The Mayor Who Didn’t Want To Know — And the Whistleblowers Who Tried To Alert Him
Perhaps the fairest way to judge the competence, integrity, and character of a government is how it responds when credible information about misconduct is brought to its attention. Any administration can suffer a scandal, because the susceptibility to temptation has been part of human nature since the serpent in the Garden of Eden. Any of us can be fooled or betrayed by a subordinate. Even Rudy Giuliani had to prosecute one of his own assistants who had become corrupt.
The fundamental question about the Koch administration is no longer why the mayor gave power to so many crooks, but exactly what happened years ago when whistleblowers, law enforcement investigators, and private citizens first tried to warn him of questionable contracts and commissioners who smelled of graft. Nothing reveals the heart of the Koch administration better than its treatment of these prophetic individuals who discovered clues to criminal or unethical practices, spoke out, and were punished or crushed for their idealism and honesty.
Over the past month I have interviewed a dozen people, including a former high city official who was fired while investigating former transportation commissioner Anthony Ameruso; a city contract manager who was demoted for trying to audit a suspicious boondoggle; a woman harassed out of the taxi industry after she went on TV to call for an investigation of the Taxi and Limousine Commission chairman Jay Turoff; a cable TV businessman who went bankrupt after refusing to pay a bribe to Donald Manes; and three former prosecutors who were prevented from setting up a sting operation to catch Manes in 1982.
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These people provided new evidence of just how serious and broad an effort was made between 1982 and 1985 to warn Mayor Koch of corruption within his administration. Together, they paint a picture of a mayor and an administration willfully indifferent to vital information — almost Reaganesque in not wanting to know.
(These are not the witnesses discovered by the Martin Commission, who volunteered significant leads in 1982 about corruption in the Parking Violations Bureau — and were ignored. Those highly credible whistleblowers included a police officer and James Rose, the PVB comptroller.)
Gordon Haesloop, the former city deputy investigations commissioner, was ordered to stop a productive investigation into transportation commissioner Ameruso in early 1985 and then was fired a few weeks later. Department of Environmental Protection whistleblower Edward Nicastro, a contract manager, suffered a demotion, harassment, was almost fired, and then was reassigned to the equivalent of a gulag — a garage in Queens — by a Friedman crony after seeking permission to audit a Friedman client.
To understand more fully the political, bureaucratic, psychological, and moral context of these five stories of rejected early warnings, it is useful to first summarize some recent history. It is helpful to recall all the signals and messages that the highly popular mayor was sending at the time to his commissioners, to the political culture, to the opinion makers, and to those seeking city contracts.
• To become mayor in 1977, Koch reached an accommodation with Brooklyn Democratic Party leader Meade Esposito. In his second book, Politics, Koch explained that part of his deal was that Esposito, whom Koch knew to be a friend of racketeers, must keep his personal backing a secret. Koch wrote: “We made it clear that one thing we didn’t want him [Esposito] to do was endorse me in any public way … he agreed to pull strings very discreetly … I must say he has always been very helpful to me.”
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In return for this covert institutional and financial backing, Koch gave Esposito hundreds of jobs for clubhouse hacks exempt from civil service merit exams. He also gave Esposito at least two commissioners: Jay Turoff and Anthony Ameruso. The Ameruso appointment was the very first message Koch sent to all of us, even before he was sworn in. Esposito wanted Ameruso, his personal protege, who had been the mediocre highways commissioner in the Beame administration, to be promoted to transportation commissioner by Koch. When an independent screening panel of transit experts, including Sally Goodgold, Joel Harnett, and Theodore Kheel, recommended six other people and found Ameruso unqualified, Koch immediately dissolved and denounced the screening panel and named Ameruso, saying, “I believe he will prove that my judgement is right.” (Ameruso is now under indictment for perjury by Manhattan district attorney Robert Morgenthau.)
• In 1985, the mayor’s own Department of Investigations released a report that concluded that Staten Island borough president Ralph Lamberti had violated the conflict-of-interest provisions of the City Charter, and had committed five misdemeanors. The next day Koch held a press conference, endorsed Lamberti for reelection, and called him an “honest man” and “a partner.”
