J'ACCUSE - Part III

As Tony left that night after demonstrating how Fred had fabricated the chats, he strongly urged that I should hire some private investigators to look into Fred.  I hadn't thought of this and considered it a good idea.  I could show that he had been committed to a mental institution and had several suicide attempts, thereby refuting his credibility.  Tony recommended a firm headed by a Rudy protege named Bart Schwartz.  Tony told me that given the closeness of Schwartz to Rudy this could be comped.  I said great, let's do it, but I need to talk to Irwin (my lawyer) first. 

I saw Irwin a day or two later.  When I told him of Tony's idea he hit the roof.  Irwin had said many times that he would control all aspects of this case and I was not to do anything without consulting him first.  I explained that nothing had gone past the discussion stage and that no one had been contacted.  "What firm is this?  Irwin asked. "I don't know the name but the main partner is a former Rudy guy named Bart Schwartz," I answered.  "Oh, I know that firm, they're good.  They're called Decision Strategies.  Yes, that is a good idea.  I'll call Bart Schwartz."  A day or two later I was back in Irwin's office and we had Bart Schwartz on a conference call. 

I remember it was the beginning of a weekend.  Schwartz said there would be no problem getting background on Fred.  I emphasized that he should focus on the suicide attempts and his commitment.  I said that there must be public records of these things.  Schwartz asked if I wanted to have Fred tailed that weekend.  He explained that they would have to hire someone local in Indianapolis and this I would have to pay for. I thought out loud to Irwin and Schwartz, "what would be the point?  It's not like we know he's going to do something this weekend.  No, I don't think so."   Schwartz and an associate then asked me a series of questions about Fred and I endeavored to provide as much background as I knew.  That was the beginning and end of my involvement or any involvement during this case with Decision Strategies.  No contract was ever signed by me as this was all going to be on the cuff.  {I mention this as a year later Bart Schwartz would contact me with a past due bill for $23,000. I was flabbergasted.  The net product of Decision Strategies investigation of Fred was that he had a Visa Card and a drivers license.  The report they gave us I could have gotten off the internet for $30.  It was worth what I thought we had payed for it which was nothing.  Included in the bill Bart Schwartz would present me with were such items as $150/hr for reading Village Voice articles.  More about that bill later.  But suffice to say, Decision Strategies are ganefs; yiddish for crooks.}

Let me step back a moment.  From the time I first heard of this investigation I had contacted Luke, who was still a Sr. VP at HDC.  He and I met on a few occasions to go over the expenses. Many of the trips under scrutiny we had been on together.  At first he was his usual calm, collected self.   But as the days wore on, Luke started to lose his grip.   HDC was ordering him  to cooperate with DOI. Moreover, it was starting to become clear that Deputy Mayor Doctoroff had taken a big hand in this and was a driving force behind this investigation. One day Luke called to tell me that Doctorff had ordered that Luke cooperate or else.  Luke said he was going to march over to the bullpen at City Hall and tell off Doctoroff.  I had never heard Luke this angry about anything.  This was of course madness.  Dan Doctoroff had no idea who Luke Cusack was, other than being my right hand.  Furthermore, he probably would have had Luke arrested, if Luke had managed to make it to the second floor cubicles at all.  Cops let me pass routinely.  They would not have done that for Luke.  I told him very calmly that this was a dumb idea and that it would probably be wiser for him to quit HDC.   He resisted that suggestion until he hired an attorney who advised him to do the same thing.  Luke and I had an agreement since the start of this whole thing; if our interests were no longer aligned in this matter, we would say so frankly and not attempt to harm the other.  One day Luke told me his attorney thought that we should no longer speak to each other. I was sad naturally, but understood completely. 

Since I had hired Irwin to represent me I had assumed that his advice and counsel was geared solely towards my interests.  One of the first things he told me to do was to reexamine my expenses from HDC.  He instructed me to review any expenditures that might seem, not illegitimate, but lavish, which is different.  If I stayed in a very nice hotel on a business trip, for example, Irwin suggested that I calculate the difference between the nightly rate there with that of a Holiday Inn or Motel 6 and refund the difference to HDC.  I thought this completely idiotic.  I was the president of a multi-billion dollar corporation, not a city agency.  Even city commissioners didn't stay in Holiday Inns.  Moreover, this struck me as some sort of admission of guilt; that I was acknowledging having done something unethical or illegal.  Irwin and his law partner repeatedly assured me this was not an admission of guilt.  We must have discussed this particular point a dozen times.  During the first weeks of this, prior to DOI even entering the picture, I ended up paying $57,000 for these types of things as well as trips and some meals that had only a marginal business purpose or none at all.  (Gerald Shargel, my second attorney would later tell me that those repayments were suicidal from a legal perspective.  He said he had never heard of a criminal defense attorney advising a client on the verge of a possible criminal investigation to do something that injurious.  He also revealed to me that it was those repayments that first interested the U.S. Attorney's Office in me when they read of them in the newspaper.)

