What’s Wrong With Rudy Giuliani?

What’s Wrong With Rudy?

ON A RAINY DAY LATE in June, about a month after Rudolph Giuliani formal­ly announced his candidacy for mayor of New York, his car rolled north to Harlem for lunch at Sylvia’s restau­rant with an endangered species: black Republicans. Giuliani was conserva­tively dressed in a gray suit, his thin­ning black hair combed into the now familiar it-only-looks-like-a-bad-tou­pee style. He was missing his belt, wristwatch, and the eyeglasses he uses for reading. Giuliani forgot them while rushing out of his East Side apartment in the morning.

The prosecutor-turned-politician was fiddling with a portable phone in an effort to reach a former colleague who had just won convictions in a tough mob trial, when the talk turned to the city school system:

“What are your thoughts about the number of chil­dren enrolled in special education programs?”

“In what sense?,” the candidate replied.

“There are a staggering number of kids enrolled in special education. What are your thoughts on that?”

“You’ll have to make it a more specific question.”

“OK. Well, the number of children enrolled in special education is thought by some to be abnormally high, distressingly high.”

“I’m sorry. I don’t understand the question.”

“Do you think there are too many children enrolled in special education?”

“Do I think that there are children enrolled in special education inappropriately? That shouldn’t be in a spe­cial education program because the numbers are so high? I don’t know the answer to that.”

This is the man who was the most famous federal prosecutor in memory — the media’s darling, who never seemed to make a false move when the public eye was on him. Now, suddenly, Rudy Giuliani seemed very mortal.

As New York’s top cop, Giuliani spent the past five years in a fortress-like environment, as insulated from the nitty-gritty of urban life as any midwestern Republi­can here to gape at the tall buildings and exotic types. In that monastery of indictments and investigations Giu­liani excelled, but on the streets of New York, he frequently seems lost. His solemn face and candlewax skin were appropriate for an avenging angel announcing the indictment of mobsters, inside-traders, and crooked pols. But at street fairs, walking tours, and other venues for mayoral candidates, Giuliani looks wooden, robotic, even a little ominous at times. If he held up a baby, it might cry.

What happened to the Rudy Giuliani many peo­ple had such hope for? A stunning cross-sec­tion of the city was excited about the idea of his candidacy, but after more than three months of lackluster campaigning, he has slumped badly in the polls. He is trailing both his likely Democratic opponents, Ed Koch and David Dinkins, and so far, he’s looked good only in comparison to the dread Ron Lauder. Fortunately for Giuliani, many voters have yet to make up their minds, but among the uncom­mitted, his campaign has raised doubts and failed to quell fears. And the media, which initially smiled on Giuliani, has joined the chorus of doubt. “I like the idea of change at City Hall,” says one newspa­per executive. “And I like the idea of Giuliani coming in and cleaning things up. But I don’t know what this guy stands for.”

The crime-fighting Giuliani would nev­er have dreamt of becoming, in a single day, the target of tabloid headlines that ranged from “RUDY’S MEN ACTED LIKE NAZIS,” in the Post, to “RUDY HAS A BLACK EYE,” in Newsday. The former allegation was largely bogus; the latter was the biggest blunder of Giuliani’s law enforcement career. In 1987, the prosecu­tor arrested three Wall Street executives on insider trading charges so flimsy that the case against them dissolved almost overnight. Nevertheless, he pressed a two-and-a-half-year criminal investiga­tion of the trio. It ended last week with no charges filed against two of them. The third executive pled guilty to a charge unrelated to the allegations that prompt­ed the arrest. “It was a mistake to move with that case at the time that I did,” Giuliani said, “and to that extent I should apologize to them.” But Giuliani’s tortured explanation did not help. The politician was paying a heavy price for the abuses of the prosecutor.

Giuliani’s supporters believe his strongest personal and political quality is his leadership ability, but the campaign has so far found him on the defensive on important issues like abortion and irrele­vant ones like Noriega. His continued fixation on the C-words — crime, crack, and corruption — might well require the services of a deprogrammer before the election. (Giuliani recently conducted separate press conferences on corruption on three straight days.) “He’s good at the only thing a mayor doesn’t have to do — ­prosecute criminals,” says Democratic mayoral candidate Richard Ravitch.

Giuliani’s political beliefs remain shrouded by the “fusion” fog pouring forth from his $23,000-a-month headquarters at Rockefeller Center. Giuliani’s press releases refer to him as a “fusion candidate” or omit his party affiliation. This is an honorable tradition in New York, where Fiorello La Guardia ran as a Republican/Socialist, and John V. Lind­say initially pieced together a Republi­can/Liberal coalition and won reelection without the GOP. But La Guardia, and Lindsay (at least initially) had a popular touch that overcame confusion about their affiliations. Giuliani will go through the ritual flesh-pressing of New York politics, but watching him meet and greet voters, it’s clear he doesn’t have the com­mon touch. Giuliani is used to the kind of personal appearances a crimebuster would be expected to make. He is intro­duced, makes a short, formal speech, an­swers questions from a friendly, white, middle-class audience, and departs. This is not exactly the testing ground on which voters in New York decide whom they will allow to live in Gracie Mansion.

The abortion issue, in particular, has left the two-fisted gangbuster doing more head spinning than Linda Blair in The Exorcist. The Supreme Court’s ruling last month underscored Giuliani’s unwilling­ness to take strong positions on most controversial issues. “I would not take a leadership position supporting or opposing abortion,” Giuliani said just after the court’s decision was announced.

But the problem for Giuliani goes much deeper than appearances. There’s a perception among large groups of voters he will need to fashion a winning coali­tion that Rudy is traveling in three direc­tions at once. Giuliani wants the Republi­can and Liberal Party nominations. He must also attract large numbers of Demo­crats if he is to become the next mayor of New York. He therefore presents himself to the voters in the fuzzy form of Mr. Fusion, the candidate who is all things to all people.

It’s worthwhile noting that Giuliani’s pronouncements on issues like abortion are made only after what one of his asso­ciates calls “considered judgment.” For instance, shortly after the abortion ruling was announced, staffers huddled at Giu­liani’s campaign headquarters. They re­viewed the decision and Giuliani’s previ­ous statements on abortion. They also discussed questions Giuliani might be asked as a result of the ruling. They then moved on to a second meeting with the candidate himself. “We presented to him what had happened and what he’d said on abortion,” former campaign manager Russ Schriefer explained. “We let Rudy talk for a while, and as he talks, we kind of get an idea what his position is, where he’s coming from.” The Giuliani team then peppered the candidate with ques­tions he might be asked. Only after this process was completed did Giuliani emerge from his campaign cocoon to pub­licly turn one thumb up and one thumb down.

As Schriefer explained, without appar­ent irony, the most challenging aspect of the Giuliani campaign was illustrated by the abortion controversy. “Every decision you make has to be weighed as to how it’s going to affect another element or anoth­er area,” he says. “Abortion was one where the decision-making process had to take into account that there was a liberal position, a Democratic position, and a Republican position.” The “decision-­making process” clearly wasn’t good enough. Giuliani’s waffling hurt him bad­ly among women and Jews, prompting an unconvincing recent “clarification” in which the man opposed to Roe v. Wade said that he would fight any effort to outlaw abortion. “It’s one thing to screw up through inexperience,” said a Koch campaign official. “But you don’t have to be a brain surgeon or a savvy politician to have a strong, clear position on abor­tion.”

At a recent town meeting, Giuliani was asked a simple question about whether community boards should be given more power and money. It took him 350 words to explain that he would “be happy to consider” such an increase. Even when it comes to crime, Giuliani’s performance has hardly been emphatic. The candidate has had much difficulty in straightening out the exact age at which he believes young killers should be electrocuted. Is it 14, 15, 16, 17?

Then there was the Donald Trump newspaper ad in which the balding air-­shuttle executive talked about his “hate” for muggers and murderers and the need to incinerate the little criminals. Even death penalty–Ninja Ed Koch found this excessive, but Giuliani hailed the ad by the co-chairman of his first big fundrais­ing event as contributing to what he called a “healthy debate.” On the day he announced his candidacy, however, Giu­liani traveled to Bishop Loughlin, the Catholic high school in Brooklyn that he attended as a boy, and faced a solidly black and Hispanic student body. Giu­liani swiftly distanced himself from “Trump-the-ad” when a black student asked him if he endorsed the hyperactive casino owner’s position. No flapdoodle for this audience.

Giuliani has raised eyebrows among Irish voters by expressing warm admira­tion for Margaret Thatcher, and blundered through a campaign appearance at a city firehouse — a place where partisan politicking has always been prohibited. His campaign garnered a potentially valuable endorsement from the families of four slain policemen, but he promptly angered other fallen cops’ relatives by announcing the endorsement minutes af­ter a memorial service for the officers.

“Rudy does not suffer from the Arthur Goldberg or Pete Dawkins syndrome,” in­sists Raymond Harding, the Liberal Par­ty leader who has singlehandedly crafted the Giuliani fusion. “This is not a man who goes out to campaign and steps on his dick.”

Perhaps not, but Giuliani is clearly a man who has had trouble with his fly.

By mid-June, it became apparent that the campaign was in trouble. By July, the polls confirmed the obvious: Giuliani was trailing Din­kins and Koch. His declining pop­ularity has made fundraising more diffi­cult, and by August, he was faced with a financial crisis. Two weeks ago, he cut staff salaries in order to generate cash for television ads — the lifeblood of any effec­tive campaign.

Perhaps it was inevitable that, when trouble arose, Giuliani would place the campaign in the hands of one of his old­est and most trusted friends. With the exception of one stint as a lawyer in pri­vate practice, he has spent his entire ca­reer as a criminal prosecutor. He shares the caution and suspiciousness of the law enforcement fraternity. As a prosecutor, Giuliani’s top deputies were more than subordinates; they were his personal friends. So it’s not surprising that he would push out the pros. Says one Giu­liani confidant: “You don’t win Rudy’s trust overnight.”

Peter Powers and Rudy Giuliani go back to high school. They double-dated, joined the same fraternity at Manhattan College, graduated in the same class at NYU Law School, and then went their separate ways professionally — Giuliani to the federal prosecutor’s office in Manhattan, Powers to a successful practice as a tax attorney. The two men still live close to one another on the Upper East Side, and their passion remains arguing about politics. This decades-old dialogue goes back to the days when Giuliani was a Kennedy liberal. Powers is a lifelong con­servative, and though the two still don’t see eye-to-eye on everything, he has emerged as the most influential figure in Giuliani’s organization.

The steady, cautious Powers has been involved with the campaign since day one. He was part of a team who picked Richard Bond, George Bush’s former deputy campaign manager, and Schriefer, another Bushie, as a team to run the campaign. As Giuliani’s candidacy floun­dered, he turned more and more to Pow­ers. One afternoon in late June, the two men sat side by side in a nearly empty car of a Metroliner bound for Philadelphia. It was the first time in months Giuliani and Powers had been able to enjoy each oth­er’s company without interruption. Their talk, however, was about the problems they had left behind in New York. “Look,” the candidate told Powers as the train slid through Trenton, “I think it’s time you came on board full-time.”

Over the next month, Powers was phased into the campaign. By July, Schriefer, who had been the day-to-day manager of the campaign, was meeting each morning with a “management com­mittee” composed of Powers, campaign chairman Arnold Burns, and Liberal Par­ty chief Harding. On July 25, Giuliani made it official by appointing Powers as his campaign manager. Attorney Ken Ca­ruso, another longtime Giuliani pal, is slated to become Powers’s deputy. He joins deputy campaign manager Bob Bucknam, another friend who worked for Giuliani as an assistant U.S. attorney. Schriefer and Richard Bond — two “Bushies” originally hired to run the campaign — were pushed aside.

(Giuliani’s old sidekick, Denny Young, has never been a major player. Young made the move to White & Case with Giuliani, and his duties with the firm have prevented him from becoming a full-time campaign activist. His presence is missed. As Giuliani’s top deputy in the U.S. attorney’s office and a close friend, Young often seemed epoxyed to his boss. The mild-mannered Young functioned much as a human Thorazine tablet by calming Giuliani in moments of anger and tension.)