• Koch gave Donald Manes and Stanley Friedman control over hundreds of patronage jobs and let them convert low-visibility city agencies into clubhouse fiefdoms. As a favor to Manes, Koch appointed Geoffrey Lindenauer deputy commissioner of the Parking Violations Bureau in July 1980, despite Lindenauer’s lack of qualifications and sordid past as a phony sex therapist. Koch allowed Manes to control the bidding process for cable television in Queens — an abdication that created backroom deals and an opportunity for extortion.
• Koch gave Friedman the Citisource contract for hand-held computers that was worth $2 million to Friedman. He appointed Friedman’s law partner, Ted Teah, to the City Planning Commission; he named Friedman crony Paul Victor to the Conciliation and Appeals Board; he authorized $15 million in city contracts to groups under the control of poverty blimp Ramon Velez; and he named Fred Carfora deputy commissioner of the Department of Environmental Protection, in which position Carfora demoted and then tried to fire whistleblower Edward Nicastro.
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Koch hired Friedman’s wife, Jackie, for a City Hall job exempt from civil service requirements and invited Friedman to be one of a dozen guests at his private swearing-in on’New Year’s Eve of 1985 — a signal of intimacy that city contractors surely noticed.
When publisher/gadfly Jim Smith questioned Koch at the City Club in October 1984 about the legalities of Friedman’s assetless company getting the profitable no-bid hand-held computer contract, Koch insulted Smith, defended Friedman, and said: “How dare you say those terrible things about him … It’s so easy to libel people.”
Ambition drove Koch to make a deal with a steep price. The political structure kept its bargain. It gave Koch a working majority on the Board of Estimate and loyalty on election day. And Koch gave the clubhouse system patronage and contracts. Koch got what he wanted: power, a stage, celebrity. And the rulers of the system got what they wanted: wealth and power.
For eight years, almost everyone was satisfied — the buyer, the seller, the public, the media. Just by doing their jobs, the whistleblowers were a threat to this sordid compact against the public interest.
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EDWARD NICASTRO WAS THE DIRECTOR of procurement and contract manager for the Department of Environmental Protection in 1984. He was everything the public, and the mayor, could want a city employee with a responsible job to be. He was a graduate of St. John’s University and the University of Bridgeport Law School. He was an expert at modernizing and administering contracts. He had a profound sense of civic virtue, partially rooted in his desire to repay a debt of gratitude fo the city that sheltered his father from Sicily.
Nicastro had been given the highest possible job ratings by his supervisors, and about 30 employees worked under his supervision. His staff had saved the city hundreds of thousands of dollars when it discovered padded bills and underweighted deliveries from asphalt contractors. He was also a true believer in Ed Koch as an honest, independent mayor; Nicastro’s wife had been a full-time worker in Koch’s victorious 1977 campaign for mayor, and she knew Koch personally.
Early in 1984, Nicastro became suspicious of waste and bid-rigging in the construction of City Water Tunnel Number Three, being built between Manhattan and Queens, which, has now become the focus of a major investigation by U.S. attorney Rudy Giuliani. All Nicastro knew in 1984 was that there were millions of dollars in cost overruns, apparent collusion in the bidding by two consortiums, and that no independent audits were being conducted, because his office was being excluded from the review process. He could see that there was no accountability for the bids and contracts on the biggest project ever done by the DEP.
Motivated more by a conscientious concern for cost-effective management than by any dramatic thoughts of a conspiracy, Nicastro politely expressed his concerns to his two immediate superiors in March 1984. They were deputy commissioners Jeffrey Sommer and Fred Carfora. He told them his office should be analyzing the water tunnel bidding procedures and billing practices and that the exemption of such contracts from review was a direct violation of city rules. He warned Sommer and Carfora that the absence of accountability could lead to corruption.
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Carfora assured Nicastro that he would get his oversight authority by the end of the fiscal year, in June 1984. When this did not occur as promised, Nicastro carried his warnings to the Department of Investigations in October 1984, when Patrick McGinley was commissioner.
“DOI was polite, but they never did anything,” Nicastro says now. “Four or five months after I went to them, I called them up to find what was happening with the investigation. That’s when they told me the the case had already been closed.”
