attended a July 21, 1985, lunch at the World Trade Center with Trump and Sandy Frucher, the president of the state’s Battery Park City Authority. During the lunch, Trump expressed an interest in being designated for a choice hotel site on the Battery Park site, just off Wall Street. Frucher urged him to bid when a request for proposals was announced, but Trump was looking for an inside track. When Frucher didn’t offer it, Trump didn’t bid.

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Donald was not the only one with an interest in Trump projects to retain the Cuomo firm. Abe Hirschfeld, Trump’s limited partner on the West Side and an increasingly close ally, also hired the firm in November 1985 to represent him in a disputed real estate closing. Hirschfeld publicly said in a later interview that he thought hiring the firm was a way “to get in the good graces with the governor.” While Andrew Cuomo and his partners have attempted to lowball Trump’s business with the firm — never offering a total for him or Hirschfeld — the fact is that the unwanted publicity about the long-secret retainer killed the relationship before the “significant transaction” Trump cited could close, obviously limiting the Cuomo firm’s fees.

The retention of the Falcone firm was hardly Trump’s only Cuomo move. In November 1985, Donald hired Albany lobbyist and former transportation commissioner Bill Hennessy, who’d just resigned as chairman of the state Democratic Party. When Cuomo installed Hennessy as head of the party, the Times saw it as an indication of the governor’s “intent on staying deeply involved in organization politics, since Hennessy has never held a party post and thus has nothing to fall back on other than Cuomo’s support.” On a $2000-a-month retainer, plus a $500 per diem rate, the Hennessy firm’s main job for Trump was to lobby some of the very transportation officials he had appointed for favorable rulings on an array of West Side yard issues.

As potent as the Falcone and Hennessy combination was, Donald did not stop there. In the spring of 1986, Trump hired UDC’s in-house counsel, Susan Heilbron, who had worked extensively on the stadium project for the agency. The two first discussed the job while they sat together in December 1985 during the final stadium designation talks. Well known at the top levels of the Cuomo administration, Heilbron helped engineer the selection of her best friend as Tese’s new counsel, Joanne Gentile, an attorney who had worked under Trump attorney Harvey Myerson at Finley Kumble.

Trump also tried, over a period of six months in 1986 and 1987, to lure Sandy Frucher into his lair. Frucher, one of the governor’s half dozen top advisers, eventually declined, after countless courting sessions.

On Falcone’s recommendation, Sive Paget & Riesel, the ten-member environmental law firm Trump retained for the lucrative West Side yards approval process, hired Richard Gordon, the executive director of the Friends of Mario Cuomo. Gordon, who had worked with the Cuomos since the 1982 campaign, remained director of the campaign committee, even though his law firm had a multiplicity of matters before state agencies.

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Trump’s most unusual reach, however, was for a very special driver and bodyguard, Joe Anastasi. A state trooper assigned to UDC, Anastasi had been Mario Cuomo’s personal bodyguard for years, starting when Cuomo was lieutenant governor, and had accompanied him throughout the 1982 gubernatorial campaign, starting most mornings in Cuomo’s kitchen in Queens over a cup of coffee. After Cuomo became governor, Anastasi was on his security detail in New York City until, in late 1984, Bill Stern told Cuomo that his agency needed an investigator to do background checks on state contractors and Cuomo suggested Anastasi. Anastasi worked at UDC for three years, but was seldom seen there, reportedly because he was “in the field” at UDC construction sites.

In 1986, Anastasi began accompanying Trump on various trips across the country. He told friends he was setting up his own security business and that the Trump work on his résumé would help him attract business. Top Cuomo officials, including the governor himself, learned of Anastasi’s Trump duty and viewed it as a conflict with his UDC post. He was told to end it, and he soon resigned from state service.

In addition to surrounding himself with everyone from the governor’s son to his bodyguard, Donald tried to score political points with Cuomo on several fronts. He let it be known to the Cuomos that he’d been recruited by state GOP boss George Clark to run against the governor in 1986, and he went public in 1987 with a highly questionable account of a meeting he had with national GOP kingmakers, including Roger Stone, the GOP consultant Trump had hired as a lobbyist. They had supposedly tried to convince him to oppose Cuomo in the next election, which would not occur until 1990. In both instances, of course, he’d said no. He also cooled down his irate partner, Abe Hirschfeld, who ran for lieutenant governor in the 1986 primary but was knocked off the ballot by Cuomo. Hirschfeld was considering backing Cuomo’s GOP opponent and assailing Cuomo publicly, but Trump convinced him not to.

More important, though, than any of these local political gestures was Trump’s willingness to talk openly and favorably about Cuomo’s possible presidential candidacy. From the governor’s perspective, the public praise of a Republican icon like Trump had a national impact, enhancing Cuomo’s plausibility as a pro-business candidate. Of course to Donald, his calculating praise of Cuomo had nothing to do with the governor’s public performance. Trump had not even bothered to vote in either of Cuomo’s gubernatorial elections, nor when Cuomo ran for mayor in 1977.

The final thread connecting Trump and Cuomo was Tese himself. Tese’s business connection was not with Donald directly, but with Donald’s lawyer. Neither Harvey Myerson nor Tese disclosed — to the NFL or to the federal court in the antitrust case — that Tese was a private client of Myerson’s firm. In fact, Myerson had the nerve to object, in a sidebar conversation with the judge, about a small retainer one of the NFL firms had with UDC, charging that it “raises a potential or actual concern for impropriety.” But he misled the court about his own UDC work — claiming it was “unrelated” to the stadium when he had a contract to handle the stadium bond issue for the agency — and failed to report at all his deeper, private ties to his witness, Tese.

More surprising was that Myerson’s firm decided to waive payment on $122,000 in fees due from the Tese companies in 1986 — the same year Tese testified — and wrote off another $157,000 the next year. The bankruptcy trustee in the Finley Kumble case ultimately labeled these forgiven fees — as well as waivers granted other favored clients — a “fraudulent transfer” of the firm’s rightful earnings. Indeed Myerson was personally involved in some of his firm’s legal work for Tese.

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The bankruptcy trustee eventually brought a lawsuit to recover these fees plus interest, and lawyers for Tese’s companies responded by contending that Myerson’s firm had agreed to the write-offs because it had overbilled the companies. The trustee’s suit wound up going nowhere — with the Tese firms assailing Myerson’s “inflated, overstated and padded” billings and the trustee insisting that compliance with discovery demands could not be made without violating the lawyer/client privilege. But what appeared to be beyond dispute in this two-year litigation was that in the midst or aftermath of Tese’s USFL testimony, the Myerson firm was slashing the fees it once claimed Tese’s companies owed it.

What was particularly disturbing about the Myerson/Tese intrigue was that Tese’s companies got this apparent $279,000 write-down during the same period that Tese’s UDC was awarding the firm $288,000 in new retainers for bond counsel work and was greatly increasing its payments on a suit involving Dow Chemical that had begun before Tess arrived at the agency. Myerson’s UDC earnings on the Dow case soared from roughly $200,000 under Stern to $4.4 million under Tese. Top UDC staffers at the time reportedly went to Tese and complained about Myerson’s bills, but Tese did nothing. While the lawyers for Tese’s companies would later claim in the bankruptcy case that Myerson’s firm had not only overbilled them, but had acknowledged it and reduced the bills, the companies and UDC continued to use Myerson after the collapse of Finley, Kumble, moving on to his new firm with him. Tese even insisted in a 1990 interview — shortly before Myerson’s indictment on overbilling charges — that Myerson had never overbilled his agency, a contention belied by counts in the subsequent indictment which specifically involved UDC overbilling. The confluence of these factors left Tese in a classic conflict of interest position — lending the state’s credibility to his own personal attorney by testifying inaccurately as his witness in a major lawsuit, as well as hiring and allegedly overpaying that lawyer on the public tab, while accepting waivers of at least part of his company’s private fees.

(Confronted with these appearances of conflict, Tese insisted that he paid his share of the fees but that his partner, James Sinclair, refused. Asked to provide documentary evidence of the payment, he declined, and Sinclair refused to discuss it. While Sinclair was the only individual defendant cited in the bankruptcy trustee’s suit, Tese was co-managing partner of the companies named in the action. It is difficult to understand how Tese could have paid all of his share of the billings since the trustee asserts that the companies he and Sinclair owned did not make payments at all for the 1987 and early 1988 work. Though Tese was no longer involved in these inoperative companies, he concedes he would have been partially liable if they lost the lawsuits that the Myerson firm was handling at the time.)

The casual ethical judgments implicit in this disturbing intertwine occurred against the backdrop of all the other Trump ties to the Cuomo inner circle. In fact, the Myerson firm itself — at least at the point in 1986 when Tese testified — was part of the Cuomo circle; Bill Hennessy was its Albany lobbyist as well and Andrew Cuomo would personally spend several weeks during this period at the firm’s office, negotiating a major real estate deal with Myerson’s closest friend in the firm. Through Myerson, and all his other levers of compromise, Donald had managed to insinuate himself, almost imperceptibly, within the Cuomo government, and the benefits of this relationship would extend far beyond the doomed stadium.