The new team is long on the trust factor and very short on political experi­ence. Powers clearly has his work cut out for him. Despite a large and highly paid staff of 35, Giuliani has no briefing book containing his positions on important is­sues and other pertinent facts. The candidate has also been writing his own speeches — an enormous waste of time, particularly since Giuliani lives in anoth­er era when it comes to the written word. He does not type. He does not dictate. He writes everything from letters to major speeches in longhand on yellow legal pads and gives them to his faithful longtime secretary, Beth Petrone, to type. Outsid­ers brought in to check the campaign’s temperature were amazed to realize that the candidate was laboriously composing speeches that should have been done by hired hands.

Powers says speechwriting has now been turned over to others. A briefing book is being prepared. Another nagging problem, the lack of a media consultant, has been solved with the hiring of Roger Ailes.

The newest member of Giuliani’s inner circle of advisors, Ailes is a 49-year-old veteran GOP media man with the reputa­tion of a tough guy. Ailes is said to have a certain flair for leaning on journalists. Barely on board, he has already called a reporter to complain that her story on a recent Puerto Rican Day Parade in the Bronx had a pro-Koch slant.

Ailes was one of Nixon’s key media men in 1968, and has a lengthy involve­ment in GOP politics. When Nixon went on television in 1970 to announce the U.S. invasion of Cambodia, Ailes was there. Foolish Nixon advisers wanted the president to use a pointer to illustrate the movement of our boys into the tiny Asian nation. But Ailes quickly realized that the heavy pointer might cause Nixon’s hand to shake, thereby sending the wrong message to the nation and the communist enemy. Thanks to Ailes, Dick Nixon used his forefinger on that fateful night.

Ailes was also manning the ramparts during the dark days of Al D’Amato’s campaign for the Senate in 1980. Once again, the media savant proved equal to the task by unleashing Ma D’Amato on television audiences. The elderly lady was strategically placed at the produce counter of a supermarket. “Every time I go to the supermarket, prices keep ris­ing,” she complained. “I am afraid to walk the streets because of crime. That’s why my son is running for the Senate.”

The rest is history.

Ailes fashioned George Bush’s televised attacks on Michael Dukakis last year, though the modest videomeister denies any responsibility for the infamous Willie Horton commercial. This year he has already raked in major bucks by turning out insufferably boring commercials for Giuliani’s Republican foe, Ron Lauder. After either being ousted in a power struggle or discovering to his horror that Lauder was out to get Giuliani, Ailes quit the Lauder campaign.

Giuliani aides say Ailes has been push­ing the candidate to go on television as soon as possible, but the campaign’s con­tinuing financial woes have made it un­certain when commercials will begin. Ailes is planning a series of “positive” ads to precede the September 12 primary. This may well work against Ron Lauder, but in the general election, some of Ailes’s better-known traits may emerge. There’s already been a backlash among liberals to the mere presence of this hard­core Republican — a heartbeat from Lee Atwater — in the Giuliani camp. Ailes’s own image problems could complicate Giuliani’s task of courting Democrats in the general election.

If that weren’t difficult enough, Ailes must teach the candidate to deal with the press. Giuliani needs to return to the “directness and candor” that marked his style as a prosecutor, says Ailes. “I think he’s been too careful. Rudy should stop worrying about being political candidate Giuliani and just be Giuliani.”

That first day of Giuliani’s campaign, May 17, also launched his mushrooming press problem. The day began well enough. The candidate, flanked by his wife, television anchorwoman Donna Hanover; son, Andrew; and mother, Hel­en, launched into a speech highlighting the C-words: crime, crack, and corruption. The R-word, Republican, was never uttered.

After delivering the speech announcing his candidacy, General Giuliani executed the first flanking maneuver of the war to come by walking out of the Metropolitan Republican Club in Manhattan without answering any questions from the media. Television, the important medium, would be forced to focus on his message without the danger of annoying questions that might deflect attention, and airtime, from the candidate and the C-words. The strategy worked in the same way one might succeed in “tricking” a drunken gang of Hell’s Angels armed with chain saws and lead pipes. The press quickly caught up with Giuliani and began a sav­aging that continued for weeks. Wasn’t his new law firm, White & Case, representing the government of Noriega, the Panamanian dictator/drug dealer? Of course it was a nonissue. And the media would cream him with it.

The transition from prosecutor to poli­tician transformed Giuliani’s press rela­tions. During his five-and-a-half years as U.S. attorney, Giuliani’s critics liked to revile him as a masterful media manipu­lator, but it took candidate Giuliani less than a week to establish just how gener­ous that assessment of his talent really was. Giuliani sweated, shifted in his seat, and in one instance simply fled the pres­ence of a hostile television journalist. Nothing remotely like this had happened to him on Foley Square.

“It’s the case of a guy from a very protected environment being thrown into one of the toughest [media] bullrings in the world,” says David Garth, Koch’s me­dia maven. “I can understand the culture shock.”

And Giuliani’s new opponents were not handcuffed or accompanied by lawyers telling them to say nothing. The candi­date’s political enemies readily heaped verbal napalm on his head. Of attacks by rascals Ed Koch and Republican perfume scion Ron Lauder, Giuliani said: “If they really were men, they would apologize.” Needless to say, the unmanly imps sneered at the White Knight and contin­ued to slip thistles under his mayoral saddle.

“Prosecutors throw bombs. Mayors catch them,” says Mitchell Moss, director of NYU’s Urban Research Center. “Giu­liani has proven to be a bleeder.”

Koch in particular seemed to sense instinctively that it takes very little to set Giuliani off. He was right. Even as U.S. attorney, Giuliani could be stupendously thin-skinned. For instance, there was a flattering profile of Giuliani published in the Daily News Magazine shortly after he became U.S. attorney in 1983. The story was typical of the favorable pieces that were regularly written about Giuliani dur­ing his tenure. The author provided some balance to the article by mentioning a few criticisms of the prosecutor. There was a line in the story that reported — correct­ly — that Giuliani had a temper.

“He got so upset about it,” his wife, Donna Hanover, recalls. “He was hurt, saying this is terrible and so forth. I said, ‘Honey, it’s a little line. There are two or three criticisms in this long article.’ But he was in agony. We agonized the whole Sunday. It was a miserable, miserable day.”

Giuliani’s best qualities — intelligence, courage, honesty, and leadership abili­ty — have yet to put in an extended appearance on the campaign trail. His worst traits — self-righteousness, hypersensitivi­ty, and a grasping opportunism — have been too much in evidence.

His message, certainly, is not getting through. Most New Yorkers know little more about what Giuliani believes than they did three months ago. They might be forgiven for wondering if the candi­date actually has any strong feelings on any issue besides law enforcement.

Just what does Giuliani believe?

As most people know, Rudy Giu­liani started life as a liberal Democrat who worshipped John and Robert Kennedy. He voted for George Mc­Govern in 1972, and according to friends who knew him then, despised Richard Nixon with a fervor typical of Kennedy worshippers. A year later, however, he registered as an independent. He did so partly because of his growing disillusion­ment with the party of McGovern but also, as he told the Daily News, because he was working as a federal prosecutor in a Republican administration.

In 1975, Giuliani came under the wing of Judge Harold Tyler, a pillar of the respectable Republicanism of the Eastern Establishment. Tyler was appointed num­ber two man in the Justice Department of Gerald Ford, and took Giuliani along with him as his deputy. When Ford was turned out of office in 1976, Tyler took Giuliani back to New York with him as a partner in the white-shoe law firm then known as Patterson, Belknap & Webb. By then, his politics blended with those of the firm: the liberal Republicanism of Nelson Rockefeller.

A month after Ronald Reagan defeated Jimmy Carter in 1980, Giuliani switched again, registering as a Republican. The timing was not coincidental. When Rea­gan took office in 1981, Giuliani was of­fered the number three job in the Justice Department. Giuliani took two young as­sociates with him to Washington. He ad­vised Renee Szybala, a liberal Democrat, and Ken Caruso, who had no party affili­ation, to become Republicans, just as he had.

Giuliani was showing a flair for taking on the political coloration of his employ­ers, and his stint as associate attorney general from 1981 to 1983 marked him as a loyal and energetic Reaganaut. He was a leading player in the administration’s war on drugs, and capably supervised an array of important Justice Department agencies.

His first messy mission involved a pending criminal case against McDonnell Douglas. The gigantic St. Louis airplane manufacturer and four of its executives had been charged during the Carter ad­ministration with bribing Pakistani offi­cials to buy the company’s DC-10 airlin­ers. In one of the controversial early decisions of the Reagan administration, Giuliani dropped criminal charges against the four executives. He concluded that the government’s case against the four rested on the retroactive application of a congressional act outlawing overseas bribery, even though the courts had up­held the legality of the indictment. It was the kind of pro-business gesture that set the tone for the Reagan years.

A second act Giuliani undertook as as­sociate attorney general has come back to dog him in the mayoral campaign. The Reagan administration decided to stop the influx of Haitian refugees into south­ern Florida by jailing those who arrived in the Sunshine State and turning back those they could stop at sea. More than 2000 Haitians were placed in detention facilities critics described as “concentra­tion camps.” This shameful policy was not of Giuliani’s making, but he went to dubious lengths to defend it. Partly on the basis of a 48-hour trip to Haiti in 1982, he testified that political repression was not a problem in Haiti under Presi­dent-for-Life Jean-Claude “Baby Doc” Duvalier.

“It was like someone in our own gov­ernment getting up to say the Soviet Union is a democracy,” said Stephen Cohen, a State Department human rights specialist in the Carter Administration, who found Giuliani’s assessment “laughable.”

Giuliani’s opinion — although based on a visit somewhat shorter than a luxury cruise boat-docking — was important. Im­migration law permitted aliens to be granted asylum in the U.S. if they fled political persecution. So if the Haitians were to be kept out, it was essential for Giuliani to find an island bereft of politi­cal torture, imprisonment, and intimida­tion. He followed up his trip to Haiti with an appearance as a government witness in a federal civil case in Florida filed on behalf of the refugees. Under questioning by lawyers for the Haitians, Giuliani de­scribed the dread Tonton Macoutes as an “interior police department” that was “alleged” to have committed repressive acts in the 1960s.

Q. Do you believe that the Tonton Ma­coutes does not exist anymore?

A. I don’t know if they exist or don’t exist.


Q. Mr. Giuliani, in your tour of Haiti, how many prisons did you visit?

A. I spoke with no prisoners.

All of this suggests that like most poli­ticians, Giuliani is a man quite capable of adjusting his beliefs to suit the temper of the times. And a man whose political advice the candidate values highly is, not surprisingly, a professional pollster.

Robert Teeter was the pollster and a top campaign strategist for George Bush in last year’s presidential campaign. The 50-year-old former political science in­structor has been active in Republican politics since he went to work for Michi­gan governor George Romney in 1956. He is widely regarded as one of the best in the business by Democrats and Republi­cans alike.

Teeter’s advice helps to account for the Johnny One-Note character of Giuliani’s campaign. “By anybody’s definition, those [crime and drugs] are severe prob­lems in the city,” Teeter says. “But more importantly, they are the problems the voters think need attention right now.” Teeter, who lives and works in Ann Arbor, Michigan, flies into New York peri­odically for discussions with Giuliani and members of his campaign staff. He and Giuliani also talk by phone. Teeter, at least, has no doubt about Giuliani’s poli­tics: “I think he has a fundamental, basic, Republican, center-right philosophy.”

Which brings us to the old saw about strange bedfellows. The last member of Giuliani’s Gang of Four is Ray Harding, a portly aficionado of unfiltered Camels who holds a doctorate in political schem­ing. Harding has been a major player in the endless and impenetrable infighting in the state’s minuscule (and ridiculous) Liberal Party. But he delivered the par­ty’s nomination to Giuliani and is ad­mired by the candidate for his shrewd­ness and political judgment.

Of the men Giuliani relies upon the most for political advice — Powers, Ailes, Teeter, and Harding — only Harding has extensive experience in New York poli­tics. Some political observers believe this to be a serious shortcoming. Ailes dis­agrees: “I haven’t done a whole lot in New York,” he says, “but politics is poli­tics. I’d never done anything in Wyoming, and I won in Wyoming.”

With the new team in place, the future of Giuliani’s campaign is becoming clear. “You’re going to see a new Rudy coming down the pike in the next few weeks,” Powers predicts. The “new” Rudy will speak more forcefully; his answers will be clearer and more concise. The candi­date is being made over into a strong leader with the courage and determina­tion needed to make the changes voters want.

