Corruption is the tone you set at the top. — Rudolph Giuliani, September 9, policy speech
THE MOLLEN Commission hearings that concluded October 7 filled pages of newsprint and hours of TV, forcing New Yorkers once again to wonder just how high up police corruption might reach. Cocaine-riddled cops, blue-uniformed sadists, and see-no-evil superiors confessed crimes and shortcomings in excruciating detail. Reformers described lonely, futile efforts. Yet for all the candor, there was a dramatic silence — a dog that did not bark.
Somehow, not a single person on the Mollen panel or at the witness table addressed the one institution that routinely defends cops accused of malfeasance and that blocks serious reform programs: the Patrolmen’s Benevolent Association. The Mollen Commission report, due this month, is expected to be equally silent on the role of the PBA in police corruption.
The 20,000 member union is so dominant and so brazen it can hold the city hostage if it sees fit, as it did last year when a PBA rally turned into a drunken riot, with thousands of police officers storming the steps of City Hall and blocking traffic on the Brooklyn Bridge. Mayor-elect Rudolph Giuliani’s proposed anticorruption endeavors won’t mean a thing if they don’t include the PBA’s influence in police affairs and in New York politics.
For the PBA, life is mostly a one-way street. Politicians kowtow to it, and taxpayer dollars provide most of its financing, yet PBA officials operate with virtually no accountability to the public, the police brass, or the union’s own rank and file. Meanwhile, inside the New York Police Department little gets done without tacit PBA approval — which is to say without the consent of its president, Phil Caruso, who refused to meet with the Mollen Commission. Now in his fourth four-year term and with no challenger in sight, Caruso has outlasted five police commissioners and two mayors. On January 1, president Caruso will see the inauguration of a third mayor, one the PBA strongly backed over incumbent David Dinkins, a man the union leadership despised and publicly challenged.
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Since 1980, when Caruso became the union’s head, the PBA has evolved into an all-but-invincible network. Much of the credit for the union’s ascent, and perhaps most of the blame for its worst impulses, goes to Richard Hartman, who from 1978 to 1991 served variously as the PBA’s lawyer, labor consultant, and insurance broker, and who continues to this day to have ties to the PBA’s law firm. Together, Caruso and Hartman shaped the once-complacent PBA, formed in 1894 to assist widows and orphans of slain police officers, into a potent, feared, and secretive organization.
A year-long Voice investigation has uncovered a shameful history within the PBA, a litany of misdeeds and disturbing associations that raises fundamental questions about the values of the city’s police union leadership. Both Caruso and Hartman developed a practice of blatantly favoring their friends and punishing their enemies. The Caruso Hartman team has also demonstrated a willingness to associate with, and often act like, the very crooks police are supposed to arrest.
The Voice has learned:
- Since Caruso and Hartman attained power in the PBA, law enforcement wiretaps have caught La Cosa Nostra figures bragging about their relationships with the two men. These gangsters included soldiers and associates of the Genovese and Luchese families. In addition, former Hartman associates told the Voice that Frank “Kiki” Testa, a retired sanitation worker who appeared to have ties to the Philadelphia mob, was for a period of time a menacing presence around the office where PBA legal matters were handled.
- Caruso stood by as a gambling addiction engulfed Hartman and compromised the integrity of the union. Like so many compulsive gamblers, Hartman became both liar and thief as he piled up enormous losses in Atlantic City casinos. Besides improperly taking funds from a police officers’ escrow account — i.e. the officers’ own money — to feed his habit, Hartman turned to a loan shark and to clients who agreed to pay their bills in cash. In one instance, an associate with a criminal record delivered $250,000 in cash to Hartman’s Atlantic City hotel room, so the lawyer could get back to the craps tables. Many sources for this story believe that the millions Hartman blew at the gaming tables came mostly from the grossly inflated retainers, fees, and consulting contracts he received from Phil Caruso’s PBA.
- Hartman relied on his close relationship with Senator Alfonse D’Amato and other friends in the Nassau County Republican machine to aid him in winning extremely generous contracts for clients. As a Nassau County supervisor, D’Amato intervened in labor talks on behalf of the Nassau Community College adjunct faculty. Hartman reciprocated by playing a vital role in D’Amato’s first successful race for the U.S. Senate. Among other things, Hartman allegedly funneled contributions through his staff. D’Amato later hired Hartman’s brother-in-law and eventually helped the man attain a judgeship, despite his lack of significant courtroom experience. The senator also assisted Hartman clients, including a felon, in efforts to get gun permits.
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- By massaging the labor negotiating process in Nassau County, Hartman racked up huge salary gains for cops there. He then cited the Nassau contracts as fair precedents in getting concessions from New York City, concessions that benefited the PBA bureaucracy far more than New York’s police officers. Although Hartman had previously seen numerous associates charged with legal improprieties including two bosses, a coworker, and a law partner, he greased this process by providing gifts and favors to officials in Nassau county. Among other plums, certain county officials who favored Hartman were rewarded with well paid teaching jobs on the Nassau Community College adjunct faculty, a client of Hartman’s and a patronage pit.
- Caruso transformed the modestly paid position of PBA counsel into a gold mine, paying Hartman millions of dollars a year and sending him millions more in referral business. Prior to Caruso’s election to president, the PBA spent a little above $1 million a year for legal representation, labor negotiations, and lobbying. By 1991, the PBA was spending more than $7.2 million for the same services. The huge bargaining budget had virtually no effect on the basic police officer’s salary, which at best has only kept pace with inflation. Others benefited greatly, however; Hartman poured contributions into Caruso’s campaigns for the PBA presidency and in 1981 gave Caruso a Jeep. According to investigative sources familiar with a 1988 Manhattan grand jury, convened to examine embezzlement in the union, the topic of cash kickbacks to a PBA official was also explored.
- The PBA foiled investigations of police corruption. Before going to jail in 1985 for bribing witnesses not to testify against cops, Walter Cox, the PBA’s private investigator, recounted that he had been operating under explicit orders from superiors. More recently, a PBA precinct official tried to sidetrack initial police probes of renegade cop Michael Dowd. And law enforcement sources say the PBA also recently ruined a Bronx D.A./NYPD sting set up to snare crooked cops.
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- After the Manhattan D.A. discovered that Hartman had raided the PBA members’ escrow fund to pay for gambling binges and got him to surrender his law license, Hartman turned right around and set up a cozy relationship with the PBA’s successor firm, Lysaght, Lysaght & Kramer. The new outfit, headed by Hartman’s former roommate, an ex-cop named James Lysaght, seamlessly took over the lucrative PBA account, moving into Hartman’s offices and retaining his staff. Several Hartman relatives are on the Lysaght payroll and his brother Elliott until recently has handled the firm’s bookkeeping, just as he did before the transition. Furthermore, the Voice observed Lysaght holding a clandestine meeting with Hartman during the past year, one of a string of business discussions Hartman held in near empty parks on cold winter days. If legal matters were discussed, such a meeting would seem to violate Hartman’s agreement with the district attorney to get out of the PBA’s legal affairs.
- Instead of firing Hartman for dipping into the escrow funds, Caruso continued to reward him. After Hartman gave up his law license, Caruso granted him another multi-million dollar compensation arrangement. Hartman became both a “labor consultant” to the PBA and the broker on an expensive new life insurance policy sold to PBA members, before handing the account off to the wives of PBA lawyers James Lysaght and Peter Kramer.
- Caruso, his staff, and PBA accountants are decidedly cavalier in the way they handle the PBA’s huge cash flow — $63 million in annual contributions from the city, dues from PBA members, and income on assets. In every document filed with the government, one of the biggest line items is always “other,” which is rarely explained on supplemental sheets. In 1991, a whopping $6.6 million in expenses was lumped under “other.” That figure only hints at the overhead that the PBA carries today. Because of its extravagant administrative costs, and huge payouts to lawyers, lobbyists, and labor negotiators, the PBA’s expenses nearly equal the benefits it disburses to members—approximately $26 million. (See “The PBA’s Bloated Overhead,” page 28.) For United Way and other tax-exempt organizations, such spendthrift practices have recently triggered public outrage and forced resignations. So far, the PBA has successfully avoided virtually all inquiry and criticism.
