The Voice has learned that Henry Kissinger, Frank Sinatra, Mary Tyler Moore, Donald Trump, and other celebrities were involved in a sales tax evasion scam that resulted in the indictment last year of an exclusive Fifth Avenue jeweler and two of its executives.
Danaos Ltd., which operates the Bulgari jewelry store in the Hotel Pierre, was charged in the indictment with failing to collect sales tax on more than $1.5 million in transactions. The indictment alleges that Bulgari and two of its officials, Nicola Bulgari and Richard Storm, used the “empty box” scam to illegally allow customers to avoid paying New York State sales tax. Customers with out-of-state addresses would have their purchases recorded as being mailed or delivered to them in order to avoid paying sales tax. However, the indictment charged, customers would leave Bulgari with their jewelry, while store employees would mail an empty box, or one containing a piece of costume jewelry, to the out-of-state address.
The Danaos indictment refers to 101 separate transactions, ranging from $240 to $130,000 per item, on which the scheme was employed. While Attorney General Robert Abrams, who is prosecuting the Bulgari case, has refused to release customer names, the Voice has interviewed two former Bulgari employees who took part in the scam and compiled a partial list of these customers.
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Both former employees detailed how Bulgari security personnel would package worthless chokers and mail them to customers and how, at Christmastime, they would prebox dozens of chokers to be prepared for the holiday tax evasion rush. The employees also noted that security officials would designate the bogus shipments by marking an asterisk next to the transaction in the company’s registered mail logbook. Bulgari employees, investigators discovered, often put only enough postage for an empty box on packages supposedly containing items ranging in weight from a few ounces to several pounds.
During the period audited by state investigators — December 1980 to March 1983 — Bulgari customers involved in the empty box scam included:
Henry Kissinger, who made two purchases, totaling about $20,000, on which he did not pay sales tax. His lawyer, Arthur Liman, does not dispute this, but claims that Bulgari “should have charged him the tax, but they didn’t. It’s their fault.” Liman said that Kissinger’s assistant, Chris Vick, was subpoenaed to testify before the grand jury, but that Kissinger himself was not called. While Liman denied that empty boxes were sent to two Washington, D.C., addresses, a former Bulgari employee told the Voice that he delivered the boxes to the post office.
Frank Sinatra had jewelry delivered, on at least three occasions, to his Waldorf Towers suite, where an aide would sign for it. Empty boxes were mailed to casinos in Las Vegas and Atlantic City, according to a former Bulgari employee, who estimated Sinatra’s purchases at about $30,000.
Mary Tyler Moore purchased about $20,000 in jewelry during the audited period and had it delivered to her West Side home. The empty boxes were sent to a business associate in New Jersey. Jackie Becher, Moore’s publicist, said the actress was busy rehearsing a new play and would have no comment.
Donald Trump, according to the former employees, made at least two purchases at the store — a necklace for $50,000 and a second purchase of about $15,000. On the smaller purchase, an empty box was sent to the Connecticut home of Trump’s former attorney Roy Cohn. Trump’s spokesman, Howard Rubenstein, said that the developer denied using the empty box scheme and that his purchases at Bulgari “were bona fide transactions.”[related_posts post_id_1=”397777” /]
Takeover specialist Ronald Perelman, who last week made a $40 million profit on a stock sale, was one of the store’s biggest customers, and often benefited from the scam. A Bulgari employee would deliver Perelman’s jewels to the East 63rd Street headquarters of MacAndrews & Forbes, his company. Bulgari’s business records made it appear that the jewelry was actually mailed to a Philadelphia address. On one occasion, store records were doctored to make it appear that a Bulgari car drove to Philadelphia to deliver an item to Perelman. Rubenstein, Perelman’s spokesman, said that the businessman contends “he made no such purchases and did not appear before the grand jury.”
Adnan Khashoggi, the billionaire Saudi Arabian arms dealer, made two purchases totaling more than $200,000 worth of silver items and had them delivered by courier to his Olympic Towers residence. The empty boxes were sent to Geneva. Khashoggi is reported to be the world’s richest man; the empty box scheme saved him about $17,000.
C. Z. Guest, who writes a weekly gardening column for the Post and is a staple on New York’s social scene, allowed various friends to use her Florida estate as a dumping ground for empty boxes. Guest, herself one of Bulgari’s biggest customers, refused to answer Voice questions.
Television producer Mark Goodson used a Fair Lawn, New Jersey, address for his empty boxes. A spokesman for Goodson said be was subpoenaed to testify before the grand jury, but never did. Goodson’s lawyer, Roy Blakeman, did not return Voice calls.
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Though many customers, in effect, conspired with Bulgari to evade sales tax, Abrams has contended that since it is a retailer’s obligation to collect sales tax, they are the only ones who can be successfully prosecuted. Later this week, Storm and Bulgari will appear before Judge Harold Rothwax where a plea agreement may be announced. ■
Great cities find their forms through compact. New York entrusts its destiny to deals. Donald Trump will direct the future of 77 acres of our most vital territory not because he’s in any way earned the privilege but because he’s paid for it. This is the urbanism of the shooting gallery: put your money down and take your shot.
I refer to the young masterbuilder’s recently announced plans to build a “Television City” on the old Penn Central rail yards stretching from 59th to 72nd Street along the Hudson. In case you missed the hype, Trump intends to put up the following: one 150-story (“world’s tallest”) building, six 76-story buildings, one 65- story building, and one 15-story building. These are to be filled with condos and offices and would sit on a titanic “podium” that would contain the eponymous TV production facilities as well as department stores, shops, parking, and other mall-style amenities, all topped by 40 acres of what the press release describes as “parks.” The architect for this scheme is Helmut Jahn of Chicago, a designer of particularly primitive sensibilities whose shallow insights and unfettered esprit de glitz must have struck Trump as especially congenial. I can almost hear the conversation between them. “Helmut, I like your style,” says Trump. “And Donald, l like your style,” says, Jahn.
The scheme is so stupid, my initial reaction is to think it’s a phony, a stalking horse for some marginally less barbaric proposal Trump is willing to trade down to. Even in shrunken form, though, we haven’t been treated to a towers-in-the-park proposal for quite some time. There’s a reason for this. The architectural profession has — over the past 20 or so years — woken up and smelled the urban bacon, come to the realization that most of what we prize in our climax metropoli, like Manhattan, comes from formal strategies in which the urban ground is favored over the architectural figure. This privileging is the compact of character that makes such cities singular. Over time, certain means have emerged as central to the particularity of these great cities. In Manhattan, for example, the skyscraper, the brownstone row, the hard-lined, even-topped avenue, are among the keys to our urban specific.
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One of the great powers of cities conceived in terms of convention is that they can be forgiving of mediocre architecture. Helmut Jahn’s several midtown skyscrapers (now going up) will be absorbed in that forest, a few more trees (however twisted) among the multitude. The West Side project, however, is apparently unaffected by so much as a whiff of the genius loci. Looking at the boneheaded proposal, one wonders whether the architect even visited the site. Indeed, there’s evidence that he did not. The rank of glyphs bespeaks lakeside Chicago, and the centerpiece of the scheme, the 150-story erection, Trump’s third go at the “world’s tallest building,” looks to be the same world’s tallest building proposed earlier this season for the Columbus Circle site. Was ever a man more preoccupied with getting it up in public?
If one were actually to approach the Penn yards site in terms of its particulars, one sees first an edge, the meeting of land and water, the moment at which the island asserts itself. Manhattan offers plenty of precedents for this. Our characteristic edges include the hard ones (Central Park West or Fifth Avenue along the park), the soft ones (Riverside Park, which depends on the wall of the drive for its special reading), and the fingered ones (the vanishing system of piers, their economic rationale fading but their physical possibilities very much alive). After a million years of struggle over Westway, these issues should not be strange to even a vaguely conscious designer.
There’s also the instructive recent case of Battery Park City. Naturally, conditions down there are somewhat special: this is newly created land not yet entirely of the main. Two strategies are being used to invent the connection. First, there’s the World Financial Center gambit, a complex centered on a fresh-carved harbor, an attenuation of the shoreline. This idea of making a big civic space directly at waterside is A-OK. It recalls the first schemes proposed for Battery Park City, now abandoned, which were filled with ’60s-style megastructural grandeur and marvelously monumental waterfront spaces. The residential zones under construction in Battery Park City take a different tack, largely in reaction to this earlier vision. The big shtick here (propagated in an atmosphere of endless self-congratulation) is laying out the landfill in “traditional” streets and blocks, culminating in a waterfront promenade. In addition, a set of architectural codes have been imposed on the site, intended to establish a homogeneously Po-Mo decorative strategy for all new construction.
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The Battery Park City “idea” is an attempt to ape a “natural” process of city extension, to describe and replicate an indigenous way of building. Ironically, this residential gridding and platting has no real history nearby. The choice to build according to some idealized vision of a New York City residential neighborhood (whatever the conservative appeal of the defense via precedent) is — at this specific place — really just whimsical. In terms of the economics of parcelization, it does have its vulgar logic, facilitating the handing out of pieces to the usual developers. But the real visionary genius of New York lies in the tension between precedent and innovation. There’s no better example than the area of lower Manhattan that Battery Park City adjoins, where 20th century skyscrapers rise from the medieval-style street pattern laid out by the Dutch.
Alas, the visionaries of the Reagan Era are all Edward Tellers and Donald Trumps, arrogant apostles of the indefensible. Television City is exactly that, an urban vision apt for the TV era. Like television, Television City is all about unnatural juxtaposition. Just as the TV system validates any adjacency, not blinking an eye at those segues from commercials to carnage, the cut from the starving Ethiopian baby to Morris the Finicky Cat, so too, Television City simply inserts itself in prime time. There’s no point in building the world’s tallest building or a row of 76-story apartments, beyond the logic of anything goes if it sells.
Trump owns a couple of casinos in Atlantic City, one of them called “Trump’s Castle ” which advertises on TV continuously. In the ad, a little Henry the Eighth arrives in a coach as a chanteuse belts “You’re the King of the Castle” (king at least until you’ve lost all your money to Don). A message flashes on the screen: FREE INDOOR PARKING. This is important. Atlantic City is a fine example of the way people like Trump see cities, hostile places to be secured by means of strategic enclaves filled with glittery fun. Television City is likely to have the longest expanse of indoor parking in Manhattan and its first full-blown suburban shopping mall, safely tucked into the podium to protect it from the rest of town. Atop this (at an elevation of 85 feet) will be the “public” space. It would take an oxymoron to embrace this notion. I’ve no doubt that this park will (like the pathetic little upstairs amenity in the Trump Tower, supposedly public) never be anything of the kind, just an inaccessible, shadow-darkened nowhere.
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At least one distinguished architect turned this commission down. And, although the man adamantly refused to go on record about any part of the circumstances, it’s reported that he was loath to undertake a job so predicated on haste. As far as great cities are concerned, haste makes wasteland. Whatever your specific stylistic predilections, it’s clear that cities thrive on a certain density of elaboration. The Trump scheme may have fewer architectural ideas per unit volume than any project since Robert Moses’s most malnourished housing schemes. It’s the kind of work that would get a D- at a second-rate school of architecture. The only reason for the passing grade would be that the student had at least finished the presentation.
I can imagine the final review. Somebody would ask what the idea behind the scheme was. Since making a fortune is an answer that is disallowed before graduation, the kid would be forced to come up with an explanation of a more architectural or social character. The first effort would be to pin up various spurious diagrams of circulation, covered with red magic marker arrows pointing to the river snd the city, phony signifiers of accessibility. “You mean that to get to the river you’d have to walk several hundred feet down that ridiculous spiral ramp?” someone would ask. “I put it all on a podium so you could look out over the highway,” might be the next gambit. The ass-backwardness of this approach could be entertained. The kid would then revert to some stock palaver about composition. “I put the big building in the middle and balanced it by putting three 76-story buildings at either end of the site.” The klaxon of asininity would sound and our student would scramble once again. “It’s got the tallest building in the world!” he’d finally blurt out. And then the jury would go on to the next project.
Unfortunately, we cannot go on to the next project.
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Man of the Century
“I wanted to be an architect. I was an architect. I consider myself as a sort of witness.” So aphorized Oscar Nitzchke during an interview a few years ago. Born in 1900, Nitzchk — recently the subject of a lovingly organized show at Cooper Union — was certainly present at the scenes of many of mod arch’s most memorable creations. He’s a man who clearly loved — and still loves — being there: helping Van Doesberg and Arp on the Cafe L’Aubette; at the Salle Pleyel for Duke Ellington’s Paris debut; sitting with Picasso and Joyce during their first meeting at the Cafe de Flore; hanging out at the Cedar Thvern with Pollock, de Kooning, Kline, and Gorky; schmoozing at Black Mountain with Cage, Cunningham, and Bucky Fuller; holidays with the Braques; a stint in Le Corbusier’s office; work on the U.N. project; student in Auguste Ferret’s Atelier du Palais de Bois along with Nelson, Goldfinger, Lubetkin. How could 85 years of such ubiquitousness have left Nitzchke so little known today?
Certainly, as teacher, collaborator, and colleague Nitzchke has many friends and admirers. The depth of this respect is corroborated by the fact that Nitzchke’s small renown is the result of efforts by the sons of two of his associates. The Cooper show, for instance, was the work of Gus Dudley, whose father, George, was Nitzchke’s student at Yale. But the influence of personality and comradeship is an anxious and ephemeral one, always begging the question of works. And for Nitzchke, there’s a complication. The project that is the prime guarantor of his architectural reputation — the 1934 Maison de la Publicité — is unbuilt, commissioned by a man whose enthusiasm for Nitzchke’s preliminary designs was soon mitigated by his taking a mysterious powder. Bad history’s intervention also aborted the 1937 Palais de la Decouverte, a vast and forward-looking science museum, victim of the war. Nitzchke’s corpus, while exquisite, is more drawn than built.
Placing Nitzchke demands some sort of attention to categories. He doesn’t slot into the visionary niche with those delineators of the not-quite-possible-Sant’ Elia or Chernikov, say. Nor is he one of those great solidifiers of paradigm, source of coherence for some currency of fragments: there’s no Maison de Verre here. Nitzchke’s an exemplar rather than an avatar, a man with modernism in his veins, in love with a vision of the life of his times. And becauae his cognizance was sharp, his work has always been to the point, not derivative but original, continuous with a founding generation.