His learning curve is on the rise. De­spite blackouts on topics like special edu­cation, his knowledge of municipal prob­lems has increased since the campaign began. He has earnestly studied the is­sues in briefing sessions that feature guest experts who enlighten him on vari­ous subjects. But one of those urban spe­cialists, who arrived eager to share his expertise with the mayor-to-be, came away disappointed by Giuliani’s glassy-­eyed response. “He was very passive, and he didn’t seem at all familiar with the issues we were discussing,” the expert said. “If it were Mayor Koch, he would have been engaging me and asking tough questions. I didn’t have any sense that I was getting through.”

“Getting through” to Giuliani is a mat­ter of arousing his passion. The man who as a little boy donned priestly vestments sewn from Turkish towels to solemnly perform the mass and distribute Holy Communion to his mother and grand­mother does not take things lightly. (On one occasion, his mother substituted chocolate mints for the white Necco wa­fers she normally gave him for use as communion hosts. Young Rudy sternly rebuked her for sacrilege.)

Giuliani has moved from passion to passion throughout his life. Horse-racing, tennis, New York Knicks basketball, pho­tography, and the Civil War are among the interests that he has embraced and abandoned. These pursuits are not as well known as his love of the law, opera, and the New York Yankees, but he has approached them all in the same way. He will read everything he can get his hands on about a topic that strikes his fancy in an effort to master it as quickly as possi­ble. Last winter, when Giuliani privately decided to become the 106th mayor of New York City, he devoured books about municipal government in his small East Side apartment at night and played U.S. attorney during the day.

But the passion always seemed to be missing. Giuliani appeared to look upon governing New York City as a problem to be analyzed and dissected rather than an intoxicating challenge to his abilities. He has always been keenly interested in poli­tics, but there is nothing in his past to suggest that he wanted to become the mayor of New York. He has talked with some measure of enthusiasm about be­coming governor, but the road to Albany is blocked by Mario Cuomo’s popularity. He also toyed at length with the notion of challenging Democratic senator Daniel Patrick Moynihan, but he ultimately abandoned the idea.

At the time, one of his closest friends said Giuliani seriously considered run­ning against Moynihan only because the opportunity had presented itself rather than because Giuliani wanted to become a U.S. senator. The same might well be said of his mayoral candidacy. Ed Koch’s job was the only important political posi­tion on the horizon when Giuliani wrapped up his law enforcement agenda at the end of 1988 with the trial of Bess Myerson and the settlement with Drexel Burnham, Wall Street’s big bad investment firm. Giuliani took the plunge, but nothing about the candidate or his campaign to date suggests that anything approaching a fire burns in his belly.

Giuliani’s supporters are betting that he’ll hit his stride as the campaign un­folds and take on the job of vanquishing his rivals with the same workaholic drive he applied to the Mafia and political cor­ruption. That may happen. Giuliani is a man who doesn’t like to fail — as a college student he was blackballed by the most prestigious fraternity on campus, but he rebounded by promptly gathering a group of his friends and taking over a dying fraternity with three members. The re­born frat made Rudy its president.

But New York City is no fraternity. The divisions between rich and poor, black and white, prochoice and antiabortion, are too deep to permit the election of a formless Mr. Fusion. Rudy Giuliani isn’t La Guardia, and he won’t defeat a Dinkins with bona fide liberal creden­tials, or a middle-class hero like Koch, unless he tells the voters exactly who he is and what he stands for. “It’s going to be a lot easier for us when we get down to the general election and it’s one of them against one of me,” Giuliani predicts. It’s true that he will get a second chance. But the “new” Rudy will have to show much more to convince New Yorkers he’s an alternative to the “old, tired political leadership” that has made one of the world’s great cities a miserable place for the poor and middle-class alike. ■



The Reinvention of Andrew Cuomo

For a politician with a true gift of gab, Andrew Cuomo has been operating for more than three years now under some strict and self-imposed rules of the road. As described by the state’s own Attorney General, they are:

One: No trash-talking allowed. Two: Let the ball do the talking. Three: Run up a big score.

These decrees are not surprising coming from a guy whose own trash talk helped sink him the last time he ran for governor, back in 2002. That April, he was on a bus packed with reporters headed for Buffalo on a four-day statewide tour announcing his run for the Democratic nomination. He was bantering with those around him—microphones set in Record mode—when he popped off about then-sitting governor George Pataki and how he had let Mayor Giuliani hold center-stage after the horror of 9/11. “He stood behind the leader,” said Cuomo, spacing out the words in his rich Queens voice. “He held the leader’s coat.”

Even for those who agreed with him, the words clanged like a bad shot off the rim. They also sparked an electric shock of recognition: Oh, right, a lot of folks were suddenly reminded. That Andrew Cuomo. The bad-talking twentysomething who played the big-shot bully in the big office when his father, Mario, was governor. The kid they called the “Prince of Darkness.” That Andrew Cuomo.

The now-ancient history is that he never made it back on the bus. A week before the primary, he pulled out of the race. This was a belated bid at fence-mending with those who were irate that he would run against H. Carl McCall, the state comptroller then trying to become the state’s first black governor. It was also to avoid ignominious defeat. “Our internal poll numbers had it at 60-18,” a former McCall aide says.

These days, Cuomo makes no bones about his missteps. “It was a bad comment,” he told the Voice last week. “It was a mistake for me to say that.”

But this sort of sudden, near-death experience is often greatly instructive for survivors. And the fallout from the Buffalo bus ride is one of the reasons why the successful reinvention of Andrew Cuomo these past three years has kept him unnaturally tight-lipped.

You don’t see him spouting off on TV talk shows. You don’t read wide-ranging interviews. You don’t hear him commenting on the crucial issues of the day, other than those that fall squarely within the parameters of the Office of the New York State Attorney General.

What you do get is a steady drumbeat of press releases and carefully staged news events presenting The Andrew Cuomo Show: a reality-based series featuring a modern Knight Templar waging a crusade against wrongdoers and rip-off artists. The show itself gets exceptionally high ratings. But the tightly scripted performance by its star—a clearly ambitious politician—has driven some of New York’s media right up the wall.

For instance: Over a year ago, Bob Hardt, the news director at NY1, posted a “Cuomo Clock” on his website, counting down the days, hours, and minutes since the sitting AG has failed to come in for a round on the station’s influential Road to City Hall show. On Tuesday, the clock stood at 1,126 days.

“I have spoken repeatedly to him about coming on the show, and he has said he would,” says Hardt. “But when we try to nail it down, it never happens.”

Not that Cuomo doesn’t talk often, and at length, to reporters. It’s just all cautiously off the record. You can talk for an hour to the state’s top law enforcement officer. If you come away with a quotable sentence in your notebook, you’ve done well.

Even his press conferences—and he averages better than one a week—tend to keep the press at bay. While he does many in-person events outside the city, his preferred mode in media-dense Gotham is to hold telephone call-ins. Reporters sit dumbly looking at the phone while some off-screen wizard selects those looking to ask a question.

A good example was last week’s phone presser on cyber-scammers who dupe customers into hidden fees on their credit cards. Among the alleged culprits were some of the Internet’s biggest salesmen: Barnes & Noble, Ticketmaster, and the movie ticket retailer Fandango. It was a classic episode in the crusade: The people’s lawyer using innovative tools to bring big shots to heel.

The press conference also came two days after Cuomo took a hard elbow from Governor David Paterson, who insists he is running for re-election no matter how much better Cuomo does in the polls (64 percent to 31 percent), or how much fatter his campaign coffers may be ($16 million vs. $3 million). Paterson said Cuomo was hiding out in a “candidate-protection program,” ducking the tough issues. A day later, Daily News columnist Bill Hammond—no big Paterson fan—seconded that emotion, urging Cuomo to “quit the fan dance.”


Three dozen reporters were on the line listening to the cyber-scam announcement, but only two questions were asked, both pleasingly on-topic. Cuomo aides said they were surprised no one hit the buttons to raise an impertinent query about politics. That’s a break Cuomo would never catch at an old-fashioned stand-up conference, where the press gets to piggy-back off one another’s inquiries.

But even if Cuomo were more available to the media scrum, it’s not certain they’d dent his armor. Like his old man, he’s a Zen master at deflecting tough questions. When he showed up at Al Sharpton’s Martin Luther King Day event last month, several veteran reporters squeezed off their best shots trying to get him to voice his political intentions.

After the sixth or seventh response, he sounded like his own Greek chorus: “There is plenty of time for politics. Right now, I am serving as Attorney General.”

Whatever the media’s frustrations, the hide-in-plain-sight strategy has worked remarkably well for the governor-in-waiting. His stay-on-message approach has been the natural complement to the remarkable stroke of luck that left Cuomo as the last man standing of the three top statewide officials elected in 2006. He is now—eight years after his Buffalo belly-flop—poised to become the Democratic nominee for governor. And barring some new nasty foul that takes him out of the game, or a massive voter rebellion akin to last month’s Democratic collapse in Massachusetts, he’s a likely bet to win in November.

The generally accepted wisdom is that he is ready for the job, that the tantrum-prone, ego-thumping young lawyer whose Jaguar boasted vanity plates reading “AMC ESQ” has been left far behind. Not everyone buys it. He is only 52, and he still carries more old baggage than the airline carousels at JFK, from law partners gone wrong to programs that slipped off track while he was Bill Clinton’s housing secretary. On the flip side, there is a proud record of hard work for the homeless and a lifetime of liberal pursuits. And, given the McCall fiasco, followed by a painfully public divorce, even those who longed to see that abrasive young man get his comeuppance might agree that he’s paid at least some of those dues.

The attorney general who doesn’t like to talk for attribution thinks so. “I’ve been through a lot in life,” he says. “I’ve learned a lot. I’ve been up, been down, been all around. I believe I have the context and breadth of understanding at this time of my life that’s very helpful.”

As for those legendary screams down the phone lines at the Albany press corps, it was part of the times. “When I first started with my father, I was in my early twenties,” he says. “Politics was populated with young, hard-charging people. The passion level was very high. The stakes were very high. We were all kids. Older eyes that need glasses tend to see situations very differently, metaphorically and literally.”

That’s Cuomo the philosopher talking, a familiar and not wholly unpleasant sound to New Yorkers who recall his father’s three terms in office in the 1980s and early ’90s. The bigger surprise—at least to charter members like this one of the “Andrew Cuomo Is All About Andrew Cuomo” club—is that the son has lived up to Rules Two and Three of his game plan: With the ball doing much of the talking, he’s run up truly impressive numbers as a rookie state attorney general.

Colleges conspiring with loan companies to profit off their own students? A month into his job, the AG starts spreading subpoenas around. Three months later, as colleges desperately sue for peace, he wins a new law barring such conflicts. Within weeks, it’s a national cause, with hearings before Congress and new federal legislation.

Albany’s pork-barrel spending hidden behind a wall of secrecy? Hire a top ethics advocate to help develop an easy-access website for one-stop shopping for government data. Dub it “Project Sunlight” and let citizen fingers do the walking.

Reimbursements for health care expenditures are skewed in the insurance industry’s favor by rigged and out-of-date cost schedules? Another sprinkle of subpoenas, another threat to sue. Private health insurers ante up $100 million for a new independent database, amid pledges all around to reform their bad old ways.

Wall Street fat cats still laughing all the way to the bank even after a massive taxpayer bailout? Send attorneys into court to force giants like AIG and Bank of America to cough up embarrassing info about high-cost junkets, perks, and bonuses. In short order, even the change-oriented Obama administration is eating his dust.

These and a few dozen other good-government initiatives have all been accomplished, of course, with a maximum level of showmanship. As carefully as he skirts political debates, Cuomo makes sure he draws every bit of available publicity on his projects. And Cuomo’s critics point out that many of his ventures are relatively risk-free since they stop shy of litigation, where the threat of embarrassing courtroom defeat always looms. His response has been a maxim that he posted atop his first annual report in 2007: “It’s not who you sue, it’s what you solve.”


But there’s also the not unreasonable suspicion that the job of attorney general is a lousy training ground for would-be governors. It’s a notion that has gained much currency in the wake of the fabulous flame-out by Eliot Spitzer, whose own high-scoring record as AG won him the governorship. Attorneys general get to wear white hats while waging high-profile battles against bad guys, the thinking goes, while governors must deal in negotiation, compromise, and deep shades of gray.