WEARING EXPENSIVE tailored suits and a withering scowl, Phil Caruso is the face of the PBA, and to a large degree of the New York Police Department itself. Commuting from his home in Sayville Suffolk County, he encourages a hostile view of New York City, the notion that it’s nothing but an armed camp that issues nice paychecks. The same outlook informs the PBA’s 19 other executive board members, most of whom live in the suburbs. They’re all white, all male, and, though they don’t perform any police work, all collect taxpayer financed NYPD salaries and have generous PBA expense accounts. The next level down on the PBA hierarchy contains 364 delegates — virtually all white and male, most of them living in the suburbs.
Despite the PBA’s fundamental alienation from the city, the organization has become an increasingly potent local political force. Although it made no formal endorsement in the mayor’s race, its sympathies were obvious: Rudy Giuliani was the man. Giuliani joined Caruso at the infamous September 1992 City Hall police rally. The candidate screamed out one “Bullshit!” after another in his critique of Mayor David Dinkins, and Caruso told the mob, “The forces of evil are all around. They are trying to surround us. They are trying to defeat us.”
Ever since that rally-cum-mutiny, the PBA has championed Giuliani. As tallied by Shaun Assael and Wayne Barrett in the November 2 Voice, PBA-connected sources contributed $20,500 through a single bundler to Giuliani’s campaign, and many police officers worked as volunteers. Yet now that he’s moving into Gracie Mansion, the former prosecutor has to decide if he is willing to stand up to his PBA supporters. He’s sent out mixed signals so far: he pledged that, for the time being, he will leave alone the Dinkins-mandated civilian police review board, which the PBA is staunchly against. But in a year, Giuliani warned, he will review the board’s performance “to see if officers are being treated fairly.”
More encouragingly, Giuliani has also called for the return of an independent special prosecutor to investigate police misconduct, a post Governor Mario Cuomo abolished in 1990. With the Mollen commission ready to issue its report and with Giuliani about to name his police commissioner, there has perhaps never been a better time for an independent prosecutor to look into police affairs, especially the inner workings of the PBA.
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Not that it will be easy. Almost every source the Voice approached in preparing this article was reluctant to speak. People intimately familiar with the PBA said they feared for their lives and those of their families if they talked. As one person put it: “It would be suicidal for a police officer to speak out.”
After months of building trust and cultivating leads, however, the Voice persuaded many knowledgeable sources to reveal what they know. Interviewed were more than 100 people — many of them several times — including PBA employees and other law enforcement sources from New York City, Nassau County, New York State, New Jersey, and the federal government. Along with details drawn from stacks of documents and files, the insights of these administrators, investigators, police officers, attorneys, and other professionals enabled the Voice to piece together a portrait of an organization that operates above the law and without review.
Caruso himself refused to comment, declining repeated requests for an interview and saying through a spokesman, “The Village Voice is anti-cop, anti-PBA, and anti-Phil Caruso.”
Attempts to contact Hartman were ignored or rebuffed. A prominent criminal defense attorney who has represented Hartman promised to relay the query, but no answer came back, and a phone message left with a woman at Hartman’s west side apartment was not returned. Neither did Hartman respond to letters mailed to him at all known addresses. As for the firm Lysaght, Lysaght & Kramer, which has taken over Hartman’s enormously profitable PBA work, both James Lysaght and Peter Kramer abruptly hung up the phone when the Voice called to request an interview.
When the Voice telephoned the PBA office to ask how to get in touch with Hartman, a woman who refused to identify herself said, “He’s retired.” Then how do you reach him? “You don’t,” she snapped, ending the conversation. Hartman’s formal ties with the union may indeed have been severed, but a network of friends, relatives, and legal and business allies remains firmly in place.
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PHIL FOR PRESIDENT
FOR CLOSE TO A DECADE and a half, Phil Caruso and Richard Hartman have been the odd couple of police organizations. Disheveled, charming, and compulsive, Hartman was the Nassau County conjurer who brought to the union political muscle, negotiating savvy and dubious associates. Manicured, reserved, and willful, Caruso was Hartman’s sponsor, bankroller, and enabler, feeding him larger and larger retainers and contract, and backing him with the unqualified, unquestioning support of the PBA. Together, using tax revenues they bargained for in the name of the cops on the street, Hartman and Caruso built a powerful, wired institution that stands virtually beyond scrutiny.
The unlikely partnership began in 1977, with Hartman making a pitch for the New York PBA’s legal work and Caruso a bid for the PBA presidency. Hartman had just come from the patronage pit of Nassau County politics. A bright, energetic student at Long Beach High, he had scored in the top percentile on his college board exams. At New York Law School, he had been taught by none other than the notorious Roy Cohn, the Joe McCarthy aide whom Hartman would cite as a role model and who would be disbarred for improperly handling a client’s funds. Hartman went on to ace the bar exam, and presumably could have aimed high in the legal field, perhaps for a clerkship for the U.S. Supreme Court justice or a career in corporate law. Instead he descended into the mercenary, brawling world of Nassau County law and government. (See “Nassau’s GOP Affirmative action Machine”)
Then, as now, Nassau politics had little to do with issues or ideas; it was all about power, getting ahead, and helping yourself, your family, and your friends. Throughout these early years, Hartman played protégé to a string of ethically challenged mentors. A Nassau D.A. he worked for went to jail for padding his expenses; a Suffolk district court judge for whom he worked was removed from the bench for improprieties ranging from fixing traffic tickets to advising a prostitute on how to avoid prosecution.
Besides his intelligence, energy, and colorful presentation, Hartman could rely on the Nassau GOP machine, in which his father, a grocer and bookie, had been a party committeeman. Richard established early relations with the D’Amato brothers, Alfonse and Armand, friendships that later proved fruitful for all concerned. After taking over representation of the Nassau PBA, he began adding other police unions, including the Suffolk County PBA, and before long had an incredible stable of 300 client unions, most in law enforcement. Hartman’s connections, combined with his penchant for handing out tokens of his esteem to county officials, helped make the Nassau and Suffolk police the best paid in the country. Nassau officers currently earn a base pay of $52,229 after seven years of service. With overtime, some officers earn as much as $90,000 annually.
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While Hartman was first making a name for himself in suburban police labor negotiations, Philip Caruso was rising fast in New York City politics. After two years in the army and two years installing telephones, the young Brooklyn native had joined the NYPD in 1958 and served as a patrolman and plainclothes officer working 42nd Street. Caruso began his climb through the PBA hierarchy as a delegate, a sort of shop steward who represents the union in his precinct. In 1971, the PBA president elevated Caruso to sergeant-at-arms, the first rung of PBA leadership.
Caruso stood out from day one. He spoke more eloquently than others. “The guys were hail fellows well met,” said Stuart Linnick, a former PBA attorney. “Phil was more dignified.” And he polished his resume by picking up a bachelor’s degree and a master’s in public administration from Pace University. Former colleagues recall that Caruso considered himself above, and was even embarrassed by, uneducated, inarticulate officers.
In 1974, a slate of young policemen, including Caruso, ran unopposed, and were elected to slots on the executive board. In a typical display of bravado, Caruso immediately announced that in the 1977 election he would take on president Ken McFeeley. When ‘77 rolled around, Caruso’s platform included a promise: If elected, he would hire Long Island wunderkind Richard Hartman as the PBA’s attorney and negotiator. Hartman reciprocated by helping to finance Caruso’s run.
Though Caruso lost, narrowly, the rest of the slate prevailed. The top four officers below president Samuel DeMilia were Caruso allies. The group quickly staged a confrontation, hoping to force DeMilia to hire Hartman.
On December 30, 1977, DeMilia and the board met at his home. According to a contemporaneous memo written by DeMilia’s counsel, Harold Foner, “DeMilia stated that the opposition members of the Board led by [first vice president Charles] Peterson wanted Hartman retained… [I] emphatically told DeMilia not even to consider Hartman, that it was rationally stupid and untenable to retain a man who gave large sums of money to defeat him and who had actually campaigned against him.”
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On February 15, 1978, in a meeting at the PBA’s offices, Caruso’s executive board allies, including Charles Peterson, plus Hartman, met with Carmine Perrotta, the man who had been hired the previous August to handle the legal assistance plan. The group presented Perrotta with an ultimatum: step down. His back to the wall, Perrotta, whom the PBA was paying $47,500 a year, reluctantly agreed to a $100,000 buyout. The following day, at age 37, Richard Hartman became attorney and chief negotiator for the PBA, with an annual retainer of $750,000.