On the West Side, for example, Donald’s grand Television City design required the approval of several state agencies and, from late 1985 through 1987, Donald was methodically lobbying for special favors, especially at the Department of Transportation. Trump wanted changes in DOT’s planned rehabilitation of the elevated West Side Highway, which ran over the 60th Street site along the waterfront. When the site was owned by another developer a couple of years earlier, DOT decided that a partially built and never-used southbound ramp off the highway at 72nd Street — the tip of the Trump site — had to be removed entirely for safety reasons. Donald wanted it retained and converted into a permanent ramp running right into the retail mall he planned to build underneath his office and residential tower complex. Not only did DOT back the new plan, but the agency was also willing to let Donald pay for only part of it, while the other developer had been required to finance the entire cost of removing the old structure. The ramp — which state memos freely conceded “was needed” for Trump’s project “but would otherwise not be needed” — was designed to deliver customers to the very stores whose leases Andrew Cuomo’s law firm was trying to negotiate. When the plan was presented to the federal highway officials who were funding the rehabilitation project, they warned DOT that the ramp was so clearly designed to benefit the Television City project that the traffic and other impacts of both TV City and the highway improvement would have to pass environmental review standards to be built. That warning killed federal funding for the ramp.

DOT also approved a new connection from a northbound ramp off the highway directly onto the boulevard that Donald planned to run through the heart of Television City. The state’s anticipated widening of the West Side Highway was likewise designed to meet Trump concerns, with the new roadway extended exclusively on the western, waterfront side, rather than on the east, where Donald wanted to construct his project as close to the highway as he could. This decision meant that the widened road would hang out over 1.4 acres of the already small park that Donald had promised along the water, reducing the opening to the sky by fourteen percent. Trump’s planned southbound ramp would have also cut into the planned park, narrowing it to a mere thirty feet in width — barely the size of a sidewalk — in some places. And while the state had removed that ramp from its federal rehabilitation agenda because of the objections raised in Washington, it quietly encouraged Donald to construct the ramp on his own before the rehabilitation formally started. DOT so closely tracked Trump’s desires for the site that internal memos acknowledged the agency’s acquiescence but observed that this high level of cooperation was being extended “as discreetly as possible.”

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Trump’s success with DOT was largely a result of the lobbying of Hennessy. In fact, John Shafer, the assistant commissioner at DOT who helped steer much of the Trump plan through the agency, was so close to Hennessy that when Cuomo named Hennessy to chair the Thruway Authority in 1987, Hennessy made Shafer the Authority’s executive director. Lucille Falcone was also involved with the West Side planning, occasionally attending the weekly meetings Donald chaired of his West Side working group. While there was no indication that either she or Andrew played any personal role with DOT, there are memos indicating that the governor’s top staff at the Capitol was monitoring very carefully the department’s handling of the roadway issues.

The Grand Hyatt, the midtown hotel that UDC had helped Donald build in the ’70s, also got its own special state service in the Cuomo years. The benefactor again was Vincent Tese, whose agency was still the Hyatt’s landowner and was required to collect the hotel’s annual property tax payments and pass them on to the city. When Trump suddenly slashed his payment by 80 percent in 1987, UDC just accepted it without raising any questions, though it had a right to audit the Hyatt’s books under the terms of the lease. Several months later, the city asked UDC to allow its auditor general, Karen Burstein, to audit the hotel’s paltry $667,000 payment, and UDC went along. The city audit revealed that Trump had shortchanged the city by $2.8 million.

In meetings between city and UDC officials, however, Tese and his counsel vigorously resisted the audit’s findings and its release. Though UDC was merely acting as a pass-through collection agent for the city, Tese formally notified the city that he had hired an independent accounting firm “to review the audit.” His counsel adopted Trump’s position that the public release of the audit “would breach the mandate of confidentiality” in the lease. The tensions between Tese and the city were so great that Koch, Burstein, and other top staff didn’t tell UDC until the last minute that they were going to announce the audit findings at a City Hall press conference. Tese responded by criticizing the audit in public statements to the newspapers, his spokesman saying that they wanted an outside accountant to determine that the city’s charges were the result of sound accounting practices, not of “a special political agenda.”

Tese even refused to serve a demand notice on the hotel for payment as requested by the city, forcing the city to threaten legal action against UDC. The city, which calculated that Trump had already saved $60 million in taxes since the Hyatt opened, was adamant, and Burstein demanded to know “whose side” UDC was on at one heated meeting. Tese finally had to give in, agreeing to seek payment from Trump.

In the middle of the audit dispute, Lucille Falcone hosted the annual Cuomo fund-raiser at the Sheraton. Trump bought the most expensive ringside table, and Tony Gliedman, the former Koch housing commissioner who had become Donald’s main emissary on the audit issue, spent the night mingling with a crowd that included the governor, Tese, and Andrew. Trump was Cuomo’s biggest 1989 corporate giver, donating $25,000.

A few nights after the fund-raiser, Donald went to a second, private, Cuomo affair — Andrew Cuomo’s birthday party at a midtown pub. The party was cohosted by one of Andrew’s closest friends, Dan Klores, the fast-talking aide to public relations czar Howard Rubenstein, who had handled the Trump account for years. But Donald barely spoke to Klores at the party, instead huddling with Andrew for a half hour. Andrew would later claim that it was the first time he’d ever met Trump — his way of minimizing the client relationship that had a transparently troubling side to it. It was just one more rhetorical Cuomo ploy — hiding a compromising business arrangement behind the supposed detachment of personal distance.

By Donald’s decade, this sort of political intrigue had become the essence of what it meant to be a real estate mogul in New York — a specialized form of social engineering. Without a flair for ensnaring the public officials whose discretion could make or break development schemes, the New York entrepreneur was dead in the water. It was the only way to bring grand projects to life, the inevitable route to publicly allocated wealth. The Cuomo episode just demonstrated what a master Donald had become at it. Tempting, captivating, inveigling, and baiting those with public power were the tricks of his trade, and for the moment, Donald, preserving miraculously his air of innocence, was its unchallenged, brash new champion.

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Categories
NEWS & POLITICS ARCHIVES THE FRONT ARCHIVES

We Watched the Cuomo-Nixon Debate So You Don’t Have To

David Colon: Aaron, hello!

Aaron Gordon: Dave, are you ready for another installment of a liveblog that will be posted after the event is over?

DC: Yes! And I think in this instance especially, it fits, since for some weird reason the event was on a tape delay. Why? Who knows! Did you check for any spoilers?

AG: Because I am a sad human who is only barely evolved past the rat that pushes the button to get a hit of endorphin until it dies, I logged on to Twitter unwittingly and saw some spoilers. Anyways, I saw just enough to know this is going to make me upset.

DC: Hoo boy, always a good start. Well, please avoid any Tony Schiavone–like spoilers as if this is Monday Nitro in 1999 and you’re ruining Mick Foley’s big moment.

AG: Let the record show Dave had this embed code ready to go right after he made the reference. You may have prepared for this even more than Cuomo did. Any predictions?

DC: I did prepare, but I was actually kind of excited about it since, like I said earlier, the idea of Cuomo forced to stand on a stage and just explain his whole deal is kind of great. Not that I expect much, but I got very sad when I saw this debate drinking game had a reference to America Is Great–gate and realized it would probably come up.

AG: Greatgate is my favorite political scandal of my adult life. Before it begins, how important do you think this debate is, on a scale of the remainder of the Mets’ season to the remainder of the Yankees’ season?

DC: Gosh, maybe like…the remainder of the Mariners’ season? Like, it prooobably doesn’t matter, but in theory there’s still time left and if someone really fucked up terribly then we’d have something shocking happen. Poor Mariners.

AG: I’m trying to think of what could happen that would drastically change the landscape of this race. Even inventing some made-up term about socialism that is obviously super racist probably wouldn’t do it.

DC: I guess that’s why the governor took a mysterious not-a-bribe related to the investigation of the way Cy Vance didn’t investigate Harvey Weinstein — he just figured it wouldn’t matter at all.

AG: As someone who has been a living, breathing creature for the past three years, I generally don’t give a fuck what polls say for the same reason I don’t consult a 1976 TV Guide to find out what’s on TV. But lots of people still care about polls and Nixon is very far behind in them. My question, Dave, is: over/under 2.5 questions about the MTA?

DC: Under! There’s so much to talk about, like criminal justice reform (a real thing) and whether the governor wants to fuck the flag or what (a very real thing in the addled minds of teevee people).

AG: I hope one of the questions for Cuomo is if he’s ever fucked a flag before.

DC: You gotta ask to be sure. Aaron, as New York’s premier transit journalist, how depressed will the MTA question (singular) make you as far as its simplicity and inconsequential nature?

AG: I cover the MTA for a living, so my baseline is pretty low. I’ll be overjoyed if Cuomo doesn’t make the totally irrelevant point that on paper the city owns the subway.

DC: We live in hell! On a nicer note, I have very fond memories of Hofstra, where the debate is being held. My dad went to law school there, I went to summer camp there, and I was a member of the Long Beach High School marching band that came incredibly close to getting kicked out of a marching-band competition there for grossly bad behavior.