It’s all true. Different skill sets for different jobs. But there have also been some glimpses during Cuomo’s three-year stint in office that offer a decent clue at how he might handle things as the state’s chief executive.

One of them was Cuomo’s seemingly obscure battle to force the country’s largest investment firms to assist customers who had been badly misled about something called auction-rate securities. Former deputy AG Eric Corngold said that he was skeptical at first: “My attitude was that this was some esoteric kind of investment that only rich people make. I said, ‘I’m not sure we should get involved in this.’ “

Like most of the deputies Cuomo hired, Corngold was a former federal prosecutor and had never met the attorney general before. “At the first meeting of the senior people, I remember him saying, ‘You know, none of you really know me. I don’t really know you. I don’t even know who you voted for in the election.’ I raised my hand and said, ‘Primary or general?’ “

One of Cuomo’s first demands was that top aides join him on sojourns across the state to hear what was on people’s minds. Whole days were spent in Utica, Niagara, and Rochester listening to mostly humdrum gripes. But among the complaints was that of a couple who had lost their kid’s college kitty after their broker persuaded them to put it into auction-rate securities. They’d been told the securities were just as liquid as savings accounts, and paid more interest. But the liquidity dried up when the auction-rate market collapsed in February 2008. “They said, ‘Now we can’t get our money out and our kid can’t go to college,’ ” recalls Corngold. Another woman said she had had to un-retire after putting her retirement money into the now-frozen securities.

Cuomo launched his probe in early summer 2008. By December, the office had deals with such titans as Citigroup, UBS, JP Morgan, and Goldman Sachs to unfreeze some $50 billion in investor assets. It was the largest return ever of investor funds. Some $600 million was collected in fines, $125 million of it to New York.

The negotiations revolved around highly technical legal issues, but Corngold says Cuomo was a hands-on participant at a table crowded with megawatt lawyers defending their most valuable clients. “He wasn’t the guy sitting in his office waiting for the results. He was a tremendous and brilliant negotiator. I have learned the world from him about how those deals get done.”

That’s one checkmark in the correct box on the list of what it takes to be governor. Another is old-fashioned gumption. Among the many charges that the attorney general has led with his sword pointed at the enemy, the biggest and most notorious is the sprawling criminal probe into the startling corruption Cuomo’s team found at the state pension fund under the watch of former comptroller Alan Hevesi.

So far, five people have pled guilty to paying kickbacks to grease their way into hundreds of millions of dollars in pension investment deals. None are small fry. In December, Cuomo won a guilty plea from a Los Angeles–based financial magnate named Elliott Broidy, a former national finance chairman for the Republican Party who held fundraising soirees at his Bel Air mansion for his pal George W. Bush.

Locally, the best-known name to take a collar in the ongoing investigation has been Ray Harding, the aging walrus who for decades was the chain-smoking mastermind behind the Liberal Party. If ever there was a time for the old-boy network to cash in its political favors, this should have been it. But despite the long relationship between Harding and the Cuomos, it didn’t happen.

Over the years, Mario Cuomo and Harding had many duels. But the father stayed on the party’s ballot line, and Harding was a Cuomo strategist as late as Mario Cuomo’s losing race to Pataki in 1994. When Andrew Cuomo ran for governor in 2002, Harding gladly gave the son the Liberal endorsement. This proved to be his last hurrah: When Cuomo dropped out of the race, the Liberal Party lost its ballot line by failing to snare the required 50,000-vote minimum.


His political career sunk, Harding turned for help to Hevesi, his other statewide candidate. Under the tutelage of Hank Morris, Hevesi’s political guru, Harding became a “placement agent,” a kind of marriage broker between pension funds and investors. Not that he did any real work. Harding admitted in court that his $800,000 in fees was the product of a series of shams.

The attorney general announced Harding’s guilty plea in one of his phone-ins in October. The state’s pension funds, he said, had been “looted to reward a political boss.” Thanks to either politeness or a lack of institutional memory, nobody asked Cuomo whether he had thought of Harding as a “political boss” back when he was running on his Liberal Party line for the state’s highest office.

The bottom line here is that it’s refreshing to see a potential governor pull no punches in dealing with a crooked ex-ally. On the other hand, it’s a little chilling to hear someone denounce his one-time political sponsor as a “boss,” without even a tip of the hat to his own past history.

Harding may still catch a break, providing he helps himself first. The plea agreement allows the AG to reduce the charges if Harding cooperates fully in the ongoing probe. The target here is Morris, whose indictment last March along with Hevesi’s former pension investment chief, was the trip wire for the massive investigation. It’s one of several pieces of unfinished business that Cuomo would presumably like to wind up before announcing for governor sometime this spring.

Another is the matter of Steven Rattner, the billionaire investment banker and Democratic angel who quit his post as an Obama economic adviser last summer as the pension fund probe was heating up. Rattner has not been charged, but his name surfaced in one of the many nutty aspects of the case: His Quadrangle Group investment firm not only paid Morris a $1.1 million fee for “finding” it a $100 million deal with the state, he also had an affiliate buy the DVD rights to a screwball movie produced by the pension fund director’s brothers.

Cuomo also has to decide what to do about another high-profile donor, a hedge fund operator named George Hall whose Clinton Group has donated more than $250,000 since 2005 to Democratic candidates. In 2006, Clinton was part of a three-way joint venture that landed a whopping $750 million of state funds. Cuomo has charged that the deal was manipulated by Morris and the pension fund chief to generate huge fees. One joint venture partner has already pled guilty; another agreed in July to fork over $2 million as its share of the proceeds.

In 2008, after the probe was under way, Hall donated $10,000 to Cuomo’s campaign committee. Cuomo’s people say donations are sometimes not returned immediately in order not to alert subjects that they might be under investigation. In Hall’s case, he got his money back in October—after a Bloomberg News reporter asked about it.

Campaign money is a complicated issue for Cuomo. He has steadily condemned the “pay to play” atmosphere of state politics. He’s also called for a new system to cap campaign donations, à la the city’s Campaign Finance Board. At the same time, he’s raised a ton of money the old-fashioned, pre-Obama way: from big donors.

Inside the huge tub of $16 million he’s sitting on, the average donation is somewhere north of $1,000. Almost 600 donors have written checks for $5,000 or more. More than 50 have given over $50,000. It’s hard to identify all of them because, under the state’s wide-open rules, it’s still perfectly legal to split up donations among different corporate entities, whose principals aren’t even disclosed to the public.

This is the same anything-goes kind of politics condemned as “disgraceful” 20 years ago by the Feerick Commission on Government Integrity, a panel appointed by then governor Mario Cuomo in response to an earlier generation’s campaign scandals.

Scroll through the rolls of Andrew Cuomo’s givers and you can find most of the permanent government, a bipartisan crowd of power brokers and fixers who are used to getting their way and are happy to pay for the privilege.

Those two dozen checks for $5,000 apiece from corporations out on Union Turnpike in New Hyde Park? That’s Leonard Litwin, longtime pillar of landlord power. Those half-dozen donations of $10,000 and $5,000 from companies on Oak Street in Garden City? It’s Al Benjamin, developer pal of Alfonse D’Amato, the former senator turned lobbyist who has been rainmaking for Cuomo 2010.


Here’s the Dolan family and Cablevision, dropping $55,000 into the bucket. The Long Island company even rated a personal visit to its Bethpage headquarters in April, the same day that Cuomo held a fundraiser at swank Oheka Castle in Huntington.

Given the system that exists, however, you need multiples of millions to be taken seriously as a statewide candidate. And Cuomo’s argument is that any would-be favor-seekers won’t get to first base with him because he has more than enough dough to be able to tell them to get lost. His eight-figure war-chest makes him a pressure-resistant “mini-Bloomberg,” his crew argues.

“Can you look at my filings and see a lot of the usual suspects?” says Cuomo. “Yeah. That’s the campaign system we now have, which desperately needs to be changed.”

To ease the sting, Cuomo has imposed a rule that his campaign will not take donations from anyone—other than their attorneys—with matters pending before his office. Donors are asked to sign cards certifying it.

“It’s not perfect,” he says. ” ‘Perfect’ is no contribution ever.” But politics, he adds, “shouldn’t be an occupation only for billionaires or millionaires. At the end of the day, you are never going to get past one variable—that you have to elect people who you believe are going to do the right thing. There will always be a force trying to influence them, either monetarily, or politically, or electorally. And that is why you have to elect people who you believe are going to act from the proper motivation.”

Last week, the day before he knew a Times story was likely to run describing his agency’s dealings with several developer donors, Cuomo held a telephone press conference to try to show where his heart is. He announced plans to sue Vantage Properties, one of the Wall Street–driven operators that scooped up thousands of city working-class apartments and then began harassing tenants out. “We understand their calculus,” Cuomo said. “The only thing in the way is the law.”

But campaign money obscures even the best of intentions. And when the score is being measured in dollars raised, tough questions often go unasked.

Shortly before Thanksgiving, for instance, Cuomo attended a campaign fundraiser on Long Island held by a prominent local attorney named Howard Fensterman. Back in 2007, Cuomo had decided not to take donations from Fensterman, who had been serving as his Long Island campaign finance chairman. The reason was a report in Newsday that Fensterman was trying to become partners with a health care businessman then under investigation by the AG’s office in a wide-ranging scheme involving home health care fraud.

Fast-forward to last fall and here is Fensterman again raising money for the campaign. The largest donor at the November 24 Cuomo event was the businessman in question, a major nursing home operator named Ben Landa, who contributed at least $6,000 in checks drawn on his various corporate entities. Three weeks after the fundraiser, Landa signed an agreement with Cuomo’s office to pay $3.7 million, without admitting wrongdoing, to settle the attorney general’s fraud probe.

Asked if the donations violated the AG’s pledge not to take money from those with matters pending before his office, aides acknowledged that the contributions had slipped through the cracks. “They are being returned,” said one. Fensterman’s own fundraising was OK, they said, since he had withdrawn his application to become partners with Landa.

The real-life lesson here, though, for a would-be governor is that contributions are often just the opening gambit. Back in the 1990s, Landa was even more generous with his checkbook to then governor Pataki, who responded by placing Landa on the state’s Public Health Council. There, Landa hit on the idea that mentally ill patients could be released to adult homes who would then keep them in locked wards. State health officials agreed and, as luck would have it, hundreds of such patients wound up as paying guests at several of Landa’s adult homes.

Those abysmal conditions later became part of the disturbing series that won a Pulitzer Prize for Clifford Levy of the New York Times. Levy’s stories about the Dickensian adult homes appeared just as the 2002 gubernatorial race was getting under way. Cuomo and McCall held dueling press conferences where they both accused the governor of failing the public.

“This is a tragedy,” Cuomo said then. “This is a fundamental governmental failure.” The kind of thing he may soon get his chance to fix.


Hevesi’s Friends in Need

Hank Morris was already a famous and successful political consultant when he suddenly became fascinated by high finance back in 2003. He took and passed a pair of brokerage exams, becoming Henry Morris, securities broker, license #4675685. Given the vast influence he enjoyed in the office of his close friend and political client, state comptroller Alan Hevesi, this was a fast ticket to riches. But politics remained ever at the forefront.

For instance, as charges filed against Morris and another former Hevesi aide last month by state Attorney General Andrew Cuomo and the Securities and Exchange Commission describe, when another old political ally said he needed to make some money, Morris was happy to oblige.

Why not? They had a $150 billion public pension fund at their disposal and investment firms clamoring to help manage all that money. There was plenty for all.

The friend in need was Raymond Harding, former leader of the state’s once-powerful Liberal Party. Harding carried Hevesi on his ballot line throughout the Queens politician’s career, even backing Hevesi’s disastrous bid for mayor in 2001. A year later, the party lost its ballot line altogether after the campaign of its over-eager gubernatorial candidate—one Andrew Cuomo—imploded.

A bad time was made worse in March 2003, when—following a Voice series—Harding’s son Russell was indicted on embezzlement and child-pornography charges. Things went even more sour when his once-influential law firm collapsed.

It was then, according to the complaints, that Ray Harding sought out his friends in the state comptroller’s office for help.

