I have received much e-mail over the last few weeks regarding the contretemps surrounding the NY Yankees request of the City's Industrial Development Agency for additional public bonding authority. Many of you have asked me, knowing I worked at EDC, what I may have to contribute to this. Further, many seem intrigued by the star player, Yankees President Randy Levine. I have also been asked to recount any memories of him. Well I certainly opposed the additional bonds. No public purpose was ever enunciated. EDC President Seth Pinsky seemed flummoxed and bewildered when asked to provide a rationale. EDC used to have a great stats unit. They're the ones who tell you the economic impact on the city of a World Series or the Thanksgiving Day Parade. Boy, times there must have changed. The best Seth Pinsky could do was say this would create 57 jobs. Jesus! Imagine if, in a retention deal, the IDA gave away $500 million dollars in benefits to Goldman Sachs and the net result was the combined creation AND retention of 57 jobs. During my time there would have been an investigation and a resounding call from the press for someones head at this profligate waste. That comes out to nearly $9 million dollars a job. Insanity. But Randy Levine managed this beautifully. I had planned a few weeks ago to post regarding him and a notorious deal with Bear Stearns done during my tenure at EDC. Now seems the perfect time to publish that post.
Of the eight years working in and around the Giuliani Administration, I spent two of those at the city's Economic Development Corporation (EDC). It was there that I confronted, and tried to prevent, one of the great scandals of the administration. Emblematically, it represented the Mayor's weakness for his friends, hearing facts selectively, and remembering only those items of interest that suited him. Such was and will be the scandal of Randy Levine and Bear Stearns.
Randy Levine, later and currently President of the New York Yankees, by the summer of 1997 was the Deputy Mayor for Economic Development. And as such oversaw EDC. Randy had done a highly commendable job as Labor Commissioner but by the time he assumed the deputy mayor post, his burgeoning thuggish tendencies was affecting his judgment.
EDC has too many functions to list. The big two are attracting businesses to NYC and trying to retain those businesses that are already here to stay and grow. The latter function within EDC's structure is handled by the Business Retention division. For many years, and most of my tenure, it was lead by Executive Vice President Ross Moskowitz. Ross was an extraordinarily able and affable man. He was very much the guy EDC and the city wanted on its side of the table negotiating these deals with Fortune 500 companies. And for however much heat we continued to take from elected officials for "giving away the store," EDC during the Giuliani years had in fact put in place provisions in its deals providing for return of benefits should job gains not materialize or should the companies renege and move jobs out. These were known as claw back provisions.
Under Ross, EDC and the City had become protected for its losses in the deals it was negotiated. You could argue on principle that these deals were bad policy, but under Giuliani the City had tried to make itself less exposed than under the Koch and Dinkins Administrations.
By the summer of 1997 Ross had left to take a job with the law firm of Stroock, Stroock and Lavan. His deputy, Eric Deutsch, had been promoted to his position. Eric was as able and affable but lacked Ross's sharp elbows for pushing back, built over years of experience. And more importantly for the coming purpose lacked the deference that would have been shown Ross due to those years.
During the last week of August my deputy, Bernadette O'Leary, informed me that we were going to be doing a deal with Bear Stearns. Normally Business Retention would work closely with my department, Corporate Communications, for many days after a deal was reached, or nearly completed, to create a large package prior to any major retention. It would involve: the press release, the President's remarks, talking points for the press, sample Q&A, a proposed speech for the Mayor, and about five other standard items. It was a major undertaking for us on a complicated deal with lots of tax breaks and complicated financing. It was our responsibility to learn this information and explain it to the press. We did many of those a year and we had a good system in place. I had a great team in my department - Bernadette in particular was outstanding - but still this took time to put together.
[Bernadette's predecessor - NY Post columnist Adam Brodsky - had been a disaster. He would stay shut in his office until noon each day reading the papers before he would begin doing work. I had to get rid of him but knew Millard would never let me fire him. At the first evaluation I did of him I marked 'Needs Improvement' in some category. Familiar as I was with his ego, I knew it was only a matter of time before he quit. Sure enough he did, I was able to promote Bernadette to his job and never regretted it. (She did such a good job that she would eventually get my job after I left EDC).]