Tom Robbins was soon to start reporting on my expenses in the Village Voice.  Apparently they wanted a current photo to go along with the piece.  The doorman in my apartment building tipped me off that someone was watching the building and he thought it was a reporter or a photographer.  He was absolutely right.  I decided that I couldn't remain a prisoner in my home and drove to my parents house upstate.  It was during this trip that I realized for the first time that my father, rather than helping me or at least not harming me, was actually intending to sacrifice me and my legal defense in the name of his own political interests. 

Ray called a meeting in his office with Irwin, Artz, and me by telephone upstate.  Ray & Artz wanted to have me put out a statement.  I said fine. Let me have 15 minutes and I would call them back with a statement written.  The statement I wrote said basically that I do not believe I had done anything wrong, was proud of my record in creating affordable housing, but that if the Board of HDC had a question about any expense during my tenure there I would repay it the next day.  When I read this to the group, Ray and Artz were not pleased.  "The press isn't going to like that statement," Artz said.  "You can't say that," agreed Ray.  I noticed Irwin wasn't saying anything.  Finally, I said, " I want to hear what my lawyer has to say."  Irwin mumbled something but was extremely passive.  "You're my lawyer," I yelled, "say something."  Artz then read something he had written which basically had me admitting a crime and apologizing for it.  "You would let me say that?" I asked sharply to Irwin over the phone.  "Uhhh, no...we should tone it down somewhat," he said quietly.  I told them I would never agree to that statement.  What they wanted me to say wasn't true and I was not going to say it.  Ray then crafted something more moderate and in an attempt to guilt me into compliance, mentioned how harmful this was to him with the press.  He then turned everyone's attention to what statement Artz would release from Ray.  I told him that I didn't want him issuing a statement especially the one he had in mind.  His statement was so bleak and ponderous.  It clearly gave the impression that he believed something seriously wrong was going on - another admission of guilt.  You have to bear in mind there wasn't the slightest suggestion at that time or ever that Ray was somehow involved in my spending at HDC.  His actions that day had no legal significance for himself, they were completely self-serving to his PR and political objectives.  What do I mean by this?

2002 was an important election year for Ray.  The party he lead, the NYS LIberal Party, needed 50,000 votes in the election in order to survive another 4 years (all political parties in NYS are required to obtain 50,000 votes in every gubernatorial election in order to be considered a permanent party).  He was promoting Andrew Cuomo for Governor that year and needed all other distractions put aside.  Ray's lifeblood was his relationship with the press.  With my troubles only starting and possibly increasing, no reporter was going to let Ray sell his story of that election season.  They were going to hammer him about his son and HDC.  Ray calculated early on that the only way to get himself back in front of the press was to remove the news value from this matter even at the expense of the legal strategy.  You see Ray was behind Irwin Rochman's urging me to make repayments and Ray was behind Artz's admission of guilt statement.  If I am admitting guilt and making repayments, the press may still be very interested in me but what could they say to my father?  Ray needed desperately to have me admitting guilt and point to those repayments so when he went back on NY-1 or chatted with a New York Times reporter he could say, "I have nothing to say,  Russell has admitted his misdeeds and is making restitution."  And he was right.  What could a reporter say to the father after that? Nothing.  Anything else would just be overkill.  You cannot visit sins and he is not my keeper.

Had I steadfastly maintained my innocence then the reporters could have dragged out all sorts of examples of spending and asked my father did he think they were justified.  He never would have focused them on his message - a Cuomo candidacy.  But once Ray removed that obstacle, the press had nothing more to say to him about me.  Consider this: the first indication of any trouble was around the second week of February.  I didn't let Ray know about it until maybe 10 days after that. He was back on NY-1 giving a live interview - in studio- less than 4 weeks after this started.  Remarkable.  He had orchestrated this whole thing: my hiring Irwin as my attorney, hiring Artz as my publicist, the repayments and the statements; all to get himself back on TV in record time.  And it worked.  After that first somewhat uncomfortable night in the studio with Dominic Carter, Ray was back to being a regular guest.  The reporters were calling again about politics, not about me.  Once again Ray had masterfully controlled events to his advantage.  I would find out later that a few weeks following that conference call and the release of those statements Ray would make a secret payment to Irwin Rochman, my attorney, of $25,000.  I was not short of cash at the time and had Irwin needed more money - hardly likely since he never came close to expending the $50,000 - I would have provided it.  Why did Ray pay this money to my lawyer and why was it kept a secret from me at the time?  I have no definitive answers but a whole lot of suspicions.