Nitzchke’s gifts as a a draftsperson were considerable. The Cooper Union show held many fine drawings, appealing for their combination of discipline and informality, for a relaxed technique that never confuaes itself with primary architectural ideas. Their pleasures, though, are tinged with the retrospective sadness of latency, the work filled with the possibility of construction. It’s a testament to Nitzchke that the enthusiasm that suffuses these drawings never dissipates into irony, empty technique, or the easily current. The summary artifact is the Maison de la Publicite, a paper masterpiece that might have become one of modern architecture’s monuments. The building was designed for a site on the Champs Elysee and meant to house both offices for an array of ad persons and a variety of spaces addressed to the public. In its programmatic complexity, the Maison was an ideologically deformed version of a “social condenser,” the modernist beau ideal of an architectural pressure cooker meant to form the new socialist citizen. While the truth the Maison was meant to propagate wasn’t exactly Pravda’s, its mecans were familiar, sibling in spirit with the Vesnins’ 1923 tower for the abovementioned daily. Both were transparently graphic, literally communicative, kinetic and mutable as the “news.”
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The Maison fronts the Champs with an ever-changing facade of “information,” projected in luminous electric signage. Nitzchke’s vision concentrates a phenomenon that was transforming European cities: the enlightenment of neon times. This was the heyday of the movie palace which, with an array of vast illuminated facades, helped re-form urban nightlife. But Nitzcbke’s signage is not simply veneered, it’s consistent and continuous with a fully configured overall vision. At street level, the building presents an exhibition area meant for a changing show of products, a space anchored by four squarely composed cylindrical columns that broaden to dramatic mushroom capitals. Up a level is a cafe, overlooking. Down a level, an egg-shaped newsreel theater, cranked winningly into a corner of the volume. The upper-story offices are organized into two buildings, flanking a central cafe court and linked along one side of it by an undulating circulation spine of glass block. It’s beautifully done and beautifully drawn, so strong and so assured as to, at least partially, dissipate the sad question of “what if.”
Oscar Nitzchke’s triumph is not merely one of talent but one of keeping the faith. In project after project be sustains modernism’s enthusiasm for its version of the new. In 1929, Nitzchke and two collaborators won a competition for the design of a “Maison Metallique.” It’s a swell solution to the confrontation of architecture with new, industrially produced materials, one of modernism’s favorite intersections. The project is thoroughly realized and unsentimental, a machine for living. Reconfronting the question of the metal building in the late 1940s, while working on the design of the Alcoa Tower in Pittsburgh for the office of Wally Harrison (bis long-time employer), Nitchke’s enthusiasm for the problem is undiminished. While my feelings about the final project are mixed (intervention of committee design?), there’s no mistaking the vigor of Nitzchke’s investigation. Later projects reveal the same drive: a church in Tunganyika echoing Ronchamp, a cathedral in San Salvador under the Perret sway, neither built, yet still tributes to modern architecture’s possibility. And this does seem like Nitzchke’s legacy, this enthusiasm for prospect, this optimism for architecture.
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One Show, Too Quickly
The current show at Rick Kaufman’s Art et Industrie is very good. The best piece is a table by Richard Snyder called Moto. Sitting atop four cylindrical black steel legs is a hollow truncated cone of colored spun aluminum which widens to support a square glass top. Moto is primarily engaged with issues of support, both its own and that of the objects it’s ultimately meant to bear. The location of the point of instability is always central to the art of furniture: each work describes an equilibrium.
The theme of statics runs through the show. Forrest Myers’s Manifold armchair of patinated half-inch steel plate is a complete solution to the hoary origami issue of the jointless chair, an ideal problem delimited by self-imposed technical constraints: take this plate, cut and bend, make … a chair. James Hong also contributes a structural tour de force with his coffee table Iggy. A circular glass plate is supported by a series of accordion-folded pieces of parachute fabric, stiffened with clear resin, tenuous and improbable. Howard Meister’s suite of spindly hand-wrought black-painted steel pieces are like frail sketches come to life. They’re minimalist in means but liberated from mainstream Minimalism’s ponderous addiction to geometry.
As you may know, I haven’t euctly been reticent in concealing my hostility toward the proposed expansion of the Whitney Museum. Now there’s a good opportunity for you to judge for yourself. At the Max Protetch Gallery a group of Michael Graves’s recent projects are on display, the Whitney scheme among them. Graves always makes a compelling graphic case for his work, and the projects in this show are no exception. Whatever one thinks of the work itself, the volume, consistency, and conviction are striking.
A Piece of Good News
It’s always nice to have the winds taken out of your journalistic sails by the arrival of an event you were just preparing to argue for. On November 19, the City Council passed an extremely important piece of environmental legislation, requiring strict regulation of the way in which buildings are demolished in order to prevent the poisoning of both workers and the public by asbestos. It should be an object of great pride that New York has become a national leader in this crucial issue. Although uae of asbestos by the construction industry bas been widely curbed, vast quantities of the stuff remain in many buildings, ready for release into the air during fires, demolitions, and other decompositions. If well-enforced, the new legislation will offer crucial protection to many of those moet directly at risk from this terrible pathogen. ■
If Donald Trump has his way, the Kremlin towers will soon have a new neighbor. Trump Towers, just beside Red Square.
The Donald’s mouth has often been bigger than his bank account. But if Russian news reports are on the money, Trump’s first foreign real estate ventures includes plans to renovate the Hotel Moskva, a landmark-turned-to-seed Stalinist structure off one of the most famous squares in the world. A Trump team was in Moscow months ago to assess the venture. A top Moscow city government official told Moscow News that the hotel deal was just about complete.
For now, Trump is being unusually — though self-servingly — silent about the deal. However, his spokeswoman did not deny it. “It’s too soon to talk about it,” said Norma Foerderer, Trump’s long-term spokeswoman.
Moscow’s first vice premier, Vladimir Resin, told the Russian news agency Interfax that Trump and the Moscow city government had “practically reached agreement” on the deal. Moscow News described the hotel deal as complete. Trump will apparently renovate the hotel and turn the top floor into luxury apartments. Russians, the newspaper proudly reported, will be hired to carry out the reconstruction, “excluding the finishing touches.”
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If Trump does jump into the Moscow real estate frenzy, he and his deal would make Lenin, still mummified, submerged in glass and on display inside the square, rise with rage. Trump, who in some ways became a symbol for 1980s greed and American expansionism, would enter the post-Communist real estate market as anti-American sentiment in Russia is on the rise. Trump visited Moscow last November, the same month a pioneering American cowboy capitalist, Paul Tamm, was gunned down outside the luxury Radisson-Slavyanskaya Hotel, which he helped create — and where President Clinton used to stay.
In Moscow, Trump would become just one of many brash entrepreneurs in a country where the lines between government, gangsters, and business are inextricably linked. Trump may also finally meet his real estate match: the notorious Moscow mayor-mogul, Yuri Luzhkov.
The Trump team sent to Moscow formally assessed the cost of fixing up the decrepit Hotel Moskva, an imposing gray and gloomy building. Trump has been negotiating with Brooke Group Ltd., a Miami-based holding company that owns Liggett Group Inc., of L&M, Lark, Eve, and Chesterfield cigarette fame. Nicotine is big business in Russia, and such brands are giving Philip Morris hefty competition.
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If Trump succeeds, he will be biting into a solid chunk of Soviet history. Hotel Moskva’s lopsided towers are a tribute to Stalin’s totalitarianism. When the architect showed Stalin two different plans, legend has it, the dictator approved both. Terrified to displease him, the architect complied; hence the hotel’s asymmetrical design.
Russian newspapers have reported Tsar Trump’s deal as clinched. The renovation is expected to take 18 months to complete.
In the early 1990s, as Communism was collapsing, the Hotel Moskva was one of the most popular expatriate hangouts in town. It boasted one of Moscow’s only non-Soviet restaurants, known as the Spanish bar, where spies, business-people, reporters, and other unsavory types used to gather for sangria, garlic trout, imported chorizo, and special-order paella. Patrons were (willingly or otherwise) serenaded by guitar-playing gypsies and Cubans who came to Russia as students and stayed. ❖
Start a War? Violate a Constitutional Privilege? Spur Economic Disaster?
For Al D’Amato, Nothing’s Too Much for a Big Donor.
One more sleaze story that puts Al D’Amato in bed with a contributor is like one more sex story about Ted Kennedy, in or out of bed. A decade of endless revelation has made New York’s two-term junior senator the Madonna of corrupt coupling. But since he is saluted as Senator Pothole as often as he is derided as Senator Shakedown, all that the electorate is left with is the perception that at least the state has a feisty senator who never fails to shake the pot. With the election less than a week away, despite almost a dozen years of saturation tawdriness, Al D’Amato’s most spectacular senatorial achievement is that he has somehow managed to immunize himself from ethics charges, at least in certain regions of the public mind, by making new sagas of his duplicity so “hopelessly” redundant that few readers have the patience to wade through them again.
Many of the millions of New Yorkers who will vote again for him next week will do so knowing he is a con man. You can see them holding up their hands when they are approached by reporters and insisting that they don’t want “to hear about the past.” They know he is taking care of himself — horse-trading with every special interest imaginable to pay for the $21 million worth of televised lies that have been protecting his Senate seat since 1981. But as long as he convinces these voters that he might also be taking care of them free of charge, they will tolerate his bartered service.
D’Amato’s campaigns are seen as raffles with enough prizes for everyone who plays to win a little something. Sure, those who buy a block of tickets get a Washington wallet-full, but ordinary voters out in Buffalo or Melville think they own a reassuring piece of him themselves, even if all they get is a promised tax break or a bone tossed to a personal bias. He will never be so lofty they can’t visualize him coming to their house for dinner, and bringing an expensive dessert. If he is Jesse James, it is not their bank deposits he is stealing.
Inside this review of D’Amato’s life and times are three new Fonz fables that show just how far he is willing to go for the ticket buyers who can afford the wallet-full. For friend and financier Donald Trump, he was willing to violate the constitution by volunteering privileged information on the witness stand. For Drexel-Burnham, he was just as prepared to submarine legislation that, had he pushed it, might have restricted junk bond influence on S&L collapses and hostile corporate takeovers. The story also reveals D’Amato’s shocking effort to manipulate the Manhattan U.S. Attorney’s office in ways that benefitted his Drexel donors.
The third episode in this trilogy of a contributor-conscious career exposes D’Amato as a senator whose attitudes about the Noriega government shifted with those of a longtime donor, even to the point of becoming an advance man for an invasion that would ultimately secure his client company’s oil pipeline interests.
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Of course, it’s a given that D’Amato believes in nothing. Though it has somehow passed unnoticed all these years, even his personal life is a fraud. As soon as he won his 1980 Senate race, just before he assumed office two months later, he separated from Penny, his wife of many years. Twelve years later he is still separated, yet they have never divorced. In the meantime he has dated half of Manhattan and Washington, demonstrating an ironic fondness for former and current prosecutors, yet maintaining the political sanctity of his Catholic marriage, a presumed prerequisite for reelection in a decidedly Catholic state. While other Catholic politicians with wayward views but less wayward lives must keep a wary distance from the unpredictably disapproving cardinal, tuxedoed Al D’Amato is welcome at the Al Smith dinner or at O’Connor’s hospital bedside afterward, photographed on his way to this corporal act of mercy by attending news cameras and allowed by a tolerant cardinal to wrap himself around a church pillar. Perhaps O’Connor thinks that Al, too, is a celibate.
The senator’s technical avoidance of the sinful stain of divorce, as well as his possible pillow talk with a top organized crime investigator, might ordinarily be fodder for the New York Post; but in recent years, it has been owned by the senator’s longtime finance chair, Peter Kalikow. It would not be too hard for the Post to source the story, since D’Amato began using his friend Kalikow’s Fifth Avenue apartment as his legal address when he left his wife all those years ago, even sometimes visiting the developer’s penthouse for a change of clothes.
Consistent with this counterfeit life, D’Amato has, in the final weeks of what may be his final campaign, shed a “principled” position a day, transforming himself into a Clinton Republican, redefining his abortion position, embracing gays, waffling on plans to punish the welfare pregnant. His commercials have been such transparent hokum — ranging from the ridiculous misuse of Benito Mussolini, Geraldine Ferraro, and 26-year-old assembly votes by opponent Bob Abrams — that D’Amato almost seems to be winking at the voters, offering up openly banal explanations so they can justify their otherwise indefensible urge to support him. This campaign of high-priced deceit has been such an outrage because D’Amato knows he is not just running for reelection; he is running for his life, painfully aware that a Justice Department liberated by a Democratic administration, with federal prosecutors in New York nominated by two Democratic senators, might not be as forgiving as those who’ve been in charge of the constant probes of him that have occurred in recent years.
While D’Amato may still be able to draw on this cynical grassroots acceptance and win, he knows now that a consensus has finally coalesced against him at the elite levels of New York politics. When Newsday and The New York Times brilliantly assailed him in same-day endorsements of Abrams last week, he officially became an outcast, revered only by the “he’s-never-been-charged-with-a-crime” Post. Even when he extended his hand for one final dance with his old partner Mario Cuomo, the governor slapped him in the face, apparently well aware that too many people were watching to resume their once mutually soothing tango. As the Times, which had endorsed D’ Amato last time, put it about the senator’s vice, enough was finally enough.
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Mike Armstrong, the savvy and loyal D’Amato lawyer and confidant, reminded me last week that the ethics cloud over D’Amato was first floated by the Voice during his bitterly reminiscent 1980 campaign. But when Jack Newfield, Joe Conason, and I finished that four-part series, we sadly came to realize that we’d actually helped him win his narrow victory. The grave charges we launched — all based on his prior career as a Nassau County official with a penchant for plunder — created such a stir that we’d go to an Alphonse press conference and the cameras would surround us. The D’Amatos, with brother Armand playing an aggressive role in the publicity war, successfully positioned themselves as the targets of the far-left, progay, anti-Italian Voice and rode the hard truth of our charges to triumph. (Then, as now, D’Amato declined to talk to the Voice.)
