J'ACCUSE - Part II

(Start with J'ACCUSE - PART I)

I received a number of e-mails after I posted J'Accuse Part I asking me to talk more about HDC and my tenure there.  I hesitated originally because I did not think people would be all that interested.  But I am happy to recount those years briefly.  I am very proud of them.

Richard Roberts, the former HPD Commissioner and HDC Chairman perjured himself when he described how I became HDC President.  As he was desperate to save himself from prison I guess it's understandable, but still not an honorable thing.  I was at EDC seriously looking for a job in the private sector come the Spring of 1998. I was talking to headhunters and sending out resumes.  I had no intention of staying in the administration.  Then one day at work in April, Richard Roberts, a friend from City Hall days, calls to ask me to consider taking the job of HDC President.  I knew HDC only a little.  Richard explained that he had removed the president and given her a position at his agency.  She wasn't measuring up.  He further told me that the semi-permanent head of HDC, its Executive Vice President, was blocking all of his attempts at new projects.  HPD, you see, had the muscle but HDC had the cash.  And Richard needed money to fund his legacy projects in Harlem.  Because of the Exec VP's  pull with certain orthodox Jewish leaders close to City Hall, unless Richard found a heavyweight for the job of president it would go to the Exec VP.  I told him I wasn't interested and said so on about two more occasions. Richard lobbied me hard.  We wound up finally agreeing on this during a 1AM phone call at home.  Richard's version to a grand jury was that Ray Harding pressured him and Deputy Mayor Randy Mastro to get me this job.  That story is completely false.  But it made Richard a victim in that I am supposed to have been foisted upon him against his will. 

I found HDC to be completely moribund.  I had never seen anything quite so mismanaged.  No organizational system, no long-term or short-term goals, dreadful morale and a total lack of leadership.  When I came aboard, the President, Exec VP and General Counsel had all just left.  To my way of thinking that was a blessing.  HDC's problem, as I soon discovered, was that it had atrophied.  It had incredibly talented staff: knowledgeable, hardworking, loyal & dedicated. But that was also part of the problem.  In an era where people move jobs every few years the pattern at HDC was that no one ever left.  I called them 'lifers.'  It didn't encourage new thinking and broader visions. The answer to every process question I asked was answered with, "we've always done it that way."

This was 1998 and almost no one had a computer on their desk.  No email, no voice mail, absolutely no internet access and the place was a deathtrap.  On one of the upper floors, which was stacked floor to ceiling with paper, had there been a fire, everyone would have died.  Most astonishingly, no one but the president had a direct telephone line.  All calls had to go through a central switchboard.  1998!!!!! 

The corporation was badly understaffed although it wasn't producing much housing at that point so it didn't matter much.  I did what I always do when I take over a group of people; I tried to get to know them.  That was nearly impossible at HDC.  When I walked around the office chatting with staff, one after the other would say the same thing, "I've been here 10 years and no President has ever spoken to me before."  I initiated brown bag lunch days by dept. so I could meet them and they could see me.  I asked - begged - them to speak their minds and tell me what was good and bad about the place.  I soon learned that the model HDC president before me was someone who never left their office, didn't speak to staff, and let the former Exec VP run the place.  Staff were freaked by the president and didn't know what to do when I spoke to them.  Many absolutely refused to call me by my first name. It was creepy. HDC had had glory years but they were clearly just a memory when I showed up.

I quickly set an ambitious agenda.  The former Exec VP had become happy with the corporation making money in any manner that guaranteed the highest return.  At that time it meant government investments, not housing.  The misconception throughout my entire case, fostered by my prosecutor and perpetuated by my judge, was that HDC is a City agency.  It was not.  It was a 501(c)3 not-for-profit corporation.  In fact it was a multi-billion dollar corporation.  It had no official ties to New York City and it did more business with Goldman Sachs and Bear Stearns than it did with the City's Department of Housing and Preservation. 