Harding soon caught the investment bug as well. He took the same exams, obtaining his own brokerage license. Thanks to the special political magic that weaves connections into easy money, within two years the hard-luck lawyer had pulled in $800,000 in fees paid by investment firms chosen to do business with the pension fund. According to the authorities, he did no real work. The SEC says Harding—who is referred to only as “Individual C”—failed to perform “any bona fide finding or placement services.” The Attorney General also omitted Harding’s name, referring to him simply as one of Hevesi and Morris’s “political cronies” who received “sham” fees as “rewards for political favors and endorsements.”

Last week, Harding picked up the phone at his current law firm, Cozen O’Connor, only to graciously decline comment. “I am not discussing the matter, but thanks for the call,” he said. Harding was only slightly more forthcoming in early January, when the Daily News‘ Ken Lovett reached him after rumors of his involvement in Morris’s schemes first bubbled to the surface: “I thought I’d explore other avenues,” Harding said then.

In fact, that’s exactly what he told the Maryland-based brokerage firm that sponsored him when he obtained his license. “He wanted to sit for a securities license,” said Goodloe Byron, head of Potomac Capital Markets. “We sponsored him to take the test. He took it. He passed it. It was a legitimate business relationship.”

And what exactly did Harding—a brand-new broker who was 70 years old when he got his license—bring to the table? Byron answered plainly: “Well, look, obviously he knew the comptroller. He knew some of the guys on the staff there. It shouldn’t be any surprise that sometimes it’s hard to get meetings in some places, right? So I didn’t envision him doing, you know, 30 years in the investment banking business. I thought he could help us with an account.”

As it happens, Harding seems to have mainly helped himself. According to the charges, Morris and his inside fixer-ally, chief pension investment officer David Loglisci, arranged to have Harding’s name sandwiched into a deal as the so-called finder who had brought an outfit called Paladin Homeland Security Holdings to the fund. A Paladin senior executive was asked to pay Harding a 1.5 percent fee on the $20 million that the pension fund invested in Paladin in May 2004. The math was done correctly, and Harding soon received $300,000.

Paladin is headed by Michael Steed, a financier who is active in Maryland’s Democratic Party. The firm’s executives were still happy enough two years later with Hevesi’s office to donate $7,500 to his campaign. Steed did not return calls.

Harding’s new career paid even bigger dividends a few months later, when the pension fund agreed to invest $100 million with the giant investment firm Pequot Capital Management. According to the charges, Morris and Loglisci persuaded the placement agent on that deal to give Harding a one-third share of his hefty $1.5 million fee. Harding’s end came to a sweet $505,000.

The agreeable placement agent who shared his fees with Harding was another veteran political insider, William Howell. Although he’s a Democrat, Howell was a top fundraiser for former governor George Pataki, who named him to several state posts. Since then, Howell has worked for a number of financial firms that sought and won state business. “Bill Howell has done nothing wrong,” said his attorney, Gerald Shargel, last week. “Any commissions he received were disclosed. I am not expecting him to be charged.”

Harding’s sponsor at Potomac Capital, Goodloe Byron, said he knew nothing of the deals or the sizable fees paid to his broker. “He got what?” groaned Byron when told about them.

Also suddenly eager to break into the investment business after Hevesi became the sole trustee of the state’s pension fund was a former top City Council aide from Queens named Kevin McCabe. Referred to as “Individual B” by the SEC, and as another unnamed “political crony” by the Attorney General, McCabe was chief of staff in the ’90s to former City Council Speaker Peter Vallone Sr. A close ally of late Queens Democratic Party leader and congressman Tom Manton, McCabe later went into business building schools and amphitheaters.

He said he got the investment itch after learning that a small, minority-owned firm from California was trying to land a meeting with Hevesi’s staff. Unlike others cited by the authorities, McCabe spoke openly to the Voice. “I thought putting a black-owned firm into state pension fund investments was a good idea,” he said.

For starters, McCabe contacted Hevesi’s then right-hand man, Jack Chartier, who set up a meeting with pension fund officials. At the time, McCabe’s client, GKM Ventures, had just $13 million under management. After several months and a series of meetings with Loglisci and other pension fund staff, business was booming: By 2007, the state’s pension fund had invested $800 million with the company.

According to authorities, McCabe’s ticket to success came when he and Morris agreed to set up a jointly owned company in 2003 called Purpose LLC, which received all of the fees generated by the GKM deals with New York’s pension fund. By July 2007, more than $658,000 had been deposited in the corporation’s account, with $477,000 forwarded to McCabe’s own company.

McCabe says it wasn’t until after GKM asked him to line up other, out-of-state, accounts that he first hooked up with Morris. “I figured Hank Morris has done campaigns all around the country, he knows who to reach out to,” said McCabe. He said that he kept control of the remaining $181,000 in the account as payment for Morris once they landed other business.

McCabe said he was stunned to learn later that Morris was separately doing his own brokerage business with New York’s fund, collecting millions in fees from other investment firms doing pension fund work. “I had no idea Morris was hanging out his own shingle,” he said. “I would never have gotten involved with him.”


The Lush Life of a Rudy Appointee

April 16, 2002

On January 16, with just two weeks to go until his last day on the job, Russell Harding, president of the New York City Housing Development Corporation—a small but powerful city agency—picked up the phone and called the corporation’s travel agent.

He booked a $10,700 trip that would take him to Singapore, Thailand, and Bali. Through the agent, Altours International, he also ordered a pre-paid, open ticket for $7500, destination unnamed.

Unlike other departing aides to the administration of former mayor Rudy Giuliani who may have been planning post-employment vacations, Harding ordered the bill sent to his agency for payment. That same day, the travel agent faxed an invoice for the trips to HDC, where an official vendor-payment request was immediately prepared. Six days later, on January 22, Senior Vice President Luke Cusack, a close friend who was hired for his job by Harding, signed off on it. A check for the full amount was promptly issued and the invoice stamped “Paid.”

Harding, the son of one of the state’s most powerful political figures, Liberal Party boss Ray Harding, resigned as scheduled on February 1. But records released in the wake of his departure show the planned Southeast Asia trip was just the cap on a virtual nonstop, three-and-a-half-year spending spree during which Harding and Cusack traveled literally around the world at city expense.

Records show that after Harding was appointed by Giuliani in 1998, he and Cusack racked up more than $250,000 in travel, dining, and entertainment expenses—ranging from $1000 dinners at the Four Seasons to a Hong Kong junket. Even Harding’s morning bagels, purchased for $1.25 each, were charged to the agency.

The records also show that Harding dipped into the agency’s pocket to shower presents on at least one friend who hadn’t the remotest connection to city affairs, at the same time bragging about his ability to file personal expenses—including gambling debts—with the agency as business costs.

Those expenses are now being pored over by the city’s Department of Investigation, a probe that was set in motion after new agency officials examined the records in order to comply with several long-standing Voice Freedom of Information requests.

Alerted by agency insiders that Harding was spending freely, the Voice first filed to obtain the expenses in October 2000. But Harding produced just a handful of records and claimed the rest had been lost in an office move.

Following Harding’s departure in February, however, the Voice re-filed its requests. New HDC president Charles Brass, a Michael Bloomberg appointee, located the records and turned them over. He also immediately fired Cusack, who had remained at the agency, alerted the investigations agency, and ordered Harding’s Southeast Asia tickets canceled.

Harding, 37, has refused to discuss his conduct. Irwin Rochman, a criminal attorney hired to represent him, said Harding “decided not to discuss the matter.”

Citing the ongoing investigation, HDC president Brass declined to address most questions. A spokeswoman, agency assistant counsel Melissa Barkan, said that Cusack had been informed that “his services were no longer required. Beyond that it is inappropriate to comment.”

Cusack also declined comment. “I’m just not going to talk about it,” he said.

Rudy Giuliani quietly promoted Russell Harding to the HDC post, at a salary of $111,000, in June 1998. The Daily News reported it, pointing out that Harding had never finished college and had no financial background for running an agency that puts together multimillion-dollar bond deals to build city housing.

At a City Hall press conference, Giuliani was instantly defensive. It didn’t matter that Harding had no experience in the field, he said. And it mattered less that his father was Ray Harding, Giuliani’s chief political adviser, a man he’d publicly embraced and hailed as “a genius” a few months earlier at his re-election victory rally.

“Russell Harding has done an excellent job for this administration,” he said. “This new job is something that he will do I’m sure with exceptional skill and ability. I don’t hire people because of their father and I don’t hold anybody’s father against them either.

“What I do is,” continued the mayor, warming to his argument, “I try to be fair and have the most talented people I can find in this administration. The reason this administration has been more successful than any administration of the last 30 or 40 years is that we have more talented people than those administrations had,” he said.

Then he threw one last jab at the press corps before him. “I knew when I switched him to this position that you would all criticize me. But sometimes I enjoy it. Particularly when I think you’re wrong and I’m right.”

The mayor knew he was on fairly safe ground at the time. Russell Harding had worked in Giuliani’s campaigns and held two prior lower-level posts in the administration. After dropping out of Clark University in 1986, he had worked as an aide to former senator Alfonse D’Amato and later won a series of public relations jobs with his father’s help. Unlike his brother Robert, who was considered a rising star in the Giuliani administration (and ultimately served as a deputy mayor), Russell was generally rated merely competent.


Flush from his landslide re-election, Giuliani was rewarding his allies, and Ray Harding had proved to be his most valuable political ally. The senior Harding not only helped forge electoral and city policies but also screened potential administration job candidates. He also used his law firm to lobby city commissioners, a practice that had made him wealthy under Giuliani.

The Housing Development Corporation was a perfect spot for Russell—one of those out-of-the-way places where it is hard to foul up too badly. The agency generates its own budget from fees charged to developers who are seeking city-authorized, tax-exempt bond financing for their development projects. In bureaucrat-ese, HDC is “off-line,” meaning no one, neither the city or state comptrollers, nor the City Council has direct oversight or regulatory authority.

It is, in short, the perfect municipal hideaway.

And the newly released records show Russell Harding took his appointment there as a gold-plated ticket to the high life.

From the Bellagio to a bagel: no expense was too great or too small. Harding’s petty cash receipt for his morning bagel.

He was clearly thrilled to be the boss. One of his very first expenditures was to buy a brand-new official city badge to carry. He hired his friend Cusack, with whom he had worked at the city’s Economic Development Corporation. He also gave himself and top executives new corporate credit cards with Diners Club, a practice rarely in use at city agencies. He had the agency acquire a new fleet of cars, including a Ford Windstar, a Chevy Tahoe, and a Mercury Grand Marquis complete with lights and siren. The siren wailed nonstop whenever Harding was chauffeured around town, agency employees said.

“The siren, yeah, we used it to beat traffic,” said one of Harding’s city drivers, Herminio Torres. “It was cool. I personally liked using it.”

But Harding was in the fastest lane when he traveled outside the city. Records show Harding and Cusack, traveling together, logged more than 30 lengthy trips, visiting Vancouver, Seattle, Portland, Toronto, Palm Springs, Dallas, Chicago, Tampa, Denver, Las Vegas, Charleston, Los Angeles, San Diego, and Miami—often returning to favorites for a second stay.

They listed the business purpose of the trips as attendance at housing finance and technology conferences. But they rarely stayed at the hotels where the conferences were held, and according to others who attended, they were usually absent from the proceedings.

Instead, the expenses show that they ran up huge car rental bills and dining tabs as they sampled local fare.

The pair’s travel tabs dwarf even those of most private, corporate executives. A survey of 200 private corporations conducted in 2000 by a management consulting firm found that the average three-day domestic business trip cost $970, while international trips of seven days averaged $3455.

Harding and Cusack also logged expenses way beyond those of other city officials. When former police commissioner Howard Safir was criticized for taking 10 separate out-of-town trips in 1999, his total expenses were $9100, almost half of which was paid by a private company.

To pay for their travel and entertainment, Harding and Cusack bypassed their agency’s own written expense guidelines. HDC rules mandate that lodging costs at conferences are to be at the set conference rate. Airfare is to be “the most economical.” Meals, both on the road and at home, are not to exceed “reasonable and customary” costs. Exceptions can be granted by the president, however, the rules state, and Harding and Cusack appear to have had a full-time waiver.