AG: A terrifying vision of things to come. Anyways, the debate has just gotten started. They’re each seated at their own table draped in a blue tablecloth. The first question is of Nixon. “Why are you running?” A question she has literally never been asked before.

DC: True story, I saw a guy ask her why she thought she could run even though her character, Miranda, never left Manhattan in Sex and the City. Like, he asked her this as a journalist, at a campaign stop.

AG: That’s…not great.

DC: Ooh, what in her background gives her the strength of will to run New York? Fair question for our bribe-soaked hell up north.

AG: It’s true, she wasn’t born to a public official and therefore cannot be one. It’s in the Constitution.

DC: So, she was an activist and oh man as I was answering that Cuomo started kissing McCain and the half-mast flag. Then said governing is about “doing” not “advocating.” Drink! A bottle!

AG: I love how Cuomo makes Trump sound like some kind of devious mastermind political maneuverer, instead of a guy whose entire policy is derived from Fox and Friends.

DC: They should have asked Cuomo if he was going to refrain from “pulling a Christie” instead of “will you serve out your term?” And goddamn, he’s talking Trump again.

AG: “He tweets at me weekly” is also what I say about the guy from Queens who is always pissed off at the 7 train.

DC: Lord knows that guy isn’t the governor.

AG: Cuomo just said he will serve four years as governor except “if God strikes me dead.”

DC: I love every politician who makes this promise and then IMMEDIATELY breaks it. We should just stop asking.

“We don’t need a corrupt corporate Democrat in Albany” — man alive, Nixon is going for it.

AG: Nixon is asking Cuomo a bunch of pretty good and fair questions about his record. Cuomo then says they were all misstatements. So this is going well.

DC: He’s talking about his record as a huge liberal? I watched a bunch of (basically) children get arrested in his office because he refused to sign a pledge saying he wouldn’t take campaign money from fossil fuel companies. I saw it happen with my own eyes!

AG: MTA question! “Are you satisfied with the progress of the rescue plan?” And would he consider having the state make up the shortfall instead of fare hikes?

DC: Holy shit, why are you starting with Trump and infrastructure? I fuckin’ hate this guy. And then he said this is really about the New York City Transit Authority. Holy shit we are doomed. Aaron, we’re doomed.

AC: Cuomo just talked for a whole minute and didn’t answer either of the questions. The moderator had to ask it again. “I would consider canceling the fare hike because the service is not what people deserve.”

DC: Oh my god, he’s doing the city/state thing. I’m so glad I’m drinking for this. We’re doomed. We’re fuckin’ doomed.

AG: NONNONONONONONONONONONONON AAAAAAAAAARRRRRRGGGGGGHGHHHHHHFGHHGHGH PPLKLmtp.

DC: I’m fucking dying. I’m dying over here. How is Marc Molinaro better on this than he is?

AG: Friends, I’m sorry, I couldn’t transcribe Cuomo’s falsehoods fast enough because I had a fit listening to him. But in short, he basically lied or spun falsehoods about the entire city transit landscape for about two minutes. It physically pained me to listen to.

DC: An actress is better on pointing out the MTA is a state agency than the longtime governing man. Does Cuomo think this is just gonna sell in the suburbs and upstate? I don’t understand any of this. And then he has the gall to say she “lives in a world of fiction” before going into the goddamn “the city owns the subway.” Aaron, I don’t know how you do this for a living.

AG: Neither of them said anything new during all of this. Just the same shit over and over. This is rapidly devolving into “you’re a liar,” “no you’re a liar” discourse.

DC: TV people love gravely intoning questions about “How will you pay for single payer?” Honestly, rather than that I wish they talked about this plan about making corporate America pay the Trump tax plan profits into the MTA. It’s weird, but I like it!

AG: Now they’re arguing about whether Nixon would support Cuomo for governor if he won the primary. They’re both making faces about it.

DC: Oh man, Cuomo isn’t gonna be able to thread this needle where he says states don’t have the budget to handle single payer because he’s just gonna freak out about the stated cost instead of the fact that states can’t deficit-spend like the feds.

AG: Really enjoying this debate between Andrew Cuomo and Invisible Donald Trump.

DC: Not that Nixon did great there? But anyway, on to corruption!

AG: Extremely “Sir, the question was, is this your handwriting?” vibes to every single Cuomo answer. Not for the sexual content, but the complete non sequiturs.

DC: So I’m gonna take heat for this, but if you say the state legislature can’t take in outside income, you need to raise their salaries! Some of them actually have to live here. (Here being New York, New York, baby!) But the rest of this answer basically came down to “I don’t know who Joe Percoco is.”

AG: Nixon is not particularly composed in her answers, but I also think it’s a ridiculous facet of political analysis that makes that an important consideration.

DC: Like I said while we were dreading this earlier, political debate makes for an actual awful conversation between people.

AG: It doesn’t resemble how adults argue, in which the loudest person wins.

DC: This debate is…bad. Wait, is Cuomo really making the argument he’s never done anything for his donors? Like…literally…today. They’re seriously not gonna ask about the goddamn BuzzFeed report.

AG: Dave, I have a confession. I am a corporation.

DC: Oh, me too, I became an S-corp pass-through after the tax reform.

AG: AaronWGordon LLC.

DC: “What would you tell a parent trying to tell their children to stay away from drugs?” Me, I’d say loosen up, dingbat, look how many people are in fuckin’ jail.

AG: This is probably why I’m not a parent, but do parents still have a DARE-style talk with their kids to Stay Away From Drugs? If so, those parents are square as hell.

DC: I get it, addiction is bad and kids shouldn’t probably toke up at kindergarten, but this is an awful line of questioning. Like, you can’t take your kid to the ballpark without seeing beer ads everywhere, your kid is corrupted everywhere. Fucking TV people.

AG: Cuomo goes Galaxy Brain on the question and says mass incarceration isn’t about marijuana. Which, duh, but the question was about marijuana.

DC: I literally cannot believe the question about legalizing pot is concern-trolling about The Children. Like it’s 1983.

AG: “I experimented with marijuana in college,” Cuomo says, like the joint was in an Erlenmeyer flask.

DC: I experimented with marijuana like an hour from now.

AG: Fucking Christ, Dave, they’re asking about the naming of the Tappan Zee Bridge.

DC: It’s why I’m experimenting with marijuana. That and the pro–Robert Moses quip. Honestly, name the Tappan Zee whatever, I’ll vote for anyone who’s gonna take the carpetbagger RFK’s name off the damn Triborough.

AG: The moderator asked why it can’t be called the Mario Cuomo Tappan Zee Bridge. She keeps badgering him about this. It is literally the least consequential question facing the state since like a month ago when the legislature fixed the typo of the Verrazano Bridge name. Anyways, they’ve now spent longer debating this question than they did the MTA.

DC: The thing is, you gotta pander to drivers here. Think about how many gallons of ink are poured out online for us and our stupid “trains.” This is TV, land of the car.

AG: Would love to see the notes Cuomo is taking down right now.

DC: Send the state troopers back upstate, and while they’re at it send the stupid blue-and-gold color scheme on the buses with them.

AG: True story: About two months ago I saw four state troopers chillin’ under the 30th Ave N/W station. They were eating gyros. Lamb, if I’m not mistaken. One of them had dribbled a bit of sauce on his uniform.

DC: Now that’s what I call observational journalism. On a more serious note, apparently those jerks were handing out tickets to cyclists riding their bikes over the Gil Hodges Bridge.

AG: Dave, I have to admit, this is starting to resemble an actual argument now, since the two are talking over each other about releasing their taxes. It makes for shitty, shitty TV.

DC: What I like about this argument is that the point is to learn if someone is owned by a foreign or corporate subsidiary, and Trump is probably the first guy ever who actually is. I don’t give a shit about Nixon’s, Williams’s, or Cuomo’s taxes, actually, ’cause they’re all (relatively) poor compared to Trump.

AG: I heard William Henry Harrison was in the pocket of Big Oriental Rug.

DC: I mean, who isn’t, those things are great. OK, Cuomo, who got elected on punching public-sector unions in 2010, just said he’s in office to fight for unions and working people.

AG: Well, the Transit Workers Union has been literally campaigning for him, so.

DC: Ah yes, with the famous very positive hashtag, #CuomosMTA. I was “never at war” with the labor unions, says the man who delivered a hostage tape to the 2014 Working Families Party convention.

AG: Question about Nixon’s support for repealing the Taylor Law, which imposes draconian penalties for public workers who strike.

DC: I wish she just said “I support the idea because strikes work.” But appreciate her bringing up the teachers’ strikes even in the face of “Even if it paralyzes the city,” as if the 2005 MTA strike like…destroyed New York.

AG: “Trump is the problem,” Cuomo says, once again owning his debate opponent, Donald Trump.

DC: This answer of his is incoherent and actually that’s why this debate is good. Because Cuomo thinks a public-sector union strike can create mayhem and so he’s not letting them ever strike but also Nixon is the one who attacked the TWU who can obviously do whatever they have to except of course strike and that’s why he’s a friend to unions. You follow?