She was now telling me she had word from Eric that there was a deal coming soon. "Soon?" I thought. We had all heard about Bear Stearns and a deal, but I didn't know they were actually working on anything that was going to result in an announcement. I go to the meetings and talk to all the other department heads just so that we don't get blindsided by things like this.
I called Eric and asked him what was up with this rumor. He sounded really distressed. "You're doing Bear Stearns?" I asked. "Yea," he said. " We haven't done any serious work on this. Randy wants this wrapped up in two days." "What?" I yelled. "Two days? This large a deal has taken you two months, at least. How in the world can you possibly do this in two days? What is going on? What is Levine thinking? How can you do any due diligence?"
"That's not the worst part," he said. "He's mixed baseball in on this. Wilpon sits on the board of Bear Stearns and he wants him in on the negotiations. Somebody heard this from Lenny Cherson (Levine's Chief of Staff)," he said. "I don't get it," I responded, "isn't Levine barred from this?" "Apparently not. I asked Charlie to get us more time but you know he's scarred shitless of Randy," Eric said. I laughed. Charles Millard, the President of EDC, was terrified of his boss Deputy Mayor Randy Levine. For his part, Randy had nothing but loathing contempt for Millard. We all knew it and Randy didn't hide it. Millard could do nothing to please Levine. And he tried. Lenny Cherson would snicker and bad mouth Millard to Cherson's best friend, Maury Satin, who was coincidentally and conveniently Millard's Chief of Staff. Millard was pretty helpless and besieged on all sides at this point in his tenure.
Randy was in fact barred from doing business such as he was in the process of conducting. He had received dispensation from the Mayor and the City's Conflict of Interests Board (COB) to conduct limited dealings with Major League Baseball (MLB) while holding his position as Deputy Mayor. This was necessary because of his past private dealings with the Yankees and Steinbrenner personally. Where he was treading now was far beyond any line set down by COB. His actions in the next 18 hours would cost the city millions, constitute highly unethical and almost surely illegal behavior,while endearing him to MLB and one of its owners for many years to come. Randy's future surely lay with the Yankees, not the Mets (Wilpon), but it could not hurt to have a major league owner this indebted to you. Especially if you were able to let him dictate the terms of his own deal with the City.
The only person who had more contempt for Charlie Millard than Randy Levine was myself. And that was because I worked for him. I was able to witness how he mistreated subordinates. He had been a city councilman prior to EDC and never responsible for a staff greater than five. Here he was now overseeing a multi-billion dollar enterprise with a staff approaching two hundred. He was certainly bright enough, that was not the issue. He was just an abysmal manager. He would call people at 2 AM to correct punctuation in a memo. He was insecure, small minded and petty. EDC was a wonderful place to work: great staff, projects and history, he just made it increasingly unbearable. He worked for three deputy mayors and each found him to be a toadying joke. Trust me I knew all three.
I loved my job, my staff, my colleagues, and the projects; so I stayed. Charlie and I ended up in a cold war by August 1997 and we barely spoke. He couldn't fire me given my relationship to the Mayor, Tony Carbonetti and Ray Harding. I never flaunted that fact and was always tried to be professional. But we wound up communicating mostly through my number two, Bernadette.
Bernadette was frantic to start learning about this Bear Stearns deal and get Corp. Comm. up to speed. We would have to get the package together and the sooner the better. She was constantly harassing Business Retention for details but there were none. They had nothing for her. At this point I called Ross Moskowitz to try and understand if this whole thing was in fact routine and looked different to him than it did to me. He told me that he had already spoken to Eric and that what Randy was doing was outrageous. Ross was usually a very conciliatory guy but he was clearly steamed. Ross told me that he was pissed that Randy was taking advantage of Charlie's need to please and Eric's brief tenure to pull this off on behalf of Wilpon. Ross like me had a real affection for EDC. This naked attempt by Levine to set up his own future at the expense of EDC and City coffers, was disheartening for the staff and caused terrible morale for those who would learn of it.