In one instance, shortly after arriving I asked the NYC Law Dept if it was alright if we used the City seal on some materials.  I received an opinion back that we absolutely could not, we were not a City agency.  HDC made its money three ways: through the fees that it charged developers, through in-house investment of its reserves and through various fees and contracts in which we charged third-parties.  The corporation took no city tax dollars other than those we charged HPD for investing some of their funds. We didn't like doing this so we charged them a high rate.   We did nothing for free.  We also had a contract with HUD that I will talk about later.  It was popular during my case to talk of fleecing the city or taxpayers money.  No city, state or federal tax monies were misspent by me.  We made increasing profits every year I was there and that money came primarily from our investments and fees.

My motto was, "the H stands for for housing."  As I said, the previous regime had been happy getting 8% return from our investments in government bonds and treasury notes, as they were higher than mortgage rates.  I stopped that.  We were going to invest in housing and a lot of it, whether or not it paid the higher return.  It was our mission.  I immediately expanded the middle-income housing program and devoted a lot more cash to its subsidies.  I expanded the low-income program and saw the creation of 4 new programs.  I began the process of modernizing the corporation.  I negotiated a long term lease in good Class-B space for below market rent.  I set about an entire reorganization of HDC.  Overseen by my chief of staff the whole place was reorganized so that there were now clear lines of authority and that 12 people didn't have the title 'Assistant Treasurer' when half had nothing to do with finance.  I created a Workouts unit to help our financially distressed properties.  I signed a ground-breaking contract with the Oracle Corp. to create a state of the art system for our entire financial side (we used a Wang operating system so antiquated that Wang refused to service it and no replacement parts existed). The Oracle VP told me that he had never seen a contract like ours approved by their General Counsel's office.  I insisted that any overruns in time or money be borne by them.  We wanted this delivered shortly after we moved and if it was not I was not going to pay the daily rate of $2,000 per person to keep their programmers and consultants around.  This had never been approved by them before. They made a lot of their money from overruns.  I insisted on this provision knowing the value they placed on producing this software so as to go after the rest of the state housing finance industry.  That provision turned out to be a savings of over $1 million dollars to HDC.

I expanded the staff and increased salaries and benefits.  All the while working with the CFO to find ways to increase revenue.  We had one record year after the next in terms of our bottom line.  Also, and this was very important to me, HDC oversaw for HUD 70 Section 8 projects with over 7,000 units of housing.  As soon as I started the job I told my staff I wanted to visit and inspect every project.  We set aside Wednesday mornings and accompanied by one of our on-staff engineers I would tour 2-3 projects. I learned about boilers, roof ponding, elevator motors and fire safety issues.  I would knock on a few doors and sit down with residents to discuss their concerns.  

It seemed the natural and responsible thing to do. I was absolutely astonished to learn that no HDC president before me had done this.  How could you possibly get a sense of the condition of the properties we were ultimately responsible for if you didn't go and take a look?  By reading reports?  It was just another bizarre aspect regarding HDC that I was determined to change.  In my 3 1/2 years as president we tripled the number of projects and doubled the number of units financed over the prior five years.  It is not popular, but also no exaggeration, to say that 1,000s of people in this city have a roof over their heads today  because at a particular moment in time, I was President of HDC.  It is also beyond dispute that  had I not invested the time and money in turning the corporation around, HDC could not have been the financing engine it has become post 9/11.  It was simply imploding in on itself when I arrived.  The corporation I inherited could never have functioned to produce the housing it has in the last 7 years.  It's just a fact.