I remember the Fonz’s father, Armand D’Amato Sr., whom we unveiled as a double-dipper on public payrolls who collected exorbitant insurance brokerage fees from the county through his son, chasing our car down an Island Park street, shaking his fist at us. I remember our discovery during the series that D’Amato had hired a private investigator who’d once worked for Colombo capo Sonny Francese to tail us.
But mostly, I remember the salty taste in our mouths at the end, disappointed that we had been portrayed as mere partisans, though our portrait of the Nassau GOP machine was a carbon copy of our earlier work on the Brooklyn Democratic organization.
Since then, the breaking stories about Alfonse, published by every newspaper but the Post, have come nonstop. He is the only elected official in the state who’s been the recipient of three sets of illegal contributions, all of them earned by public performance on behalf of the compromising donors — $30,000 from Wedtech (“the most corrupt little company in America,” according to the subtitle of one book); $10,000 from Unisys, the defense contractor whose payments to brother Armand led to his current indictment; and $32,000 from a group of Puerto Rican HUD developers, who are also the subject of a pending criminal case.
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D’Amato is the only senator in America who has acknowledged having conversations on behalf of two mobsters with a United States Attorney, contacting Rudy Giuliani in one instance to “warn” him that “lawyers” thought he might be “embarrassed” over the possible loss of a racketeering and murder case against boss of bosses, Paul Castellano. Just as unique was D’Amato’s appearance as a character witness for mob-tied disco owner Phil Basile, whom the senator kissed on both cheeks in the courtroom after proclaiming him “a man of honor and truth.” D’Amato rents his office to this day — paying the highest congressional rent in America and far more than the market rate in the building — from a landlord who was involved in a parking lot deal with convicted felon Basile (both Basile and the building’s owner, who have contributed thousands of dollars to D’Amato, have also been represented by brother Armand).
Of course he has also distinguished himself before the Senate Ethics Committee, which found barely a year ago that he “conducted the business of his office in an improper and inappropriate manner” by letting his brother “systematically misuse” it for “personal gain,” writing a letter for Unisys on the senator’s stationery. While others in Washington have only bad checks to count, D’Amato may have set other kinds of Guinness records — seven immunized witnesses forced to testify about his actions, 41 wiretapped conversations from various federal jurisdictions where his name came up, 35 potential witnesses who took or said they would have taken the Fifth Amendment rather than testify about him, and four full days of sealed testimony by a senator seeking reelection.
Of course the committee never considered the charges now being entertained by a federal grand jury in Washington, which is reportedly examining the senator’s attempt to induce a HUD regional director to perjure himself for him. As Newsday‘s Bob Greene has revealed in recent days, the Washington prosecutors are also reviewing for possible perjury prosecution 11 pro-D’Amato witnesses who appeared before the Ethics Committee about the Island Park houses, and they are doing it on the recommendation of the Senate.
D’Amato has of course so far survived the recurring investigations that have dogged him, but conduct that so frequently attracts prosecutors yet falls short of an indictable offense is hardly an affirmation of innocence. Indeed these bouts with grand juries have become so routine that a self-conscious Newsday downplayed Greene’s exposé of the latest one, and the Gabe Pressmans of this city’s media pack have yet to shove a mike under the senator’s chin to even ask him about the alleged perjury coaching. A prospective deputy mayor who may or may not have harassed a female aide has gotten much more attention, even in the Times, than these criminal allegations against a senator up for reelection. Astonishingly, Greene’s second story, shaking the foundation of the Ethics Committee’s already hesitant findings on Island Park and announcing the probe of the 11 witnesses, was shunted off on page 23.
It is indisputable that if Abrams, rather than D’Amato, were suddenly revealed as the subject of a criminal probe, it would be banner headline news in every newspaper and would bury his candidacy. But even though the new charges against D’Amato resonate against a background of endless allegations (or perhaps because they do), they cannot compete with the media magnet of another black hard-on and have been relegated to the back pages. D’Amato is once again saved, in part because of the familiarity of his sins. It is as if the worse editors in this city’s media establishment believe he is, the less they will allow themselves to reveal it.
Almost every one of these D’Amato scandals has involved a contributor, an unsurprising fact for a public official who proudly told the Times that “only 35 per cent of those who give expect something in return.” Since that adds up to over $3 million in quid pro quo contributions since 1981 — at a mere $ 1000-a-head — the senator has been very busy indeed, by his own account, delivering to demanding donors.
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The irony is that he has successfully made Abrams’s questionable fundraising techniques a focus of his campaign commercials, zeroing in on the Feerick Commission’s conclusion that the Attorney General solicited a $15,000 contribution from a developer who had millions in condo plans pending before Abrams’s office. What no one’s noticed is that D’Amato himself has collected $23,500 since 1980 from the family and employees of this developer, who goes unnamed in the senator’s television commercial, and that D’Amato has done more for the developer than Abrams ever dreamed of doing. The developer is Donald Trump, who in addition to contributing actually hosted D’Amato’s annual fundraising dinner at the Grand Hyatt at a deliberately reduced rate five years in a row during the ’80s. The senator in fact may have decided not to mention his friend’s name in the commercial for fear of jeopardizing the possibility of spending another weekend at Trump’s dazzling Mar-A-Lago in Palm Beach, as D’Amato did in the late ’80s — a far cozier scene than Abrams’s breakfast with Trump.
While there is no evidence that Abrams ever personally participated in his office’s review of Trump’s condo plans, D’Amato himself took the witness stand for Trump in the biggest legal case of Donald’s life, the United States Football League’s $3 billion antitrust suit against the National Football League in 1986. D’Amato was used as a witness to lay the groundwork for a key contention in the USFL case that was, in the end, flatly rejected by the jury: that the NFL had engaged in a conspiracy with New York Jets owner Leon Hess to block Trump’s USFL team from getting a New York stadium and franchise. D’Amato testified about three conversations he had with Hess that supposedly proved this thesis, but a Voice review of the legal billings submitted to the USFL after the trial has revealed that a partner in the law firm Trump handpicked for the floundering league talked to D’Amato shortly before two of the conversations with Hess. The timing of these contacts suggests that the Fonz may have been acting as a conscious agent of Trump’s lawyers when he called Hess, setting the Jets owner up for testimony at trial.
The Voice has also obtained sealed sidebar discussions with the judge prior to D’Amato’s testimony revealing that the senator was planning to testify about much more than his Hess conversations, but was stopped by an embarrassing legal ruling. He was prepared to detail talks he had with other senators who supposedly told him that NFL Commissioner Pete Rozelle “was making personal threats to yank franchises unless they voted right” on certain key NFL antitrust legislation “or to grant franchises if they would go that way.” But U.S. District Court Judge Peter K. Leisure ruled that D’Amato’s proffered testimony would violate the Speech and Debate Clause of the U.S. Constitution, which bars senators from revealing in court privileged conversations with other senators. The judge prevented Trump’s lawyers from asking any questions about the Rozelle conversations, though D’Amato was apparently quite willing to break a senatorial confidence for his ingratiating supporter.
Such boldness, however, was a small matter compared to how far he would go for that other billionaire emblem of the ’80s, Mike Milken.
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What Jesse Kornbluth in his new book, Highly Confident: The Crime & Punishment of Michael Milken, called the “leveraged buyout of Al D’Amato” is already a fairly well-known story. First reported in 1986 by The Wall Street Journal, it is standard D’Amato fare, only this time with a peculiarly high level of impact. When the Fonz took the money and tanked it for Drexel, he managed, according to much of the hindsight analysis, to encourage the junk bond explosion in both corporate takeovers and S&L’s, leading eventually to the collapse of companies and banks laden with over-priced debt.
While the Senate Ethics Committee cleared D’Amato of “any improper conduct” on the Drexel charge, its carefully
worded finding addressed only the question of whether D’Amato had “changed his position on junk bonds” after he “promised to introduce restrictive legislation.” Since the committee restricted itself to reviewing the charge only in its most damning form — a callous reversal of position after collecting the cash — the result was predictable. Unless Drexel witnesses at the very top were willing to say that they told him they’d give him thousands if he would tank the swirl of 1985 reform bills, the committee was doomed to come up dry.
Instead, of course, something vaguer happened, and either Mike Milken, who personally hosted the May 31, 1985, D’Amato fundraiser at Chasen’s in Beverly Hills, nor D’Amato, who tried embarassingly hard in retrospect to insinuate himself deeply inside the glamorous Drexel fast track, is likely to ever say just what it was. But the fact is that the Milken party occurred, generating at least $34,000 for Alfonse barely two months after his subcommittee launched hearings on junk bond reform and just a week before Drexel CEO Fred Joseph testified. Then, one week after D’Amato produced a watered-down study bill on junk that December, Joseph and 34 other Drexel executives bought $500 tickets to a giant D’Amato fundraiser in New York.
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D’Amato called the timing “absolutely coincidental,” but what is not coincidental was just how often this sort of awkward happenstance has hit the senator. When these two large chunks of donations are added to those from Drexel’s PAC and other individual contributions, the Fonz’s total hits $70,750 by the end of 1986. Voice calls to many of the donors last
week found few willing to discuss their generosity, though one, Jon Jetmore, said that “someone” at the company asked him to give, indicating that “it would be good for Drexel” and explaining that “there were few in Congress defending Drexel publicly and that D’Amato was the only one the company felt would listen.” Jetmore, who contributed after D’Amato produced his toothless December bill, recalled that the Drexel donations might have been connected with the fact that D’Amato had “voted against inhibiting legislation” Drexel opposed.
If most of the donors were still shy about such a straightforward explanation, the senators who were pushing for restrictive legislation at the time no longer are. Former Wisconsin senator Bill Proxmire, who has never before been quoted on the subject, said in a Voice interview last week: “The legislation could’ve been very good for our economy because it would have prevented hostile takeovers and that is certainly one of the reasons we have so many major bankruptcies today. [D’Amato] got contributions because he was chairman of the securities committee; they were buying influence. PAC’s don’t contribute because they admire someone’s principles or their looks. I think D’Amato was unusually supportive of Drexel. That is why he got the contributions.”
Senator Howard Metzenbaum told the Times back in 1986, three weeks after D’Amato was reelected, that D’Amato had given him “a firm commitment” to introduce a bill aimed at curbing takeovers “before the July 4, 1985 recess,” but that it “never came to pass and I never heard another word about it.” Last week he told the Voice that D’ Amato later “offered a number of excuses for his failure to do so, none of which I considered compelling.” Metzenbaum added that D’Amato’s eventual bill came so late and was so weak it “effectively eliminated any possibilities of passing takeover legislation that session,” which came at an unusual, historical moment, when leading Republicans were temporarily outraged by Milken tactics. “It’s clear that by failing to move forward as promised, Senator D’Amato squandered a golden opportunity to enact meaningful reform at a point in time when it was needed most.”
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D’Amato counsel Mike Armstrong likes to point to a supposed discrepancy between Metzenbaum’s post-1985 comments and his attempt that November at typical senatorial back scratching when he praised D’Amato during a committee session for running “excellent hearings.” But the fact is that in the same brief statement, Metzenbaum said he was still hopeful his reluctant colleague would “soon introduce his own tender offer bill,” making his ultimate disappointment perfectly consistent.
Most of the reporting about D’Amato’s Drexel relationship ended with that bill, but the relationship itself didn’t. Prime Drexel clients like Integrated Resources dumped $58,750 into the D’Amato coffers, much of it in the midst of the 1985 machinations, and employees of Saul Steinberg’s various Reliance entities donated another $56,000. Everyone from Drexel raider Boone Pickens to the Milken-manufactured billionaire Nelson Peltz to several Drexel lawyers like Richard Sandler to Milken publicist Linda Robinson dropped change in the passing D’Amato hat.
The senator was flown out to Beverly Hills for four days in April of 1986 at Drexel’s expense, paid a $2000 speaking fee, and entertained at the infamous High Yield Bond Conference, better known, at least after Connie Bruck’s 1988 book, as “The Predators’ Ball.” Before bringing him out to the coast, Drexel paid for a strange stop in Denver, where D’Amato was apparently the beneficiary of another fund raising festival, collecting over $18,000 from 51 Colorado donors, led by executives of the MDC home building company. Described in S&L bestseller Inside Job as “a junk bond Frankenstein given the spark of life by Dr. Milken,” MDC president Larry Mizel kicked in $1000 for D’Amato, while his brother and several other company officials gave $300, the ticket price for the party (two Mizel companies later pled guilty to making illegal campaign contributions to a Colorado congressional race).
Once out in California, D’Amato stayed in the luxury Palm Desert, condo of Columbia Savings and Loan president Tom Spiegel, currently under indictment in Los Angeles for bilking his bank of millions and one allegedly illicit transaction with his mentor Milken. Drexel’s Dennis Levine, the insider-trading felon who wrote his memoirs in prison and was himself a D’Amato donor, recounts one brief exchange with D’Amato during the notorious conference festivities: D’Amato, “effusively working the room” at a Chasen’s dinner party and approaching his table, slapping Boone Pickens on the back and extending “a warm hello” to Boesky. When D’Amato moved on, Boesky muttered to Levine, “That bastard cost me five thousand dollars” — an apparent reference to past campaign contributions.
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The Republicans lost the Senate, and D’Amato lost his subcommittee, in the beginning of 1987. With Boesky’s indictment a few weeks earlier, Drexel, too, was in the midst of dramatic change. Instead of chasing every consumable company, they had suddenly become the quarry themselves. Ironically, Drexel’s pursuer was none other than an appointee and friend of Al D’Amato’s, U.S. Attorney Rudy Giuliani, whose office had wired up Boesky for meetings with Milken shortly before the inside trader’s $100 million guilty plea was publicly announced. The fear of Giuliani on Wall Street and in Beverly Hills was palpable at the time: pressing forward with new theories of securities prosecutions, he seemed both unreachable, in standard political parlance, and dangerously skillful when it came to making towering cases stick.
Before 1986 ended, Mike Milken’s brother Lowell, a top Drexel executive with potential exposure in the unfolding scandal, hired as his criminal attorney Mike Armstrong, the senator’s strong right arm. A former federal prosecutor and the principal powerbroker on the D’Amato screening panel that nominates federal prosecutors and judges in New York, Armstrong immediately flew out to California to meet with his client and his client’s brother. Over the next three years, Armstrong would play a broad role in the joint Milken defense, running up a fortune in Drexel and Milken bills (he still represents Lowell on outstanding civil matters).