Nicastro was aware that Sommer and Carfora were both clubhouse appointees loyal to Bronx Democratic boss Stanley Friedman. He knew Sommer had worked for Friedman when Friedman was deputy mayor, and he had heard that Carfora’s mother had been a Bronx district leader, and that Carfora had gotten his job through the party organization. And as someone experienced in politics himself, Nicastro was aware of Friedman’s power to control jobs and contracts in the Koch administration.
What he did not know until much later was that Friedman was also the lawyer who was being paid a six-figure fee to represent a consortium of companions with 90 per cent of the contracts to build Water Tunnel Number Three. And that one of Friedman’s clients he had wanted to audit had already paid almost $5 million in fines for bid-rigging outside of New York.
Nicastro is a self-described “tough Sicilian,” and he did not back off from his position that the water tunnel needed to be audited, since it already had $31 million in cost overruns, and was 20 years behind schedule.
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That’s when the attempt to crush Nicastro began. His job performance ratings mysteriously began to decline from “outstanding” to “marginal.” In October 1984, deputy commissioner Carfora tried to fire him, falsely claiming that Nicastro had submitted fraudulent time sheets. At that point, Nicastro told the DOI he was being fired because he was a “whistleblower,” and Carfora put his request to fire Nicastro on hold. In November, Carfora transferred Nicastro to the agency’s gulag — a garage in Maspeth, in a dead-end job as purchasing agent in which he didn’t begin to utilize his skills.
On November 15, 1985, Nicastro sent a registered letter to Koch, with a copy to deputy mayor Stanley Brezenoff, explaining in detail what was being done to him, and repeating his “concern about DEP’s contract procedures, which violate City Charter rules as well as controller’s directives.”
Nicastro’s letter to Koch reminded him: “Your Mayoral Memorandum of May 2, 1984, clearly states that all retaliatory actions [against whistleblowers] are to be investigated.”
On November 22, Nicastro received a reply from Dean Silverberg, then deputy counsel to the mayor, saying: “I have forwarded your materials to the Department of Investigations for their review of your concerns.”
Nicastro was now in the realm of Kafka, where faceless bureaucrats toyed with his future. On December 2, 1985, he was informed that his salary was being reduced by $1000 retroactively to the previous August. At the same time, other managers in DEP were getting $4000 raises. Nicastro was told that this punishment had been authorized by Joe DeVincenzo, the mayoral assistant officially in charge of “salaries and job classifications” but unofficially the patronage liaison to the Democratic county leaders, including Friedman.
Nicastro was in despair working in the Maspeth garage for less money, and constantly trying to explain to his coworkers that he was right and his bosses were wrong.
He went through a trauma that scars many whistleblowers forever. David Durk and Frank Serpico went through the same kind of experience when they were trying to expose police corruption in the late 1960s and no one was listening. In retrospect, people like Durk, Serpico, and Nicastro might look like steadfast heroes. But they pay a large psychic price in fear, anger, and depression before they are absolved by history. And sometimes by a movie.
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During 1985, Nicastro was drinking a lot and coming home after his two young children went to sleep. There were severe strains on his marriage.
“I was very unhappy and I felt like my life was coming apart,” he recalls now. “I became a different person. I was in a rage all the time. I thought I was being followed and I worried about my family’s safety.”
On December 2, 1985 — the day his salary was cut — Nicastro’s wife, Alice Horowitz, feeling that all other options were exhausted, wrote a personal letter to Koch. It began:
“Back in 1977 during your first mayoral campaign, if you recall, I was your advance person. I advanced you all over the entire city and became a dedicated follower of yours; I believed in your policies.”
Alice Horowitz-Nicastro’s letter then went on to inform the mayor of her husband’s fate as a whistleblower: his degrading demotion for trying to save the public money and alert his supervisors to potential fraud and bid-rigging. The letter ended with a personal appeal to the man she admired and had helped elect:
“Ed, is this the way a man is rewarded for his honesty and dedication? My husband loves working for the city. In his years with the Department of Environmental Protection he has saved the city hundreds of thousands, if not millions of dollars, because of his honesty.
“This constant harassment has not only taken a monetary toll on him, but a mental and physical toll on him and the rest of us, including my children, who are too young to understand why their daddy is always so angry.
“Please, Ed, please help me. It has taken me a very long time to write this letter. I really hoped it would not get to this, but the survival of my family depends on it.