After talking to Ross, Bernadette told me that Eric and his staff had been sent by Levine to meet with Wilpon at Shea Stadium and further she had learned from someone in Business retention that Levine was actually dictating the terms of the deal ostensibly on behalf of Bear Steans and Wilpon. I then learned from someone else - and I don't think this has ever been reported - that Wilpon was part of the real estate team on the Madison Avenue site itself (the location of Bear Stearns new HQ which was driving this deal to begin with). This was really too much for me. There was so much conflict of interest going on around this deal that it stunk to high heaven. If Charlie wasn't going to protect the integrity of his agency then I sure as hell would give it a shot. I called Tony Carbonetti and explained that he had to talk to Rudy and put a stop to this.
"Give EDC the time it needs and stop Levine from dictating the terms of this deal," I told him. Tony understood how bad this looked and agreed to talk to Rudy. He called me back a few hours later and said, "Rudy said "the COB waiver covers this," he spoke to Levine and Levine said it's fine." "Did you explain to him that this is going to cost millions needlessly because the terms of the deal are not standard and not in the City's - his - best interest?" I asked. "Not in those words, but I explained that Levine was meddling and the appearance wasn't good. He doesn't care. He kept mentioning the COB waiver."
This really got me mad. "The COB waiver never for a moment covered him helping MLB owners with city agencies involving non-baseball interests. It's ridiculous to suggest that," I said. "I know, I know," Tony said, "he just doesn't want to intervene." "But Tony, he is the one who is going to have to stand up in the Blue Room and defend whatever Levine gives away, not Randy."
Tony had a fine relationship with Randy. But like me he knew him for what he was. Anyone - and I mean anyone - who has ever been in a room with Rudy and Randy and heard Randy's outsized, sycophantic laugh whenever Rudy spoke, would know how manipulative and insincere he was. Rudy could say the least funny thing and Randy would boom this ridiculous laugh. Rudy ate it up. But to those in the room, it made all of us cringe. It was so naked and phony. It was a classic Giuliani character flaw that he couldn't see that Levine had transformed into someone who was using him only to advance his own personal interests.
"You're preaching to the choir here," Tony said, "I see firsthand all the shit Randy gets by him. I've even had to enlist Cristyne a few times to try and reverse some bad shit he's gotten by Rudy. So you don't need to tell me about Randy pulling shit and not giving a fuck about the consequences for Rudy." I thanked Tony for his efforts and hung up. There was now nothing to be done.
Randy Levine did in fact dictate the terms of the deal to Charlie and Eric and told them to give Wilpon what he wanted. No deal before - and I would imagine since - has been done this way. I am convinced, though no fault of Eric's, that had Ross still been there he would not have permitted this to happen. Levine would not have attempted to steamroller him the way he did Charlie and Eric. Also Ross would not have done it I believe. So the City through the IDA gave Bear Stearns more tax breaks, more bonds and more favorable conditions then it would have received otherwise. Does it matter? Well, EDC unlike the corporation I ran, HDC, has a contract with the City - known as the Master Contract. It ties EDC to the City. It provides for EDC to act as the City's agent on economic development matters and requires EDC to turn over any excess cash at the end of the year to OMB. This Levine scheme matters because millions of dollars were lost due to his dictating terms and preventing EDC staff from doing their jobs. The money that he cost EDC would have gone to the City. And now here we are a decade later and Bear Stearns has ceased to exist. Has anyone gone back and looked at the terms of that deal in light of their purchase by JP Morgan? All deals done by EDC and the IDA are predicated on the idea that they will retain and produce jobs. What were the job guarantees made by Bear Stearns in that deal? They are surely shedding thousands. Has the City or Seth Pinsky - who looked so pathetic sitting next to Levine at the Brodsky hearing - sought to recoup the IDA investment, if the deal has in fact not expired. I assumed the deal would have had those provisions, others did at the time. This deal represented in a nutshell Randy's total contempt for the rules and his belief that he was above them. It served his personal interests and that was all that mattered.