Armstrong maintained in a Voice interview that neither Milken brother discussed his ties to D’Amato. At the time, however, Armstrong was starting his seventh year of periodic pro bono representation of D’Amato. Beginning in 1980, during the first Senate campaign, D’Amato asked Armstrong to advise him about the possible release of his earlier grand jury testimony about a Nassau County 1 per cent kickback scheme, which had become a hot issue in a close race. Named to D’Amato’s panel as soon as the senator took office in 1981, he continued representing D’Amato in a federal probe of the senator’s involvement with a Hempstead recycling plant, ultimately appearing in court with the senator when D’Amato testified at the trial of one recycling plant defendant. He was there again in 1983 when D’Amato appeared on behalf of Phil Basile, and later during the senator’s Wedtech testimony.
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Armstrong’s Legal Aid list for D’Amato, including aspects of the many HUD investigations and the Meade Esposito case, goes on and on. He didn’t charge D’Amato, however, until 1989, when he took on the senator’s defense in the Senate Ethics Committee probe. Today, a senator who claims a net worth of $60,000 owes Armstrong $400,000 for the concluded probe.
A few months after Armstrong went on Drexel retainer (he was paid by the company until the two Milkens were indicted in 1989, when Lowell was forced to pay his own bills), Al D’Amato called Giuliani and said he “wanted to talk politics,” inviting him to dinner and asking that he bring his wife, television newswoman Donna Hanover. Though D’Amato wasn’t any more specific than that, Giuliani discovered what the agenda for the August 1987 dinner was while riding there in his car. WTNS reported that D’Amato was trying to talk the politically ambitious Giuliani into running against Democratic senator Pat Moynihan. That night, for hours, and for weeks later, chummy Al kept the pressure on, promising to raise millions for the run. Giuliani, whose four-year term was winding up, was sorely tempted, even writing a declaration speech at one point. But U.S. Attorneys don’t have to leave when their term expires, and Giuliani was also reluctant to leave, with so many giant cases hanging in the balance.
He asked that D’Amato allow him to pick his own successor, announcing publicly his preference for an aide, Howard Wilson, but D’Amato balked. Then news reports appeared listing a half dozen finalists that Armstrong’s panel was considering to replace him, and describing prominent defense attorney Otto Obermaier as the frontrunner. This worried Giuliani, and he said so in news interviews, but only in the most general terms, expressing a concern that several of the senator’s prospective appointees specialized in representing the securities industries or white-collar criminals. When D’Amato charged that Giuliani’s reluctance was “provocative and not too smart,” Giuliani replied that he’d tried to “convey to the senator that I’m not being arrogant,” adding that he was “concerned about four or five very, very sensitive investigations.”
The concerns started with Armstrong, whom Giuliani refused to talk to about the transition, precisely because of the defense lawyer’s Milken conflict, a message Armstrong concedes was sent directly to him. Another powerful player on the panel, Paul Curran, represented Robert Freeman, the head Goldman, Sachs trader whose Wall Street handcuffing and arrest in early 1987 had caused a media stir. Obermaier had a client squarely in the middle of the same case. Bob Morvillo, a partner in Obermaier’s small, top-flight criminal firm, was just starting to represent Tom Spiegel, the senator’s California condo host whose S&L had $3 billion in Milken junk. The firm was also representing top Drexel brass, including one potential witness it has refused to identify when questioned by reporters to this day. While Obermaier seemed the allbut-certain designee, others on the published list of candidates were also involved in the securities cases, including a partner of Peter Flemming, Mike Milken’s principal attorney.
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The efforts to induce Giuliani to leave were so carefully monitored at Drexel that the weekly meetings of its so-called “War Council” — discussions that included 15 or so executives, lawyers, and consultants — were regularly interrupted by chitchat about his possible departure. Even Armstrong conceded in a Voice interview that he “may have talked about the Southern District situation in a conversational way” with his client Milken. “I didn’t agree with the way Rudy was running the office,” says Armstrong. “I wanted him to leave.” Armstrong had in fact convinced D’Amato to name John Keenan to the post in 1983, and the Keenan appointment was only blocked when Giuliani, who worked in the Justice Department then and had strong support there, prevailed on D’Amato to change his mind.
Armstrong also acknowledges that it was he who recommended Obermaier, an old colleague from their days in the U.S. Attorney’s office together, though he claims he was unaware of Obermaier’s published views, mostly in a New York Law Journal column, bashing insider-trading and other securities cases. It was this philosophy that most upset Giuliani, since not even an Obermaier recusal on an individual case where his firm had a client could protect the office’s securities prosecution from a wholly different point of view about everything from the use of the RICO statutes against white-collar criminals to deferring to the SEC on trading cases. Giuliani was so uncomfortable with these columns he carried them around with him and showed them to friends. “Otto had the same point of view as everyone else,” Armstrong argues now, listing several former securities prosecutors who shared Obermaier’s views, and not even noticing that all of them wound up with Drexel clients. “Rudy didn’t know shit from Shinola about securities cases,” Armstrong declared.
By early 1988, Giuliani had all but decided to pass on the Moynihan race. Wilson had appeared before the D’Amato panel, and Armstrong and Curran had left the room during his interview, implicitly recusing themselves on his review, though at least Armstrong was clearly involved in the ultimate selection. Neither Giuliani nor Wilson would return Armstrong calls on the matter or discuss it with him, until he finally cornered Wilson at the swearing-in of a federal judge. According to a memo Armstrong prepared — out of what he says was caution over how Giuliani might one day misinterpret his conversation with Wilson — he offered to make Wilson chief assistant under whoever was the new U.S. Attorney, and give Wilson control over “the ongoing investigations about which Rudy had expressed concern.”
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While Armstrong sees this memo as proof that Drexel wasn’t his motive in trying to facilitate a Giuliani departure, it is clear that Armstrong’s offer was a last-ditch proposition on the eve of Giuliani’s announcement that he would not run. Indeed the memo reports that Wilson told Armstrong that Giuliani had already decided not to run even though he very much wanted to.” Wilson says that Armstrong “may have said I’d be someone’s deputy, but I don’t think so”; he was “positive that the Drexel thing wasn’t presented.” Even Jesse Kornbluth, whose sometimes-persuasive Milken book is a staunch defense, spent hours discussing this pivotal period in the effort to block a Milken indictment with Armstrong, Milken, and many others, leading him to tell the Voice last week: “It’s pure projection; but it’s hard to believe that the effort to get Rudy out wasn’t fully discussed. God knows every other avenue of saving the Milkens was gone over innumerable times from 1986 to the end.”
When Giuliani announced he wouldn’t run, D’Amato seemed to lose whatever interest he ever had in fielding a Republican opponent against Moynihan, endorsing an obscure Long Island businessman who’d long been a backer of his, but declaring that he was “too busy” to campaign with him. Giuliani stayed in the office another year, took Drexel’s guilty plea but could not get Milken’s. In a sudden, and deliberately arranged maneuver, he resigned and brought back to the office from private practice a onetime top aide, Benito Romano, getting the Justice Department’s approval to install him as an interim U.S. Attorney in an end-run around D’Amato. One top Justice Department official who cut the Romano deal with Giuliani, Robin Ross, said that an angry D’Amato called him and was “quite blunt about his displeasure.” D’Amato immediately moved to nominate the ever-patient Obermaier, but Justice and the White House sat on his name for 10 months, leaving Romano in office.
That gave Romano time to finally either indict Milken or get a guilty plea. When the two Milkens did not meet a March plea deadline offered by Romano, he filed a racketeering indictment against them. Though Romano remained in office until October, Milken’s lawyers never resumed plea discussions with him. “I wanted to resolve the case before D’Amato’s replacement got there,” Romano told the Voice. “Whether they were waiting” for Obermaier, “you’d have to ask them.” A few months after Obermaier arrived, Mike Milken finally pled guilty to six felony counts, none of them on the racketeering charges, and the always-difficult case against Lowell Milken was dropped.
Obermaier recused himself on the case, as he has on at least 34 other cases that went to indictment since he took office. (Since the only information the office will provide about this unprecedented number of recusals is the press releases issued by the chief assistant when Obermaier is conflicted out, there is no way to count recusals in cases that never get to indictment. By contrast, the U.S. Attorney in Brooklyn, Andy Maloney, has recused himself on two cases though he’s been in office twice as long as Obermaier.)
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While there are certainly aspects of the office’s handling of Milken that have continued the tough traditions of the Giuliani/Romano era, the decision this summer to write a letter to sentencing judge Kimba Wood, citing his “substantial” cooperation, in direct contradiction to a letter sent by the SEC enforcement chief, has been widely questioned. What Giuliani himself says made the government’s position on sentence reduction so strange was that its letter offered no critique of Milken’s testimony as a defense witness for one Drexel client, even though Milken’s “appearance against the government was expressly rejected as unbelievable by the jury,” which convicted Milken’s friend anyway.
Wood, who wound up citing the letter from Obermaier’s office as a basis for reducing Milken’s sentence to two years (slightly less than Boesky, the witness who brought him down), did not dispute in her opinion the SEC contention that Milken was principally offering information to prosecutors about Drexel folks who’d cooperated in the investigation of him. The judge cited only one other letter in her decision — a voluntary submission helpful to Milken on the issue of his attempt to make restitution to those he’d damaged. The attorney who wrote it, Pat Hynes, represented a group of civil claimants whom Milken had agreed to make a sizable payment to, though she was hardly the principal litigant in these separate lawsuits. A close friend of D’Amato’s who Armstrong acknowledged used to date the senator, Hynes was recently dubbed by D’Amato to join the Armstrong screening panel.
In addition to the favorable treatment for Milken by Obermaier’s office, it has also recently passed on retrying the Drexel spinoff, a case against several traders from Princeton-Newport that was overturned principally due to a sentencing error by the judge, and also decided not to prosecute Columbia S&L’s Spiegel (eight months later, federal prosecutors in L.A. indicted him on largely different charges). Obermaier recused himself on these cases, as well he might since his law firm is extensively involved in both. But his recusal did not prevent him from summarily dismissing the prosecutor who’d tried Princeton-Newport and, though he’d since left the office, was available to work on its appeal. Obermaier used the assistant’s appearance in a television interview as a rationale.
While there is no smoking gun establishing what D’Amato’s purposes were in all the intricate machinations surrounding his Southern District appointment, the final proof is in the pudding. The office that once pioneered Wall Street cases has not made a new, significant securities prosecution since the “scholar-on-Ottomatic” got behind Rudy’s desk.
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It Is January 1983 and Al D’Amato, just starting his third year in the senate, is aboard a chartered flight to Panama City. He and his daughter Lisa are taking a four-day trip to Panama paid for by the Long Island petroleum giant that will soon employ her as an economic analyst, Northville Industries. While Northville will fly over 300 people down to Panama to join in ceremonies and receptions celebrating the opening of its new, 80-mile pipeline across the heart of the Isthmus, D’Amato is the only U.S. senator aboard. But he isn’t going just because of his daughter’s imminent job.
In fact his daughter’s job was an outgrowth of his own almost 30-year friendship with the president of this family-owned firm, Harold Bernstein. According to Northville vice-president Joseph Ackell, Bernstein and the company were major financial supporters of D’Amato’s during the early days in Nassau politics, and news reports indicate that on occasion, at least, he purchased oil from them as Hempstead’s presiding supervisor. Since D’Amato’s 1980 primary race against then senator Jacob Javits, the Bernstein family, the company PAC, and a few Northville executives and their wives have donated at least $28,000 to D’Amato campaign coffers. In addition, Bernstein was named by D’Amato as one of his six top fundraisers in a 1986 Times story.
The pipeline Northville opened that January was erected by the U.S. Congress. Its viability to this day utterly depends on the periodic renewal of a controversial piece of legislation barring the export of Alaskan oil anywhere outside the U.S. (its principal prior market was Japan). Originally instituted in the mad days of the 1970s energy crisis, and rationalized as part of a national strategy for oil independence, the ban led to the building of the pipeline in 1981 — D’Amato’s first year in the Senate. The senator has been a major force in the preservation of that ban ever since, helping to sustain the pipeline, which stretches from the Pacific coast port of Charco Azul to Chiriqui Grande Bay on the Caribbean and is designed to carry 800,000 barrels of oil a day.
Far cheaper than shipping the oil through the Panama Canal, the pipeline has become the principal conduit for the transport of Alaskan oil to markets along the East Coast of the United States. It also became, as spokesman Ackell described it in a Voice interview, “the biggest thing going in the Panamanian economy,” throwing off hundreds of millions in taxes, fees, and payments to Panama’s government, which is a partner with Northville in the ownership of the line.
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Of course, the government of Panama in 1983 was dominated by military strongman Manuel Noriega. Already serving as the number-two man in the Panamanian military that January, he was slated to become commander in chief by March under the terms of a prior agreement with his ally, Ruben Paredes (a short delay resulted in Noriega’s formal takeover that August). The country’s civilian vice-president, Jorge Illueca, a Noriega front whom he would later install as president, hosted the actual opening ceremony, which was held near a remote Indian village outside Panama City at the Atlantic terminus of the pipeline.
While Ackell says he did not see Noriega himself at the ceremony or any of the host of receptions and other events surrounding the four-day celebration, others remember his participation, including Noriega’s one-time minister of commerce and industry Mario Rognoni, who is currently the opposition leader in the Panamanian National Assembly. Ackell also tries to downplay the company’s relationship with Noriega during the flush years of 1983 to 1987, but he concedes that Northville “had to find a way to work with each administration.” Everett Briggs, the American ambassador to Panama during most of that period and current ambassador in Portugal, goes a bit further, recalling that “it’s safe to say” that the relationship between Northville and Noriega was “probably very good.”
Just how D’Amato fit into this relationship is somewhat murky, though Ackell acknowledges that the senator “might have been identified with the company” in the minds of Panamanian officials, then and now. The senator flew down to Panama for a second four-day stay paid for by Northville in December of 1983, after Noriega’s formal ascension to power, but Ackell said he could not recall why (Northville paid for a third D’Amato trip in 1988 as well, this time, to Pennsylvania).