Their most exotic fling came in November 1999 when they flew to an international housing conference in Hong Kong. They put up at the Royal Garden there for $2000 in a four-day stay, and spent $1000 on meals. They stopped off in San Francisco on the way back, staying at a small luxury hotel called the Monaco, running a tab of $4000 over four days and dining at a nearby French spot, Restaurant Lulu, where one dinner came to $400.

Last year, records show, Harding and Cusack were on the road almost constantly. For a Washington, D.C., visit in March, they spent $2800 at the Four Seasons in Georgetown, where rooms start at $390 a night.

In April, they jetted to San Diego, saying they would attend a meeting of the National Association of Local Housing Finance Agencies. It was an apparently last-minute decision; tickets were booked just two days before departure and cost $2437 apiece, as much as the first-class rate. They checked into the Hotel del Coronado, considered the city’s most luxurious—and expensive—retreat, where the bill ran to $5300. They spent another $280 on a rental car and almost $1000 on dining.


In May, there was a short, $2500 jaunt to Tampa. In July, Harding went to the Snow Flake Inn in Stowe, Vermont, for a housing meeting, spending $2200. The same month, records show he made quick visits to Houston and Las Vegas.

In October, Harding and Cusack flew to Los Angeles for a “technology” conference. They stayed at the Casa del Mar in Santa Monica (cost: $5780), and dined at Spago, Hollywood’s most crucial see-and-be-seen spot (tab: $390). Harding also asked to be reimbursed for $751 charged to his personal Visa credit card—which he rarely used for business purposes—for the cost of two visits to “Aqua” in Santa Monica, describing them as “conference dinner expenses.” But a search shows no restaurant by that name in Santa Monica, only a plush spa overlooking the Pacific Ocean that offers “exquisite pampering” with massages and aromatherapies—and doesn’t take Diners Club. The L.A. trip cost $11,725.

Two weeks later, the duo was off to Las Vegas for the Comdex computer technology show, considered one of the nation’s largest and wildest. They stayed at the posh Bellagio and spent a total of $7030.

They squeezed in one last trip in 2001, returning in early December to San Diego and the palatial Hotel del Coronado. Airfare ran a staggering $4000 apiece. Another $7000 was consumed in lodging, dining, and car rental.

Back home, in between the four-star hotels and resorts, Harding and Cusack continued to live large, the records reveal. When in New York, they regularly dined at the city’s most expensive restaurants. Their tastes ranged from the chic and trendy—Metrazur, Da Nico, Craft, L’Orto, Etoile, and Union Pacific—to the dependable: Ben Benson’s, the Palm, 14 Wall Street. There were more than 300 such meals recorded. In a one-week stretch in April 2000, Harding managed to dine out six times, spending a total of $880 at restaurants including L’Orto, Estiatorio Milos, Fresco, and Fireman’s, one of his favorite haunts around the corner from his East 62nd Street apartment. On June 1, 2001, Cusack charged a $1000 meal at the Four Seasons, the city’s swankest restaurant.

On January 11, Harding had lunch at the new Water Street steakhouse, Marc Joseph, for $230. Then he dined at Café des Artistes for $198.

All of the meals were recorded simply as “business” occasions, with no indication of the purpose or the companions. Based on his expense statements, Harding was a man who rarely rested from his work. On July 4, 2000, a national day of relaxation, Harding charged a $23 “business lunch” at Vinci’s, a pizza parlor near his home.

Even on the harrowing afternoon of September 11, Harding wasn’t too shaken to talk business over lunch. He billed the agency $36 for burgers at Jackson Hole, also around the corner from where he lives. That one time he listed a dining companion: his driver.

No item was too small to be charged to the agency. Petty cash logs show that Harding regularly reimbursed himself for the bagel he bought in the morning. He submitted receipts for individual 69-cent sodas, bought at the drugstore next door to his office. A heavy smoker, Harding daily dispatched his driver to buy his cigarettes, always at least two packs at a time. They were recorded on petty cash chits as “incidentals” or “office supplies.” Smoking, of course, is an increasingly expensive habit. And the records show that in a two-year stretch from December 1999 to December 2001, more than $2500 was charged this way.

Harding was also generous with his friends in spending agency funds. When a friend he met in an AOL chat room for movie buffs told him he was watching TV on an old 13-inch Emerson, Harding ordered a new Sony 20-inch combination TV-VCR for him. A couple of months later he had a new DVD player sent as well.

“Don’t worry about the price,” he typed in a message on September 9, 2000, to his online pal, Fred Sawyers of Indianapolis, “i can put them both on an expense report at work. i do it all the time with shit like that . . . just one of the perks of being president.” He added a sideways cyber smile, :), then continued, “besides that is how i paid for the tv i got you.”

Sawyers, 33, said these and other comments made him suspicious about what Harding was doing and he decided to file away copies of their online chats. “I was worried I might get in trouble,” he said. “I didn’t know what he was doing and my tendency is to save everything anyways. I’m a pack rat.” He also saved the packaging receipts, which he gave to the Voice. They show that both items were sent to him by Harding from his home address via online vendors. The DVD receipt from indicates it cost $359.90 and that Harding paid for it with his Diners Club card.


Agency expense records show that Harding submitted the Crutchfield charge, along with the rest of his Diners Club expenses, to HDC for payment. The purchase was marked “MIS [management information systems] equipment.”

Similarly, Harding sent Sawyers, by way of, a DVD of Billy Wilder’s Sabrina last June 21. On the same date, expense records show, Harding charged $72.94 to Amazon using his Diners Club. He listed the expenses as “president’s publications.”

On one occasion, Sawyers said Harding sent him an unsolicited $500 by FedEx to help Sawyers—whom he has never met—pay some bills. After the package arrived, Harding ordered him to destroy the packing slip. “I don’t want anything in your house with my name and number on it . . . you understand???” typed Harding. Sawyers agreed, but held on to the slip. The FedEx air bill shows Harding’s name and address, in his characteristic left-slanted handwriting.

During their online chats, Harding often bragged about billing other personal expenses to his agency. In one exchange on November 15, 2000, Harding told Sawyers he was writing on his laptop from his hotel room in Las Vegas. He was having a great time, Harding typed. “I’ve been playing the tables some . . . lost a few thou 🙁 . . . but it’s cool . . . I can just work anything I lose back into my expenses that I turn in for the trip.”

Harding was in Las Vegas that day, the expense records show, attending a computer conference. The records show Harding and Cusack ran their largest tab ever on that trip, almost $17,000 for airfare, two hotels, restaurants—and a $936 helicopter ride.

Sawyers acknowledges that his decision to seek out the Voice earlier this year came after hearing from Harding that a reporter was seeking his records—and after Harding badly hurt his feelings last summer. A cancer care group in Indianapolis gave Sawyers, who suffers from leukemia, a free trip to New York, a place he said he always wanted to visit. When he shared the good news with Harding, however, his friend became irate, insisting that he not come.

Harding has since accused Sawyers of “stalking” him and warned him in an e-mail that if he talked to the reporter about him it would be considered “extortion.” Sawyers denies that he’s ever demanded anything of Harding or threatened to pursue him.

“It’s kind of hard to stalk someone from Indianapolis,” said Sawyers, who returned the free New York ticket to the cancer group unused.

Neither does Sawyers appear to be motivated by publicity. He initially maintained that he did not want to be named in this article and only agreed after the Voice went to Indianapolis to interview him and confirm his identity.

As an administrator at HDC, Harding got mixed grades. He was credited with updating the agency’s obsolete computer systems. In a move that he said was designed to improve morale and productivity, he relocated the agency in plush offices on Williams Street, spending millions in the process. He bought expensive Aeron chairs for every worker and spent thousands more installing a shower in the president’s office. He also held corporate picnics, spending $15,000 for an outing held last August, and extravagant Christmas parties costing tens of thousands more.

But he showed little patience with his employees, firing at least 14 during his term in office and making other workers so nervous that some began taking home records that documented his spending sprees. “The man was a tyrant,” said one longtime staffer.

One executive, Mina McEvoy, 63, was fired from her post as vice president for marketing after running afoul of Harding in 2000. In response to an age discrimination complaint filed by McEvoy, Harding listed McEvoy’s shortcomings as failing to get the agency’s more than 700 holiday greeting cards out on time and omitting a photograph from the agency’s annual report. McEvoy denies those charges, but both parties agree on one thing: The annual report was pulped and destroyed, at a cost of more than $25,000.

Harding knew he was unpopular, according to his online chats with Sawyers. “I found out last week that my whole staff hates me,” he typed on October 3, 2000. “It was very upsetting . . . not so much because they hate me but because i actually thought i was very well liked. And bear in mind i have a staff of 110.”


At least a year before he resigned, Harding told friends he knew he’d be out of a job once a new mayor was in City Hall. His February 1 departure date was set weeks ahead of time, and Cusack had the agency shell out $665 for a farewell party. But Harding had already made sure he would be going out in style.

Records show he had HDC pre-pay one-year subscriptions to The New York Times, the Daily News, the New York Post, Newsday, The Wall Street Journal, U.S. News and World Report, and Vanity Fair, at a cost of more than $2500, to be delivered to his home. He also had the agency pay more than $1000 for a year’s service for his handheld computer. On Christmas Eve, he went on an $860 shopping spree at Borders. He used his corporate Diners Club card to buy what appear to be either last-minute presents or a stack of reading material for a long vacation. He purchased a book on old cars, two biographies of Ronald Reagan, Caspar Weinberger’s memoirs, and new thrillers by Ken Follett and John Grisham, as well as three $200 gift cards. He also picked up maps and guides to Bali. On his next-to-last day in office, January 31, Harding spent $264 at Staples on office supplies and billed the agency.

His planned trip to Southeast Asia didn’t come to light until after the Voice filed its new requests for all travel and expense records. On March 14, HDC president Brass canceled the tickets. It was too late, however, to avoid one more Harding expense: a cancellation penalty of $500.

In his only comment, Harding’s attorney said that the agency has been reimbursed for the cancellation penalty, as well as the Borders shopping spree.


Hard Time for Harding

The defendant shall now rise, said the judge. Russell Harding stood up.
He wore a loose orange smock turned inside out to hide the prison initials printed on the back. His rumpled tan pants were prison issue as well. No one had brought him a suit to wear for the occasion. In all likelihood, his parents would have done so. But he’d told them not to come.

Ray Harding and his wife, Liz, haven’t spoken with their younger son in over a year, according to friends. He stopped speaking to them sometime after he was locked up on their complaint when he threatened suicide on the eve of his November 2003 trial. In the meantime, Russell Harding passed his 40th and 41st birthdays in federal prison. There, he concluded that it was all their fault anyway. He had embezzled more than $400,000 while serving as president of the city’s Housing Development Corporation because he was severely depressed, he argued in legal papers. He had frittered the money away on lavish resorts, fancy restaurants, and electronic gizmos, all in an effort to escape his own demons, dark thoughts that had plagued him since the “emotional trauma” he’d suffered in his youth at his parents’ hands.

Even his old job, the one Rudy Giuliani had inexplicably handed him in June 1998, was his father’s fault. Given his psychological problems, he was “not prepared to handle” the post, he stated in a written appeal to the judge for leniency. Ray Harding, then the leader of the powerful Liberal Party and Giuliani’s political mentor, had been more interested in obtaining an impressive title for his son than in his mental or emotional condition, the appeal stated.

Three different doctors hired by the defense told the court that Harding suffered from mental ailments including a bipolar disorder. But when a government psychiatrist sought to question him, Harding took the Fifth Amendment rather than answer, an “extraordinary step,” as Judge Lewis Kaplan later described it. A neuropsychologist who evaluated Harding at a Minnesota prison also found something the other shrinks had somehow missed: Despite previous denials, Harding was “a chronic abuser of cocaine,” prosecutors stated.

In March, three years after the Voice first reported his spending binges, and two years after his arrest for embezzlement and possession of child pornography, Harding appeared via a video transmission from a prison hospital in North Carolina to change his plea to guilty.

As at earlier hearings, he sat hunched over beside his lawyers, silent, sullen, and morose, his face pasty, his dark hair now flecked with gray. But in the interim he had apparently stored up a lot that he wanted to say, and when he appeared for sentencing last Thursday before Judge Kaplan in Manhattan Federal Court, the words spilled out for more than 40 minutes.