Two years later, in March 1980, DeMilia, suffering from eye cancer, resigned, elevating Charles Peterson to the position of acting PBA president. Hartman maintained a friendly demeanor with his ally Peterson, yet behind the scenes he was plotting the new president’s downfall in the June election. Sources said that between 1977 and 1980, Hartman pumped large sums into the PBA presidential elections, and though some of it went to Peterson, the bulk flowed secretly to Caruso. “Richie was smart enough to realize that Peterson wasn’t the politician Phil is,” a former Hartman staffer recalled. Hartman was not only observed as a Caruso bankroller but according to sources close to the elections, also fed Caruso information straight out of the Charlie Peterson camp.
“Everything Peterson told Hartman, Hartman told Caruso,” according to former PBA spokesman George Douris, who was dismissed by Caruso in late 1980. In other words, to insure that Caruso would win, Hartman sucker punched Peterson. (In an odd twist, years later, after Peterson himself died of cancer, Hartman would wed the man’s daughter.)
The pattern of overthrowing friendships was hardly unique to Hartman. Caruso, too, saw pals as expendable if they got in his way. PBA vice president Nick Chiarkas, a man responsible for Caruso’s rise through the PBA ranks and one who urged him to pursue degrees at Pace University, paid dearly for his encouragement. Once Caruso secured the presidency, he dispensed with the older Chiarkas, who was known for his integrity. At the time, Chiarkas was retired from the force and working at the PBA as a civilian. When Chiarkas left the PBA, Caruso refused to allow Chiarkas to continue his medical insurance at his own expense. When Chiarkas died of cancer in 1985, his wife and daughter were left to fend for themselves.
“That son of a bitch double-crossed me,” Chiarkas told a friend after being cut loose by Caruso.
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FAVORS AND APPEARANCES
IN 1980, WHEN Phil Caruso took the PBA helm — as its eighth president in 10 years — the triennial labor negotiations were already underway. Hartman and Caruso were so confident of doing well that the PBA team bragged before bargaining began about exactly what gains they would be attaining. They even discussed the need to drag the discussions on for the sake of appearance. During negotiations, PBA officials were upstairs in a hotel room partying. To help pass the time, a couple of them even enjoyed the favors of prostitutes, according to a source who said he personally brought the women to the hotel.
Hartman was able to engineer increases in the form of complex benefit packages, which often benefited the union more than its members. But he was less successful in his efforts to force salary gains in the NYPD by pointing at rates he’d won on Long Island. Today, the base pay for a Nassau police officer stands almost $12,000 over that of a New York City officer.
Still, Hartman couldn’t resist using unorthodox methods that had worked well on Long Island. A favorite ploy was developing warm relations with negotiators on the other side of the table. For example, former assistant labor relations commissioner Bob Pick told the Voice earlier this year that Hartman had come to Pick’s house to tutor his wife in math, and when he got too busy, sent over the head of Nassau Community College’s math department, Abe Weinstein. Asked about this, Weinstein said that he could not recall a Bob Pick, and that he did not do tutoring. Accepting such favors or gifts would be improper, according to Bruce McIver, the Office of Labor Relations director and the superior of these negotiators from 1980 to 1985: “You can’t let them buy you lunch, you can’t let them buy you tickets to the theater.”
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If warming up bargaining opponents weren’t enough, Hartman also befriended neutral arbitrators. In 1976, while Hartman was unofficially advising the New York City firefighters union, arbitrator Eric Schmertz awarded a controversial, generous settlement. “My feeling was he had lost some of his impartiality,” said McIver. “My impression was he was favoring the fire union.”
Schmertz nevertheless moved on to more prestigious posts, including that of dean of Hofstra Law School. One student who enrolled at Hofstra during that period was Phil Caruso’s daughter Lynda, who has since become a lawyer at the PBA’s law firm. (Schmertz later served as director of Mayor Dinkins’ Office of Labor Relations. In October he was nominated to the National Labor Relations Board, but told the Voice last week he had just withdrawn his name for “political considerations.”)
Right after winning the 1980 police contract, Caruso and Hartman faced another pressing task: moving Al D’Amato onto the national stage. The Nassau County supervisor, already close with law enforcement, bonded anew with police that August when he called a press conference to denounce a Nassau police department affirmative action plan, designed to answer a lawsuit that challenged the makeup of the force, 97 per cent white and male. Immediately thereafter, the Nassau PBA endorsed D’Amato’s Senate bid, in which he was contesting the seat of fellow Republican Jacob Javits.
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Hartman and his associates went into high gear. “His election came up. We dropped everything,” a Hartman staffer remembered. Hartman called his clients for donations to D’Amato’s campaign. He also, according to a onetime employee, gave cash to some staffers to donate in order to circumvent contribution limits.
“Richie was pulling [D’Amato’s] strings,” said a former associate. “Al knew he needed Richie for the campaign contributions and all the clout Richie had. He represented 200 police organizations at the time. D’Amato got every single police department endorsement when he ran. That’s a hell of a base to start with.”
So close were the two that Hartman loaned his driver to the supervisor to ferry his family to the 1980 Conservative Party convention at the Diplomat Hotel in Manhattan. Hartman’s driver did other errands for D’Amato during the campaign, even babysitting his kids during the victory celebration at the Hempstead Marriott.
After D’Amato won, he gave a job on his Senate staff to Hartman’s brother-in-law, Bruce Alpert, who was married to Hartman’s sister Lynn and worked as Hartman’s office manager. Alpert’s job largely involved fund raising. With D’Amato’s assistance, Alpert later won a judgeship, which raised a few eyebrows. “You should have a little trial experience, a day or two at least,” joked a former cop who knew Alpert. Reached by the Voice, Alpert said that he had tried cases as a lawyer, but could cite no specifics.
In 1987, D’Amato also sought judicial robes for Robert Roberto, a former colleague of Hartman’s in the Nassau D.A.’s office, recommending him for a federal judgeship. Roberto’s confirmation was sunk when it was revealed during hearings that he had once carried out his own sting on a prostitute in which he arrested the 16-year-old after she masturbated him. He voluntarily withdrew his nomination. Roberto nevertheless went on to win an appointment to the state supreme court, with D’Amato’s backing.
D’Amato’s image as Senator Pothole extended beyond judgeships to small but potentially deadly favors. For instance, D’Amato helped get a pistol license for Raymond David Tse, a controversial Chinatown businessman, restaurateur, and Hartman client who in 1988 would kill a young gang member in his office. At his 1991 trial, where he was represented by a non-Hartman lawyer, Tse argued that he fired 18 shots in self defense. He was acquitted.
And when Hartman was representing boxing promoter Don King, D’Amato intervened in an effort to get King a pistol permit, despite the fact that he had served four years for manslaughter after he beat a man to death. Felons are generally prohibited from owning weapons, and the police denied the permit.
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THE PBA’S FINEST
THE CARUSO HARTMAN ERA ushered in some new faces at the PBA. One figure with a troubled past was Gary Melius. As a young thug, he’d met Hartman and gone on to work his way into the union’s circle of friends.
In 1963, the teenaged Melius and three friends had offered a ride to a young man who had been waiting for a bus, then choked him and robbed him of $40. The following year, Melius was convicted of malicious mischief — six months, suspended sentence. In 1971, he and James C. Mileo, a 40-year-old Nassau County patrolman, were arrested in an attempted $1000 shakedown of a narcotics courier, a young woman caught with a pound of heroin in her car. She said she didn’t have the money, so the patrolman ordered her to go get it. When she returned, Melius, who worked as a general contractor, was there to receive it. Perhaps the scheme would have been successful if the woman had not been an undercover police officer.
When Melius was arrested after driving off with the money, attorney Richard Hartman represented him. He had Melius plea bargain to third degree grand larceny, and to the great relief of the young builder, Hartman turned a potential 15-year sentence into three years probation and a $1000 fine. “[Hartman] always inferred he was a connected guy,” Melius said in a Voice interview.
Melius was later arrested for his role in a “steal to order” business that delivered hot tractor trailers and construction equipment on request. The ringleader was a young woman connected with organized crime figures. Melius was charged with grand larceny, and Hartman again got the charge reduced to a misdemeanor and probation.
Subsequently, Melius moved the office of his small construction company into the ground floor of Hartman’s dumpy two story building at 300 Old Country Road in Mineola; Hartman’s law firm occupied the upstairs. Melius began chumming around with the attorney and before long was both a personal aide and social pal.