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Escolastico Calvo, the editor of a Panamanian newspaper who once served as a close Noriega aide, specifically recalled a D’Amato meeting with Noriega in Panama, but was fuzzy about the timing. And legislator Rognoni was certain that D’Amato and the general “knew each other personally” and that D’Amato was “friendly” with the Noriega government “while he was dealing with his business interests,” which he identified as Northville. D’Amato routinely voted in favor of military and other aid appropriations for Panama during these years, though he hardly distinguished himself as particularly active on these issues.
What he did distinguish himself on was pipeline legislation. As a member of the banking committee, which has jurisdiction over the Export Administration Act, he became a cosponsor in 1983 of a bill that passed the Senate a year later extending the Alaskan oil ban for six years. D’Amato even went so far as to introduce, with a handful of other senators, an unsuccessful measure to extend the ban forever. This bill also attempted to void the conditions contained in the old law that permit the president to lift the ban, with the consent of Congress, if he could make a showing that it was in the national interest (D’Amato is still pushing this rather extraordinary bill, having cosponsored it again in 1990). The ban is still effective even though its last extension expired in 1990, since it remains in force unless the president meets the conditions set in the law for lifting it.
There is little doubt about why D’Amato has been such a pipeline champion. Ted Sorenson, the former Kennedy aide who has represented Northville for years, says D’Amato called him at one point in the 1983 controversy over the bill: “He said he was going to make a speech for it on the floor and I said fine.” Why was he on the inaugural trip and why has he been such a strong supporter of the ban? “He’s a friend of Harold Bernstein,” explained Sorenson. “They went way back.” Steve Toth, the Washington lobbyist for Chicago Bridge & Steel, which is a 20 per cent partner of Northville and the Panama government in the ownership of the pipeline, put it similarly: “D’Amato supports the ban because the principal owner is Northville Industries and Al supports his constituents. He shows his support with his votes.”
Like Northville and the other bulwark of the lobbying force behind this legislation, the maritime industry, D’Amato has resisted any efforts to modify this total ban. The coalition even opposed Alaska Republican senator Frank Murkowski’s amendments to permit the export of 200,000 barrels a day. Based on the premise that it is wrong to bar only Alaska from exporting its oil, Murkowski’s changes were nonetheless rejected, though he offered to continue to require that the exported oil be carried on U.S.-flag tankers.
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Critics of the ban, like Marshall Hoyler, who did a study for the Georgetown University Center for Strategic and International Studies, have branded it “a scandal,” saying it has “enriched a small number of individuals and corporations, who have formed a vocal interest group in its behalf.” Hoyler calculated years ago that federal revenues would jump over $10 billion over the next quarter century if the ban was dropped (and that oil costs would drop over the long haul). A staff economist for the Senate Banking Committee, Paul Freedenberg, explained the support for the ban when the D’Amato extension was under consideration in 1983 by observing: “Too many people are making money because of the way it is now.”
While the strongest rationale advanced for the ban is the need to reduce American dependence on foreign oil, William Silvey, the Energy Department’s planning director, argued when the ban was last extended that “the congressional perception” wasn’t taking into account that “there is one world petroleum market and that we are part of it,” concluding that because of the export restrictions, “we are charging ourselves more than we need to” for oil.
But there are indications that D’Amato’s ties to Northville help explain more than just the pipeline aspects of his Panama policy. All the public remembers about D’Amato and Panama is his explosive opposition to Noriega, when he moved center stage in the Washington debate about Panama policy in mid 1987, at first urging sanctions and eventually an invasion. Though D’Amato’s rage was ostensibly over Noriega’s cocaine trafficking (D’Amato called him “a tinhorn drug dealer”), it is hard to explain it on just those terms. Sy Hersh had revealed Noriega’s smuggling activities in June of 1986 on the front page of The New York Times, even detailing an American plot to assassinate the then lieutenant colonel in the 1970s as a common drug dealer. Yet D’Amato remained silent for almost a year.
Like many other senators, D’Amato moved when Gabriel Lewis, the former Panamanian ambassador to the U.S. and onetime Noriega ally, broke with the government and began lining up opposition to it in Washington. One of the architects of the Panama treaty, the well-connected and wealthy Lewis, who once hid the Shah of Iran in his Panama home as a favor to American authorities, struck up a close relationship with D’Amato. Long tied to the Kennedys, and close to Ted Sorenson, Lewis was one of three Northville appointees on the board of Petroterminal de Panama, the joint venture of Northville, Chicago Bridge & Iron, and the Panamanian government that owned the pipeline.
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Lewis pieced together the Kennedy/D’Amato alliance that suddenly turned the Senate into a firestorm of Noriega opposition. D’Amato even became a harsh Reagan administration critic on the issue, blasting the administration as
“cowards” for not moving against the general and provoking Defense Secretary Frank Carlucci to publicly object to D’Amato’s “insults.” The senator solidified his relationship with Lewis during this rhetorical war, getting so close that he has become a periodic visitor at Lewis’s Panama estate since Noriega’s ovenhrow.
It would be an oversimplification to attribute D’Amato’s sea change solely to a Northville agenda. While many factors were surely involved, D’Amato’s goal of compelling an American take-out of Noriega was perfectly compatible with Northville’s objectives. The company’s spokesman Ackell concedes that during this period, Northville was “very anti-Noriega,” including “everybody who worked for us down there, from the workers to the managers,” adding that the company was “pleased” with the December 1989 invasion. Indeed, on the eve of the invasion the Washington Post reported that if it “continues as planned, it should become easier for Northville Industries to do business in Panama.”
Relations between Northville and Noriega were so strained in 1988 and 1989 that the company stopped meeting altogether with its partners on the Petroterminal board, which Noriega had stacked with his brother-in-law, publicist, and finance minister. A freeze ordered by the Reagan administration, and expanded under Bush, barred Northville and other American businesses in Panama from making any payments to the Noriega government, and Northville pumped over $70 million due to Panama into an escrow account here. Northville got a waiver from federal officials so that they could keep the payments in its own account, rather than make them to the exiled Delvalle government, a shell entity recognized by the U.S. Fat with funds from other American interests, the Delvalle government retained as its lobbyist John Zagame, the former D’Amato aide who is still very close to the senator, and Rich Bond, the current head of the Republican National Committee.
Throughout these tense two years, the pipeline continued to function virtually uninterrupted, with Noriega apparently convinced that any disruption of the line might be used as a rationale for an American invasion. He even used his army to force striking electrical workers back on their jobs in early 1988, in part because the strike had knocked out a pumping station along the pipeline. While anti-invasion leaders like Rognoni believe that Northville was itself trying to cause a stoppage in early 1988 to provoke U.S. action against Noriega, Ackell says the company was simply biding its time.
Since Noriega was replaced with the current American-installed Endara government, relations with Northville, said Ackell, have been “very good, as good as things can go.” The only one left muttering is opposition leader Rognoni, who calls D’Amato a hypocrite and claims that Noriega himself once told him “how surprised he was that D’Amato had turned against him.” ❖
SPECIAL REPORTING ASSISTANCE BY SUSANNA DOYLE. RESEARCH BY SCOTT ANDERSON AND LOU PACILLI.
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LETTERS TO PRISON
While U.S. Senator Al D’Amato was ready to go to war in Panama to nail one drug dealer, his office relayed letters to federal prison officials on behalf of 23 drug dealers who were complaining about their treatment in jail, the Village Voice has learned. The senator also forwarded letters from two mob bosses, including Phil Rastelli, the former head of the Bonanno crime family.
While other federal officials also pass along similar letters, D’Amato has set a record for one more form of constituent service. The U.S. Bureau of Prisons says it sent 50 prisoner response letters in a recent year to D’Amato, compared with a mere 15 for D’Amato colleague Pat Moynihan, and a total of 13 to a sample group of five congressmen.
From 1987 10 1991, crimebuster D’Amato sent more than 200 such letters about inmates whose offenses ranged from heroin and cocaine distribution to murder and racketeering. The prisoners’ sentences ranged from a year to 75 years, including one drug dealer with a 20-year sentence. Because prison officials will only disclose fragments of the correspondence file, it is impossible to determine how many times D’Amato wrote his own letter on behalf of the prisoner in addition to relaying the prisoner’s letter.
The letter D’Amato forwarded for Phil Rastelli sought a transfer from Oklahoma to a prison closer to his New York home, citing medical reasons. The June 1987 letter to D’Amato was written only eight months after Rastelli began serving a life sentence. When D’Amato sent the Rastelli request to the bureau, his form letter took no position on the merits of the proposed move.
Robert Fueselo, executive director of the Chicago Crime Commission, said he regarded the routine forwarding of these letters “as inappropriate as can be to act on behalf of any prisoner who has been involved in hideous crimes, let alone an organized crime boss.” Rudy Giuliani said it was okay to forward this kind of letter without screening it, “except in the most notorious cases.” D’Amato forwarded more letters for drug offenders than any other criminal category. — W.B.
At the beginning of [Donald] Trump’s campaign for Board of Estimate support of the Commodore abatement plan in late 1975, Trump and attorney Sandy Lindenbaum met with Comptroller Harrison Goldin and Dick Wells, a Goldin aide. Goldin wound up the meeting by assigning Wells to meet with Trump and Lindenbaum to study the particulars of the project. Wells didn’t handle Board of Estimate matters for Goldin then, nor was he experienced in assessing a complicated real-estate transaction. Instead, Wells, who managed Goldin’s recent statewide campaign, was described to me by a former Goldin aide as the comptroller’s principal political assistant.
Those on Goldin’s staff who did handle Board of Estimate issues, as well as those experienced in real-estate transactions, were excluded from these early discussions. In place of them, Wells involved Charles Goldstein, a partner in the law firm of Baer and McGoldrick, to serve as a pro bono counsel to the comptroller in assessing the Trump proposal. The addition of Goldstein further politicized the issue.
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The Baer firm, which recently became Schulte and McGoldrick, has been the legal and fund-raising arm of Goldin’s political campaigns for at least a decade. Goldin says he’s known Thomas Baer, a founder of the firm, since he was 13 years old. He has known Charles Goldstein for 15 years. Eleven partners and associates of the firm contributed $10,000 to Goldin’s 1978 race. Even when he had only minor opposition in 1977, the same 11 kicked in $6100. The return address on Goldin’s filings with the Board of Elections was 460 Park Avenue, the Baer firm’s address. In 1973 five different Baer partners were listed as treasurers for 15 different Goldin committees in his first campaign for comptroller. Goldstein is even listed as a treasurer for Goldin’s 1972 state senate race.
Goldstein began negotiations with Trump and city attorney Michael Bailkin, who designed the tax-abatement plan. The initial plan called for Trump to purchase the hotel, sell it to the city, and then lease it back from the city at a nominal rental (and no real-estate taxes). “Goldstein argued that the city leaseback might have constitutional problems,” recalls Bailkin. “So he suggested we use the state’s Urban Development Corporation.” Goldstein and Wells discussed the UDC concept with its president, Edwin Cohen, another close Goldin associate. Cohen and Goldin had been associates in the same law firm in the ’60s; Cohen’s wife worked in Goldin’s office as an assistant counsel.
Goldstein happened to be on retainer as outside counsel to UDC at the time. He represented the agency in co-oping apartments on Roosevelt Island, a business without much of a future since the project was near completion. His UDC fees had declined from $73,000 in 1974 to $29,000 in 1975. The negotiations — now between UDC, Bailkin, Goldstein (still representing Goldin), and Trump resulted in the following arrangement: The leaseback arrangement would be with UDC, not the city; UDC would receive a $300,000 fee and Goldstein would be retained as UDC’s counsel on the deal (his fees would be paid by Trump and funneled through UDC). “I suggested that UDC retain Goldstein,” explained city anorney Bailkin, “because the comptroller trusted his judgment. I thought it would secure Goldin’s vote for the project.”
In the first of what has become a series of city-UDC business-incentive projects, Goldstein earned $66,000 on the Commodore. Though Goldstein had done no economic-development projects for UDC prior to the Commodore, he has since been paid $857,ooo in fees and expenses on a dozen incentive projects. Every investment project represented by the Baer firm has been supported by Harrison Goldin at the Board of Estimate, though his staff has sometimes required changes in the terms. (Goldin subsequently hired a staff assistant referred to him by Goldstein and assigned her to handle all of Goldstein’s projects at the board.)
Goldin’s support of the UDC tax-exempt projects is ironic since a recent draft audit by Goldin has assailed another city program of business tax exemptions as giveaways. UDC is not involved in this other program, whose abatement terms are not nearly as generous as are the Goldstein deals invariably supported by Goldin.
Goldin said that anyone who believed that Goldstein’s retainer would secure his vote for the Commodore and subject incentive projects was “naive.” He denied that he had any special tie to the Baer firm and claimed that he’d known each of the 11 partners who contributed to his campaign before they joined the firm. “It’s really quite a small town,” he explained.
Goldin insisted that he would not have signed off on the project unless Walter Prawzinsky, his deputy comptroller, approved it. I asked him if that meant Prawzinsky, a career civil servant known for his fiscal shrewdness, was an unelected comptroller. Goldin quickly explained that he made the policy decision as to whether or not the Commodore tax exemption and UDC/city agreement should be supported. He said Prawzinsky merely indicated when he’d extracted the best terms from Trump that he thought he could. Prawzinsky was not involved in Goldin’s initial meeting with Trump and Lindenbaum. Nor was he consulted when Goldin turned it over to Wells and Goldstein. He was brought in later in the process and by the time he was, he knew where Goldin, Wells, and Goldstein stood. All that was left for him was a salvage job.
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Sources close to UDC say that Goldstein’s firm has, in effect, run the UDC legal department in recent years. While the Goldin connection may have had something to do with Goldstein getting into the UDC contracts, it’s clearly not the only factor keeping him there. The firm contributed $7800 to Carey’s recent race. They’ve also established a close relationship with UDC’s new president, Richard Kahan, who was formerly staff director for the incentive projects and worked closely with Goldstein.