AG: “I worked in homeless care for 25 years.” He was chair of commissions, secretary of HUD, and other high-ranking positions in organizations/departments that deal with, in part, homelessness. Dave, how many times do you think Andrew Cuomo has had a conversation with a homeless person?

DC: In the last ten years? Zero. But I mean, I’d be willing to believe he’s worked with and listened to them in the past, tbh. But also, like, this question was “Will you let us force homeless people into shelters?” Or did I brown out for a sec?

AG: No, that’s pretty much it.

DC: We live in hell.

AG: Short-answer questions! Do you support sports gambling? Nixon says…no? OK then.

DC: Gimme the damn gambling.

AG: Cuomo describes his relationship with de Blasio as “dysfunctional,” probably the first 100 percent true thing he’s said all night.

DC: True story, I saw a fellow reporter scream, “Do you want the mayor’s endorsement?” at Nixon after an event and she just made a weird face.

AG: Nixon was just asked if she would forgo her governor’s salary because she’s so damn rich. What an absolutely shitty question.

DC: This is the least understanding of socialism argument I’ve ever seen, and I went to college for politics.

AG: Cuomo just said ordinary workers don’t have corporations. I guess I’m not an ordinary worker!

DC: Duh, you’re extraordinary, Aaron.

AG: Speaking of extraordinary, that extraordinary debate is now over. Dave, what did we learn here today?

DC: Andrew Cuomo can’t actually say he both supports public-sector unions but not their ability to strike in a coherent fashion. Other than that, nothing. Guess I can go experiment now, at least.

Categories
Housing THE FRONT ARCHIVES

Cuomo Lets Scofflaw Landlords Make Good — by Raising Rents

Mark Scharfman may not be the most infamous of New York landlords — at least not on the scale of a Croman, Walentas, or Kushner — but he’s still managed to attract a bit of notoriety in his decades-long real estate career. The owner of an estimated 4,000 apartments in the city through his Scharfman Organization, Beach Lane Management, and other holding companies, Scharfman has earned headlines for bringing the Gap to St. Marks Place and doubling the rent on the Cornelia Street Café. He landed a spot on the New York Press’s “50 Most Loathsome New Yorkers” in 2003 for his “Dickensian tales of tenant abuse.” In 2016, tenants at one of his Bronx buildings called Scharfman a “criminal” after he was charged with falsifying renovation documents to claim that the 125-unit building was vacant.

In that same year, Scharfman was one of numerous New York City landlords who received a letter from Gov. Andrew Cuomo informing him that he had illegally deregulated apartments that were required to be kept rent-regulated as a condition of getting city tax breaks — a measure that Cuomo said would end up re-regulating 50,000 apartments citywide. “There will be zero tolerance for those who disregard the law and reap these benefits while denying tenants affordable housing they are obligated to provide,” the governor said at the time.

Scharfman did indeed re-regulate more than 400 of his apartments, tenant advocates say — but this didn’t mean anyone’s rents went down. Instead, they say, Scharfman and other landlords used a scam they have dubbed “scheme swapping” to keep rents high while still raking in city tax breaks. And the Cuomo administration, they charge, has done little to crack down on the practice.

The Scharfman Organization, according to Aaron Carr of Housing Rights Initiative, is “one of the biggest, if not the biggest, J-51 tax cheats in New York City.” HRI, which has filed more than thirty class-action suits against owners over J-51 violations, estimates that Scharfman has received at least $10 million and probably more than $20 million in J-51 benefits over the past ten to twenty years.

“Scheme swapping is real estate fraud 2.0,” says Carr. It provides a way for landlords to keep rents high while the state can still claim credit for returning apartments to the rent-regulation rolls, he explains. “Our affordable housing stock is descending into a sinkhole, and all the governor wants to do is decorate it with Christmas lights.”

***

The city’s J-51 tax abatement program was created in the 1950s to help property owners improve rent-controlled buildings, such as by installing hot water in “cold-water flats.” In exchange, landlords agree to keep the buildings rent-regulated for the duration of the tax break, which can last between fourteen and 34 years.

For more than two decades, though — starting with the 1994 vacancy decontrol law that allowed landlords to deregulate vacant apartments if the rent was high enough — owners regularly removed apartments getting J-51 abatements from the rent-regulation rolls, and the state did little to check up on them. Even as Cuomo and then-attorney general Eric Schneiderman announced a crackdown on illegally high rents, noted ProPublica in 2015, “state and New York City officials have tolerated the problem for years — and ignored pleas to investigate.”

That article helped spur Cuomo’s 2016 enforcement effort. But instead, according to Carr, many landlords simply swapped in a new scheme for keeping rents high: If they had to re-regulate apartments, they would — but at the high rents they’d set while the buildings were illegally deregulated, not what the rents should have been if they’d followed the law.

Here’s how the scam works, according to some of the scores of rent histories HRI has helped tenants obtain from the state. At 709 West 176th Street, a six-story 1920s-vintage brick apartment building in Washington Heights, one Scharfman tenant’s apartment was registered with the state at a rent of $872 a month in 2010, then not registered at all from 2011 to 2015. After Cuomo’s letter, the landlord re-registered it in June 2016, setting the legal rent at $2,895 — though the tenant was charged a discounted “preferential rent” of $2,450, which can be raised to the legal maximum once the lease expires.

(The Scharfman Organization did not respond to phone messages left at its Westchester County office number.)

HRI has identified more than 1,000 buildings that had received J-51 benefits which had unregistered apartments in 2016. In more than 95 percent of cases where landlords later re-established them as rent-stabilized, Carr says, they scheme-swapped — re-registering the apartments at the illegally deregulated rent levels. The result, he adds, is that those apartments are now “rent-stabilized in name only.”

The method by which landlords are supposed to set re-regulated rents is complicated: For buildings that already had some legally deregulated apartments when they started receiving J-51 benefits, the rent in those units can be raised above the last previously registered amount by adding vacancy bonuses, increases for apartment renovations, and other legal charges.

But one thing is for certain: The state Division of Housing and Community Renewal flatly states in its J-51 FAQ that “the legal regulated rent to be registered cannot exceed the actual rent being paid by the tenant.” So while it’s hard to determine precisely where rent should be set for a re-regulated apartment, at most it should be the rent the current tenant is paying — meaning setting “legal” registered rents higher than tenants’ preferential rents, as the West 176th Street lease shows, is undeniably illegal.

“That’s the smoking gun,” says Carr.

DHCR insists it is enforcing the law. “We have zero tolerance for landlords who are trying to game the system by benefiting from the J-51 New York City–administered tax abatement and not registering their apartments as rent-regulated,” state Homes and Community Renewal spokesperson Charni Sochet told the Voice. As for setting rents too high on re-registered apartments, DHCR indicated that it can impose penalties on landlords who violate the law.

The state agency, however, has long had a reputation for weak enforcement. Until the creation of its Tenant Protection Unit in 2012, it only investigated whether apartments had illegally high rents if the tenant filed an overcharge complaint. But if landlords ceased to register apartments, they didn’t have to report rents to the state at all — making it nearly impossible for new tenants to tell if they were being overcharged.

“The DHCR is imposing, in most cases, no penalty for failure to register. That’s the real bottom-line problem here,” says tenant lawyer David Hershey-Webb, who says he has numerous cases involving scheme-swapped apartments.

The state housing agency says it is working to crack down on J-51 abuses. It says the Tenant Protection Unit analyzed rent-registration data to identify units that appeared to have disappeared from the registration rolls, including apartments receiving the J-51 benefit, and told their landlords that they had to either re-register them or document that they were lawfully deregulated. It adds that its Office of Rent Administration and statistical analysis unit are “using data mining and creating algorithms” to look through the registration rolls to find irregularities that could show illegal overcharges and deregulation.

Tenant lawyers, though, say it’s hard to tell if the state is cracking down on scofflaw landlords when DHCR won’t even release the names of the landlords that were caught violating J-51 rules in the first place. Attorney Robert Grimble filed a request for the list of names under the state Freedom of Information Law, but says it was denied on the grounds that it would “interfere with law enforcement.”

In May, Grimble, Carr, and other lawyers filed suit against DHCR to demand those names. “The list is important because it will better allow tenants, tenant attorneys, and tenant advocacy groups like HRI to enforce the rent-stabilization requirements of J-51 buildings that no agency is currently enforcing,” says Shaina Weissman, an attorney with Grimble & LoGuidice. “This could ultimately result in thousands of illegally deregulated apartments being returned to rent stabilization.”

***

The J-51 fight is complicated by the fact that until 2009, DHCR allowed landlords to deregulate buildings receiving J-51 benefits, so long as the tax breaks were not the only reason the apartments had been regulated. But in that year, the state Court of Appeals ruled in favor of Stuyvesant Town/Peter Cooper Village tenants in the Roberts v. Tishman Speyer Properties case, who had sued their landlord, Tishman Speyer, after it raised rents in some apartments to more than $4,000 despite receiving J-51 benefits.