“I just hung out with him,” Melius said. “We went to the movies. We went to the racetrack, to Roosevelt, to Nathan’s.”
By 1975, the two had become such fast friends that Hartman sold 300 Old Country Road to Melius for $250,000. Melius said he paid the entire sum two years later. Subsequently, Melius demolished the building and constructed a sleek three story professional office condominium complex, which he sold for a huge profit.
In 1979, law enforcement officials again took an interest in Melius. This time, investigators for the Manhattan D.A.’s office came upon his name while following checks written by loan shark Teddy Moss, operating from the garment district. One such check, for $25,000, had gone to Gary Melius
When the $25,000 check surfaced, investigators summoned Melius to their offices. “Once he saw that check he literally took off,” one investigator said. “He fled out the door.” Ten minutes later, Richard Hartman called the investigator to quiz him as to what he wanted with his friend. Melius, who does not recall the meeting in the D.A.’s office, but does remember a phone call, said he told the investigator that the money from Moss was a loan.
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The loan shark was a familiar figure: back in the ’60s, Moss had been a principal prosecution witness in the Crazy Joey Gallo trial. He’d worn a wire and gotten protection from the D.A. because Gallo wanted to kill him. But by this time, Moss’s days of cooperation with law enforcement officials seemed long over.
Prosecutors suspected Moss’s check to Melius was a means of laundering illicit profits. And though Moss pled guilty to criminal usury (charging 69 per cent interest) and paid a $45,000 fine in 1980, an investigator on the case feels it was not Moss’s idea: “Somebody told him, ‘You better plead or this thing is going blow up in people’s faces.'”
Soon after Phil Caruso’s election to the PBA presidency, the ubiquitous Melius entertained the policeman and his family on Hartman’s yacht Big Bart. (The name was Melius’s moniker for Hartman, drawn from a dirty joke about a pig.) “Richard bought the boat for entertaining, especially to take Phil out,” Melius recalled.
The PBA boss put Melius to work handling production of the union’s magazine, New York’s Finest. “That was Phil’s idea,” said Melius, who coordinated ad sales and got to keep some of the revenues. Prodigious spending on printing and advertising was a pre-Caruso PBA tradition; hiring publishing consultants with criminal records was something new. Though it is not clear whether Caruso knew of Melius’s history, one would assume he hadn’t checked. And Melius and the Carusos were decidedly friendly, even attending a Lincoln Center concert together.
“Phil was sickeningly obsequious with Gary,” said one associate.
Most people who gamble don’t really want anyone to know what they are doing. Most of them will lie about what they had for breakfast. Compulsive gamblers who are down on their luck steal 90, 95 per cent of the time.
— Bill, Gamblers Anonymous
OUTSIDE OF WORK, Hartman had only one pleasure: dice. His father, the grocer and politico, had tripled as a bookie, so Richard’s obsession with gambling was not entirely surprising. Early in his career, according to acquaintances, Hartman had wagered heavily, then eased off. But in September 1980, only a few months after Phil Caruso won the PBA presidency, Hartman opened what appears to be his first line of credit in Atlantic City, at Caesars. Over the next several years, he opened credit lines at eight different casinos.
Hartman was enthralled by the craps tables and would stay at them far too long. In one night in 1983 at Bally’s Park Place, for example, he lost $667,500. “It irritated the hell out of him that he couldn’t beat the system,” a former associate said.
As a man who rarely bothered with a good night’s sleep, Hartman was a natural for the casino environment. He was also the ideal casino client. One night in Atlantic City, Hartman had $5000 on the table. He turned to a companion and asked him to roll the dice. “I kept rolling sevens and elevens, and the stack of chips kept getting bigger and bigger,” the companion recalled. When the winnings began to pile up, he suggested stopping, but Hartman urged him on. The next toss crapped out — one roll, $148,000. “Typical degenerate crapshooter,” a high ranking casino official recalled when asked about Hartman.
As they commonly do, casinos tripped over themselves to offer the big time spender loads of perks, beginning with complimentary rooms, even ones he could pass on to friends. In the mid ’80s, when his former PBA cohort Charlie Peterson was being treated for cancer near Philadelphia, Hartman suggested to the ailing cop’s daughter, Patricia, that during her hospital visits she stay in one of his comps in Atlantic City, not far from Philly. Patricia, a Long Island Rail Road cop, seemingly unaware that the lawyer had betrayed her father in the 1980 PBA presidency campaign, started seeing Hartman in October 1986. He lavished her with expensive gifts. Within a month, she asked her husband, a New York City police officer with whom she had a rocky marriage, for a divorce.
Hartman’s cash flow was like a torrent. It came in fast and went out faster. Like most obsessive gamblers, Hartman was always short of funds.
Often, sidekick Gary Melius was with him in Atlantic City, but even when he wasn’t, Hartman might desperately summon him. An acquaintance remembered overhearing an imploring call: “Richie kept saying, ‘C’mon Gary, c’mon’ like, jokingly, but he was really begging for money.”
A couple of hours after one such plea, Melius arrived in Atlantic City, having been flown down on a private plane from Nassau County’s Republic Airport. He came directly to Hartman’s casino penthouse carrying a bag crammed with cash. “He opened it up and emptied the money onto the bed,” recalled another person in the room. “Two hundred fifty grand. I had never seen that much fuckin’ money.”
Melius, who confirmed the incident and the amount, said he got the money out of Hartman’s bank, Irving Trust, where he routinely cashed sizable checks, made out to “Cash,” from the attorney’s business account. (Hartman, always preferring cash, apparently did not maintain a personal bank account.) Melius also made deposits there, as much as $300,000 at a time. An Irving Trust vice president personally fussed over Hartman’s account.
Much of Hartman’s gambling money was, of course, New York City tax revenue that had gone to the PBA and out to Hartman. His PBA retainer had grown to $1.2 million, but even that was not enough. Some funds apparently came from the aforementioned Teddy Moss, who Melius says he has known for many years. Besides his loan sharking enterprise, Moss is said to own pizza parlors, a Chinese restaurant, movie theaters, bowling alleys, and a First Avenue card shop.
During Hartman’s casino meltdown, according to a former Hartman associate, a courier picked up sizable amounts of cash several times over a two month period, sometimes from Teddy Moss’s Chinese restaurant. Reached by phone recently, Moss volunteered that he had accompanied Hartman on several visits to Atlantic City, but denied ever loaning him money, beyond what he described as “car fare” for the millionaire lawyer to get back to New York.
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Hartman was close enough with Moss to have his driver pick up Moss’s daughters and take them to the airport for a trip to Europe and one to Israel. Even when the driver began working for Phil Caruso, if Melius or Hartman asked that the chauffeur handle airport runs for Moss, he would do so. Moss said he met Caruso on one or two occasions.
Clearly, Hartman had lost control of himself. He even started lying to those who had previously accompanied him to Atlantic City, denying where he was headed. Instead of summoning his driver, he began taking private flights from Republic Airport. Eventually, morale in his Queens office deteriorated, along with its finances. One week in 1983, the paychecks actually bounced.
Eventually, Hartman finances fell into such disarray that he ceded Melius almost total control over his monetary affairs. For a short period during the early ’80s, Melius controlled all of Hartman’s business bank accounts, personally handling the money himself.
By early 1984, following a three-month craps binge, Hartman had defaulted on $700,000 in gambling debts. At Hartman’s prompting, Melius wrote a letter to casinos urging them to allow Hartman to settle. The attorney ended up paying just 42 cents on the dollar to Bally’s, the Golden Nugget, Caesars, the Sands, and Resorts International.
Why was Melius doing Hartman’s deals? “Richard couldn’t negotiate his own deals,” Melius said, insisting Hartman’s publicly acclaimed bargaining prowess is much exaggerated.
It was around this time, when Hartman’s gambling put him into a financial tailspin, that Frank “Kiki” Testa, a retired West Hempstead sanitation worker, began hanging out in Hartman’s office. Testa, the father-in-law of a Melius high school chum, was a man with a menacing aura.
A staffer in Hartman’s office got the impression that Testa was there to keep watch over the operation. One former associate recalled seeing Testa in Atlantic City with Hartman on several occasions. Testa had confided to a handful of Hartman associates that he was a member of the Angelo Bruno organization in Philadelphia — a Philip Testa ran that family for several years — and that he had killed quite a few people. Melius, for his part, had told an associate that he himself was connected with the mob.