When Kahan was named president by Carey, Goldstein co-hosted a formal celebration at the Plaza Hotel. One partygoer described the scene: “I got an invitation to ‘meet the new president’ of UDC, and here it’s from a guy UDC pays fees to. I went and there was a Baer partner at the door. He would steer each dignitary that arrived over to a photographer who’d take pictures of Kahan, the dignitary, and a Baer partner together.” Another Baer partner, who’d gone to law school with Kahan, did the closing when Kahan bought a $60,000 East Side co-op. Under Kahan, Baer fees at UDC have continued to rise.
Last October, Kahan asked the Baer firm to handle negotiations on a new Trump/UDC project, the $400 million convention center. Earlier, Ed Koch had named Baer, formerly the head of the firm and still associated with it, as his pro bono representative on convention-center negotiations. The city and state — in the person of Baer and Goldstein — could negotiate convention-center positions without ever leaving their office. Goldstein could now bill UDC for discussions with his own former partner.
Though his firm earned more than a million public dollars from UDC and city contracts he got through Goldin, Goldstein refused to talk to me. ❖
Across the street from the Commodore is the main branch of the Bowery Savings Bank, with $5 billion in assets, second largest savings bank in the country. The Bowery’s stake in the renovation of the Commodore is unmistakable. The Bowery stated that interest in an impassioned letter to the Board of Estimate supporting the Commodore project and warned that the hotel would become “a major blighting influence in midtown Manhattan” unless renovated.
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Bowery had a relationship with UDC. Its marketing vice-president, Pazel Jackson, had been appointed to the UDC board by Carey in 1975. UDC chairman Richard Ravitch was also a friend of the bank’s and would shortly be named to its Board of Trustees. Ravitch and Jackson voted for the UDC general project plan on the Commodore, as well as a batch of other resolutions authorizing aspects of the deal. When three resolutions went to the board in May 1978, making the project technically operative, Jackson voted for them (Ravitch had left the board by then). No one ever raised the issue of Jackson’s possible conflict, even after the Bowery became the second largest lender on the project, with almost a $15 million mortgage investment. Ravitch wasn’t named to the Bowery board until a month after he left UDC.
But the most curious aspect of the Bowery/UDC relationship is the striking similarity between letters sent by both to the city concerning the Commodore deal. Each letter makes the same four recommendations to the city on how to structure the deal. In several parts of the letters, the wording is identical.
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One of the issues on which the bank and UDC agreed — in almost exactly the same terms — was that Hyatt’s participation was required. It is easy to understand why the Bowery took this position. Since critics of the Commodore plan, like the Citizens Union, had attacked it for ”subsidizing tourists at the upper end of the income scale,” it’s more difficult to explain UDC’s insistence on it as a condition for agency participation in the project. Neither Ravitch nor Jackson could explain the striking similarities in the Bowery/UDC letters and positions. Nor would the Bowery tell me what its earnings or rate of interest was on the Commodore loans, one of three UDC projects it financed that were approved by the Ravitch/Jackson board. ❖
The Village Voice once called Richard Ravitch “the city’s most honorable builder.” That quote wound up cited in The New Yorker and even in the court records of the Penn Central bankruptcy case (by brokers representing Ravitch who were trying to impress a judge then considering a Ravitch bid). Considering the competition, it wasn’t much of a compliment even then. But his recent record makes it impossible to repeat it. For one thing, Ravitch recently sold his third-generation family firm, HRH Construction Co., so he’s no longer a builder. More important, the Commodore story led me into a series of possible conflicts concerning his role as the unpaid chairman of the state’s Urban Development Corporation:
When Ravitch took over UDC, he brought in his company’s law firm with him — Barrett, Smith, Schapiro and Simon. Since 1975 UDC has paid the firm $1.5 million in fees. They remained counsel to HRH and Manhattan Plaza, Ravitch’s most important housing project, throughout Ravitch’s two-year at UDC. Ravitch told me he saw “no conflict.” This dual role placed a difficult burden upon the lawyers in determining what portions of their conversations with Ravitch were to be billed to UDC and what portions to Ravitch’s own company, HRH.
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Two weeks after Ravitch resigned from UDC, he sold HRH to Starrett Housing Co. Starrett would become UDC’s principal builder, with almost $150 million worth of contracts on UDC jobs. Indeed, after the sale by Ravitch, as a Starrett subsidiary, received the contract to build the Commodore, the largest UDC project approved while Ravitch headed the agency. As part of his agreement with Starrett, Ravitch divested himself of any interest in HRH projects like the Commodore (though he set up his own office at Starrett and began working jointly with them on a number of unrelated projects). Ravitch’s longtime partner, Irving Fisher, still president of HRH, is building the Commodore and has become both a major shareholder and chief officer of Starrett’s domestic construction activities. The rest of the HRH staff has gone with Fisher.
A week before Ravitch voted to approve UDC’s role in the Commodore in 1976, he wrote the state Board of Public Disclosure: “No part of HRH Construction Corporation’s business has any involvement in any project or activity currently subject to UDC jurisdiction and I do not anticipate that there will be any future dealing with matters subject to UDS jurisdiction [itals added].” A few months after this letter, Ravitch began negotiations with Starrett to sell HRH and Donald Trump began negotiations with Starett to build the Commodore. These negotiations proceeded simultaneously through late 1976 and early 1977, and when they concluded, Starrett owned HRH and Trump was committed to use HRH as his Commodore builder.
Trump and Ravitch — who are not friendly — say they did not talk to each other about their simultaneous bargaining with Starrett. Starrett isn’t answering any questions about what either said to them. Though Trump negotiated with Starrett — not HRH — his contract ultimately was made with HRH and he didn’t switch to Starrett until the Starrett/HRH negotiations had begun.
This complicated intertwine may have also affected UDC policy. There were dozens of decisions affecting the Commodore being made at UDC while both the Ravitch and Trump negotiations with Starrett proceeded. Trump and Starrett are partners in major ventures and Trump is the largest equity investor in Starrett City (Ravitch says he was unaware of this relationship). Were Ravitch’s UDC to create problems for Trump’s Commodore, it might have affected Ravitch’s negotiations with Trump’s friends and business partners at Starrett. Were Starrett assured of a major institutional job like the Commodore, it might have increased the firm’s interest in acquiring HRH.
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In addition to the Commodore, UDC was at various stages of negotiations on four other projects where Starrett eventually acted as developer or builder. The discussions between UDC and Starrett regarding all of these projects were going on while Ravitch was still at UDC and negotiating with Starrett himself.
Several months after UDC designated Starrett on these projects, the agency requested an after-the-fact opinion from the state Board of Public Disclosure on the propriety of these relationships. The ethics guidelines for UDC staff during Ravitch’s reign stressed the need to avoid “not only real compromises of integrity but also the appearance of such conflicts or compromises” and barred direct or indirect financial interest that have “or might soon have a substantial business relationship with UDC.” But the board’s staff secretary managed a decision dated one day after the request and — in one paragraph — found no conflict. There are no public filings about the HRH/Starrett merger; so there is no way to penetrate these negotiations. But the appearance is there: can anyone be sure that Ravitch’s influence over UDC projects was not what Starrett thought it was acquiring when it was negotiating to take over HRH? ❖
In January 1978, Stanley Friedman moved out of City Hall, where he’d been Abe Beame’s deputy mayor and principal political operative. There were some negative news stories about the fact that one of Beame’s last official acts was to name Friedman as lifetime chairman of the city’s water commission, a seldom-show, $25,000-a-year post, with extras like a chauffeured limousine. Jack Newfield had written in The Voice as early as November 1977 that Friedman had also lined up another post for himself — he would become a partner in the law firm of Saxe, Bacon and Bolan, a firm noted for a name that does not appear in its corporate title — Roy M. Cohn. The firm acts as a kind of general counsel and adviser to [Donald] Trump and represents him on certain aspects of the Commodore. As predicted, Friedman not only joined Cohn’s firm that January but moved himself into Cohn’s office in the firm’s East 68th Street townhouse. Shortly thereafter, Stanley Friedman cashed in the chips he’d accumulated as deputy mayor and got himself elected Bronx Democratic county leader by vote of its district leaders. Roy Cohn at last had his own in-house party boss.
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But before Friedman left the city to join his new firm, he had to clean up a few loose ends for longtime Cohn client Donald Trump. In the last two weeks of the Beame administration, Stanley Friedman frenetically pieced together the final, extraordinary pieces of Trump’s Commodore deal and bound the city to it in ways that new mayor Ed Koch could not undo.
Friedman’s advance work for his new firm included forcing an “escrow closing” that ended on December 21, 1977, 10 days before the end of the administration. Hadley Gold, special assistant to the corporation counsel, told me it was “the only escrow closing I’ve ever been involved in or heard of in 11 years” of handling the city’s real estate transactions. The problem was that Trump was unable to close the deal because he hadn’t lined up his private financing. He didn’t have the bank’s $10 million to buy the hotel from Penn Central or the $60 million he needed to renovate it. Financing is usually an indispensable ingredient for the closing of a real-estate transaction, but it was clear that Trump could not get his until after December 31, by which time Beame and Friedman would have left office.
No one was sure that the Koch administration would accept the project on the same terms negotiated under Beame. In addition, Trump’s option with Penn Central had been timed to end 20 days after Beame left office. (The political timing of Trump’s options is now a familiar pattern — his options on the 30th and 60th street yards also ended with Beame.) The fear was that even Trump’s allies at Penn Central —because of the booming hotel market — might be forced to consider higher bids. A new developer might have been willing to renovate the hotel at less expense to the city and state.
So, at Stanley Friedman’s hurriedly arranged escrow closing in late December, a three-party agreement was signed — between Friedman for the city, Richard Kahan for UDC, and Trump. The UDC lease and a host of other agreements with Trump were also executed and Friedman signed them as the mayor’s designee. All of these documents were placed in escrow with UDC anomeys, awaiting the final closing, when the agreements would be exchanged and the purchase price paid. The city and UDC were bound to the project. Trump could walk away if he failed to complete the financing. But if Trump got his financing, the new city administration could not change one word of the deal.
Participants described Friedman’s closing as “a marathon session that went on for days.” One said “Nobody knew what was coming next.” Another negotiator, who’s handled city real-estate transactions for 20 years, said he’d never known of any other escrow closing and that the city would generally not participate in any, because it meant that the city would be taking all the risks, committing itself when the private developers and lenders weren’t ready to make a commitment.
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Friedman told me he’d never been involved in an escrow closing before, either for the city or as a private attorney. He claimed he’d signed the agreements “on advice of city attorneys that everything was kosher” (so “don’t try to stick this thing on me,” he said). But participants in the closing said Friedman was pushing city attorneys, forcing them to complete their review of the documents. “Sure I told them to move it,” Friedman conceded, “but I don’t know if I’d call that pressuring them … my whole thing was to get it accomplished fast.”
In addition to the escrow closing, Friedman, acting as the mayor’s designee, signed a lucrative franchise agreement — which he’d pushed through the Board of Estimate a month earlier — for Trump on December 29, two days before he left city government. The agreement permitted Trump to build a glass-enclosed “Garden Room” restaurant 18 feet beyond the Commodore property line and extending over the city sidewalk. As part of the last-minute negotiations, the city’s Bureau of Franchises agreed to increase the length of the franchise from 10 to 25 years and cut Trump’s annual payments to the city in half for the first 10-year period, to a fixed $28,000 a year. Trump brought in Sandy Lindenbaum and Louise Sunshine to help Friedman push the franchise through.
Friedman told me that he “didn’t recall” discussing the Commodore with Cohn at the time and that “he didn’t know Trump was a Cohn client until the spring of 1978” (Cohn’s representation of Trump was front-page Times and Daily News copy). Friedman did acknowledge that he “may have met Trump at Cohn parties” before he’d arranged the escrow closing and left the city.
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Friedman’s other line of defense was that the escrow closing and franchise agreement had also been approved by “those fancy lawyers up at UDC,” led by Richard Kahan, then the agency’s director of economic development. In addition to executing the escrow closing for UDC, Kahan — without the approval of his board — also allowed the developer to switch the Garden Room franchise from a city agreement with Trump to one between the city and UDC, resulting in highly favorable terms for Trump. Kahan also wrote into the lease the provisions that permitted Trump to use the waived sales taxes on the project’s construction materials in ways that benefined Trump. Kahan told me that this significant grant of tax funds to Trump was already in place when he joined UDC in the summer of 1976; but there is no reference to it in the draft lease submined to the agency’s board that fall.
Kahan’s actions in this period occurred at a time, after both Ravitch’s and Cohen’s departure from UDC, when the agency, in effect, had no head. Kahan was also willing to remedy that problem: He became a candidate for president of the agency. “I kept my candidacy to myself the first five months after Cohen’s resignation in October,” Kahan told me. “Then I had many discussions.” Among his principal supporters for the Carey appointment were Sunshine and Trump, the governor’s chief fund raiser and his second largest contributor.
Carey left the position vacant for eight months and then, a month after Kahan concluded the final closing on the Commodore, he appointed Kahan president. The 32-yearold Kahan had joined the agency only two years earlier as an assistant director of a single unit in the agency. Kahan’s selection cannot be simplistically attributed to his service of and support by Sunshine and Trump. He is a brilliant and resourceful bureaucrat and was also backed by people like Robert Wagner, Jr. What this record told me was that Kahan was willing to court political insiders, like Trump and Sunshine, even at the possible expense of sound public policy.
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Under Kahan’s authority, a few days before his appointment as president, condemnation papers were served several of the hotel’s commercial tenants. In one case, Trump had actually signed an agreement with the tenant to give him a new lease, almost doubling his rent to $180,000 after threatening to use UDC condemnation powers. Six months later Trump was demanding $100,000 more per year and $100,000 cash up front. These demands were in effect enforced by a UDC condemnation order only a week after the owners refused to pay the increases.
Friedman and Kahan wound up indirectly back together on just this case, though neither appeared in court. Friedman’s partner, Roy Cohn, had represented Trump in several aspects of the case against this particular tenant. In the condemnation proceeding itself, Trump was not a party (UDC v. Strawberry). Nonetheless, Cohn accompanied Trump to court as an observer. Indeed, after it was revealed that the judge in the case had met Trump at a recent party in Cohn’s home, she removed herself from the case and Cohn stopped visiting the proceedings. Cohn has, however, brought a separate damages suit for Trump against the tenant and, like the condemnation, that case is also still being litigated. ❖
The following snapshots of the political life of the city — some sinister, some bizarre — are taken from the appointment diaries and phone logs of convicted former Bronx Democratic boss Stanley Friedman. The Friedman records, seized by the feds early last year and released as part of his criminal case, were maintained by Friedman’s longtime secretary, Rose Mintzer, at Friedman’s East Side law office.