Two years later, a state appeals court ruled in Gersten v. 56 7th Avenue LLC that the rent-regulation requirement could be applied retroactively to apartments illegally deregulated before the Roberts decision. “There’s no argument anywhere for not registering after Gersten,” says Hershey-Webb, “but the DHCR still lets them not register.”

On August 16 of this year, the same appeals court muddied the waters, ruling 3–2 that an Upper West Side landlord who’d deregulated apartments while receiving J-51 benefits in 2003 did not have to re-regulate them, on the grounds that the 1997 state vacancy-decontrol law prohibits investigating rent overcharges more than four years old unless there’s evidence of fraud.

That ruling, however, would not seem to protect landlords who deregulated apartments after the Roberts decision, such as Trump son-in-law Jared Kushner. Kushner is another scheme-swapper, according to rent histories obtained by tenants with HRI’s help. In March 2015, his Kushner Companies bought 310 East 83rd Street on the Upper East Side as part of a sixteen-property portfolio for $131.5 million. (The seller, Stone Street Properties — notorious for harassing rent-stabilized tenants so it could charge more rent for vacant apartments — had paid $73 million for the buildings in 2012.)

Afterward, the rent on one vacant apartment almost doubled from July 2014 to July 2015, from $1,875 to $3,619, according to a rent history obtained by the current tenant. In 2016, Kushner stopped registering the apartment entirely, and when a new tenant moved in that September, he received an unregulated market-rate lease for $2,675.

Two months later, according to documents obtained by the Voice, Kushner attached a rider to the tenant’s lease informing him that while the apartment was permanently deregulated, it had to be rent-stabilized “solely because” the building was in the J-51 program. The rider set the “legal rent” at $4,279 — the last registered rent plus an 18.25 percent vacancy bonus — but said the tenant could keep paying $2,675.

In reality, according to Department of Finance records available online, the building had been receiving J-51 benefits since 1996, when the apartment cost $725. (The benefits expired in July 2017.) DHCR said it could not comment on whether the $4,279 “legal rent” was illegal, as its policy is not to release rent histories to anyone except the tenant of the apartment in question.

In April 2017, DHCR sent Kushner a letter directing the company “to register ALL individual apartments as rent-stabilized.” Two months later, it followed up with a threat to fine him at least $1,000 for each apartment that wasn’t registered. Kushner has not yet registered any apartments in the building, according to the state housing agency, and failed to show up for a pre-hearing conference this May. An evidentiary hearing, the equivalent of a trial, was scheduled for August 1, but was postponed.

Asked about the relatively low fines being charged — which could be worth no more than a month or two of the rent overcharges Kushner is receiving, Carr quips: “More than 10 percent of all political contributions at the state level are from real estate. This is what they’re paying for.”

Meanwhile, many of the buildings whose landlords received letters from Cuomo — including Scharfman’s at 709 West 176th Street and 710 West 173rd Street — are still receiving J-51 benefits, according to the Department of Finance. When the Upper Manhattan Scharfman tenant moved in in 2014, she says, her rent was about $1,650, but the lease said the legal rent was $2,650 — and she had to sign a rider stating that she understood that the apartment was “not subject to any form” of rent regulation “whatsoever.” When she renewed it in 2016, it didn’t include that rider, but it raised her rent to $1,770, and the “legal rent” to $2,770. (The maximum increase allowed by the city Rent Guidelines Board in 2016 was 2 percent.)

When she requested a rent history from DHCR, she adds, there were no records from 2012 through 2016. The last registered rent was $1,500 in 2011.

“How many more buildings is this happening in?” she asks.

Categories
Healthcare THE FRONT ARCHIVES

Round-the-Clock Care, Half-the-Clock Pay

Socorro Toribio emerged into bright sunshine on a recent Wednesday morning in July after spending four days in her bedridden client’s Lower East Side apartment. Although the sixty-year-old home health aide said she hadn’t stepped outside since arriving at work the previous Saturday, she was eager to head home to the Bronx apartment she shares with her eighteen-year-old grandson.

“A lot of work last night,” Toribio said in Spanish, letting her head, wrapped in a Dominican flag scarf, tilt to one side.

Yet despite feeling sleep-deprived, Toribio didn’t head home after work that day. Instead, she took the train to Downtown Brooklyn to the headquarters of the state Department of Labor, where home health aides held signs in Spanish, Chinese, and English denouncing the state policy under which they are allowed to be paid for just thirteen hours of their 24-hour shifts.

The state labor department’s longstanding guidance to home care employers is based on the assumption that aides are able to sleep and eat during the other eleven hours, mostly uninterrupted. But workers say that’s rarely the case. While working consecutive 24-hour shifts, for example, Toribio says she gets up multiple times each night to check her diabetic patient’s blood-sugar levels, help her change position, change her diaper, and respond to the frequent night-time outbursts that come with advanced Alzheimer’s disease.

“Some nights the patient calms down and I get a little rest,” said Toribio, “but not much.”

While Gov. Andrew Cuomo has touted his support for the “Fight for $15” — the movement that succeeded in raising the minimum wage to $15 in New York City by the end of 2018 — his administration is aggressively pushing back against workers like Toribio who are fighting to get paid for a full day of work. Last year, multiple courts ruled that home care workers should get paid for every hour they’re at their clients’ homes. Yet since then, the state Departments of Labor and Health have actively sought to preserve the thirteen-hour policy, arguing that the higher costs could destroy an industry that allows elderly and disabled New Yorkers to remain in their homes.

Critics of the administration’s response say it’s time for the state to come up with a way to sustain the largely government-funded home care industry without relying on free labor. Home care industry groups estimate that could cost billions of dollars. But without the administration revealing, at the very least, how many patients actually receive 24-hour care, it’s hard to get a clear picture of what the impact would be.

What’s needed, says Assemblymember Richard Gottfried, who chairs the Assembly Health Committee, is “coming up with a cost estimate and then making sure there’s money in the state budget to pay for it. It is abhorrent to tell workers that we expect them to work without getting paid.”

***

The number of retirement-age Americans is set to double between 2016 and 2060, according to the Population Reference Bureau, and the demand for home care is rising. But few states make the service as accessible as New York, which helped pioneer the shift toward home care as a safer, more cost-effective, and more humane alternative to nursing homes. In New Jersey, for instance, it’s much more difficult for an older adult to qualify for home care under Medicaid, the government-funded, state-run health insurance program for low-income residents.

Because Medicaid coverage is more robust for home care in New York, 24-hour care is more common. “An aging population is not unique to New York state but New York is unique in that it has an opportunity to set a tone for what home care could look like,” said Amy Torres, director of policy and advocacy at the Chinese-American Planning Council Home Attendant Program, which provides home care services. “That means fully funding the work people are doing and making it so the 24-hour shift is not commonplace.”

Home care accounted for $9.3 billion of New York’s roughly $70 billion Medicaid budget last fiscal year, according to the state Department of Health. In New York City, where more than three quarters of the state’s 224,400 home care employees work, 93 percent of home health aides are women and 79 percent are immigrants. The union 1199SEIU United Healthcare Workers East has estimated that 8 percent of the home health aides in New York state work 24-hour shifts.

The Cuomo administration has declared that it is adding $6 billion in new funds for home care from 2015 to 2021 to pay for the long-overdue gains the workforce has made in recent years, such as overtime and minimum wage protections that were extended to these workers for the first time in 2015 by the Obama administration. Yet the thirteen-hour policy is one relic of home care’s past that has been particularly hard to shake.

Recently, home care workers have filed more than 145 class-action lawsuits against New York home care agencies challenging the policy and seeking back wages for workers’ uncompensated hours, according to the law firm Littler Mendelson, which represents home care agencies. In October, workers achieved a victory when two state appellate divisions ruled in their favor in lawsuits that have the potential to set a precedent for other cases.

But home care employers cautioned at the time that if the rulings are upheld by the state’s highest court, they will lead to rising costs that could cripple the industry. In addition to doubling the cost of providing 24-hour care, the rulings could make home care agencies liable for back wages for any aide who has worked a 24-hour shift in the last six years, per the statute of limitations in New York.

Littler Mendelson has calculated it would cost a single home care employer an estimated $600,000, plus fees, to pay the back wages owed to just a single home health aide if a court rules in the aides’ favor. (That estimate, though, is based on the unlikely scenario of an aide working 24-hour shifts, seven days a week, for the same agency for the entire six years.) Meanwhile, the price of 24 hours of home care under the current wage regulations in New York City would go from about $222 per day before overtime and administrative costs to about $410 — similar to the average cost of a day in one of the city’s nursing homes.

“In other cases employers always suddenly announce that they’re impoverished when they get sued for having egregiously violated people’s rights,” said Richard Blum, an attorney with the Legal Aid Society who has represented both home care workers and patients. “And we see when regulations are proposed that would ameliorate conditions for workers the industry comes out and says, ‘Oh no, we can’t afford that; we’ll go bankrupt.’ We hear that all the time.”

The difference here, Blum said, is that much of home care in New York is publicly funded. Both labor advocates and home care employers hold the state responsible for the situation the industry is in, and are calling on the state to help clean up the mess it created. But how it should go about doing that is a point of contention.