In an early Voice interview, Melius said his claims about being in the mob were inventions intended to impress people. In a subsequent conversation, he denied ever making the claim: “That is very inaccurate.” Such a boast would indeed seem particularly misplaced since he was hanging out at the office of a police union. He couldn’t provide a satisfactory explanation of why Testa would have been spending time with Hartman, though he did allow that Testa could have had mob ties: “I’d believe that he knew people.”
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While Testa was around, “Gary didn’t say so much as boo,” said a Hartman associate. “When Kiki came into the office people were very uncomfortable. Very uncomfortable.” One young Hartman assistant remembers Testa offering him a word of advice, drawled out with exquisite meaning: “You know, working with Richie, you’re in a verrrry sensitive position.”
That was a lesson Melius himself soon learned. Hartman had come to believe that Melius, having access to Caruso, had become such a presence that he was a threat. Also, as Hartman’s gambling made him more dependent on Melius, the contractor appeared to lose respect for his onetime mentor. Hartman quietly began working to oust him, making sure that all the top PBA officers knew the full extent of Melius’s criminal record. The conspiracy did its work. By mid-1984, Melius had been eased out the door, never realizing that it was his growing clout in the office that had done him in.
Yet even after Melius was pushed away from the PBA, Hartman had one more request. By 1985, the lawyer was so desperate for cash that he decided to ask former associates to rejoin his ranks in order to recapture clients that he had voluntarily relinquished years before.
“He wanted me to talk to them, and I wouldn’t do it,” said Melius, explaining that he had tired of serving as Hartman’s point man on such assignments and that this refusal was the last time he spoke to Hartman.
In his interview with the Voice, Melius confirmed his crimes prior to his friendship with Hartman. But he argued that for quite a few years now he has been a decent family man, with a respectable reputation. In a November 23 letter to the Voice, Melius writes, “I have spent my adult life establishing myself as a business man whose word is his bond and a responsible member of the community.”
Indeed, Melius was featured on Lifestyles of the Rich and Famous in 1986 as the owner of an estate in Cold Spring Hills, Long Island, a 120,000-square-foot palace, the second largest private residence in America. Formerly known as the Otto Kahn Castle (or Oheka), it had been built in 1917. Melius purchased it in 1984, fixed it up, and sold it in 1988 for $22 million to a Japanese businessman who insisted on a no-publicity clause. Today, Melius has sizable developments throughout Long Island.
Of his earlier activities, including his association with Hartman and the PBA, the 49-year-old Melius has regrets: “I was trying to hang out with what I thought were the good guys — lawyers, law enforcement. I would have done better with the bad guys.”
Without Melius, Hartman still managed to finance new excursions to Atlantic City, judging by a civil suit the state of New Jersey filed against Trump’s Castle for having allegedly violated state gaming laws in authorizing Hartman credit. On September 17, 18, and 19, 1987, Hartman cashed three separate checks at the casino, each for $500,000. Then, on September 22, he arrived at Trump’s Castle with a certified check for $817,000 later identified as the money from the New York City police officers’ housing escrow fund. He went on to lose much of this money shooting craps. From October 12 to October 14, 1987, also at Trump’s Castle, he would blow $475,000. A few days later, on October 17, the Castle raised the high roller’s nearly exhausted $500,000 credit line to $1 million, approved by Ivana Trump via a phone consultation. That day he lost another $541,000. This pattern was typical: he’d bet a couple million dollars, some of it his own money, some not. Apparently, he always knew there was more to be had.
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Given Hartman’s gambling fever and the presence of Melius and Testa, perhaps mob connected figures could be forgiven for thinking they had a friend at the union. On two occasions, law enforcement officials listening to wiretaps heard the names of the PBA president and counsel being bandied about by organized crime figures. While listening to a September 3, 1985, phone conversation between Genovese soldier Federico “Fritzy” Giovanelli and Harry Dickran, a friend and associate, FBI agents and city detectives were startled to hear the PBA president referred to with great familiarity. (See Streetbeat, William Bastone, Voice, October 13, 1992.)
Dickran told Giovanelli he was worried about having been followed and surveilled on Friday afternoons as he met with associates in a Long Island restaurant. According to the FBI audio tape, Giovanelli then asked, “What kind of car? Take the plate number.” Dickran responded with the number. “I’m gonna give it to the PBA to track it down. You know, I’ll get it from Phil, Phil Caruso. He’ll take care of that for me.”
Caruso wasn’t unique in this respect. Starting around 1983, Hartman reportedly spent time at Roosevelt Raceway with Jerry Corallo, the son of mob heavy Antonio “Tony Ducks” Corallo (now in jail). A law enforcement bug, placed in a Jaguar, picked up a conversation between Tony Ducks, former boss of the Luchese family, and Sal Avellino, a Luchese soldier. The two were worried about being watched.
Corallo: “I’m going to have Jerry check with that guy.”
Avellino: “You mean Richie, Richie Hartman?”
Corallo: “Yeah. He hangs out with Jerry at Roosevelt racetrack.”
According to Melius, the relationship didn’t end with the son. He claimed Hartman personally knew Tony Ducks and was in fact Tony Ducks’s attorney.
That the PBA’s president and lawyer would be cited as helpful contacts by organized crime figures seems especially noteworthy in light of the access the PBA has always enjoyed at police headquarters. Corruption investigators confirm that any information from the police would be extremely useful for criminals, especially those involved in the numbers racket, an activity that the department closely monitors. Requests from PBA officials for sensitive NYPD files could be couched as PBA business. According to one former PBA official, “We could pull out any piece of paper in the police department and look at it.”
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HARTMAN FALLS, HARTMAN RISES
IN SPRING 1988, Phil Caruso and Richard Hartman were at the top of their professions. Caruso was king of the cops, and Hartman his legal magician, racing hither and yon, negotiating contracts, getting cops out of trouble. The previous year, Hartman himself had filled out a form declaring estimated annual earnings of $6 million; a highly placed prosecutorial source told the Voice that his actual income, including referrals, probably topped $10 million and may even have approached $20 million in some years. A large chunk of his money came from his PBA work and related referrals, and the rest primarily from other unions representing housing and corrections officers.
Suddenly, though, the two men found themselves on the defensive. A Manhattan grand jury wanted to know why Hartman had withdrawn $817,000 in 1987 from a police officers’ real estate escrow account — which held for safekeeping the payments PBA members made in the process of buying a home — and cashed a check for that exact amount at Trump Castle in Atlantic City.
Hartman explained, in testimony to insurance investigators two years later, that “to avoid the embarrassment with all the attorneys in the office, of taking funds out of the regular operating account and making it out to a casino, I would take it from the escrow account, which was in my sole province…”
Caruso, called to testify, backed his friend, insisting that Hartman’s unorthodox dipping was okay because the PBA owed him money anyway. Caruso even said he had authorized the “advance,” and other ranking trustees testifying before the grand jury said they, too, had known about and approved the invasion of the escrow account.
Investigators told the Voice they were amazed that Caruso had authorized the withdrawal from the escrow account; it was even more startling that a number of ranking PBA officers would condone the removal. In any event, it was surprising that Caruso, who had turned the PBA into a virtual fiefdom and was privately referred to as the “dictator,” would feel the need to consult with his board members on the sensitive matter.
Although District Attorney Robert Morgenthau’s office believed that the PBA charter did not permit Caruso’s authorization for Hartman’s withdrawals, Morgenthau felt he had no choice but to abandon the prosecution. “All funds removed from escrow accounts by Mr. Hartman were repaid before the investigation began,” Morgenthau announced, “and there is no evidence of any harm to any client. The investigation is now closed.” Instead, Morgenthau settled for the forfeiture of Hartman’s law license.
Hartman later told department of insurance examiners, “I resigned [my legal license] because after one year of investigation and making the newspapers I thought I embarrassed everybody enough…”
In deciding not to press for an indictment, Morgenthau was following New York State law pertaining to embezzlement, requiring the existence of a “victim” and either the intent not to repay the lifted funds or the inability to do so. Apparently, when the D.A.’s office launched its investigation, senior staffers had no idea how much money Hartman was earning. In fact, they were stunned to learn his income.