Though they cover only a portion of 1985 and a couple of weeks in January 1986, the logs unveil the machinations of a remarkable range of prominent New Yorkers — from mobsters like Tony Salerno and Tommy Gambino to publishing giant Si Newhouse and developer king Donald Trump. The sagas of Larry Kirwan and Carlos Galvis reveal Friedman’s onetime legendary reach into state and city government, even though neither deal was achieved. And the tales of City Councilman Bob Dryfoos and Brooklyn beep Howie Golden’s daughter Michelle are commentaries on their characters, not Friedman’s. Remarkably, there are dozens more vignettes like these left in the Friedman volumes, revealing the daily activities of a quintessential power broker.
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Ties to Fat Tony
Fat Tony Salerno, the boss of the Genovese crime family, who is now doing a century on federal racketeering charges, and Vincent “Fish” Cafora, Salerno’s constant companion who is under indictment with Salerno in a still pending case, apparently visited Friedman on October 16, 1985. Salerno had long been a client of Friedman’s senior law partner, Roy Cohn, and a Cohn aide set up the meeting with Friedman the day before, leaving this message: “Tony and Fish coming at 2 on Wednesday to see Cohn and they’d like to see you too.” The entry in Friedman’s appointment diary for 2 p.m. on Wednesday simply says “Cohn.” A notation in the logs a couple of months later lists a phone number for “Fish.” When the Voice called the number and asked for “Fish” Cafora, a man who declined to identify himself, said, “He isn’t here anymore.” Law enforcement sources told the Voice that the references are to Salerno and Cafora, who were apparently on a first name basis with Friedman. Reached by the Voice, Friedman refused to answer any questions about his logs.
The indictment pending against Cafora and Salerno, who was recently convicted in the commission case, contains a count against one of their alleged racketeering partners, Milton Rockman, which says that he “misrepresented and concealed” from a federal pretrial agency in the midwest his reason for three trips to New York while out on bail pending a trial in Kansas City. The indictment says he was meeting with Salerno and other members of the Genovese family “under the guise of consulting” with an attorney, Cohn. The indictment also indicates at least one area of interest where Friedman and Salerno activities overlapped — concrete.
According to the indictment, S&A Concrete and its affiliates, owned by Salerno and other Genovese crime family members, controlled all concrete construction contracts in Manhattan exceeding $2 million. One of the rigged bids cited in the indictment is a $30 million contract for the just completed convention center. An earlier companion case, brought by State Attorney General Robert Abrams, charged that S&A and another concrete company close to Friedman, Dic Underhill, rigged the convention center bid so that S&A would win it at a price 27 per cent higher than the prebid price estimates.
A Dic Underhill affiliate, S&D, was represented by Friedman and won a $7 million city contract to repair broken parking meters (that contract is now the focus of a federal probe). Two Dic Underhill principals, Bernard Jereski and Walter Goldstein, appear on Friedman phone logs and appointment diaries half a dozen times. Dic Underhill has given $12,000 to Friedman’s Bronx Democratic committees in recent years, while S&A Concrete gave $1400 to a Friedman committee and Bronx beep Stanley Simon.
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A Cuomo Lease
State Democratic chairman Lawrence Kirwan holds no state government position, but according to Friedman log entries he was in the middle of a 1985 effort to steer a Department of Motor Vehicles office into a building owned by a big donor to the Bronx organization and borough president Stanley Simon.
On November 6, Friedman was called by party secretary Murray Lewinter and urged to call Kirwan “to speak to Motor Vehicle Com’r — would like White Plains Road for Motor Vehicle office.” Lewinter left Kirwan’s Albany telephone number for Friedman. Later that day, and again on the following day, Kirwan, who was handpicked by Governor Cuomo, left messages informing Friedman that the DMV office “will happen” on White Plains Road.
The proposed DMV site, 2078 White Plains Road, is owned by Violet Camac, who, along with her son Howard, donated $2250 to Simon’s 1985 reelection campaign and has given $3150 to the Bronx organization since 1982. The Camacs company, Yankee Lumber, also provided material for a rehabilitation of Democratic headquarters on Williamsbridge Road. Howard Camac said that he “mentioned” to Friedman that he was interested in the state lease, but did not ask for help in securing it. Camac’s lawyer, Richard Gugliotta — whom Friedman unsuccessfully ran for civil court judge three times — said that community opposition eventually led to DMV rejecting the White Plains Road site. “It came as a surprise to Mr. Camac that Larry Kirwan was involved,” Gugliotta said.
Friedman’s datebook shows three meetings with Camac in 1985, two of which included Kathy Zamechansky, the former head of the Bronx Overall Economic Development Corporation and a key party fundraiser. His phone logs refer to a fourth meeting in November, the day before the series of Kirwan messages regarding the rental. The records also reveal that Kirwan met frequently with Friedman, whose Bronx organization was one of the chief contributors to the state party (one notation refers to a $20,000 check Friedman was sending Kirwan’s state committee).
The DMV office was originally scheduled to be located in Pelham Bay in space owned by a local businessman with no political ties. However, pressure from Simon, the late Republican state senator John Calandra, and Congressman Mario Biaggi forced DMV officials to withdraw the site from consideration. The White Plains Road site was the state’s next choice, but this time — despite Kirwan and Friedman’s support for the Camac lease — protests from civic and neighborhood groups led DMV officials to drop the location.
Kirwan did not return numerous Voice phone calls about the deal. DMV officials have now decided to lease space near Fordham Plaza owned by the Metropolitan Transit Authority.
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Cohn’s Demise: A Ghoulish Golden Grab
In November 1985 newspaper stories detailed the disbarment proceedings against Roy Cohn as well as the late attorney’s battle with what he described as liver cancer, but later was revealed to be AIDS. Since he left city government in 1978, Friedman has been affiliated with Cohn’s law firm, Saxe, Bacon, and Bolan.
As Cohn’s legal and terminal medical problems appeared in the papers, Michelle Golden, the 27-year-old daughter of Brooklyn borough president Howard Golden, began calling Friedman at Saxe, Bacon, and Bolan’s headquarters, a five-story townhouse at 39 East 68th Street. Michelle Golden, a real estate salesperson with Cushman and Wakefield, left a message on November 22 stating she was “anxious to carry” the townhouse and wanted to know what was happening with it. “She read that Roy Cohn was sick and that he had some legal problems,” Mortimer Matz, Golden’s spokesman, said. “That’s what real estate people do.”
Golden, who left seven messages about the building and met with Friedman twice, was also interested in helping the firm find new office space if it decided to leave the townhouse, Matz said, adding, “Nothing ever happened.” Golden’s sense that the townhouse may have been on the block appears accurate: property records reveal that the ownership corporation took out a third mortgage — this one for $178,000 — on the townhouse in April 1986 to apparently allow the law firm to stave off bankruptcy. The money was used by the corporation to pay off a legal judgment against Saxe, Bacon, and Bolan, which is described in a rider to the mortgage as being unable even to pay its rent.
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One Friedman client who dominates his logs is Donald Trump. Though Trump conceded through a spokesman that Friedman did represent him on occasion, he contended that Friedman was representing the other side of the deal he and Friedman discussed the most during this time period: Trump’s near acquisition of the air rights over the Parkeast Synagogue at 163 East 67th Street (Koch’s synagogue, and also Mayor Beame’s). Friedman was in constant touch with Rabbi Arthur Schneier about the sale and arranged meetings with Trump. A date was set for the closing on this deal, but it conflicted with the majority leader election in the city council so it was canceled. A couple of days later the scandal exploded. Trump, who says it was Friedman who approached him and who had no specific plan for the air rights, dropped the deal.
Friedman did represent Trump in negotiations with the state’s Division for Housing and Community Renewal concerning Trump’s attempt to empty a rent-stabilized building at 100 Central Park West that he acquired some years ago. Trump says that “Stanley suggested that he might be able to negotiate a settlement,” so Trump said that he should go ahead. Friedman then began an extraordinary series of at least a dozen calls and meetings with Manny Mirabal, the DHCR deputy commissioner who had a tenant complaint on the building before him. Mirabal is recorded as having attended meetings with Friedman at Friedman’s townhouse office. After initially confirming the conversations with Friedman, Mirabal ducked a series of follow-up Voice calls pointedly asking about the meetings. In the end, Trump settled with the tenants.
On November 27, 1985, Friedman and then Bronx city planning commissioner Ted Teah, who operated a law practice out of Friedman’s office, attended a meeting at Trump’s office that the logs recorded as involving Trump’s grandiose Lincoln West project. Trump says that the purpose of the meeting was a private presentation to Teah of Trump’s plans for the West Side, which were then before the planning commission. Friedman was clearly given the job of getting the undependable Teah to the meeting, as messages like this one from Trump’s office suggest: “Ted must show on time.” Trump insists that Friedman was not there representing him, but was included because Friedman had represented Francisco Macri, the previous Lincoln West developer who had sold this prime stretch of waterfront land along the West 60s to Trump a year earlier. A spokesperson for the Macri interests said they could not recall if Friedman represented the project.
Suitably enough, Friedman is also listed as attending a meeting regarding the Hyatt Hotel with Trump and department store operator Michael Modell of the Modell’s chain. It was Friedman, as deputy mayor, who approved, in the final days of the Beame administration, a series of tax abatements and other benefits that enabled Trump to build the Hyatt — his first Manhattan deal. Trump contends that Friedman was representing Modell in the meeting, which concerned the store’s sub-lease in the Hyatt. Modell told the Voice that he’d never retained Friedman but that Friedman was a close friend and that Friedman was helping him in his meeting with Trump. Trump was so friendly with Friedman that he once left a message providing his “direct line to his Aspen room,” and when Friedman’s candidate won the council majority leadership last January, congratulated him, adding, “He is so proud of you: hope the papers do right by you.”
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Helping Gambino’s Buddy
Thomas Gambino, the son of the late mob chief Carlo Gambino and himself a member of organized crime, called Friedman on behalf of Sal Carrera, a friend seeking a real estate broker’s license.
On October 1, Carrera called Friedman and said that “Gambino told him to call” and that he was calling about a package of papers “to go to Albany.” A subsequent message reveals that the papers concerned a real estate broker’s license for Carrera. Four weeks later, Carrera called again and Friedman’s secretary left the following message: “Sent paperwork to Albany. From Tom. What’s the status?” Gambino called Friedman on November 8, “re his friend. Also he’ll call Jackie,” Friedman’s wife. The following day, Jackie Friedman, who works in the mayor’s office, left a message reminding her husband about “1) Reservation PR 2) Gambino.” The first message refers to a trip the couple took to Puerto Rico last winter.
Thomas Gambino owns one of the garment district’s largest truckers, Consolidated Carriers (his messages to Friedman included Consolidated’s number). While he has no criminal record, Newsday reported last September that Gambino was identified by a police detective in federal court testimony as a captain in the Gambino crime family. An FBI court affidavit contends that Gambino is a soldier. Carrera received his broker’s license last September through Ketrec Management on East 40th Street, where he was reached last week. Asked about Friedman and Gambino, Carrera said “That’s none of your business” and hung up. Gambino, too, hung up when the Voice called.
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Stanley’s City Council Mole
Eastside city councilman Bob Dryfoos, who double-crossed the rest of the Manhattan delegation last January and cast the decisive vote that elected the Friedman/Manes-backed Peter Vallone majority leader of the council, made his first appearance on the Friedman logs on October 9. His initial message was wedged in between two from Brooklyn borough president and county leader Howard Golden, who ultimately allied himself with the Manhattan delegation in an attempt to keep the majority leadership in Brooklyn (it was the retirement of former leader Tom Cuite, a Brooklyn councilman, that created the vacancy).
Golden’s first message read: “wants to meet with you next week — early part — just you and he — when? where?” Since Golden, Friedman, and Manes met regularly, this message was probably an attempt by Golden to sound out Friedman alone about the possibility of supporting a Brooklyn candidate against the frontrunner, Vallone, who as a Queens councilman was Manes’s candidate. Friedman’s control of the six Bronx votes made him a pivotal player in any contest between Queens and Brooklyn. The very next message that day was from Dryfoos: “Yes — meet — drink coffee here one hour — reorganization of City Council and thereto, before you talk to Howard.” A short while later, Golden called again: “Don’t do anything — OK — Howie Golden — talk to him.” Friedman’s diary lists an October 15 lunch with Golden at Friedman’s office and an October 21 meeting with Dryfoos. Neither Golden nor Dryfoos returned Voice calls.
After this initial exchange, several messages suggest a growing relationship between Friedman and Dryfoos. In early November, Dryfoos called while Friedman was vacationing in Puerto Rico and was given Friedman’s number there. Next he called for Friedman’s mailing address. Then another meeting was set in early December. As the tight race headed for its early January showdown, Dryfoos, who kept attending meetings of the Manhattan delegation and pledging his support to its candidate (Brooklyn’s Sam Horowitz), became a Friedman mole. On December 27, he called while Friedman was once again vacationing in Puerto Rico, said he “heard some news you should be aware of,” and left Friedman his own vacation number at an upstate hotel. Messages from a Bronx council-member, June Eisland, indicate that Dryfoos met with them on January 3. On January 8, Dryfoos coolly assured his fellow Manhattan members, moments before the vote, that he was with them, and then publicly announced his vote for Vallone.
The logs also suggest that Friedman was looking for some last minute insurance. Council President Andrew Stein, who had no vote on the matter unless the council members deadlocked, has confirmed that he met with Friedman and others the night before the vote. Stein insists that the meeting was only to discuss the parliamentary rulings he would make the next day and that he was determinedly neutral. But two sources deeply involved in the process told the Voice that Stein told them he preferred Vallone, and one of them says that the meeting with Friedman “might have been” to lock in Stein’s vote in case of a tie. Stein told the Voice that he met with Golden too, but in fact he met only with Golden technicians. Indeed Stein met with technicians from both sides the morning of the vote. Friedman was unlikely to personally attend an emergency meeting with Stein the night before the vote to discuss innocuous parliamentary decisions.