“Thank you for your precious time.”
On December 17, 1985, Alice Horowitz-Nicastro got an impersonal, one-paragraph letter back from Dean Silverberg. It said:
“Your December 2nd letter has been referred to me. I anticipate that your husband will be contacted shortly by the Department of Investigation.”
On March 24, 1986 — 10 days after the suicide of Donald Manes, with a new moral climate in the media, and in the city — Edward Nicastro’s story was told in Newsday by reporter Leonard Levitt. The article was accompanied by a lengthy, well-documented exposé of the cost overruns and collusive bidding practices on Water Tunnel Number Three.
In July 1986, after a thorough review by a new investigations commissioner — Kenneth Conboy — Carfora was demoted for unlawfully harassing and trying to fire Nicastro, and making false charges against him. His salary was cut from $71,000 to $60,000. Carfora resigned rather than accept this mild sanction.
Today Edward Nicastro has a dull job in DEP that has nothing to do with his proven career expertise: monitoring contracts, a skill the Koch administration would seem to need.
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GORDON HAESLOOP WENT TO WORK for the city Department of Investigations in 1979 as general counsel. From May 1981 until the spring of 1985 he was the department’s deputy commisioner. Like most able investigators, he has a stubborn, independent temperament. He supervised five or six staff attorneys and several detectives. He had been in charge of the undercover project that led to the conviction of Brooklyn city councilman Louis Olmedo.
In February 1985, Haesloop was conducting a multifaceted investigation of transportation commissioner Anthony Ameruso. DOI had a sworn deposition from a Transportation Department employee, given in September 1984, charging that Ameruso had taken “envelopes stuffed with cash” and that he had performed “special [parking] favors for Mafia restaurants.” A city contractor had complained to DOI that Ameruso was harassing his armored car company and showing favoritism in awarding parking meter collection contracts to a competitor, which had no gun permits or insurance and had organized crime ties. There were also several allegations that Ameruso was secretly living outside the city, in violation of Section 3 of the Public Officers Law, even though he had given City Hall a Brooklyn phone number at which to reach him in case of emergencies.
Moreover, by the winter of 1985, Haesloop was convinced that PVB was mismanaged and probably corrupt, and since PVB was part of Ameruso’s responsibility as transportation commissioner, he suspected that Ameruso might become part of the PVB inquiry as well. One reason Haesloop felt something was rotten at PVB was quite personal. He had received a dunning letter from Bernard Sandow’s collection agency, demanding $2000 for parking tickets he had paid a long time before.
So, approximately in February 1985, Haesloop assigned DOI detectives to begin a surveillance of Ameruso, primarily to develop evidence of his violation of the residency law. Haesloop recalled:
“Such types of surveillance usually last for about two weeks. With Ameruso, after three or four days of tailing him, we established that he lived on Roslyn, Long Island. Each morning his son would drive him along the service road to the city line at Queens. At that point Ameruso would get into his waiting city car, and his city driver would take him to work. This fact by itself could have warranted his being fired by the mayor.”
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“Next I wanted to install a pen register on Ameruso’s Brooklyn phone — a device that does not require a court order or a search warrant — that would track phone calls and prove if he had a Call Forwarding device on the Brooklyn number to his Long Island home. Pen registers were a routine investigative tool in the office. We had installed about 15 of them — some in noncriminal investigations — over five years … [DOI senior staff attorney] Susan Ross and I together told Commissioner McGinley that Ameruso was violating the residency rule and that I wanted to install the pen register. But McGinley ordered me not to use it and ordered me to terminate the surveillance. He never gave me a reason. McGinley fired me about four weeks later.”
(McGinley has denied he was told Ameruso was living outside the city, but Susan Ross has verified that McGinley was informed of that fact. A third former DOI official has also confirmed Haesloop’s recollections.)