But back to my case.  Where were we?  Yes, I had received the threatening letter from Fred co-written by Village Voice reporter Tom Robbins.  After I sent back a threatening response I crossed my fingers and hoped for the best.  Now it gets weirder.  A few days later I receive on my HDC Blackberry an e-mail from an anonymous person telling me that on a political website, I had never heard of, someone had posted a request relating to me.  When I went to the office I discovered that on this website was a request from Fred, by name, seeking the name of a good political reporter and claiming he had damaging info on me.  This was all a cover.  Robbins had gotten my HDC e-mail address and Fred had sent me the tip to look at the website.  Fred had been with Robbins for some time by this point.  Who knows why he did it or sent me that anonymous e-mail telling me about it.  But it gets more bizarre.  I would next receive a series of anonymous e-mails from someone who claimed to be a staffer at the Village Voice who wanted to be of help to me.  This person - it was of course Fred - would send me frequent reports about what Robbins was doing and his meetings with his "informant in the mid-west."  The information was always correct as it naturally would be coming from Fred.  I don't believe Robbins was aware Fred was doing this.  I think Fred had just become completely unhinged at this point and had a serious love/hate thing going on with me (the prosecution eventually had all these e-mails I am referencing). My last days at HDC were less than the pleasant goodbyes I had hoped for.  In the back of my mind were these e-mails.   In the main I tried to pretend that this wasn't something big. To make the point that I didn't consider this to be anything serious, I continued charging items through vouchers or credit card and being reimbursed by HDC.  Mainly items relating to moving my possessions and storing them.  These items of course could be subject to outside scrutiny after I left.  I always made the point later that had I thought I was doing something illegal I certainly would never have left the extraordinary paper trail that I did.

Having now left HDC I learned through the helpful 'Voice staffer' e-mails that my expense records had been FOIL'd by Robbins at HDC.  I learned this around February 7th, I left HDC February 1st.  In the last seven years since I left HDC I have had one carefree, pleasant week.  Since Feb. 7th it has all been downhill. The e-mails informed me that HDC was turning over all my expenses to Robbins . 

**Point of full disclosure - during my tenure I had caused to go missing some credit card records that Robbins had FOIL'd.  In addition - and he never knew this - some records relating to our move.  I did this not because I ever believed anything was illegal but rather to avoid embarrassment in the papers about my spending.  Yes, when traveling I stayed at nice hotels and ate at nice restaurants.  While at EDC The New York Observer had FOIL'd me and rather than having my travels and expenses revealed I paid them back the entire amount, $3,000.  With the exception of a train trip to Baltimore, all those expenses were 100% legit relating to the large marketing research EDC was doing.  We had paid Wirthlin Woldwide $1,000,000 to do the research and we were testing ideas, commercials and slogans across the country with key company decision makers in order to figure out what worked best in attracting new business and those businesses that were looking towards expansion.  The money spent paid off handsomely as our marketing was now dead-on and the results at EDC's Business Retention and New Business units attested.  I thought $3,000 a small price to pay in order not to have to go through the ordeal that had transpired the year before when Robbins staked me out in the EDC lobby for a week in order to get a picture for a 3/4 page story in the Daily News about a $3,000 annual bonus I had received.  My picture took up most of the page.  Bonuses at EDC  that year ranged from $1500-$10,000.  But naturally I was singled out.  Having paid the $3,000 to EDC the story in the Observer was avoided and was totally worth it.**

For a few weeks I worried about this whole thing privately but finally told my father.  He immediately suggested I hire a friend of his, Irwin Rochman, a noted criminal defense attorney.  This has never been revealed before but when Tony Carbonetti was being investigated criminally for his role in the HANAC scandal Irwin Rochman represented him.  That part is public record.  Not known is that my father paid Irwin's $50,000 fee on behalf of Tony.  I believe it was with this in mind that when at my house one night a few weeks into my matter, Tony said he was leaving and as he did so placed a very nice check on my coffee table.  It wasn't $50,000 but an extremely nice gesture.  I wasn't in need of money at the time but I thought then that this was his way of paying back Ray in some measure.  He never spoke of that again, which I thought a very classy thing.

As HDC turned over the documents to Robbins I also got word that the New York City Dept of Investigation had become involved.  {See my thoughts elsewhere on my views of DOI and my history with them.}  I spoke to Irwin a few times while he was in London handling a case and then we met at his office.  He asked for and received a $50,000 retainer.  I didn't know it then but he was violating recent rules passed down by the State Bar.  He never offered me a retainer agreement.  It was absolutely required that any new client sign a retainer agreement the second money changed hands.  I never signed one with him for the 8 weeks he was my attorney.  Irwin told me repeatedly that he would handle my case however long it took and even through trial for $50,000.  I told him that was ridiculous.  I certainly didn't expect this matter to reach trial or even a plea but if it did $50,000 couldn't cover a small fraction of that cost.  But strangely he kept insisting all he would take is $50,000.  Finally I let it pass as I thought it such a silly thing to say and it was, I supposed, some attempt at a goodwill gesture because of his friendship with my father. 