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Notwithstanding the D.A.’s rationale, some law enforcement figures found the whole affair curious. “What made it unusual was that Hartman was able to plea bargain before the grand jury could issue an indictment,” New Jersey deputy attorney general Kevin O’Toole told the Voice.
It didn’t hurt that Hartman’s negotiator was Michael Armstrong. After serving in the early ’70s as counsel to the Knapp Commission on police corruption, Armstrong had built a lucrative practice handling high profile white collar criminal defenses, like that of disgraced Queens borough president Donald Manes. Armstrong had also become a close personal friend and adviser to Hartman’s ally, Senator D’Amato, and would later serve as his counsel during Senate ethics investigations.
Although the D.A. decided he couldn’t bring criminal charges against Hartman, Armstrong, who had worked under Morgenthau when Morgenthau ran the U.S. Attorney’s office, presumably couldn’t save Hartman’s law license. Under the lawyer’s code of professional ethics, dipping into escrow accounts is grounds for disbarment, even without an indictment. So by conceding the license without a fight, perhaps Armstrong (who wouldn’t comment on the case) was foreclosing the possibility that the D.A. would develop something more serious on his client. Information from sources close to the grand jury indicates that prosecutors were probing the broader nature of Hartman and Caruso’s relationship, including the possibility that Hartman had improperly channeled gifts to Caruso — such as the Jeep that undeniably ended up in the PBA president’s driveway, wrapped in a red bow. Prosecutors were also said to have quizzed witnesses on a variety of names associated with organized crime.
One thing was certain: Hartman came out of the proceedings with his reputation sullied. But no sooner had Hartman’s resignation from the bar been announced than a PBA spokesman rushed to his defense, declaring: “Richie will always have a role with the New York City PBA.”
In short order, the PBA awarded Hartman a labor consulting contract worth a staggering $2 million a year. As if that weren’t enough, three months later Hartman decided on an insurance career, selling the PBA supplemental term life policies and earning himself a fat $2.2 million commission. The extravagant brokerage deal would be virtually concealed from the public and PBA members until 1992, when an accountant working for Hartman sued him and the dispute opened previously hidden financial papers.
In other words, Caruso had presented Hartman with a magnificent golden parachute. But where was the money going? It seemed a fair question, because shortly after winning his new contract, Hartman began to pass cash around as lavishly as ever. In a single day, for example, Hartman wrote out eight different checks to “Cash” for a total of $20,000.
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THE HARTMAN HAND OFF
BY FALL 1988, Richard Hartman had become a huge embarrassment to the PBA. To be sure, he had won concessions from Ed Koch’s city hall; he had helped Phil Caruso build one of the most powerful and intimidating organizations in the city; and he had made them all a great deal of money. But the public gambling, the bad debts, the indiscreet cash payments, and the open associations with the likes of Teddy Moss, Gary Melius, “Kiki” Testa, and Jerry Corallo was getting to be too much, even for Hartman’s friend Phil Caruso.
But what exactly could Caruso do? What could any PBA official do? When Robert Morgenthau’s grand jury began to investigate Hartman’s looting of the police escrow account, the union president and his lieutenants had little choice but to back him. Whatever had really gone down around the missing $817,000, Caruso (testifying under immunity) and his officers trooped before the grand jurors and backed their wunderkind attorney. They knew what Hartman had done, they testified, and they had approved it.
“There’s no question Phil told the trustees to say they had authorized it,” said an investigative source familiar with the grand jury. If they had, it would have been an extraordinary betrayal of their membership.
“At the point Hartman got fucked up on the gambling, do you think they could throw him to the wolves?” asked former police sergeant Robert Hughes, who headed the NYPD’s 1980 sick leave abuse prevention operation and therefore became a PBA nemesis. “Hartman knew everything,” Hughes told the Voice. “It was the same concept as J. Edgar Hoover: ‘I have so much on everybody, all you can do is pay me.’ ”
When Caruso did just that, naming Hartman upon his resignation from the bar to the highly paid labor consultant position, the question became: What would happen to Hartman’s lucrative PBA legal business? The solution was simple: Caruso hired Hartman’s good friends at Lysaght, Lysaght & Kramer. In a remarkably smooth transfer, the small Lysaght firm moved into Hartman’s office on Horace Harding Expressway, in Queens (to which he had moved from Mineola years earlier). The name plates were changed, but Hartman’s staff of attorneys and secretaries remained virtually intact. Over time, the Lysaght firm’s payroll would include Hartman’s mother-in-law Mary Peterson, his sister Lynn, and his brother Elliott, who has done the firm’s bookkeeping. Phil Caruso’s daughter Lynda Caruso Nicolino is currently an attorney at the Lysaght firm.
The firm had been founded by James I. Lysaght, who went on to become a village judge. When the firm took over the PBA account, it had two senior partners. One was former Nassau cop James J. Lysaght. The younger Lysaght had shared an apartment with Hartman and was widely considered the office’s public face. The other partner was Peter Kramer, whom most people regard as the firm’s workhorse.
Hartman had been dealing with Lysaght, Lysaght & Kramer long before 1988. For years, he had been referring personal injury cases to the firm, in return for referral commissions. Many of the cases came via his work representing the PBA. These were among the referrals that the prosecutorial source included while estimating that Hartman’s annual income could have been as high as $20 million.
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A TALK IN THE PARK
IN AUDITS OF the New York City housing police PBA, which was headed by Caruso buddy Jack Jordan, city officials discovered that Richard Hartman had received $60,000 in improper advance payments.
In 1991, after 16 years in office, Jordan was decisively trounced by a reform slate. The new president, Timothy Nickels, accused Jordan of making another unauthorized payment, this one for $50,000 to Lysaght, Lysaght & Kramer, issued on Jordan’s last day in office. No paperwork could be found to explain the expense.
Upon taking over the housing PBA presidency, one of Nickels’s first actions was to drop Lysaght as the union’s law firm and fire Hartman as its bargaining adviser. The union has confirmed that its annual legal costs immediately dropped 50 percent.
In rejecting Hartman, the housing police were the exception. While that union’s reformers were moving away from the Lysaght firm and Hartman, other police groups were cozying up. One example is the 1500 member New York City Sergeants Benevolent Association, the bargaining unit that recently pulled out of the Superior Officers Council, which represents ranks above patrolman. The SBA, which controlled most of the council’s money, is being wooed by Caruso and represented by Lysaght, Lysaght & Kramer. Over at the transit police union, for the first couple of years after the surrender of his law license, Hartman served as labor consultant. Lysaght provided, and still provides, legal services there.
Indeed, Lysaght, Lysaght & Kramer is the dominant law firm in the world of police unions, a status it clearly owes to Hartman. “I believe they are out to monopolize all business from all unions in this city,” said a high ranking union official.
During the past two years Hartman’s formal role with these organizations has been almost entirely ceded to Lysaght, yet the link has apparently not been broken. In March, the Voice observed Hartman leave his temporary home at the Gramercy Park Hotel and approach a car registered to James Lysaght. He asked its driver and sole occupant, “We’re going to the park?” They then drove to Stuyvesant Park, which was nearly empty on an extremely cold, damp day. There, the two pulled out a cellular phone and engaged in lengthy consultations. “How many files in the account? … How much volume are we talking about?” Hartman was overheard asking.
Since his supposed retirement from working with the PBA and other unions, Hartman has developed a fondness for meetings in parks, even in the poorest weather. And on occasion, Hartman has been seen leaving his home and walking a number of blocks, then suddenly getting into a waiting car. In August he was observed climbing into a vehicle registered to Teamsters Local 237. Until recently, Local 237 was run by Hartman’s good friend Barry Feinstein, who was forced to resign in April when federal investigators found that he had misused more than $500,000 in union funds. Recently, Feinstein has been under investigation by the state for his own insurance brokering arrangement.
If Hartman’s new career in labor consulting was designed to be profitable, selling insurance would be equally so. Affiliating with Met Life in 1989, Hartman became the PBA’s broker and agent for a new insurance plan to supplement coverage that members already had. Hartman, and later James Lysaght, were also instrumental in passing special legislation in Albany that made it easy for tens of thousands of PBA retirees to buy such extra insurance as well. By signing up once, members could have premiums automatically deducted from their pension checks.