When I asked Haesloop why he didn’t go directly to the mayor when the investigation was halted, he replied:
“There was a general perception in city government that Ameruso was favored and protected at City Hall. On top of that, I felt that Koch fired deputies who went to him to complain about their bosses …
“In June 1985, after I was fired and just before I left the office, I did speak to McGinley. I asked him to tell the mayor that something fundamental was wrong with PVB and the Department of Transportation, and that Ameruso was a potential embarrassment to the mayor. McGinley didn’t say if he would communicate that message for me …
“The separate PVB investigation was in my mind. I couldn’t understand how the mayor, even at that point, wasn’t doing more to hold Ameruso accountable for all the embarrassing problems at PVB. The city was losing millions of dollars on the percentages the collection agencies were keeping on their contracts — 40 per cent on some. The place was badly mismanaged. I just sensed that Ameruso was protected, and I would be perceived as disloyal.”
I asked Haesloop, who is now in private practice, if he had been upset about being dismissed by McGinley.
“No, I was happy to go. I was fed up arresting some poor inspector for taking $100 just before he became eligible for his pension. I felt demoralized that I could only go after the small fish. I was frustrated I couldn’t investigate a full commissioner like Ameruso. If I couldn’t pursue an Ameruso case, then I didn’t want to work there anymore.”
The mayor’s durable faith in Ameruso was indeed extraordinary. Even when Ameruso resigned in January 1986, after the PVB corruption was becoming known, Koch said at Ameruso’s farewell press conference: “He’s impeccable. I recommend him without reservation.”
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BARBARA MEYERS GREW UP IN THE East New York section of Brooklyn and graduated from Thomas Jefferson High School in 1959. During the 1960s, she was a nurse and a self-described “hippie antiwar marcher.” By 1975, after working in the shipping industry for a few years, she was contemplating a career change and decided to drive a taxi while doing her thinking.
Meyers found she enjoyed driving a cab. “I loved the variety of experience, the sense of freedom, the interaction with other people, the sense of adventure,” she says. By 1976, she had borrowed money, purchased two taxi medallions for $23,000 each, and started running the Silver Eagle Cab Company. Gradually, Meyers became a reformer within the taxi industry, a vocal defender of her rights, and a critic of the taxi commission.
On April 7, 1982, Barbara Meyers participated in a taping of the Eyewitness News Conference on ABC-TV, with reporter Milton Lewis and Richard Smith, who had authored a report for the mayor on the taxi industry. The show was to be aired on Sunday, April 10, 1982.
During the taping, Meyers charged that the taxi commission was “corrupt,” and that the giving out of 100 free taxi medallions for a diesel fuel experiment was “a fraud.” (The number of medallions had been frozen at 11,700 since the 1930s.) She also criticized Mayor Koch and Taxi and Limousine Commission chairman Jay Throff in harsh terms.
“I did it because I needed help,” Meyers says now. “I was looking for the power of the press to help me clean up the industry. I didn’t have the specific evidence to prove a criminal case, but I knew something was rotten, and I knew where to look … I remember when I said the word ‘corruption,’ the moderator [Lewis] interrupted me and asked if I realized what I was saying. I told him I did.”
The day after the taping — two days before the show went on the air — Barbara Meyers was called by Ronald Russo, deputy commissioner of the Department of Investigations.
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“He approached me in a very hostile way,” Meyers says. He tried to intimidate me and make me feel like I was the problem. He said that what I said about Turoff at the taping was inflamatory. He said I’d better come down to his office, and if I didn’t that he would subpoena me. I felt like I was the criminal and Throff was the whistleblower.”
On April 14, 1982, four days after her criticism of Turoff was on television, Meyers was the victim of Taxi and Limousine Commission harassment.
“Three TLC inspectors stopped my cab, ripped the medallion off my hood, and gave me three tickets for no reason,” Meyers told me. “I won my appeal against the tickets, but I lost a few days of work. I felt it was an obvious reprisal. I also started to get threatening phone calls at home saying I knew what happens to rats.”
On May 6, 1982, Meyers testified for two hours under oath to the Department of Investigations, with a stenographer present. She made a clear case for further investigation of the way the 100 medallions were given to a few favored fleets on the basis of the fraudulent diesel experiment.
She said: “There are 100 medallions in the street earning enormous amounts of money, amounting to millions, in a very favored way for the operator of those medallions … I want to know why, why not me? I would be happy to participate in an experiment of that nature … How were they chosen? What arrangements?”
(What Meyers didn’t know at that point was that the 100 medallions were awarded to the Research Cab Corporation, and other companies owned by Donald Sherman and represented by Stanley Friedman as a lawyer-lobbyist.)