With the self-assurance of one of his father’s candidates, Harding strode to the lectern. Punching and slicing the air with the gestures of a practiced politician, he spoke in complete sentences, ignoring his own handwritten notes. Bizarrely, however, his subject wasn’t his failures, but his successes.

“I want to talk about my accomplishments at the Housing Development Corporation,” he told Kaplan. He’d been heavily courted in the spring of 1998 to take the job, he said with pride. “I had developed a reputation as a manager.”

At HDC, he had found a “moribund” agency, its employees working in “a firetrap,” without modern computers or direct phone lines. He’d addressed those needs, he said, and reorganized its services. Rolling out housing vernacular, he said he’d “vastly expanded” development programs, and reclaimed derelict buildings. The government’s prosecutors had shortchanged his legacy by “insultingly” claiming he’d spent his time taking trips and “picking out fabric swatches” for the new offices.

In fact, that is the recollection of most people at the corporation, a small but prosperous agency tucked away in the city’s bureaucracy. Harding, they recalled, confined his interactions to a small handful of friends he hired. When not jetting to resorts on the agency’s credit cards, he’d be alone in his office, smoking cigarettes and huddled over his computer.

Prodded by the judge to address topics “a little more relevant” to the proceedings, Harding paused. “OK,” he said in a hurt-sounding voice. “I didn’t realize I had taken so long.” He then moved on to the 10 pornographic photos of prepubescent children found on his computer. “It’s not an easy subject,” he said. He had suffered from a “lifelong problem of repressed sexuality” in which porn was his main outlet.

“You start out with general, or established, pornography,” he said. “Then you need more and more to get the same fulfillment. It’s like reading westerns,” he suggested, in an original comparison. “You can’t read the same Zane Grey over and over.”

Another 1,500 adult pornographic photos were also on his computer, the defendant noted. By comparison, the child porn was insignificant. “Ten out of 1,500—it’s a rounding error. It’s less than 1 percent,” he said.

Yet the search also retrieved several hundred Internet chats he’d filed away. The files showed he had often discussed the logistics of “hooking up” with children, both in direct chats with underage boys, as well as with their fathers. “In content and number,” prosecutors Deborah Landis and Daniel Braun wrote in a letter to the judge, the chats were “shocking and disturbing.” Many had taken place in a chat room called “Bidads,” prosecutors wrote. In one instance, Harding had allegedly broken off a chat with “Jockstrapbidad” when he learned the father didn’t have custody of his 15-year-old son.

Harding’s attorneys countered that there was no evidence of any direct contact between their client and young boys. In the courtroom, Harding tried to persuade the judge the law was simply out of date. “This is where technology comes into conflict with the courts,” he said. “Cyber means cyber,” not action, he said. It was just talk, he insisted, nothing more. “At some points, I was having 20 chats at the same time,” he said.

Failed by family and friends, he told Kaplan, he had nothing left. “I am destitute, loveless, and homeless,” he said. “My future is zero, I came to terms with that. I will never lead an organization again.”

When he was done, there was more back-and-forth between the lawyers, and then the judge voiced his own findings. Harding “raised as many doubts as he satisfied with his remarks this morning,” Kaplan said. The defense’s psychiatric claims, he said, were “excuses for conduct for which the defendant is fully responsible.”

The judge then told Harding to stand up.

“You have clearly betrayed the trust of the people of this great city, not to mention everyone who ever cared about you,” he said. “All the more shocking and surprising, it is clear to me now for the first time how smart, talented, and articulate you are. You betray yourself as well as everyone else. It is in fact tragic.”

The episode, Kaplan said, “proves to me once more a lesson I’ve learned in 11 years as a judge. No person is good or evil; all are good and evil.” Yet these were “very serious” crimes deserving of “serious punishment.” Harding, he said, should serve the maximum sentence, 63 months. He would have to repay $367,000 stolen from the city. Marshals led the prisoner to a side door. He never turned to look at the gallery. There was no one to say goodbye to.


Harding’s Plea

Last week, three years after his extravagant spending on the taxpayer’s dime was exposed in the Voice, former Rudy Giuliani aide Russell Harding pled guilty to fraud and conspiracy charges in Manhattan federal court. Harding admitted to stealing more than $400,000 from the housing agency he once headed, as well as to possessing a disc, imported from Belgium, filled with pornographic images of children. In his deal with prosecutors, he agreed to serve up to 63 months in prison.

Harding is the son of Ray Harding, the Liberal Party leader who served as Giuliani’s political mentor and later grew wealthy lobbying City Hall. Russell Harding’s appointment as president of the Housing Development Corporation was widely seen as a political favor to the father, since the younger Harding lacked any background in the area.

In a series of articles that led to the investigation, the Voice reported (“Lush Life of a Rudy Appointee,” April 10-16, 2002) that Harding spent hundreds of thousands of dollars at posh resorts from San Diego to Hong Kong, and that he used an agency credit card to buy expensive presents for friends. It was “a lifestyle straight from the pages of Vanity Fair,” as city investigations commissioner Rose Gill Hearn said last week.

Harding wasn’t actually in court last Tuesday. He appeared via a closed-circuit TV hookup that broke down repeatedly, only to settle into a ghoulish green freeze-frame of a downcast Harding reading his plea agreement. Before the breakdown, Harding could be seen seated in a narrow gray room at a table beside one of his attorneys, Henry Mazurek. Wearing a brown shirt, Harding sat glumly with his chin cupped in his hands as Judge Lewis Kaplan read the charges.

Harding has been held at the federal prison hospital in Butner, North Carolina, since November 2003, when he threatened suicide on the eve of his trial. Later he claimed that mental problems made him incapable of standing trial, but Judge Kaplan found him competent.

Ray Harding was absent from the courtroom for the plea, as were other members of the family. Those who know them say that the son stopped speaking to his parents last year in a bitter fallout from the scandal.

Yet as beaten down as Russell Harding appeared, he still showed flashes of the old arrogance that friends say led to his downfall. Asked by the judge about his education, he loudly answered, “Four years of college,” fudging the fact that he never graduated Clark University in Massachusetts.

Moments later, he balked just as he was about to be asked to admit having bought a $38,000 SUV for former city housing commissioner Richard Roberts, who has already pled guilty to lying about the matter. Judge Kaplan allowed Harding to cease his allocution, but said he would order the probation department to quiz him on each aspect of the conspiracy.

“That statement will be made a public record,” said Kaplan.


Prison Therapy

He’s never been convicted of anything, but former Rudy Giuliani aide Russell Harding has already spent more than 10 months in federal prison as doctors tried to determine whether the moody former housing executive—who threatened suicide on the eve of trial last year—was competent to face embezzlement charges. Last week, authorities offered their conclusion: He can cope.

In a hearing in Manhattan federal court, District Judge Lewis Kaplan announced that, based on a report he’s received from doctors, he is prepared to rule that Harding should be tried on charges that he stole more than $250,000 from a city housing department and destroyed evidence to cover up the thefts. Kaplan gave defense lawyers until September 27 to submit arguments challenging the findings.

Harding is the son of Giuliani’s onetime political mentor, former Liberal Party leader Ray Harding. He was appointed by Giuliani in 1998 as president of the city’s Housing Development Corporation despite being a college dropout with no expertise in housing finance. While president, he awarded himself steady pay hikes and took junkets around the world, staying at posh resorts, at city expense.

Indicted in 2003, he argued that he suffered from a bipolar disability that prevented him from knowing right from wrong, an argument that was struck down by Kaplan. After the suicide threat, Harding’s parents agreed to have him remanded to federal custody for his own protection while he underwent observation.


A Going-Away Gift From Russell Harding

Less than 24 hours after Rudy Giuliani was hailed as the toast of the Republican convention, one of his former top aides appeared in federal court in Manhattan to plead guilty to lying to a grand jury.

Richard Roberts—a Giuliani stalwart through most of the ex-mayor’s two terms in office, serving as special adviser, housing commissioner, and chairman of the Health and Hospitals Corporation—admitted that he lied when questioned about his use of a new $38,000 SUV given to him after he left government. He faces up to five years in prison.

The car was a gift from Russell Harding, another former Giuliani aide, who is currently facing federal charges for embezzling more than $250,000 from the city and destroying records of his expenditures. Harding, the son of Giuliani’s political mentor, former Liberal Party boss Ray Harding, served as president of the Housing Development Corporation, of which Roberts was chairman of the board. As the Voice reported last year, Harding bought the deluxe Chevy Tahoe with agency funds and gave it to Roberts as a going-away present in the summer of 2000.

In the federal complaint, prosecutors state that Roberts lied when he told prosecutors and the grand jury that he only used the auto for official business. Roberts, 40, the son-in-law of influential Washington lobbyist Vernon Jordan, refused to answer questions after his hearing last Tuesday. His lawyers declined comment. A spokesman for Mayor Bloomberg, who retained Roberts as hospitals chief until his resignation last year, said: “He clearly lied, and he pled to that. I think he summed up the case for himself.”


Refuge of Scoundrels

When Rudy Giuliani ran for re-election in 1997, he got a boost from Charles Hughes. A Democrat and an African American, Hughes headed one of the largest union locals of public employees. He not only endorsed the Republican mayor but made a TV ad showing him giving Giuliani a hearty embrace.

It was only later, after Hughes was indicted in 1999 for stealing hundreds of thousands of dollars from his union, which represented low-wage school aides, that his doctors and lawyers asserted that the labor official suffered from bipolar disorder, a mental affliction that distorted his judgment, causing him to not comprehend the meaning of his actions.

Hughes, who built himself a mansion in Georgia with his union’s funds and larded his payroll with neighbors and relatives, suffered from “grandiosity and delusional thinking,” wrote one of his doctors to the court.

Another Giuliani ally, Russell Harding, has also claimed he didn’t know what he was doing while serving in Giuliani’s administration. Harding has been charged with similar financial crimes and is asserting the same bipolar mental disorder as Hughes. Harding, who is also charged with possession of sexually explicit photos of young children, is the son of Ray Harding, Giuliani’s onetime key political adviser. His alleged embezzling took place while he was serving as president of the city’s Housing Development Corporation, a post in which Giuliani installed him shortly after the former mayor won re-election.

Harding is represented by criminal defense attorney Gerald Shargel, who was also Hughes’s lawyer. The two defendants were also diagnosed by some of the same doctors, including Dr. Mark Mills, a psychiatry professor at New York Medical College, and Dr. Wilfred van Gorp, a well-known neuropsychologist at Columbia University Medical School.

In Hughes’s case, van Gorp told the court in a written evaluation in 2000, there was no reason to suspect malingering on the union official’s part because the treatment for his ailment was so severe that it was worse than prison. “No rational human being would trade a reduced sentence, or even no sentence, for the devastating clinical course that awaits Mr. Hughes,” wrote the doctor.

Shortly thereafter, New York State Supreme Court Justice William Leibovitz ruled that Hughes’s mental condition was immaterial to his alleged crimes and could not be presented at trial. And a few weeks after the ruling, Hughes pleaded guilty. He was sentenced to three to nine years.

Last week, looking pallid and morose, Harding appeared at his own hearing before Federal District Judge Lewis Kaplan. Standing beside his client, Shargel argued that it was mental illness that drove Harding to spend hundreds of thousands of dollars on lavish trips and restaurants.

Shargel asked Kaplan to allow Mills, van Gorp, and another doctor to tell the jury about their clinical findings regarding Harding’s ailment. Prosecutors argued that the doctors’ analyses are faulty, pointing out that Harding went to great lengths to disguise his expenditures and to hide them from a Voice Freedom of Information request.

The judge is expected to rule shortly.

In Dr. van Gorp’s case, it isn’t the first time his analyses have been challenged. In 1997, he was a key witness for the defense in the racketeering trial in Brooklyn federal court of Genovese crime family boss Vincent “Chin” Gigante, whose bathrobe-wearing saunters in Greenwich Village and constant mumbling and drooling were, his family and lawyers insisted, indications of extreme mental incompetence. Van Gorp agreed. As he has done with Harding, the doctor administered a battery of tests, including several aimed at rooting out malingerers. “Mr. Gigante has moderate to severe dementia which reflects significant underlying central nervous system dysfunction,” van Gorp stated.

Even after Gigante’s conviction—the federal judge overruled the defense’s motions—van Gorp went on 60 Minutes to confirm his diagnosis. “I have worked with dementia patients for many years; he is exactly the kind of patient we see in a dementia clinic,” the doctor told Ed Bradley.