But make no mistake, those actions taken in the first weeks still revurbarate today and caused me irreperable harm. For any chance I ever had to defend myself fully was clouded by those decisons in the early weeks.  If you think Ray's actions cold, calculating and self-serving, all I can say is that they are nothing - less than nothing - compared to what he would do to me later on.  I would come to know my father as a malevolent force, such that I could never imagine.

My state of mind during this period started to deteriorate.  The NYC Department of Investigations was by all accounts from Irwin, Artz and the numerous HDC employees who contacted me, all over HDC.

 Every day would bring another phone call from Irwin with some new revelation.  This began my vigil of 9-5 hysteria.  From 5PM till 9AM I was in basically OK shape.  But come 9AM I was a total wreck.  I didn't want to leave the house in case the phone rang but at the same time I was in dread fear of the next call.  Since all business is done between 9-5 I knew that reaching  the end of day without bad news meant I could relax for the evening until the next morning.  Those months living like that were in many ways worse than prison.  Hard for many of you to believe, I know.

This hysteria also started to affect my judgment.  I couldn't see clearly anymore who was friend and who was foe; I was constantly grasping at straws.  During this period of time Artz, the publicist/friend of Ray's, was getting info from City Hall and Robbins.  It appeared that the person behind all this was Dan Doctoroff.  He had some sort of irrational hatred of the Hardings according to Vinny LaPadula.  He tried, in a meeting Vinny attended, to get Bob Harding kicked off the Lower Manhattan Development Corporation to which Rudy had appointed him.  Bloomberg wouldn't acquiesce and it apparently enraged Doctoroff. 

Jerrilyn Perrine - Richard Robert's handpicked successor as City Housing Commissioner - and I had always gotten along badly during my time at HDC.  As Ray's son and Tony's best friend she knew however that there was only so far she could push me.  We pretended to like each other except on 2 occasions where screaming and cursing ensued.  But at the end of the day I knew she hated my guts.  But knowing this full well I reached out to her for assistance.  She was extremely sympathetic and placed all the blame on HPD's General Counsel, whom she said, was driving this train.  She said this so often that I foolishly believed it.  I mentioned this to Tony who told me that the General Counsel, Matt something (I forget) was a McManus guy.  "Why arent' you telling Ray this?"  Tony asked.  Jim McManus was the leader of the last vestiges of the Tammany Hall Democratic machine in Manhattan.  He and Ray had developed a very good working relationship over the years.  Tony, who always knew where every body was buried in City government and who was whose rabbi, instantly knew that the General Counsel owed McManus his job and McManus would not be happy that he was endeavoring to harm me. I told Ray all this and Ray reached out to McManus.  McManus reported back that he had called Matt in to read him the riot act but that the General Counsel swore that Jerrilyn was making him do this.  He had tried to slow it down or minimize the matter but Jerrilyn was on him constantly to ratchet this up.  He said it was Jerrilyn who had asked Doctoroff for permission to call in DOI.  DOI was her idea.   It seemed clear that the General Counsel was telling the truth. 

My second severe mistake in judgment was to reach out to Chuck Brass, my successor.  It was no secret since the time I joined HDC that Chuck couldn't stand me.  He did not do much to hide it, but he was probably the smartest housing guy in New York City, so I overlooked it.  I knew HDC was lucky to have him.  Chuck viewed me as an idiot, political hack and disdained me as such.  Over time his dislike of me changed in character.  He no longer loathed me for being a putz, rather he loathed me for turning the place around so successfully and earning the respect of the staff.  I was proving myself and Chuck deeply resented that this man who knew nothing about housing or finance was making such a good go at running the place.  It was known by everybody that Chuck desperately wanted to be President of HDC and it was his ultimate ambition.  In the Spring of 2000 Chuck accepted the post of President of the NYC Housing Partnership under Richard Kiley and left HDC.