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Meyers risked her career by going on television and giving a deposition to the Department of Investigations. As a reward, her attorney received a letter from investigations commissioner McGinley, dated August 2, 1982, scolding Meyers. The letter said:
“Ms. Meyers presents herself to the public as a highly responsible taxi-owner operator … In view of this, I consider her deliberate and public use of terms like ‘corruption’ and ‘corrupt’ to have been unhelpful to say the least.”
McGinley now claims he did not write this letter, that it was written for him by his former first deputy commissioner, Ronald Russo. But Russo told me:
“McGinley is not telling the truth. I did not write that letter. I left the Department of Investigations on July 9, 1982. I opened my private practice on July 12, 1982. I was not there in August. McGinley is looking for scapegoats.” Russo refused to comment on the record about his conversation with Meyers.
On April 10, 1986, the State Investigations Commission (SIC) held a public hearing on corruption at the TLC. It was four years to the day that Barbara Meyers had gone on ABC television urging the world to notice the diesel-medallion hoax. The hearing began with SIC chairman David Trager making a formal statement:
“Our investigation has led us to the firm conclusion that the diesel test program was, from its inception, a fraud designed to provide medallions worth more than $3.7 million per year to Research Cab … Former TLC chairman Jay Turoff played a central role in executing this scheme … He acted to conceal, steal, or destroy records of the TLC relating to medallions issued to Research Cab. He personally directed that 123 medallions — 23 more than authorized — be issued to Research Cab.”
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During the April 10 hearing, Robert Mackasek, the inspector general for the TLC, testified. He admitted that after Meyers made her original charges on television, his entire investigation consisted of asking his boss, Jay Turoff, if they were true. Turoff had said the charges were rubbish. Mackasek also conceded that Turoff helped arrange for him to received a $71,000 loan from the HYFIN credit union — a loan cosigned by Turoff.
Finally, Mackasek admitted that he had gone to Stanley Friedman’s law offices, and tipped Friedman that his client — Research Cab — was under investigation by the SIC. Mackasek testified that Turoff — who set up the meeting — and Research Cab Corporation president Donald Sherman were also present when he told Friedman everything he knew of the investigation.
One of the last questions the State Investigations Commission asked Mackasek was whether he was active in politics. He said that in 1985, when he was in private practice, Turoff had called him, and in response he had raised money for Koch from taxi industry companies, and lined up cabs to transport pro-Koch voters to the polls on election day.
Unwittingly, Barbara Meyers had challenged the nexus of power in New York City in 1982. She was shining a light into the eye of the tiger. Jay Turoff owed his job to Meade Esposito. Turoff was performing significant money-making favors for Stanley Friedman’s clients. And Turoff was raising substantial sums of campaign money for the mayor from the industry he was supposed to be regulating.
Turoff’s trial on felony bribery and fraud charges begins February 17 in federal court.
Barbara Meyers is now out of the taxi business. She has written a book for children on how to deal with the death of a pet, and runs a car service that transports pets that are sick.
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IN THE LAST FEW MONTHS, THREE Queens power brokers have been indicted on charges involving manipulation of the cable television franchise in Queens: administrative judge Francis Smith, realtor John Zaccaro, and political consultant Mike Nussbaum. All three were charged with acting in concert with Donald Manes to extort bribes from bidders seeking to wire Queens for cable. In addition, U.S. attorney Rudy Giuliani is now in the final stages of his investigation into the Bronx cable TV franchise, where the targets of the grand jury include Stanley Friedman, Ramon Velez, Frank Lugovinia, and Tod Tuah.
Queens businessman Al Simon had been trying to warn the proper authorities since at least 1981 that the way the city was awarding cable TV franchises was a process designed to be corrupt, because it was secretive, immune to merit, and controlled by Manes in Queens and Stanley Friedman in the Bronx. But the mayor insisted the system was “fair and open,” and nobody paid much notice to Al Simon, even when his company, Ortho-Vision, went bankrupt in 1983. He was treated as just another civic crank.
Al Simon, now 54, grew up in Williamsburg, dropped out of high school, went into the army, and then attended the NYU School of Commerce at night for six years.