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Si’s Slip is Showing
Roy Cohn’s aide Sue Bell called Friedman on October 10, 1985 and asked Friedman to try to get “a boatslip for S.I. Newhouse III (known as Sam) beginning mid 1986” for Newhouse’s 42-foot yacht, Diver Master. Publishing heir Newhouse, whose family owns Vogue, Glamour, Vanity Fair, The Staten Island Advance, Random House, and dozens of newspapers and cable TV stations across the country, wanted the boat berthed at the city’s only active Manhattan marina — at East 23rd Street. Cohn and Newhouse’s father were lifelong friends.
A series of subsequent messages indicate that Friedman called a top city official who ran the city’s ferry bureau and asked for help. But the ferry bureau didn’t run the marina; the city’s Department of Ports & Terminals did. So the ferry chief called Audrey Lasher, P&T’s leasing director, who supervised the city’s sublease with Skyports Inc., the company that operated the marina under an agreement with the city. Lasher agreed, according to the ferry chief, to talk to Skyports. Despite what sources say is an “exceedingly long waiting list,” Newhouse got his slip — only one of 27 — at the marina. Both Lasher and the ferry chief have since left the city. P&T spokesperson Marcia Reiss said that the agency’s lease with the marina operators does not permit the agency “to interfere in the allocation of slips” and that any action taken by Lasher would not be a matter of agency business.
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The Kiss of Death
A 1983 Daily News story reported that the mayor had contacted the four county leaders close to him, including Friedman, to seek their recommendations before appointing a new Ports & Terminals commissioner. A two-to-two tie resulted in Koch naming Susan Frank, who had not been favored by any of the party bosses. So when Koch began the search for a replacement for Frank after his re-election in 1985, it was widely assumed that Friedman would once again play a role. A spokesman for Deputy Mayor Alair Townsend, who was overseeing the selection of a new commissioner for the mayor, confirmed that Friedman had called Townsend on behalf of a candidate: Carlos Galvis, a Princeton graduate who had worked in the Lindsay administration and for Congressman Les Aspin. The phone logs indicate that Friedman did not know Galvis personally, but was contacted in late December by Robin Farkas, whose family owns Alexander’s. After Farkas talked with Friedman, Galvis sent Friedman a résumé.
Galvis told the Voice that both Farkas and two friends of his at the Real Estate Board suggested that he contact Friedman for help in getting the job. While he declined to say who at the Real Estate Board pointed him in Friedman’s direction, he said they also suggested that he contact Donald Manes. He added that he has known Farkas since the ’60s. Friedman gave Galvis an appointment, and Galvis went to Friedman’s law office at 11 a.m., January 10, the morning of Manes’s first suicide attempt. Galvis said that Friedman’s secretary mistook him for a senator and ushered him right in, observing that otherwise he might not have been able to see Friedman, who “was having a very busy day.” Galvis saw Friedman for about 20 minutes and recalled that throughout the interview an “unruffled” Friedman was making and receiving calls. Friedman told Galvis that “he was trying to get a car to go see his best friend in Queens, who was in the hospital.” Friedman promised: “I will call on your behalf.”
In late January, when Galvis was told he had not been hired, the city scandal had already exploded and Friedman was at the center of the storm. “Even if I was the best candidate, I had become tainted,” he said. “After all this started I felt like crap. I felt like the guy who got nominated for supreme court justice on the day the president got impeached.” But city officials insist that Michael Huerta, who is the now the P&T commissioner, had already been selected by the time Friedman and Galvis met. Huerta was reportedly offered the job on January 6 and the city was merely concluding terms with him.
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Friedman’s phone was the political Action Line. Requests from friends and fellow pols came in regularly for tickets to Broadway plays (Cats and The Odd Couple) and the Palladium (from Stanley Simon on behalf of his daughter Suzette, and from Councilwoman June Eisland). Bronx county clerk Leo Levy called asking for four hotel rooms (with dinner and a show) for New Year’s Eve at Trump’s Castle in Atlantic City. Trump’s secretary called wanting to know, “Are they heavies at the table?” since it was a “hardship” to give up the rooms. Friedman eventually informed Levy that he could not swing the rooms. Levy also called on behalf of Norman Goodman, the New York county clerk, asking for four tickets to a Carnegie Hall concert. Friedman also got requests for tickets to Midnight Mass at St. Patrick’s Cathedral as well as local football games. Jet tickets were no problem, the logs reveal, but Friedman did not have a hook in with the Giants. He could get judges to perform weddings, though.
Lillian Delgado called in September, 1985 asking for help locating an apartment for $700 in Manhattan or downtown Brooklyn. Friedman put Delgado, a friend of a friend, in touch with Lew Katz, the owner of the Uncle Charlie’s chain of gay bars and a friend of Roy Cohn’s. Katz, who also helped get Friedman’s step-daughter a job, was charged last May with stabbing to death a 37- year-old man during an argument, and is currently free on $400,000 bail. Delgado said that Katz did not find her an apartment. “I ended up paying a big broker’s fee,” she added.
One deal Friedman was not able to complete — through no fault of his own — concerned the securing of hangar space for attorney Richard Friedman’s airplane. Richard Friedman called three times in October, 1985 asking Friedman to “make the case” with officials of the Port Authority. Then, on December 9, the search was called off. On that day, Lewinter left the following message: “Richard Friedman, re: plane storage. Forget it — he crashed plane & was killed.” ❖
The scene was set for the traditional, permanent-government arrangement. Donny Trump, the 34-year-old millionaire developer weaned on Brooklyn Democratic politics, was once again going after a spectacular tax break. This time he was applying to the city’s Housing Preservation and Development Commissioner Tony Gliedman, another product of the Brooklyn machine, for a $50 million writeoff on his $155 million luxury condominium, Trump Tower, now being built on the old Bonwit Teller site at Fifth Avenue and 56th Street.
The lawyer listed on Trump’s application was Sandy Lindenbaum, son of the late Bunny Lindenbaum, a combo that symbolizes Brooklyn political influence. The other Trump lawyer pressing Gliedman for a favorable decision, calling 10 times in one day, was Bronx Democratic boss Stanley Friedman, law partner of Roy Cohn and protege of Brooklyn kingpin Meade Esposito. The roly-poly, affable Gliedman, who is not only a Brooklyn regular but a member of Esposito’s Thomas Jefferson Club in Canarsie, looked like the government connection for this array of Trump clout. Behind Gliedman, after all, was our pliable mayor, Ed Koch, the former reformer who now thinks “boss” is a term of endearment.
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Despite this recipe for legal graft, Gliedman ruled last week that Donny did not qualify for this tax bonanza. Before Gliedman rejected the Trump application, he checked with Koch and the mayor reportedly told him he’d support whatever the commissioner decided. Gliedman ruled that Trump failed to show, as the law requires, that the old Bonwit site was “underutilized” and “functionally obsolete,” thus disqualifying it for the 100 per cent tax break available under section 421A of the state Real Property Tax Law. Almost immediately, Trump was in Manhattan Supreme Court challenging the decision. Just as quickly, the city’s pristine position began to tarnish.
In a case involving this much political influence, the selection of a judge is especially critical. The judge chosen, at least in part thanks to the city, was Frank Blangiardo, a Manhattan civil court judge temporarily assigned to Supreme Court, who was listed in Jack Newfield’s 10 worst judges (Voice, September 26, 1974). Listen to Newfield’s gentle description:
“Antipoverty lawyers say Judge Blangiardo is biased in favor of landlords … Judges say he is their most political colleague.
“Blangiardo’s whole career is based on political connections. His father was a power in Tammany, and reportedly was a partner with Assemblyman Louis DeSalvio in a liquor store. Blangiardo himself was a protege of Carmine DeSapio.”
Newfield cites a number of Blangiardo’s mishandled cases, including a mistrial that the judge declared on behalf of alleged mafia leader Jimmy Napoli, after Blangiardo “maneuvered the court calendar so he would have jurisdiction over the trial.” This time it appears that someone else did the maneuvering.
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The city helped deliver the case to Blangiardo in three ways:
(1) Edith Spivak, a supervising attorney of legendary skill and honesty at the city’s corporation counsel, was first told of Trump’s appeal late Friday. She and her boss, Allen Schwartz, decided to retain an outside counsel, Rochelle Corson, a former assistant in the office who handled prior litigation involving this program.
Spivak says that they decided to try to prevent the signing of any order that would put them in court immediately, since Gliedman had just made his decision and they needed more time to analyze it. “But the order was signed before we could get over to the court,” Spivak says. Had they made it to court and successfully opposed the order, the case might have wound up before a different judge.
(2) Judge Norman Ryp made the order returnable the next day in Special Term Part I, the section of the court that receives all such motions. Judges are rotated on a weekly basis in this part and Blangiardo had begun his week of service that Monday.
Had Gliedman made a decision during the two preceding weeks, and had Trump proceeded immediately into court, the judge in Part I would have been Arthur Blyn or Thomas Sinclair, and no questions would have been raised.
Gliedman was ready to decide the case at least 10 days earlier and did not. Betsy Foote, Gliedman’s executive assistant who was put in charge of the 421A program a few weeks ago, says that Gliedman had informed Trump that he was leaning against the exemption. Trump asked Gliedman not to make a decision then offering to supply new information supporting the application. Gliedman agreed.
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For three weeks preceding his decision, Gliedman or his press office kept telling me that the decision would be announced in a day or two. He made up his mind at 4:30 p.m. on Friday, March 20, after the courts had closed for the week. Trump had been well briefed on the contents of Gliedman’s two-page rejection letter and he’d already retained a third law firm — Marshal, Bratter — which had prepared a court challenge. The firm sent Gliedman a draft of the legal papers by 7 p.m. that Friday night.
Trump wanted to go into court immediately because any protracted threat to his tax break might have a material effect on continuing financing, tenanting, and construction of his project. In addition, the city’s finance department is supposed to receive a list of approved exemptions no later than March 15, in order for Trump to receive the benefits this tax year. The department is somewhat flexible about that deadline, but it cannot wait much longer. The scheduling of Gliedman’s decision permitted Friedman and Trump to bring the case directly to Blangiardo without losing any time.
(3) Last Tuesday the city’s outside counsel, Rochelle Corson, appeared before Blangiardo. She asked that the case be adjourned for three weeks.
Trump’s attorneys leapt to their feet. They said they had an agreement with Gliedman that no adjournment would be sought. They handed Blangiardo a three-page affidavit from Stanley Friedman. Blangiardo has sat on the municipal court and civil court benches, awaiting a Supreme Court appointment, since 1959, when Carmine DeSapio first made him a judge. Friedman’s affidavit was a message from a county leader with the power to one day elevate him. Blangiardo flipped through the pages, his eyebrows arching ever upward. He called his clerk to his side.
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The pertinent part of the affidavit was Friedman’s claim that he asked Gliedman to “avoid delays and adjournments in view of the urgency of this matter” and that Gliedman “graciously told me that the matter will be handled by the Law Department, but he would communicate this to whoever would be handling it, and he pledged cooperation in bringing this issue to a conclusion at once, with no further delays or adjournments.”
Spivak says that neither she nor Corson has ever been told whether or not such a pledge was made. In court — when the Friedman affidavit was presented — Corson did not attempt to verify this alleged no-adjournment agreement. She quietly accepted Blangiardo’s decision not to adjourn the case, if it had been adjourned, the case would’ve come up again on the Part I calendar before Ed Greenfield, a supreme court judge known for his scholarly independence.
Instead of adjourning it and turning it over to another judge, Blangiardo gave the city until April 9 to answer, and said final papers were to be submitted to him.
Gliedman told me that he never made a no-adjournment pledge to Friedman, but neither he nor the city has contradicted the Friedman affidavit. Gliedman explains that he did tell Friedman that the city could win the case by “repeatedly” adjourning it: “I agreed we wouldn’t do that. I agreed we wanted a decision on the merits.”
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All these facts really demonstrate is that the city’s indifference to the court calendar may jeopardize $50 million in future taxes. Spivak said she “hadn’t considered” trying to “get the case before a different judge.” The city’s view that judge selection doesn’t matter places it at the mercy of its opponents in highly politicized cases like this one. If only the clubhouse litigants against the city play the judges-hopping game, the odds are weighted against the public interest.
Gliedman may have given in to Friedman and Trump on some of the details of timing to compensate for his unwillingness to give in on the exemption itself. An angry Trump had to take the scheduling crumbs that were offered and is now counting on Blangiardo, who may or may not prove to be the ally Trump and Friedman apparently hope for. “I’m determined to win,” vows Gliedman, who now seems to have a full if belated appreciation of the significance of which judge handles the case. “We’ll win on appeal, if we have to.”
Gliedman, and indirectly Koch, merit praise for their courageous and correct decision to deny Trump his tax haven for oil sheiks. The top condo in Trump Towers sells for $3,150,000 and has five bedrooms, seven bathrooms, two dressing rooms, two powder rooms, a maid’s room, skylit garden/playroom, sitting room, living room, dining room, study, kitchen, pantry, two interior stairs, foyer, and private elevator. There is no possible rationale for the taxpayers in a city that closes hospitals to underwrite casbahs. It is disgraceful that the Democratic Party leader for the poorest borough in the city is using his political influence to secure this exemption, in contempt of his own constituents
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But the Trump application merely highlight the disastrous consequences of the 421A program. More than a year ago, the first draft of a yet-to-be-completed City Planning Commission study of midtown development labeled the 421A program of “dubious” benefit to the city, though it is one of the costliest of all the tax-giveaway programs. The study urged the city to back a bill in the state legislature excluding the program from midtown. Gliedman and Koch have certainly seen copies of this initial draft and a subsequent one, released in July, maintaining precisey the same position. The city is still not even considering the introduction of such a bill. Had they and the legislature acted on these preliminary but axiomatic recommendations already, the Trump application would have been a dead letter.
In July, City Planning Commissioner Herb Sturz promised to release the completed study by December but it is still in mothballs. Its authors, however, assure me that its conclusions on 421A have no changed at all. With a growing galaxy of Trump-like towers planned for midtown, real taxpayers cannot afford the city’s continued-legislative laxity.