I believed at that time that Irwin would be the right lawyer.  He had saved Tony from possible indictment and gotten Ray out of a bad scrape over back taxes.  I soon grew very disenchanted with him.  He treated me like Ray's kid and never like a client, although I was the one paying him.  He kept me waiting in his lobby while he met with my father or Tony alone.  He reported all developments in the case to Ray before he did to me.  Ray always knew more than I did and between he and Irwin decided what I should and shouldn't know.  Ray also hired an old friend to do public relations, George Artz.  I didn't realize it then but George was there to do Ray's PR not mine.  I met with Artz for an hour in Irwin's office to tell him the background.  Ray reported back to me that George didn't like me.  He didn't feel that I was concerned enough about how this was hurting my father because I had relayed the story of this case too dispassionately.  This was ironic since anyone who had heard the recitation of this case from me always heard the intense emotion spew forth from my retelling.  

Artz had a good relationship with Robbins.  I think they bonded further in their dislike of me.  Great thing to have in someone whose supposedly handling your PR.  Robbins said he had chats between me and Fred.  He said they covered a wide range of sexual topics, including children and also illegal activity by me at HDC.  I was worried because Fred and I had indeed had chats about kids, but illegal activity at HDC?  What the fuck was that about?  It was then that it started to dawn on me that whatever Fred had given Robbins - I had no idea at that time that Robbins was actively helping Fred write the chats - was fabricated.  What person, sane or otherwise, kept printed copies of chats from five years earlier?  Fred and I were on good terms then, why would he keep them?  I posed this question to Tony.  He's the one who showed me how it was done. 

Now if you take nothing else away from this whole story please pay attention to this next part.  This has ramifications for anyone who uses any instant message program, young or old.  Tony was at my house one night.  I was perplexed at how Fred could have done this.  He apparently had my real screename attached to all these chats where I am saying things I never said.  Tony asked if I had a laptop.  Sure, I said.  We set up in my den a connection so that we were chatting on his AOL account on the laptop and mine on my desktop.  We chatted for a few minutes and he told me to save the chat on my computer .  He then sat at my computer and opened the saved chat in Microsoft Word.  There was the chat just as it had appeared on AOL.  Except now you could erase all the text following the screename.  Anyone who has ever chatted knows that each time a person types a message it is preceded by their screename so that the participants know who is saying what.  On AOL you cannot edit what is said, only scroll back and read it.  Once saved in Word you retain all the screename breaks but the text following it can be edited at will.  An innocent chat about the weather in seconds could be converted into a terrorist plot to blow up the Statue of Liberty. You print it and to an unsuspecting eye it looks genuine.  

I'll get into this at much greater length later, but imagine that Tony Carbonetti, self admittedly no rocket scientist in computer matters, figured this out but senior U.S. Customs Agents, and the U.S. Attorneys Office for the Southern District couldn't piece this together.  Or more accurately didn't want to.  I'll get into that later too.

POSTSCRIPT:

If you're wondering how I know that Fred and Tom Robbins collaborated on fabricating the chats, Fred told me.  I will write in more detail how and when I came to learn that precisely in the weeks ahead.

NOTE:

Apologies for this being less than I had promised.  I hadn't planned last week to write about my tenure at HDC so it cut into the amount devoted to the case I wanted to put up this week.  I will make up for everything next week with J'ACCUSE - Part III.

Comments

[Health Information Resource Blog]

Well written article. I always appreciate the true talent. I have read your J'ACCUSE - Part I and liked it so I even read J'ACCUSE - Part II. You are always impressive. Thanks.