He became a kind of cable television visionary, and first applied to the city for a cable franchise back in 1972. In 1977, Simon’s company submitted a bid for the Queens franchise, but lost out to the Knickerbocker Communications Corporation, a subsidiary of Time Inc. with power broker lawyers, publicists, and consultants. Simon filed a taxpayer’s suit that alleged Knickerbocker’s franchise was illegal because the contract differed materially from its petition for the contract. Simon won his lawsuit, and the franchise was withdrawn.
In 1981, the fight was on to wire Queens. Cable was a hot, futuristic industry, with everyone thinking gigantic profits were inevitable. Simon, viewed as an outsider and maverick entrepreneur, was competing against corporate giants like Warner-Amex, which was paying powerbroker lawyer Sid Davidoff more than $150,000 in legal fees. Simon wrote up proposals, went to community planning boards, and convinced several of them to pass resolutions supporting his native Queens company. But Davidoff was Donald Manes’s best friend. He could walk into Boro Hall and act like he was co-borough president. The corporate chairman of Warner’s was Steve Ross, another friend of the borough president’s.
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In October 1981, Simon says he was visited by Mike Nussbaum, a political consultant who had managed most of Donald Manes’s campaigns and was one of the four or five people closest to Manes. Nussbaum reportedly asked Simon for a $250,000 cash bribe. He said he was relaying a message from Manes through Manes’s deputy, Richard Rubin. He assured Simon that if the money was paid, he would get a portion of the Queens market.
“I told him no,” Simon says. “I thought I could win it on my own, on the merits. I never realized that when I wouldn’t pay off, they would freeze me out completely, and force me out of business.
“I was naïve. I never believed Koch would let Manes control the whole decision. There were two years of public hearings, hundreds of meetings, documents, minutes, records, and I never thought Manes by himself could wipe me out because I wouldn’t commit a crime. But Koch let it happen that way.”
(Simon finally told the bribe story to a Queens grand jury last year and Nussbaum is now under indictment.)
In 1982, with the bidding process still going on, and Simon still thinking he would get fair treatment in an open process, he was asked to fill out a questionnaire by the city’s Department of Investigations. In a cover letter accompanying his completed questionnaire, Simon wrote a subtle request for a serious investigation into the bidding process:
“It is interesting to note,” he wrote to commissioner Stanley Lupkin, “that the mandate from the Board of Estimate is limited to a background review of the applicants, and does not request a review of the process by which these applicants were targeted. Especially in light of a number of unanswered questions regarding the results to date.”
Simon never received a reply to his letter, which was dated February 12, 1982.
When asked why he didn’t report the Nussbaum-Manes extortion attempt at that point, Simon says: “I was afraid. I was also naïve. I thought I could get the franchise on my own. I lived in Queens. I had been in the cable television business since 1963. A couple of planning boards had voted for me. I had the necessary financial resources. I kept thinking I would get something on the merits … ”
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In 1983, the Board of Estimate, at the direction of Manes, divided the Queens market, with Warner-Amex getting all the best middle-class and and upper-middle-class neighborhoods as part of its prize franchise. And Al Simon’s company went broke. He gave interviews pointing out the conflict of interest between Manes and Davidoff, but few stories were written.
On October 8, 1984, Simon filed a lawsuit against Manes, Warner-Amex, and the rest of the Board of Estimate. Al Simon’s legal papers were a cry of, “Stop, Thief.” They said:
“The office of borough president [Manes] was an active participant along with defendant [city franchise director] Morris Tarshis in perpetuating on the public the fraud that the cable franchise selection and negotiation process was based on the merits … Tarshis and the borough president’s office knew that the political process was more important than all the paper and all the promises and all the public hearings. Both acted to preserve the political process and to subvert the public hearing and the airing of the contracts. They wanted to reassert political control over the granting of lucrative franchises in the City of New York …
“Public hearings were held on the irrelevant proposals, but the contract itself was kept from the local community boards … Defendants Tarshis and the borough president were determined that the only meaningful negotiation process should be the one they personally conducted. The office of borough president selected the cable companies that were targeted for negotiations. The decision was rubber-stamped by the mayor, comptroller, and City Council president.”