***

On the same day that Toribio and her colleagues rallied outside the state Department of Labor, the department held a public hearing on proposed regulations to codify the thirteen-hour policy into state law, in an effort to fortify it against lawsuits saying the state is violating its own minimum-wage laws. The department issued a temporary update to that effect in October, and has been renewing it without public input ever since by categorizing it as an “emergency”; the department finally scheduled the public hearing in order to make the regulations permanent.

Keeping the thirteen-hour policy intact is necessary to “prevent the collapse of the home care industry, and avoid institutionalizing patients who could be cared for at home,” the Labor Department said in the explanation for its emergency regulations in the state register.

The state stepped in with the emergency regulations after many home care agencies moved to immediately comply with the court rulings rather than risk further liability. After the court decisions came out last year, some agencies started demanding more money from Medicaid, threatening to discontinue care for 24-hour patients if they didn’t get enough funding to pay their employees for all 24 hours, according to emails sent to the state Health Department that were obtained through a Freedom of Information Law request.

“This is a very serious issue for us as Good Care Agency closely adheres to NYS labor laws,” the home care provider wrote in an email to Elderplan/Homefirst, a Medicaid-funded health plan it had a contract with, in May of last year. “We only see two ways this scenario will go from here. Either we are provided with new hourly rate authorizations for live-in cases or we request for these cases to be removed from Good Care Agency effective immediately.”

Elderplan forwarded that email and others like it to the Health Department. It also forwarded the department a letter it sent to Good Care Agency reprimanding the home care provider because it had threatened to “abandon one or more of our members.”

The state’s emergency regulations were supposed to quell home care agencies’ fears and stop this chilling effect on 24-hour care, but they haven’t necessarily succeeded. “Many agencies have stopped providing these services,” making it difficult for Medicaid beneficiaries who need 24-hour home care to find it, Claudia Hammar, president of the New York State Association of Health Care Providers, said at the hearing in July.

Meanwhile, home care workers and grassroots labor organizations have sued the Labor Department and its commissioner, Roberta Reardon, to void the emergency rules, calling them a “drastic departure” from the state’s minimum wage law.

State Assembly members Harvey Epstein and Jo Anne Simon say they want to work with stakeholders to come up with comprehensive policy solutions rather than simply holding onto the thirteen-hour policy at all costs. Epstein, who was elected to the assembly in April after serving in a senior role at the Urban Justice Center, a nonprofit legal organization that represents some of the home care workers who have sued their employers, says, “If the Department of Labor enters these rules [reinforcing the thirteen-hour policy] then it’s up to us in the Assembly and the Senate to pass legislation to overturn this really ridiculous idea that people don’t have to be paid for the hours that they work.”

Cuomo has yet to publicly weigh in on this issue and his office did not respond to a request for comment. But when the governor wants to support a cause — even an expensive one — he has found a way to fund it.

Back in 2016, Cuomo wasn’t deterred by concerns home care industry groups raised that they wouldn’t be able to afford a higher minimum wage. After the Fight for $15 was successful, Cuomo promised Medicaid would cover the cost of the increase for some home care agencies and other health care providers, which will soon amount to more than $1 billion annually.

In the last budget session, Cuomo’s fundraising proposals for health care were diverse: They included new taxes on private health insurers, surcharges on opioid manufacturers, and a tax on a major sale of a nonprofit to a for-profit company. Cuomo also proposed reining in rising home care costs by limiting eligibility to higher-need patients, although that measure wasn’t included in the final budget.

“We make difficult financial decisions all the time,” says Epstein. “The answer can’t be that the government can’t do it, and that this has to be on backs of low-wage workers who are already some of the lowest-wage workers in the country.”

***

Toribio moved to the U.S. from the Dominican Republic about twenty years ago and started working as a home health aide shortly after, reasoning that it was better than working in a factory. “If you don’t speak English there aren’t a lot of options,” she said. Toribio has been with her current patient for about a decade, and says she’s developed a lot of affection for the woman, who is only about fifteen years her senior. While some of her colleagues are calling for an end to 24-hour shifts altogether, she says she just wants to be paid for all the hours she works and “to not be abused.”

Home care agencies insist that no one should be working 24-hour shifts in the first place. “None of our employees is responsible for providing 24 hours of care,” said Jocelyn Lee, executive director of First Chinese Presbyterian Community Affairs Home Attendant Corporation, the agency that employs Toribio. “Workers are responsible for reporting to the agency if they are unable to get their uninterrupted sleep due to the patient’s condition so that a nurse can visit the patient to assess whether a different level of care is required, and to ensure the worker is properly compensated for all hours of work.”

But during the hearing, worker after worker testified before Labor Department officials that they had not been paid for the hours they worked at night, even if they reported them; two aides said they were taken off of 24-hour cases after reporting nighttime hours.

Asked if she had ever reported the nighttime hours she works to her coordinator at the agency, Toribio scoffed. “What for?” she said. “The coordinator knows.”

Although aides are officially supposed to get compensated if they don’t get the requisite amount of sleep and meal time, Medicaid funding for home care isn’t structured to accommodate that level of flexibility. Typically, Medicaid pays a flat monthly rate for each member to cover the cost of the services they need.

A spokesperson for one nonprofit agency that paid 24-hour aides for the nighttime hours they reported for a period of time said, under the condition of anonymity, that the organization pulled from its operating budget and funds raised on its own to cover the extra hours.

Home care patients who require a level of care that regularly prevents 24-hour home attendants from getting the requisite sleep and meal time are supposed to be approved for “split-shift” care, which is broken up into twelve-hour shifts performed by two different aides. However, in the city that level of care is notoriously difficult to get approved by Medicaid.

Shirley Ranz, a retired pharmacist who lives in Sheepshead Bay, Brooklyn, said the state’s labor policies led her to find an alternative to 24-hour home care for her mother, even though she qualified to receive it under Medicaid when her mother’s Alzheimer’s started to advance.

Ranz said her request to have aides care for her mother in two twelve-hour shifts was denied, even though her mom would often wander at night. “Sometimes the aide would come in the morning and every dish and pot and pan in the kitchen would be spread all over the floor,” Ranz said. Eventually Ranz’s brother moved into their parents’ house to care for their mother.

“When I learned the aide would only be paid for thirteen of 24 hours I had two reactions,” Ranz said. “One was, ‘How could they do this to these people?'” The other, she says: “If the aide can’t get to sleep at night, it’s a danger to my parents as well as to her.”

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THE FRONT ARCHIVES Transit

Maybe We Didn’t Need the Second Avenue Subway After All

When the calendar flipped from 2016 to 2017, Governor Cuomo rode the subway. As you may recall, this was no ordinary subway trip: It was the inaugural run of the Q along its new route, down from the 96th Street terminus of the shiny, new Second Avenue Subway. You know, a ribbon cutting. Our governor loves ribbon cuttings.

With last week’s release of station-by-station ridership figures for 2017, we can finally learn the impact this long-awaited subway extension had on the system. As it turns out, the Second Avenue Subway is undoubtedly a benefit, but at $4.5 billion for just the three stations built so far, a very expensive one. And the stats also tell us much more about the problem the line was built to solve — and raise the question of whether that $4.5 billion would have been better spent elsewhere.

The Second Avenue Subway’s primary reason for existence was to lighten the load on the overburdened 4/5/6 Lexington Avenue line, the busiest subway corridor in North America after the Second and Third Avenue Els were torn down mid-century. This was a worthy goal, and to some degree, the new line accomplished this: The five Lexington Avenue stops closest to the subway extension — 96th Street, 86th Street, 77th Street, 68th Street–Hunter College, and Lexington Avenue–59th Street — saw 17,377,828 fewer swipes into those stations last year, or about 47,600 per day.

Meanwhile, the three new Second Avenue Subway stations experienced almost 21.7 million trips last year, or just a hair shy of 60,000 per day. After factoring in large ridership changes at other nearby stations — the Lexington Avenue–63th Street F/Q station saw a 1.3 million bump in trips, while the Fifth Avenue–59th Street N/R/W had 560,000 fewer — the total change in ridership after the Second Avenue line opened nets out to just a hair more than 5 million additional subway riders in 2017, or about 14,000 per day.

This is greater than officials projected in terms of ridership gained: MTA planners didn’t expect much new ridership from the Second Avenue Subway, knowing that it’s only two blocks from an existing subway. But in the grand scheme of New York City transit, it’s a pretty low number; it’s about the same number of riders who take the B36 bus between Coney Island and Sheepshead Bay each day.

But since construction began on the Second Avenue Subway in 2009, the subway’s performance has steadily declined to the point where it is now in crisis. The Second Avenue Subway’s opening was a short-lived respite of good news from the otherwise constant barrage of nightmarish headlines. State of Emergency, Subway Action Plan, declining performance, you know the rest.