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Hartman handled his Met Life commissions in a curious way; he immediately wrote a series of small checks to “Cash.” Over the course of two days, upon receiving a check for $550,000 from Met Life, he wrote out three checks to “Cash” for $9500 and 16 more for $2500. This pattern of keeping transactions below $10,000 would be repeated when Hartman received checks from his Chicago commodities broker, Gerald Inc. On October 12, 1990, Gerald issued Hartman three checks, each for $9500. In the final week of that month, the firm issued four more checks, again for $9500 each. And two months later, one more for the same amount.
The suspicion, which would be raised by Hartman’s own accountant in the course of a bitter, still pending civil suit (the accountant argued that Hartman did not repay him loans he had extended Hartman to cover his escrow pilferage), was that Hartman was trying to hide his income, and specifically to avoid the Bank Secrecy Act, which requires the reporting of all cash transactions of 6,000 or more. The law also bars the intent of getting around the limit by exactly such devices as Hartman seemed to employ. (By way of response, Hartman in his affidavit did not explain his writing checks to “Cash” that slip in just under the reporting limit, other than to say: “There is nothing illegal per se about making withdrawals in amounts under $10,000… I categorically deny ever having violated or intending to violate the said federal regulation.”)
Hartman would stay with Met Life into 1991. Then the PBA’s insurance work was transferred to an insurance brokerage called Deblin Planners, which had gotten its license shortly before. The firm, interestingly, is a partnership between Deborah Martz Lysaght, wife of James Lysaght, and Linda Nunziato, wife of Peter Kramer. Met Life currently lists Deblin as the PBA’s broker. The Voice has obtained a copy of a $100,000 check that Linda Nunziato Kramer wrote to Hartman on March 12, 1991. In the check’s memo space is the word “Installment,” though it is not clear what the compensation was for. Around the same time, Nunziato’s partner Deborah Martz Lysaght also made a $50,000 payment to Hartman.
Currently, according to Met Life, Deblin represents the New York City Sergeants Benevolent Association; the New York City Superior Officers Association; the New York City Transit PBA; the New York City Housing PBA; the Stamford, Connecticut, Police Association; and Barry Feinstein’s old union, Teamsters Local 237 — all former Hartman insurance clients.
In 1992, the state department of insurance began its second of two examinations of Hartman’s fitness as a broker in light of his dicey financial background. The state took no action against Hartman. In the previous year Hartman’s labor consultancies had started expiring, including the $165,000-a-month agreement with Caruso’s PBA and a $12,500-a-month agreement with the New York Transit PBA. Now some of his insurance contracts were winding down. Several presidents of police unions, including Caruso, wrote letters to assure the state that Hartman’s commissions were deserved and, moreover, wholly unrelated to his former legal and labor relations work. A few noted that Hartman had even waived commissions so that the unions could offer rebates to their memberships. Assuming this was true, Hartman’s generosity began after he had pocketed millions of front loaded commissions that could also have gone toward substantially reducing PBA members’ premiums.
Hartman’s apparent relinquishment of those accounts would conform to his pattern of establishing business relationships, then passing them on to friends and associates. While it’s unclear exactly what compensation, if any, Hartman continues to receive from the accounts he has handed off, the insurance business did enable him to get back to the craps table, despite a 1988 assurance from his lawyer to the D.A. that Hartman was seeking help for his gaming addiction.
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In February of 1990 Hartman told a state examiner from the department of insurance that he had put his gambling problems behind him. He said he had been attending Gamblers Anonymous meetings two or three times a week for two years and had also sought psychiatric help. “I haven’t bought a lottery ticket since [the escrow account invasion] either.”
Before the year was out, however, Hartman suffered a relapse. In the final weekend of 1990, according to a Philadelphia Inquirer article on casino profits, he arrived in Atlantic City with a cashier’s check for more than half a million dollars. That month, other financial papers of Hartman’s confirm, he received a $550,000 commission check from Met Life. Caesars and Harrah’s allowed Hartman to wager the proceeds, despite his outstanding $2 million debt to Trump Plaza and Trump Castle. (Merv Griffin’s Resorts Casino had already written off $500,000.) Shooting craps at Harrah’s over four days, Hartman won $600,000.
Perhaps that marked a shift for the better in Hartman’s luck. If so, he needed it. By 1990, Harman was paying the IRS $105,000 a month to settle outstanding unpaid taxes; in October 1991, the payments dropped to $100,000 a month. Apparently he kept current on these payments, and even somehow managed to have more than a half a million dollars left over to risk in Atlantic City.
As he has done in the past, much in the mold of the late Roy Cohn, Hartman continues to live on a cash basis despite his substantial income, with practically no credit trail or attachable assets. He and his wife, Patricia, have no personal checking or savings accounts, no credit cards, no vehicles, and no listed property ownership. Alimony checks from Patricia’s ex-husband are deposited by Hartman’s sister, mother-in-law, or by the Lysaght firm. Hartman’s mail goes to a house in Merrick, Long Island, inhabited by his sister Lynn and aforementioned brother-in-law, Bruce Alpert, a state supreme court judge. Reached at his office, Alpert said he could not confirm the arrangement because both the mail and family finances are handled exclusively by his wife. Despite a promise from Alpert to ask his wife to call the Voice, she did not. The Alperts’ home number is unlisted and the judge would not provide it. He did, however, confirm that for a time Lynn had a job at the Lysaght firm. “She was a paralegal, I guess you could call it.”
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PRESIDENT FOR LIFE?
Phil Caruso is more difficult to get to than the mayor or the president.
— Eric Adams, president of the black officers’ association, the Guardians
IF THE CARUSO REIGN has been longstanding and omnipotent, the police commissionership has been ephemeral and constricted. “The turnover in the police department administration is so rapid, that nobody knows the whole story,” former NYPD investigator Robert Hughes said. “And nobody wants to know. They are afraid of them.”
Even within the union, Caruso’s only rival was J. Patrick “Paddy” Burns, until recently the first vice president and a man known for his expensive tastes. For whatever reason, however, Burns didn’t challenge Caruso. Perhaps he merely lost his ambition. “Paddy Burns didn’t do any work while I was there,” Gary Melius said. “He played golf.” (Efforts to interview Burns were unsuccessful, though on one occasion he returned a call but left no number.)
In 1991, when Burns was replaced as second in command by Caruso aide decamp Thomas Velotti, Burns was transferred to Albany as the PBA’s principal lobbyist. As lobbyist, he received $50,000 a year, which, combined with his patrolman’s salary, put his earnings at about $90,000 a year.
For 1993, PBA filings list lawyer James Lysaght as the principal lobbyist. Burns, who has reached the mandatory retirement age of 62, nevertheless has a contract with the PBA through 1995 at $50,000 a year. “The PBA has enormous influence in Albany, particularly through its campaign contributions and through providing help in campaigns,” said New York City lobbyist John Bozella. “I’m not convinced they’re successful because they’re discussing issues on their merits with the rank and file members of the legislature.” In 1991 the PBA political action committee dispensed S140,000 in campaign contributions, largely to state legislators.
Ironically, it is not legislators from the city itself who are the most responsive. “Those little legislators from outside the city are totally intimidated by them,” said one lobbyist, referring in particular to representatives of suburban communities in which so many New York City cops live.
The favorable legislation just keeps on coming. In 1991, PBA allies in the legislature passed a law that allowed injured cops to sue the city as individuals. This gave them the opportunity to earn bigger settlements than what the city already provided.
Last summer Albany nearly handed the PBA a weapon that would have dramatically strengthened Caruso’s hand, a bill with staggering consequences for the battle against police corruption. On July 7, the senate and assembly — the latter by a vote of 135-3 — passed the Confidential Communications bill. This ominous law, sponsored in the assembly by Harvey Weisenberg, a Democrat from Long Beach, Hartman’s home town, would have shielded conversations between police union officials and their members, even criminal admissions. In other words, a delegate couldn’t report, or be forced to disclose, a patrolman’s confession of taking a bribe, selling stolen drugs, or killing somebody.
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The law would have made investigating the PBA impossible. “It was a pro-police corruption bill,” lobbyist John Bozella said. Alarmed by the implications, Governor Cuomo vetoed the bill when it reached his desk in August. Yet the audacity of the legislation is a PBA trademark, and if a PBA or D’Amato ally were sitting in the governor’s seat, it is likely that it would have been signed.