I threw him a fancy going away party and heaped lavish praise on him.  He had insulted me by not informing me that he was interviewing for the job.  I found out from someone else shortly before he accepted.  He went further and hired at the Partnership someone I had fired at HDC.  But again, I overlooked all this and only wished him well and stayed in contact.  A year later the person I had hired to replace Chuck left HDC and the position was again vacant.  I received a call from Chuck asking me to meet for drinks at the American Cafe in Battery Park City, near his office.  There he informed me that in the wake of Richard Kiley's departure to London Kiley's successor, Kathy Wilde, was planning on firing him.  I hadn't known before then that Kathy Wilde disliked Chuck and certainly not to the extent that she couldn't stand to have him around for even a minute during her tenure.  It had hit Chuck hard and he started to get emotional.  Neither of us wanted to see that.  I quickly changed the subject so that he could compose himself.  He asked to come back to HDC in his old job.  I knew this was hard for him; hard to be fired and hard to ask me for something, especially something as big as this.

I told him I would think about it.  I had made up my mind to promote the General Counsel, David Boccio, to the Development job.  This threw a new wrinkle into that.  I thought about it for a day and decided to bring Chuck back.  During his year away HDC had continued to thrive and our revenue was at record levels but I thought then he would still add a depth of experience that Boccio couldn't bring.

I knew the staff would not like this.  Chuck believed himself beloved by the staff notwithstanding his curmudgeon ways.  I was shocked to learn after he had left the depth of relief at his departure. Senior people, people Chuck considered close friends, were very glad to see him go.  Those people recognized that I was trying to bring HDC into the 21st Century: technologically, programmatically and managerially.  They resented that Chuck made no bones about the fact that he considered my efforts at change to be a total waste of time.  But, as I have said, he was probably the smartest housing guy in NYC and I believed the corporation would still benefit by his expertise.  I could handle Chuck's obstinacy.  When I broke the news to the staff they were crestfallen.  I really hadn't expected the reaction to be as bad as it was. 

Although Chuck had not asked, I decided to bring him back at a higher title.  I knew how humiliating this was for him and I tried to soften the blow for public consumption.  His only request had been to bring back his secretary whom he had taken with him from HDC.  I had hoped the experience would soften Chuck somewhat.  All it did apparently was harden his existing feelings for me.  He hated that he had had to ask me for this.  Rather than be grateful it embittered him even more.  That part I didn't know.

When I found out about the FOIL I called Chuck and asked why he didn't tell me.  He was brusque.  Like a petulant child he kept saying over and over that he didn't have to tell me.  I said in a soft voice that I was aware of that.  He told me he knew that I had made other FOILs disappear and was not going to let it happen again.  I explained that being out of HDC there was nothing I could do and didn't he owe me the common courtesy of a phone call as a heads up?   You see, I had spent my last month there doing nothing but trying to get Chuck the job as HDC president once I had decided to leave.

The main contenders for the job were Shaun Donovan and Deborah VanAmerongen.  I had encountered Donovan a few times when he was at HUD and took an instant dislike to him.  He was an arrogant, snotty kid and I knew that he would not be a good fit for HDC. The serious morale problem at HPD during his tenure there confirmed my view.   Deborah VanAmerongen had headed the NY HUD office.  We at HDC all knew her to be a total incompetent; made worse by the fact that she was very taken with her own abilities.   She was the butt of many a joke at the Corporation.  I was absolutely not going to let her be President of HDC.  So that left Chuck.  I consoled myself with the fact that he knew the place and I believed in his heart cared for HDC as much as I did.  So I moved heaven and earth to see that he would be my successor.  And he was.  I had worked very hard with Vinny - who by this time was Senior Advisor to the Mayor - to push Chuck's name at City Hall with Bloomberg.

But as soon as I left, I started to receive calls, e-mails and letters from HDC employees all complaining about Chuck.  He had apparently become completely obsessed with me.  Contrary to the now popular view that I was unpopular during my tenure, the staff were generally angry with me for leaving.  They were concerned about what would happen to HDC once I left.  They knew they had never had anyone champion the Corporation as I had.  Not to mention how I had markedly improved many of their lives professionally and personally.  I had meeting after meeting before I left assuring people that Chuck was going to be OK.  He would rise to the challenge and curtail his negative character traits now that he was going to have the top job, I had told them.