When the lawyers at the city corporation counsel’s office, and the lawyers at City Hall, read the blunt claim of civic fraud in Simon’s brief, they did not start an investigation and they did not contact Al Simon. They went into court and opposed Simon’s lawsuit. Simon wants to reopen the bidding in Queens, and the Koch administration, despite three indictments, is opposing that effort in litigation now pending before the Appellate Division, First Department.
Steve Kramer, who is representing the city against Simon’s suit, says: “Simon is a disgruntled bidder. This was a completely open process.”
But Al Simon remembers the extortion attempt: “Nussbaum wouldn’t talk in my office. So we walked around the block of my office in Astoria, down Thirty-Seventh Avenue and up 32nd Street. Nussbaum said Donald wanted $250,000 up front. I would have to have it in an attaché case, or there might be a Swiss bank account involved. He said the money would guarantee me the franchise. He said the message was coming from Richie, who was speaking for Donald.”
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IN MARCH 1982, HERB RYAN WAS A member of the city’s Taxi and Limousine Commission. He had been an aide to Donald Manes and president of Manes’s home political club, named after Adlai Stevenson. He had been appointed to the taxi commission on Manes’s recommendation.
On March 12, 1982, Ryan took a bribe from the legendary undercover detective Eddie Gruskin, who was posing as a crooked car service dealer. The payoff was made in a parked car, and was audiotaped and videotaped by law-enforcement agents. During the transaction with Gruskin, Ryan said: “I want to introduce you to Donald. I want you to get to know Manes because he is running for mayor.”
(At that point Koch was running for governor with Manes’s backing and was the favorite to defeat Mario Cuomo in the primary. If Koch had won, Manes would have run for mayor.)
On March 20, 1982, Ryan took a second bribe from Gruskin in a meeting that was also recorded. Ryan was a small fish caught in a wide net. The prosecutors wanted the higher-ups.
In late March there was a meeting between United States attorney Edward Korman (now a federal judge); Stanley Lupkin, the city’s commissioner of investigations; and Tom Puccio, then the chief of the organized crime strike force. All three agreed that Ryan might lead them to Manes in a brief period. Law enforcement agencies only had suspicions about Manes at the time, although evidence introduced at Stanley Friedman’s trial in New Haven showed that Manes had been extorting bribes since at least 1979 and was a thoroughly corrupt public official in 1982.
Korman, Lupkin, and Puccio agreed that Ryan should either be reappointed by the mayor or kept in a holdover position for a brief period so that the undercover agent could get a face-to-face meeting with Ryan’s mentor, Donald Manes.
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Lupkin presented this unanimous recommendation by three law enforcement officials to Mayor Koch in early April. He informed the mayor that Manes had been named on the undercover tape. But the mayor terminated the investigation by refusing to allow Ryan to remain in a holdover position, in which he already had been serving since January 31. Koch insisted that Ryan be arrested at once. (In April 1982, Koch was running for governor against Mario Cuomo and Manes was supporting Koch even though Cuomo was a native son of Queens.)
In February 1986, as the Manes scandal was unraveling, NBC-TV reporter John Miller played on the air a portion of the undercover videotape of Ryan taking the bribe and boasting of his ties to Manes. The next day Lupkin, now a lawyer in private practice, told reporters he was “disappointed” that Koch had refused to permit the sting to proceed. He said he had argued with the major that Ryan should be kept in place.
At first, Koch responded by claiming to reporters that no one had ever told him that Manes’s name had come up, or that Manes was in any way considered a potential target of the investigation. The next day he improved his recollection and conceded that he had been informed by Lupkin that Manes’s name had been used by Ryan on the tape.
Herb Ryan never cooperated with prosecutors. He was arrested, pleaded guilty, and served four months of a lenient, six-month sentence, imposed on him by U.S. district judge Mark Costintino.
After Ryan got out of prison, he remained close to Manes. Manes’s phone logs, placed in evidence in New Haven, showed that Ryan left 57 phone messages for Manes during 1984 and 1985.
If Ed Koch had really wanted to know if the immense trust he placed in Donald Manes was justified, he would not have aborted the Herb Ryan sting, and he would not have overruled three law enforcement professionals.
ED KOCH IS THE MAN WHO ACTED naive out of cynicism. He is the man who chose to gaze into a mirror instead of out the window. He is the man who didn’t want to know. ■