Even without such a barrier, apparently no agency wants to probe the activities of the PBA. “Morgenthau went after them in 1988 and fell flat on his face because he let a deal be cut,” noted one knowledgeable observer, referring to the grand jury and Hartman giving up his law license. “He is politically afraid to try to go after them again.” Asked by the Voice to respond to this, Morgenthau said, “Nobody has come to our office and said that Hartman, Caruso, and the PBA warrant a deeper look.”
Although the D.A. does prosecute individual officers, taking on police institutions presents special problems. For example, district attorneys cannot successfully try criminal cases without cooperation from the officers who made the arrest. So excessive zeal in rooting out police corruption can make life difficult for prosecutors.
Sometimes only the press can ask the tough questions. Among the dailies, New York Newsday is easily the most aggressive in covering the union. Its reporters and columnists — Jimmy Breslin, Jim Dwyer, Leonard Levitt, and Kevin McCoy, to name a few — give Caruso fits, and he no longer grants the paper interviews. The PBA seemingly doesn’t appreciate the right of the press to ask questions, a lesson learned by Bruce Lambert, a New York Times reporter who looked under a few rocks when he was at Newsday. In the ’70s, Lambert wrote a series of articles critical of PBA negotiations. Governor Hugh Carey, outraged by the generous contract terms, called to compliment Lambert on the work. Later, the reporter would be told by the PBA’s private investigator, Walter Cox, that he’d probed Lambert’s personal life on behalf of the PBA. In particular, Hartman wanted to know if Lambert was gay (he isn’t) — information that could not have possibly served any legitimate purpose.
In its investigation, the Voice has continually encountered PBA insiders and associates who express fear of reprisals. As one ex-PBA staffer put it, “Keep me out of it. I would like to live a little longer. I have a family.” Two people with intimate knowledge of the PBA said they would consider granting an interview, then had their telephone numbers changed and unlisted. Another PBA employee described the union’s environment this way: “It’s like the Mafia. Once you’re in, you’re never out.”
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“A cop knows from day one, you do what the union tells you,” said a former police officer. At monthly delegate meetings, a member or two occasionally got up to complain about Hartman or his staff. Sitting on the dais, Hartman would laugh, while other members shouted down the dissenter. Some delegates would try to make the maverick’s life miserable. As an investigator put it, “Members will always support someone with clout over someone trying to reform the system.”
That clout allows the PBA to stymie corruption probes targeting its members. Leading this effort for a number of years was the PBA’s investigator, Walter Cox. A Nassau County Republican committeeman, Cox had retained Hartman to represent him in 1971 after he got drunk and robbed a Massapequa supermarket. In 1974, Cox was convicted of impersonating a federal officer. Hartman put Cox, who had no private investigator’s license, on his payroll and assigned him to look into cases in which PBA members were accused of wrongdoing.
In 1984, Cox was arrested in Florida, where he had been tape-recorded in a Fort Lauderdale disco attempting to bribe a potential witness in a police corruption case. Shipped to New York to face charges, Cox had legal representation, courtesy of Hartman; nevertheless, he was convicted of bribery. But before going to jail he turned on his PBA bosses, giving a crucial deposition in another case, backing up former NYPD investigator Robert Hughes, who had been fired by the department under pressure from the PBA. As head of the NYPD’s sick-leave-abuse-prevention operation, Hughes discovered that 2 per cent of police officers were responsible for 51 per cent of the absences, and he saved the department $3.25 million. (One officer was running an insulation business while out with a proclaimed bad back.) In 1987, Hughes sued the PBA and its first vice-president, J. Patrick Burns, for harassment. Eventually, he was vindicated when a judge granted him two $400,000 court settlements, one from the PBA and one from Burns. (The PBA paid Burn’s share.) Cox testified that Burns instructed him to “get Bob Hughes.” But Cox was unwilling to elaborate further, and shortly thereafter suffered a heart attack in jail and died.
The PBA’s blocking actions against corruption probes were more recently evident in the case of patrolman Michael Dowd, the leading villain in the Mollen Commission hearings. Dowd would not have been able to run his cocaine ring for years without an active PBA enforcing the code of silence. When Dowd got into trouble in 1992, according to New York Newsday, Jack Fitzgerald, the PBA delegate in the 94th Precinct in Greenpoint, called high department officials and got them to back off. Hardly a role model himself, Fitzgerald was known as “the mayor” for his ability to fix schedules and assignments for his buddies. One of Dowd’s partying pals, Fitzgerald ran a Monte Carlo club in the precinct’s basement kitchen, where cops bet and boozed.
In recent years, the PBA has gone even further in undermining efforts to clean up the department. In one instance, according to a law enforcement source, it sent people over to a Marriott hotel, where they apparently compromised a joint Bronx D.A./NYPD sting set up to snare dirty cops. (The Bronx D.A. refused to comment.)
Although Hartman himself has been tripped up by the IRS, PBA finances apparently escape scrutiny. The last city audit, by then comptroller Harrison Goldin, was in 1986. Comptroller Elizabeth Holtzman’s office recently completed field work on its only audit of a PBA account. The examination covers the 1991 tax return for the union’s health and welfare benefits fund for active members — just one of five benefits accounts the PBA maintains. Press secretary Maerwydd McFarland said the final report will likely be completed in January, when Alan Hevesi assumes the office. “There are no significant findings,” McFarland said.
Two accountants, asked by the Voice to review a stack of federal 5500 forms (enumerating employee benefits and charitable trusts) and 990 tax forms going back to 1977, were shocked at how poorly they were prepared and how vague they were in their details. They noted many unusual characteristics. Particularly troubling was the sloppy preparation, which would be a certain invitation to an audit, a rigor federal tax authorities have seemingly spared the PBA.
No one is better qualified to explain these apparent irregularities than Richard Hartman, and someday maybe he will. In January 1995, Hartman will be eligible to reclaim his law license. He could join the Lysaght firm and even become the PBA’s attorney again.
Caruso’s term ends in three years, when he will be 62, the mandatory retirement age for a police officer. The PBA constitution and bylaws, substantially revised during Caruso’s tenure, leave open the possibility that he may stay in office as long as the membership continues to reelect him.
The coming months could be decisive for the union. An announcement on a new police commissioner is expected any day. The Mollen Commission report is due within the month, and Governor Cuomo will have to decide whether to appoint an independent prosecutor to investigate police corruption. Like most other municipal bargaining units, the PBA has been operating for two years without a contract, and the new city administration will soon have to begin bargaining. More importantly, mayor elect Rudolph Giuliani will have to decide how to deal politically with the police union that was instrumental in getting him elected. ♦
Research assistance: Jeremy Bogaisky, Lea Carnevali, Malene Jensen, Kate King, Julie Lang, Carlo Martino, Jodi Melamed, Adam I. Rich, and Mark Stamey
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ADDRESS FOR SUCCESS
TODAY 300 Old Country Road is a sleek office condo complex, but it once was the address of a seedy two-story building owned by PBA attorney Richard Hartman. In 1975, Hartman sold the rundown property to his crony Gary Melius.
Nonetheless, 300 Old Country Road continued to be a repository of opportunism. Hartman ran his law business upstairs. The downstairs was occupied by Davis Optical, a small firm that grew rapidly after getting the PBA contract to supply eyeglasses to police officers and their families. Squeezed into the tiny storefront next t0 Davis was a branch of the Money Store. Famous for its ads featuring retired Yankee great Phil Rizzuto, the business would come to be criticized for its extremely high-interest loans to the poor. The Money Store co-owner was Steven Gurian, also president of Long Island Development Corporation. At the time, Gurian was allegedly under investigation for mob connections.
Gurian prospered on deals backed by the Small Business Administration. It was Senator Alfonse D’Amato who had pushed vigorously to broaden the SBA program under which Gurian and his Long Island Development Corporation/ Money Store operated.
In addition to the construction, optics, and finance firms, 300 Old Country Road served as a hangout for a clique that included Philip Basile, a music promoter, club owner, and alleged front for mobster Paul Vario. The D’Amato brothers helped Basile obtain his nightclub permits; Armand P. D’Amato was Basile’s lawyer. ln 1983, just hours before a jury would convict Basile of conspiracy to defraud (he gave renowned goodfella Henry Hill a no-show job after Hill got out of jail), Senator D’Amato would testify that Basile was “an honest, truthful, hardworking man, a man of integrity.” To the amazement of the jury, he then kissed Basile on both cheeks.