The question at this late date is not how did this happen or why. I've just told you how and why. The question is why would anyone trust a single thing Randy Levine says? And why would the City through the IDA - but also through the shrinking Parks Dept. - grant more benefits to the Yankees after the costs skyrocketed? Were the Yankees not going to finish the stadium or open it on time had the IDA not ponied up more bonding authority? Of course the Yankees would have swallowed the cost. They're the richest franchise in the history of professional sports. Why then would Bloomberg do this for Randy Levine? That to me is the interesting question.
I have known Randy Levine and his wife, Mindy Franklin, since 1989. I met them during Rudy's 1989 campaign. I was there the night they got engaged. For some bizarre reason - and completely without romance - Randy proposed in one of the dusty back offices at Radio City, the campaign HQ. For a few years I was Mindy's closest friend. She had a lot of acquaintances in her life but very few friends. For nearly two years we would meet nearly every weekday to work out at the gym and have lunch afterward. Mindy is a deeply troubled soul. Coming from a broken home following her adoption left her an emotional basket case. She has a good heart and can demonstrate it but she is the most insecure person I have known. Her judgment - especially on matters political - was the worst. She had great sway over Randy. Rudy, out of Randy earshot, would often refer to it as the "Mindy Problem." Randy suggesting something that everyone knew had come from his wife. It was usually some harebrained idea but Randy couldn't see that.
Most people who know them aren't aware that Mindy is actually Randy's second wife. He was married at a young age to a girl from his hometown on Long Island. Mindy hated this woman; she considered her white trash. That contributed to the strange schism in her mind about her fiance/husband. She loved Randy but she was also embarrassed by him. He was this very outgoing, middle class, Jewish guy from L.I. Mindy was this very outwardly appearing well brought up girl from society Milwaukee. Hers was the kind of upbringing where you would deny your racism by citing the names of your black acquaintances, usually the maid. Mindy saw Randy as a guy who wore see-through mesh shirts and drove a Pontiac Fiero, both of which he had owned. For some reason that Fiero was the kiss of death for her. It seemed to sum up all the work she had ahead of her in making him into something presentable. His parents and sister hated her for the airs she put on although she made considerable efforts to try and win them over. However, she hated them right back for being, in her view, so low-class. In her mind they were what contributed to Randy's lagging upbringing and would continue to do so as long as they remained in his life. She was constantly telling him in subtle ways what a bad mother his sister was or how bad his parents were compared to hers.
But Randy hit the jackpot with Mindy. He wanted to be molded and shaped, like a Gumby. He was open to it and extremely protective of her. Many don't realize it was Mindy's family connections that got Randy inside Major League Baseball. Her family had contacts with Brewers owner Bud Selig. It was through their efforts that Randy first landed MLB business for his law firm, Proskauer, Rose.
At some point towards the middle of Rudy's second term Randy had come to view himself not only as a savvy political guy, but as a latter day Robert Taft - Mr. Republican. Tony and I would often ponder what it was exactly that made Levine think he had political smarts. He came into frequent conflict - always behind-the-scenes, never face to face - with Ray Harding over Rudy's future. Randy believed that Rudy's future lay with the national republican party and therefore, Rudy had to position himself much further to the right in order to meet their expectations and win the base. Randy was always working to try and bring Rudy closer to Pataki, D'Amato and later, Bush. Randy worked very hard to maintain good relations with the Pataki people. I mean for himself, naturally, not for Rudy. Tony and I would marvel at the schemes Levine would hatch to forge Giuliani-Pataki alliances, only to be thwarted by Ray. What made Randy so mad, and Tony and I saw through him every time, was that these schemes, while ostensibly about Rudy, were merely ways for Randy to suck-up to the Pataki people. What infuriated him was that he was incapable of delivering. When the Pataki people wanted something serious, Kieran Mahoney would reach out to Ray and then Ray to Rudy. Nobody went through Levine, though he kept trying.