At best, the Second Avenue Subway is the lone bright spot in an otherwise concerning trend of declining public transit ridership. Even with the increase in ridership on the Upper East Side thanks to the Second Avenue Subway, Manhattan still lost 10,821,930 subway trips last year. This ridership drop is almost certainly due to the increasingly poor service, which itself is a result of maintenance backlogs, antiquated technologies, and questionable management decisions.

As I have previously reported, while tunnel-boring machines were grinding their way underneath Second Avenue to relieve the 4/5/6, the MTA was installing unnecessary signal timers on the Lexington line that ended up reducing its capacity. The New York Times later found that in June and July of last year, during the average weekday rush hour window, 57 scheduled trains on the 4/5/6 simply do not run. Those ghost trains alone could have fit the number of riders who switched to taking the Second Avenue Subway.

Indeed, at the time the MTA was justifying the Second Avenue Subway, one of the key words involved was “overcrowding” — as in, crowding on the 4/5/6 was causing delays, and the only feasible way to address that was to build the Second Avenue line. This was the prevailing logic in 2009, and even for much of 2017 after the Second Avenue Subway was completed. Yet the new transit chief, Andy Byford, has since declared overcrowding is not, and never has been, the root cause of delays. Overcrowding is the result of delays, not the cause.

We know now that the Second Avenue Subway could not possibly have been the most cost-effective way to relieve crowding on the Lexington Avenue line. That would be upgrading the signals to Communications-Based Train Control, or CBTC. One of the first lines Byford wants to tackle is, in fact, the 4/5/6 from 149th Street–Grand Concourse in the Bronx to Nevins Street in Brooklyn. Doing so would allow the MTA to run trains much more efficiently, increase capacity, and turn those ghost trains into real trains.

This project alone would provide a benefit to Lexington Avenue line orders of magnitude greater than the Second Avenue Subway for a fraction of the cost. (Re-signaling the Queens Boulevard line from Kew Gardens–Union Turnpike to 50th Street is expected to cost $425 million; the Eighth Avenue line from 59th Street to High Street has a preliminary estimate of $375 million.) But the main holdup for Byford’s plan is he needs the money. Oh, if only he could have, say, $4.5 billion available, enough to upgrade most of the subway system to CBTC.

Most transit experts will tell you that thanks to decades of apathy the subway needs to build extensions and rapidly upgrade its existing infrastructure. No disagreement here; the best version of New York City is one where we can do both. But, as the last several decades and Byford’s ongoing efforts to secure funding illustrate, that isn’t the New York we have. Instead, the MTA is working on scraping together $6 billion for Phase II of the Second Avenue Subway, which will take it up to 125th Street — at that price tag, the MTA could almost certainly re-signal the entire subway system. The question isn’t why the Upper East Side can’t have nice things, but why, with so many dire, urgent needs across the system, the Upper East Side should be disproportionate benefactors.

In any case, the Second Avenue Subway extension has now been built, so we must do our best to enjoy it. The people who used to have a fifteen-minute walk to the subway but now have a mere ten-minute walk must savor those precious moments. The straphangers still taking the 4/5/6 ought to bask in the extra space they now have. Take an extra second to enjoy the world-class art in the new stations. Somebody has to, because Governor Cuomo won’t. He hasn’t ridden the subway since. After all, there haven’t been any ribbon cuttings.

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THE FRONT ARCHIVES Transit

Cuomo’s LaGuardia AirTrain Looks Like a $1.5 Billion Boondoggle

Governor Cuomo and the Port Authority announced Monday that they’re moving forward with the LaGuardia AirTrain, which is intended to provide a much-desired rail connection between LaGuardia Airport and civilization.

Since the project was first proposed in 2015, its cost has soared from $450 million to a projected $1.5 billion before a single shovel has sunk into the ground. Nevertheless, Cuomo bragged at a Monday press conference that the AirTrain will allow people to travel between the airport and midtown in “thirty minutes or less,” which a Cuomo slide breaks down as sixteen minutes to take the LIRR from Penn Station (or Grand Central, if and when East Side Access is completed), then six minutes on the AirTrain from Willets Point to LaGuardia. The Port Authority projects the AirTrain will run every four minutes, and will also connect to the 7 train at the Mets-Willets Point station.

But the more one digs into the plan, the more it seems like a boondoggle in progress. The “30 minutes or less” vow only applies if you take the LIRR, since the 7 takes about 33 minutes itself to get from Grand Central to Willets Point. Further, Willets Point currently only gets LIRR service when Citi Field is holding events such as Mets games; and even when it does get service, it’s on the Port Washington LIRR branch which has thirty-minute headways during off-peak hours. If they’re heading to the airport outside of rush hour, then, the vast majority of travelers won’t get there in “30 minutes or less” unless they happen to arrive at the platform just as one of the two trains per hour pulls into the station.

It’s certainly possible LIRR could start providing regular train service to Willets Point, and also increase the frequency of trains, once the AirTrain is completed. But so far the railroad has not publicly committed to it, perhaps because of additional complicating factors. The Port Washington branch runs on a single track past Great Neck for the last three stops on the line, which means no trains can travel eastbound past Great Neck until the previous train has headed back out westbound. During peak hours, trains short-turn at Great Neck to allow about six trains per hour to run in the peak direction. The railroad could probably do this outside of peak hours to allow a greater frequency; the LIRR did not reply to Voice queries by publication time.

The bigger question, though, is how many riders would opt for the LIRR in the first place when the 7 train is there as an alternative. The MTA is currently in the final stages of installing a modern communications system on the 7 line and projects that, when it’s completed at the end of this year, it will run 29 trains per hour on that line, or a train about every two minutes. Even though the 7 takes some fifteen minutes longer to get from Willets Point to midtown than the LIRR, it will be cheaper — currently, a single ride on the subway is $2.75 while a one-way LIRR trip is $6.25 off-peak or $8.75 during peak hours — and more reliable. The LIRR would then need to decide if it’s the best use of the railroad’s money to run more frequent service on the Port Washington line just to accommodate the few passengers who may opt to take it to the AirTrain.

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So forget the LIRR connection for now. Is the AirTrain, merely as a means of connecting to the 7, worth building? Again, it’s hard to see how. As transit analyst Yonah Freemark wrote three years ago, “transit travel times from LaGuardia to destinations throughout New York City…would be longer for passengers using the AirTrain than for passengers using existing transit services already offered by the Metropolitan Transportation Authority.”

How is that possible? Going off Cuomo’s numbers, the new connection would provide a six-minute AirTrain ride on top of a 33-minute subway ride from Grand Central. That’s 39 minutes of pure train-riding time. Add in about five minutes of combined wait time and a few minutes for transferring between the two, and you’re looking at a good 45 minutes from Grand Central to LaGuardia via the AirTrain.

But many people don’t end their journeys at Grand Central or Penn Station — and this, in a nutshell, is the AirTrain’s biggest flaw. Most travelers don’t want to end their journeys in midtown, but that’s where the 7 train goes. And that’s why Freemark’s analysis found that existing travel options stack up just fine against the $1.5 billion AirTrain.

For example, the Q70 Select Bus Service provides an eleven-minute nonstop round trip every seven to ten minutes during most of the day from LaGuardia, not just to the 7 train, but to the E, F, M, and R in Jackson Heights as well. From there, it’s only three stops to Manhattan on the E/F (which, by the way, runs express all the time, not just one-way express during peak hours like the 7). The M60 SBS runs on a similar timetable, connecting the airport to the 1, B, C, 2, 3, 4, 5, 6, N, and W trains along its route in Queens and upper Manhattan. Even with the AirTrain, these two bus routes will remain a faster and cheaper option to many Manhattan, Bronx, and Queens destinations. (While Brooklyn is currently poorly served by public transit connections to LaGuardia, the AirTrain will do nothing to help.)

If Cuomo were truly interested in improving access to and from LaGuardia — not that this is the point of flashy infrastructure projects — he would spend a tiny fraction of the $1.5 billion projected for the AirTrain on bolstering the existing buses by ensuring dedicated and unblocked bus lanes on the entire route, increasing frequency of service, and adding new routes.

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But even if Cuomo is dead set on building something that runs on tracks, there are a few other options. One is to revisit the long-discussed N train extension to LaGuardia, which would at least provide a one-seat ride into Manhattan and Brooklyn even if, according to Freemark, it still wouldn’t reduce travel times by a significant margin. That proposal has consistently been met with opposition from local residents who don’t want more elevated tracks, and has therefore been largely regarded as a political nonstarter.

Speaking of political nonstarters, the only way to significantly decrease travel times for LaGuardia customers would be a dedicated express train from a major midtown hub such as Grand Central. But such a project is bound to be prohibitively expensive given New York City tunneling costs; you’d likely be looking at $3 billion just to dig a tunnel and install tracks, assuming Second Avenue Subway rates, but the actual price tag would almost certainly be much larger than that when factoring in other necessities like a station and trains. It would be hard to justify such a price tag against other municipal transit needs, considering LaGuardia transported 29.7 million passengers last year, or about a week’s worth of subway ridership.

But the most galling aspect of the AirTrain is that, despite popping up from time to time over the past few years with bright new renderings, there has been little in the way of public debate over the project.