Now they were telling me that Chuck was invoking my name constantly.  If a memo didn't arrive on his desk in the amount of time he thought proper his response was, "you would never have had this in late if Russell were still here."  If a junior staff member spoke to him in a less than deferential manner his response was, "you would never dare speak that way to Russell ."  Chuck had fundamentally misunderstood what had made me respected by the staff, especially the junior staff.  It wasn't fear but comity.  Over three dozen staff members contacted me after I left to relate stories like these.  These same staff members would tell me later that the troubles that befell me and by extension HDC, they all blamed on Chuck not me.  Chuck had turned over the records that Robbins had FOIL'd.  What made this not only unusual but perhaps unprecedented in FOIL history is that the records didn't exist in the corporation.  I had removed them long before.  The fundamental principle of FOIL is you are not obligated to turn over anything that does not exist.  In my eight years dealing with FOILs I had never heard of a single instance where documents were created in order to comply.  It simply never happened.  But Chuck had all these documents reproduced.  It was then that I realized that Chuck suffered from what we in my family call 'Mario Cuomo Syndrome'. 

In 1982 Ray was instrumental in Mario getting the nomination in the Democratic Party after getting a huge lift in attaining the Liberal Party nomination.  Ray along with Andrew were the brain trust on that campaign.  Ray had deemed it good strategy to open up the Liberal Party nomination and invited many candidates to apply for the Party's endorsement.  He knew he was going to give it to Mario but deemed, correctly, that its value would be heightened if all the others were seen seeking it as well.  Unbeknownst to Ray, Mario resented that Ray hadn't just anointed him with the endorsement but rather, in Mario's view, made him work for it.  That coupled with the many favorable stories after the Cuomo victory crediting Ray with the win, gnawed at Mario to such a degree that he turned on Ray completely.  He threatened Ray's law firm, Shea & Gould, with the loss of all state business unless he was fired.  He attempted successfully, for a time, to wrest leadership control of the Liberal Party away from Ray.  The man who believes himself self-made can only be so if no one exists to prove otherwise.  Ray's mere existence would forever put a lie to Mario's contention that this was all his own doing.  He had to destroy him.  Mario's weird, Bush like relationship with Andrew stems from this as well.

Chuck was trying, in his own way, not only to destroy me but to destroy my legacy as a good HDC president.   He could not come to terms with the fact that I was instrumental in his getting the job as president. 

Two federal judges and numerous former Asst. US Attorneys told me during this time that there would have been nothing improper in the Corporation reviewing any spending with me privately and asking for reimbursements as it saw fit.  As I said, many employees of HDC blamed Chuck rather than me for what happened to HDC.  The millions of dollars that the US Attorney and DOI would force HDC to spend in this investigation could have gone towards housing but was spent pointlessly as a result of Chuck having initiated all this.  This could have all been handled by HDC internally. The problem was, and I could have told Chuck this, he was a smart housing guy but when it came to politics he hadn't a clue.  When you create a whirlwind you have to be the adept wizard to control it otherwise it will destroy everything in its path.  Chuck was never that wizard and it did just that.  And because Chuck thought he was smarter than he actually was the whirlwind would consume him as well.


 

Comments

[RA Harding]

Dimitri:
Fantastic questions. I love getting questions from people who have followed along and done their homework. Every single point you raise, especially DOI jurisdiction, will be addressed in the next three parts. Nothing about this whole case will be left out. I promise with a little patience everything will be answered or at least clarified.

RAH

[dimitri]

One thing I was intinding to ask is about this spending and your managment style, are you driving at the notion that the use of these funds was part and parcel of your style of mangagment and was a major factor in how well the HDC came to function? I get it that you should not have to stay in Holiday End's or eat at WhiteCastles while out of town, but how much of this $400,000 was accounted for as just "excessive" expenses above what they would have found non-excessive and how much of it come out to appear as favors for friends, or simply spending on yourself. I see they say you bought a car, also a car for another guy, this sort of thing. I would think that the $400,000 is a number boiled down from something, is it all accounted for or is there some issue of unaccounted money like the missing credit card documents, how much is in that, I mean, credit card documents are easy to comeby, just contanct the company right? Did they accuse you of hiding money away?

[dimitri]

I am unclear on what authority the DOI had, I mean what is their jurisdiction? If the HDC could handle issues as misappropriation of funds internally then, well, I guess I want to know 'who pressed charges?' The city? the DOI is the City and they took it to the DA? Why are the charges federal? It that because its a fedral coorperation?

I am not a buisiness guy, but the story is interesting, I was turned onto it by a client and have read all three parts.

Knowing there will be more I will not question on other things such as Fred and so forth, but this financial fiasco or what ever it is is somewhat elusive.