This April, however, Gigante pled guilty to a new indictment and admitted that he had “knowingly, intentionally” misled his doctors for years. The New York Times later asked van Gorp what had gone wrong with the analysis. “It should make all of us humble that we can indeed be had,” said the doctor, adding, “We don’t get inside somebody’s brain.”

Whatever Gigante may have done has nothing to do with Harding, said Shargel in an interview. “I understand that a lot of people have been dismissive of this defense, but bipolar disorder is a real disease which a whole lot of people suffer from, and it deeply impacts on a person’s thinking process.”

Indeed, there is nothing illusory about the kind of malady Harding claims to suffer from. Some 2 million Americans are afflicted with it. Many report a constant and terrifying battle with an internal monster: raging fits of anger, steady self-loathing, promiscuity, paranoid delusions, a roller coaster of mood swings, spending binges, even bloody and inexplicable self-mutilation along with suicide attempts and repeated hospitalizations.

But some of those who have known Harding over the years are skeptical that his own demons are so bad that they took over his behavior. Instead, they assert, he may be giving a bad name to legitimately crazy people.

On a website chat room for members of Harding’s class of 1982 at Bronx High School of Science, several former classmates posted notes ridiculing his claims. “Have you guys heard that our favorite crook . . . is now trying to claim that he’s innocent due to mental defect?” wrote one former student. “I have to agree on one level. He was manic when he had our tax dollars.”

Another said, “I don’t think that depression . . . or other claims that his lawyers are making on his behalf are making any psychological sense or even legal sense. I pray,” the writer added, “on behalf of the truly depressed,” that Harding’s claims are rejected.

Michael Gelman, who was Harding’s roommate during their freshman year at Clark University in Massachusetts, said he did remember Harding exhibiting “vicious mood swings” during his college years, but never thought him out of control. “We thought he was eccentric,” said Gelman, who called the Voice after reading about Harding. “He could be a manipulator, a little sociopathic. Sometimes he would lie and contradict himself. But to say he didn’t know right from wrong? I find that a dubious argument. I would have to say I disagree.”

Harding was a big spender in those days, too, Gelman recalled. He often “picked up the tab when we went out,” Gelman said. “He liked to look like a generous person, but he always put himself first.”

His former roommate was “meticulous” in his attire, Gelman said. Unlike most of the rest of the college crowd, Harding “always dressed immaculately. His clothes were pressed and dry-cleaned.” Twice a month, Harding would travel to New York to get his hair cut, Gelman said.

The roommates lost touch for a while after college. Gelman said he didn’t learn until later that Harding had dropped out in his final semester. But they ran into each other again in the early 1990s in Washington, D.C., where Gelman lived and where Harding had gotten a job through his father working for then senator Alfonse D’Amato. They went to a few nightclubs and dined together, and then, Gelman said, he had to make an emergency trip to Europe, where his mother had fallen ill. “I had this old Toyota, and I left it with Russ. He said he’d take care of it while I was away. But when I got back, I found out he had left it in non-running order, illegally parked in his neighborhood. I had to have it towed to a garage.”

Gelman said he tried to reach Harding about the car. “I couldn’t find him. He just wouldn’t return my calls.”


Moody Blues

When Rudy Giuliani appointed Russell Harding—son of Ray Harding, the then mayor’s political mentor—to take charge of a multi-million-dollar housing agency in the spring of 1998, the new official brought with him all the math skills of a seventh grader, according to doctors who have examined him.

The younger Harding also brought a penchant for excessive spending that began as a teenager, a history of extreme mood swings marked by manic highs and suicidal lows, and a behavior that is “grandiose, arrogant, self-indulgent and hedonistic,” medical authorities hired by his attorneys wrote.

All of those traits—poor arithmetic ability, trouble coping with everyday society, a swollen sense of self-importance—are the hallmarks of someone suffering from a malady known as Bipolar II Disorder, a condition complicated by a “nonverbal learning disability,” stated the team of two psychiatrists and a neuropsychologist who subjected Harding to a battery of tests. This is a toxic cocktail of mental ailments, the doctors said, which rendered the former Giuliani aide unable to tell right from wrong when he spent hundreds of thousands of dollars in taxpayer funds on high living while serving as president of the city’s Housing Development Corporation from 1998 to 2002.

The bipolar disorder, wrote one doctor, “accounts for much, perhaps all, of his financial wrongdoing.” That was the argument made Monday in Manhattan federal district court before Judge Lewis Kaplan, who is scheduled to try Harding this fall on four charges of fraud and conspiracy relating to his expense account and other scams and two counts of possessing child pornography.

Invoking the diagnosis of the medical professionals, Harding’s attorney, Gerald Shargel, told Kaplan that Harding should be allowed to claim mental incapacity as a defense. “Very simply, Mr. Harding thought he was allowed to do what he was doing,” Shargel told the judge. “And the reason he thought he was allowed to do it was because of the mental defect.”

Harding, looking pale and unfocused, sat listlessly at the defense table, writing an occasional note to his lawyers. In their evaluations, the three doctors said they have already spent more than 100 hours examining him. In addition, they subjected him to 25 separate tests, ranging from Rorschach inkblots to card sorting to “memory malingering” probes. The results and the medical diagnoses of his afflictions were filed last month by Shargel with the court as part of his motion to allow the doctors’ testimony to be presented to jurors at trial. When a reporter asked to see the records, Shargel quickly moved to place them under seal. Judge Kaplan denied that request. The records provide a delicate, if detailed, description of a long and anguished history of psychiatric problems.

As early as elementary school, wrote Dr. Mark Mills, a Washington, D.C.-based specialist, Harding was aware of feeling “odd, special, different and isolated.” Harding told another of his psychiatrists, Dr. Allen Collins, chairman of the Department of Psychiatry at Lenox Hill Hospital, that he recalled in the sixth grade being “depressed for most of the entire academic year, precipitated by a falling out with a friend.”

As a junior and senior at Bronx High School of Science, he bounced back and forth between feeling “socially isolated” and engaging in “excessive partying,” when he cut classes to snort cocaine with friends and did so little class work that he needed to attend summer school in order to graduate.

There were brief periods of euphoria, the doctors reported, marked by “hyperactivity” and “increased goal-directed behavior,” when, for example, he slimmed down his sometimes bulky frame. These were inevitably followed by a depression familiar to millions of Americans: He would stay in bed all day watching TV, bingeing on food and gaining 20 to 30 pounds at a time.

At the darkest moments, there was talk of suicide. Harding gave “serious consideration . . . to attempting to take his own life on several occasions,” Collins said in his report.

He did well his first two years at Clark University, a liberal arts school in Massachusetts, the doctors stated, only to fall back into his downbeat ways again, leading to “deteriorating academic performance, depression and social/interpersonal withdrawal.” Harding dropped out his senior year, just four courses short of a degree. The same mood swings followed him into jobs his influential father helped him obtain, first with the Washington office of then U.S. senator Alfonse D’Amato, later with a Manhattan public relations firm, and finally with Giuliani’s administration.

Even in 1993, the year when Ray Harding piloted Rudy Giuliani into a triumphant mayoral win and when Russell Harding was working as a paid staffer on the campaign and poised for important things in the new administration, he reported that he was again beset by deep depression. He embarked on another round of “excessive spending”—no details are provided—and was so disturbed that he sought out the same psychiatrist he had seen as a teenager. That doctor prescribed the mood elevator Prozac. “He did not respond well to that medication,” wrote Dr. Mills. A few years later, in 1999, after he had been named president of HDC by Giuliani, a still troubled Harding switched to a new doctor who tried a variety of powerful antidepressant medications, including Wellbutrin and Effexor.


These were also apparently ineffective. The earlier doctors “failed to appreciate the full extent of his mood disorders,” wrote Mills. Had the proper medication been applied at the time, the doctor wrote, “it is significantly more probable than not that he never would have engaged in the kinds of illegal conduct in which he did at HDC.”

All three doctors who submitted evaluations for the defense appear to have taken Harding at his word that he was never aware that his exorbitant spending was improper. Harding told Dr. Wilfred van Gorp, a prominent neuropsychologist at Columbia Presbyterian Medical Center, that “he did not realize at the time that the behavior he has been accused of was illegal or inappropriate.” Harding told the doctor that he “did not make any attempt to conceal his behavior until he became the subject of a series of news articles which questioned his behavior.”

At that time, van Gorp continued, “Mr. Harding reported that he understood this journalistic investigation as ‘a P.R. problem’ but not as a potential legal difficulty.”

The journalistic investigation in question was that of the Voice, which sought Harding’s expense records under the state’s Freedom of Information Law from the fall of 2000 until early 2002, when, after Harding resigned from the agency, they were finally obtained.

In the government’s response at the hearing on Monday, assistant United States attorney Daniel Braun pointed out that none of the doctors who examined Harding appeared to have been aware that the defendant had worked hard to destroy the records of his lavish expenditures, ordering his alleged co-conspirator, Luke Cusack—who has already pled guilty—to hide them and office technicians to wipe all evidence from his office computer.

Even after he left the agency, Braun said, Harding sent e-mails to HDC’s travel agent, urging him not to comply with agency requests for copies of his travel expenses and itineraries.

The doctors give similar credence to Harding’s account of his sexuality and his dealings with Internet chat companions, particularly Fred Sawyers of Indianapolis, who provided evidence to investigators. Harding provided a tortured and painful description of a young man coping with his sexual identity. While he said he had been aware of his homosexuality since childhood, he said he purposely kept it a secret from family and most friends until the scandal broke.

His sexuality was so repressed, he told the doctors, that he didn’t have gay sex until he was 25. Furthermore, Harding insisted that he had never sought out “boyish men” or behaved as a “chicken hawk” searching out young boys. Harding also asserted that he had never encountered child porn until Sawyers sent it to him over the Internet. (Sawyers has told investigators the opposite.) He now looks back on his cyber-connection with Sawyers, which lasted for several years, “with shame, embarrassment, and horror,” he told doctors.

Once his conduct became known, Mills wrote, Harding expressed “concerns for the embarrassment he was causing his family and his friends in the Giuliani administration.” Such concern and openness, Mills said, “is highly unusual” for most people accused of wrongdoing. In contrast, said Mills, Harding “is more self-honest, more aware, and more genuine in his concerns for the difficulties he has caused others.” Dr. Collins too was impressed with Harding’s candid admissions and described him as possessing an “unvarnished honesty.”

The records themselves raise questions about Harding’s account. Dr. Mills said he was asked to consider two Internet chats that took place on April 29 and May 1, 2002, the day before federal agents seized Harding’s personal computer from his East Side apartment. The chats, Mills write, indicate that Harding may have been in the process of trying to find a young boy for sex. The chats “raised the issue,” wrote Mills, “of whether [Harding] intended to act out his fantasies.” Harding “vigorously denied that he has ever attempted to implement those fantasies” or that the chats reflected “an attempt to identify a boy with whom he could have sexual relations,” said Mills.

The doctor believed him, writing that it was more likely that the chats represented not an actual search, but rather “an embellishment of fantasies.” To buttress that claim, the records show, Harding took a lie detector test. The results were not provided, but Mills said they confirmed that “he neither acted out such pedophilic fantasies nor that he has attempted to implement such fantasies.”


Mills was the first expert consulted on Harding’s behalf, brought into the case early last year, initially to help provide emergency analysis and later to help influence the outcome of efforts by Harding to reach a plea bargain with prosecutors. In a letter written last October, Mills wrote that he hoped “an appropriate plea and sentence” could be reached. Toward that end, Mills wrote that while there is a continued concern about “the potential for suicide,” he believed that the threat would diminish once Harding was imprisoned. “[H]e will then have decided that he can tolerate the time in custody that the government imposes.”

Harding, however, apparently had no such intention. Although plea discussions went on for months, they ultimately fell apart, reportedly after Harding himself refused to go along with them. His trial, originally set for July, was moved to September, and on Monday changed again to November 17 to accommodate a possible battle between psychiatric experts introduced by the two sides. Shargel said in court that Harding spent 12 hours last Friday being examined by the government’s psychiatric expert and is scheduled for another examination later this week. It must be a draining process. Sitting slumped in his chair at the defense table, Harding appeared already weary of the effort to prove his incapacity.