“It is terrible public policy for the state to be moving ahead so quickly on this project with little public input and no conversations about alternatives,” Freemark writes in an email to the Voice, noting that last week the state legislature passed a law allowing the Port Authority to seize public land for the project. Maybe there really is political will for an express train from Grand Central, or perhaps deals can be made to make the N extension a reality, which at the very least is obviously preferable to the AirTrain. Either way, unless there’s a public process to discuss alternatives, we will never know. As Freemark puts it: “That’s a bad way to run a project of this cost.”

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NEWS & POLITICS ARCHIVES THE FRONT ARCHIVES

History Shows We Should Be Wary of Cuomo’s IDC Deal

Like Wonderland, Albany is a place where nothing is as it seems. Deals are agreed upon, only to evaporate in the night. Budgets are not merely budgets. Politicians register with one party and empower the other.

This week, there was momentous news out of Albany. Shortly after the Republican-controlled state senate and Democratic-controlled assembly passed a $168 billion budget devoid of key progressive priorities, it was revealed that Governor Andrew Cuomo was driving a deal to dissolve the Independent Democratic Conference — a group of eight breakaway Democrats who form a power-sharing alliance with Republicans in the senate — and create a unified Democratic majority.

Andrea Stewart-Cousins, the current minority leader, would become the sole Democratic majority leader. Jeff Klein, the IDC leader and co-leader of the senate, would become her deputy.

No more divided senate. No more strange coalitions that stymie numerous Democratic-friendly bills. Cynthia Nixon, perhaps the most formidable opponent Cuomo has ever faced, was hammering the governor on his unwillingness to pressure the IDC to return to the fold, apparently motivating him to act fast.

Though victory has been proclaimed, history shows that empowering a Democratic majority in the state legislature is never a simple matter. In fact, it’s unnecessarily labyrinthine.

To recap: Since the end of 2012, the state senate in deep blue New York has been controlled by Republicans with the help of the IDC, and the implicit blessing of Cuomo. Sitting in the majority is a very powerful thing: You can control, in an absolute sense, the flow of legislation while earning extra cash from chairing committees. Your staff budgets can be immense. All the special interest money comes to you.

The reunification of the state senate can have profound and overwhelmingly positive consequences for anyone living in New York City. Democrats in the senate are largely from the city and care more about our concerns, like fixing the subways and buses, strengthening tenant protections, and increasing funding for education in the five boroughs. The Republican conference, obviously conservative, is overwhelmingly based elsewhere.

Real estate interests driving gentrification and hoping to eviscerate the rent-regulation and rent-stabilization programs (up for renewal on a regular basis in Albany) are major funders of the senate Republicans. So too are charter schools, hedge funders, and some of the national right-wing donors who champion austerity and privatization agendas.

The Republicans have consistently opposed any and all reforms to New York’s notorious lax campaign finance laws and arcane voting laws, the latter of which has given the state one of the more dismal voter turnout rates in America. Senate Republicans have also blocked codifying Roe v. Wade in the state constitution to gird against Supreme Court overreach, and passing statewide civil rights protections for LGBTQ New Yorkers. Even relatively simple, noncontroversial reforms like early voting were ultimately dropped because senate Republicans had no interest in supporting them. Others, like the Dream Act and the New York Health Act, weren’t even entertained.

So yes, any Democrat, progressive, good government advocate, or just general believer in a fairer, more just system should welcome this deal.

If only it were that simple.

Assuming the Democrats win both special elections on April 24, they will need the cooperation of Simcha Felder, a conservative Democrat, to form a numerical majority. Even then, it will be slim and unstable, unlikely to deliver on any progressive priorities before the end of the legislative session in June.

This was why it was so egregious that Cuomo delayed calling special elections for two vacant state senate seats until later this month, ensuring Stewart-Cousins could not be in the room to negotiate a massive state budget that also, because of the quirks of Albany, carries with it the best opportunity to enact serious policy changes.

It’s important to use history as a guide here. In 2014, there was a similar handshake agreement to reunify the Democrats and IDC. The Working Families Party, a hybrid of labor unions and left-leaning activists, agreed to stop supporting primary challenges against the IDC, then a conference of a mere four. But after Republicans won a series of swing elections in what turned out to be a GOP wave year nationally, reunification never occurred. Republicans remained in the majority with Cuomo’s blessing.

It’s unclear what enforcement mechanism exists to keep this latest deal from falling apart, to keep Cuomo to his word, and to keep the IDC from reneging on the agreement when it decides not having its own conference isn’t fun anymore. What happens when Klein starts to long for his lavish staff budget and old perks? What happens when the Republicans tempt him for one more round?

This is why the IDC primary challenges must continue. Full disclosure: I am running for state senate against a Republican. The IDC has only remained influential because the Republican conference is large and unified. A sustainable reunification will only happen when the Republican and IDC conferences are weakened, allowing the mainline Democrats, who have have always been loyal, leverage to govern.

As always, we must follow the money. Cuomo and the IDC each control vast war chests of campaign cash. Neither has ever spent money to help senate Democrats defeat senate Republicans. Will that change in 2018?

Too many questions remain. Always remember: Nothing is ever as it seems in Albany.

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NEWS & POLITICS ARCHIVES THE FRONT ARCHIVES

Here Are All the Reforms the Cuomo Budget Punts On

In Albany, a budget is not simply a budget. It is a vast matrix, a behemoth stew, the mashup of unfathomable sums of money ($168 billion this year) and specific, often unrelated policies. Horses are not merely traded; they are herded and hidden and sometimes euthanized on a whim.

For progressives, the negotiation of a state budget is always dispiriting. This year has been no exception. As in previous years, the four men in the room — the governor, the Republican majority leader, the leader of the Independent Democratic Conference, and the Democratic assembly speaker — assembled to cut a deal, locking out the female leader of the senate Democrats. Three of these men (as Zephyr Teachout pointed out recently) are unabashedly beholden to real estate and hedge fund interests. And transparency is always an afterthought, with voting occurring mere hours after a budget is produced, leaving legislators no time to read anything.

With the fiscal year set to begin on April 1, the contours of the new budget are taking shape. Republicans, once more, succeeded in killing the priorities of the left.

Typically indifferent to New York’s dismal turnout and retrograde voter laws, Cuomo earlier this year proposed legalizing early voting in this budget. In most states, this is not controversial — voters get days before the actual election to cast votes if they want. But in this new budget, there is no early voting. Why? Republicans didn’t want it.

Phasing out cash bail like New Jersey has done? Nope. Republicans like the bail bond industry.

Passing the Dream Act to give undocumented immigrants tuition assistance in the age of Trump? Republicans said no.

Passing the Child Victims Act so victims of child sex abuse can have more time to bring lawsuits against the people and institutions who enabled or covered up their abuse? Republicans said no.

Codifying Roe v. Wade in the state constitution to guard against potential overreaches of the Neil Gorsuch Supreme Court? Republicans said no.

Putting civil rights protections for the LGBTQ community into statewide law? Republicans said no.

Funding for needy public schools to comply with a decade-old lawsuit? Republicans said no.

Closing a loophole that allows millionaires and billionaires to create unlimited LLCs to circumvent donation limits? What do you think?

Going into 2018, there was a chance that Democrats representing the interests of our city could exert far more influence on the budget process. In the state senate, there are more registered Democrats than Republicans, but the GOP holds a one-vote majority thanks to Simcha Felder, a conservative Brooklyn Democrat who caucuses with the GOP.

While the Republicans can technically run the senate without the IDC’s help, the leader of the breakaway conference, Jeff Klein, remains a “co-leader” of the senate, a title that is Republicans’ acknowledgement that their hold on power, one way or another, will depend on cooperation with Klein.

At the end of last year, two senate seats became vacant after Democrats won other offices. Felder last year stated that he would return to the Democratic fold if the IDC did first — he has said openly he only wants to serve in the majority to grab more funding for his district.

This set up a litmus test for how much Cuomo, a governor who has enabled the IDC and largely allowed the Republicans to keep power, really wanted a Democratic senate. The governor has sole discretion to call special elections — the sooner he acts, the sooner seats are filled.

Many progressives, rightfully, wanted elections called immediately. Had Cuomo acted on January 1, a potential Democratic majority could have been in place by this month, which is by far Albany’s most pivotal.

Instead, Cuomo decided the two special elections would be held on April 24. The 2018 budget was sacrificed for a nebulous reunification deal between the IDC and senate Democrats. Progressives within the IDC districts don’t believe in dropping their guard — seven of the eight IDC members are facing fierce primary challenges.

For any real change in Albany, we will have to wait at least another year. And that’s depending on the outcome of the primary challenges, how many Republicans lose, and what state Cuomo is in — or if he’s there at all — in January 2019.

If the New York State Democratic Party, which is entirely controlled by Cuomo, begins to spend against state senate Republicans, not just House Republicans who have enraged Cuomo, it may just mean the governor is serious about building a strong, progressive Democratic majority. Though he’s had eight years to do this, and here we are.

But for now, this year’s budget is a dud. Blame the senate Republicans, blame the governor, and blame everyone who tolerates the status quo. New York deserves better.