Ray believed the opposite about Rudy's prospects. He saw Rudy as a once in a generation type political leader. It was his independence from the party that Ray believed made Rudy so potentially appealing across a wide national spectrum. Ray and Randy went at it often, using surrogates or private Rudy meetings to make their case. Ray won almost all those pre-9/11 battles. Ray's arguments and Rudy's natural tendency not to be a tag-along helped win the day.
There are two ironies to this. First, is that we have now seen fully realized the Levine plan for Rudy played out nationally. It was of course an abysmal failure. It sucked everything out of Giuliani that made him unique and memorable. It destroyed years and years of hard work to make him out to be America's Mayor and the man who tamed NYC. He's now perceived as an anti-abortion, right wing zealot, who belittles the president. The only Republican presidential candidate this year who thought the Cheney model for the Vice Presidency was worth repeating. Randy Levine's political instincts were, as we knew then, always tone deaf. This model helped destroy 8 years of proven success, one heroic response to the greatest terrorist attack and all the hard work that went into getting people to like Rudy even at his most cantankerous. All shot to hell.
The greater irony was that all this jingoistic right wing rallying would be coming from a man who committed the greatest sin any Republican alive today could commit. The great revered figure in our party is not Lincoln, of course, but Ronald Reagan. No greater treason could be had than to publicly embarrass Reagan while in office. But of course that's just what Levine did. Many now forget, and he'd prefer they forget, that he made a very public display of quitting his job at the Justice Department to protest Reagan not firing Ed Meese, the then Attorney General. It was a huge slap at Reagan. Not the sort of behavior Republicans easily forget .
If you've read the Levine/Bear Stearns post then you know of Randy's casual disdain for rules. While at City Hall and because of his COB waiver, he was routinely FOILd (NYC's Freedom of Information Law) by the press for his appointment calendars (I had this done to me regularly as well when I was at City Hall and EDC). Reporters wanted to see if he was having baseball meetings and with whom. Now there are a lot of ways to defeat a FOIL request within the rules. Obviously many more outside the rules. I have done both but I became pretty adept at finding the weakness in the language that could legitimately defeat almost any FOIL request. But Randy Levine couldn't be bothered wasting the time. When his appointment books were FOILd he simply had Denny Young's office - who coordinated those requests - tell the reporter that he didn't keep an appointment book.
In all my years in government I only knew one public official who genuinely did not keep an appointment book. That was Bill Diamond, Rudy's Commissioner of the Dept. General Services (now DCAS). And he did that specifically to avoid FOILs. He had his secretary use Post-Its, I believe. Now, I know as a fact - I'd seen it - that Randy's secretary kept an appointment book. It would be unimaginable that a deputy mayor kept no written record of his appointments. You couldn't do that job without keeping track of your meetings, lunches, dinners and functions. But Randy just figured that there was nothing the reporter could do. Which was correct. They can't barge into your office and snatch your records. It merely reflects again his belief that the everyday rules don't apply to him. It was a brazen claim to make; that you had no record, past or present, of your business.
I do, in fact, believe that the FOIL process is abused. The majority of requests I received over eight years were simply to harass me. There was no good government purpose. But in the Levine case there certainly was concern by the press that he was using his public office to enrich himself personally. Not with graft, per se, but by using the power of his office to influence government decisions in ways to benefit his past and future clients. That was certainly a concern which was, as I have demonstrated, well founded.
But if you want to see the true character of the man, you only have to look at the testimony he gave before Ass. Richard Brodsky's committee. The personal attacks and hoodlum like behavior were classic Levine. He demonstrated again that he truly believes he does not have to account, ever, for his actions. He was affronted that Brodsky, or anyone apparently, should question him or the Yankees about this money and these bonds.
It's funny. Mindy used to revel when Randy put on this sort of tough guy act. It's supposedly every woman's fantasy - the bad boy. What she could never comprehend was that he didn't look tough, he looked low-class. It seems after all her work over two decades he's still the same crude, ill mannered, middle class, foul mouthed, jewish boy from L.I. she worked so hard to remake into a goyim society gentleman.
Some things clearly aren't worth the effort.