Issue of the Week

City Of Scandal

By Lynda Crawford

7 July 02

In the early 1970s, the actions of "The Plumbers" shocked America. Their botched break-in at the offices of the Democratic National Committee in the Watergate apartment and office building complex in Washington D.C. led to President Richard Nixon's resignation, a slew of criminal convictions and "Watergate," America's biggest political scandal of the century.

This June, 30 years later, New Yorkers learned of another plumbers scandal. This time, though, it involved real plumbers, not political henchmen. Prosecutors charged that more than half of the city's plumbing inspectors had taken hundreds of thousands of dollars in bribes from contractors over the last 10 years.

This year, tawdriness and dishonesty appear to have touched every aspect of society. Almost every day brings a revelation of another Catholic priest being accused of sexual impropriety, crimes his superiors often ignored. Allegations of crooked accounting, shredded documents and financial shenanigans of every stripe have wracked Wall Street and the business world.

In the last six months in New York City, a state senator, a city council member and a judge, as well as 18 current and former city tax assessors have been charged with crimes of corruption.

Add to this several conspiracy schemes to defraud September 11 charities, along with charges of theft by the head of Hale House, the highly regarded refuge for mothers and children. It makes one empathize with Diogenes, the noted Greek philosopher who walked about Athens with a lantern searching for an honest man -- and never finding one.

City Councilmember Eric Gioia, who chairs the council's oversight and investigations committee, chooses to see the positive side of the nefarious headlines. (Read his essay "Bringing Corruption to Light".)

"The fact that these incidents are coming to light means that others are taking their jobs seriously and investigating suspicious activity," said Gioia. "In any good garden, you have to do some weeding once in a while."

Indeed, every wave of scandal and corruption is met by promises to root it out and often by concrete proposals to do so. But while one problem may be eradicated, another later appears, testimony to the determination of some people to prey on the weak, take money that they do not deserve and probe for loopholes in the system.

So how does the current wave of scandals and corruption measure against those in the city's past? How much does it cost the taxpayer? And can fraud, gross mismanagement, and criminal activity ever be stopped?

SEAMY PAST

The dictionary defines scandal as disgrace, the "loss of or damage to ones reputation caused by actual or apparent violation of morality or propriety." Scandal has a long lurid history here -- from the 1870s when Anthony Comstock crusaded against vice in New York to the Stanford White murder to Sean "Puffy" Combs' trial last year on charges stemming from a 1999 shooting at a Manhattan nightclub.

Even scandals involving the clergy are nothing new. The young Horatio Alger, prior to finding his path promoting self-reliance and hard work, was accused of molesting young boys while serving as a minister in Massachusetts. He left town and headed to New York.

Government corruption also has been a mainstay of life in New York. In the first half of the 19th century, people got jobs with the police department by bribing politicians, and a promotion to captain cost $1,000, writes Luc Sante in his book, "Low Life." Even after getting jobs, police who failed to fork over money could find themselves assigned to 24-hour watch duty.

As William Marcy "Boss" Tweed tightened his grip on New York in the 1870s, Sante writes, "The city spent $10,000 on $75 worth of pencils, $171,000 for $4,000 in tables and chairs, and squandered $12 million on the infamous courthouse behind City Hall." Tammany judges sold court orders and other decisions and released candidates of favored lawyers in return for bribes.

Certainly, throughout much of the city's history, bribes were standard procedure for businesses eager to acquire the rights to build bridges, dig subways, install gas lines and electricity, or sell milk.

In the early 1900s, progressives and other reformers wiped out some of the government corruption. But throughout the 20th century, municipal malfeasance would be exposed and reduced only to turn up again at another place or time.

"Corruption is a moving target," said Alain Bourgeois, deputy director at the New York City Department of Investigation, a law enforcement agency. "Is it greater or lesser now? I don't know how you would gauge that. There are different opportunities for corruption today than in the past."

THE CHURCH

The public often enjoys scandals. But the recent revelations involving the Catholic church have shocked and saddened many Americans.

While the church scandal began in Boston, it has reverberated here. To name a few examples, on June 21, priest Cyriacus Udegbulem was arrested in Laredo, Texas, and charged with raping and sodomizing a parishioner in 2000 when he was assigned to a Brooklyn church.

Monsignor Charles M. Kavanagh, chief fundraiser for the New York archdiocese and pastor of the large Saint Raymond's parish in the Bronx, was removed from his post following accusations that he had an "improper relationship" with a young man 20 years ago.

Bishop James McCarthy, secretary to the late Cardinal John O'Connor of New York, had to resign after it was learned he had affairs with a number of women.

The principal of a Queens Catholic school has filed suit against the Diocese of Brooklyn, claiming her parish pastor moved a young male go-go dancer into the rectory, then pilfered thousands of dollars in church funds, including $14,000 that had been raised by students from a candy sale. Some of the funds allegedly paid for trips to a nude resort in Florida and for payoffs to the priest's lover.

The leader of the New York archdiocese, Cardinal Edward Egan, has been accused of helping to hide cases of sex abuse when he was bishop of Bridgeport, Connecticut. In the Brooklyn diocese, which includes Queens, Bishop Thomas Daily also has come under fire for his conduct in a previous post. Daily had served as vicar general of the Archdiocese of Boston during some of the years that church officials there allowed a defrocked priest, John J. Geoghan, to molest more than 130 children. Geoghan is now in jail.

Over the years, few priests in New York City or elsewhere faced criminal charges of sexual abuse, partially some critics say, because prosecutors were loathe to confront as powerful and influential an organization as the Catholic church. As the allegations surfaced this winter, prosecutors complained that they had not been given information to press charges and that the statute of limitations for many of the offenses has run out.

"I've watched law enforcement deal with church authorities for decades," A. W. Richard Sipe, a retired psychologist and expert witness in sex abuse trials, told the New York Times "Prosecutors are not acting as timidly in the face of the church as they once did."

The church hierarchy has had to change its attitude as well. Both Egan and Daily originally opposed giving authorities the names of priests involved in the misconduct. Egan first said the archdiocese would refer cases of alleged abuse to law enforcement only when there was reasonable cause to do so and the victims' families did not object. And Daily refused to divulge the names, or even the number, of priests alleged to have committed such offenses.

In April, both reversed their stands. Egan announced that his archdiocese had voluntarily given the Manhattan district attorney's office files on cases involving priests accused of sexual misconduct with minors. Brooklyn District Attorney Charles J. Hynes said Daily had promised to turn over any sex-abuse allegations against priests and would notify the district attorney if it is considering transferring or reassigning a priest accused or suspected of abuse.

The New York state legislature has been considering a bill that would add clergy to the list of people required to report suspected child abuse. That list now includes teachers, doctors and social workers. However, the measure stalled at the end of the legislative session.

COOKED BOOKS

The immediate effects of the current corporate scandals, in which companies deceived investors and others about their revenues, assets and losses, have hit far from New York -- in Houston, which Enron called home; in Clinton, Mississippi, headquarters of WorldCom; and in Chicago where many employees of auditor Arthur Andersen worked.

But as the country's financial and business capital, New York will feel the repercussions and figure in the solution. Some of the effects here have been immediate and concrete. In June, after its conviction in the Enron case, Andersen announced it could no longer make good on its plans to move into a new 47-story building on Times Square. And New York State revealed that its retirement fund had lost at least $200 million on WorldCom.

But in a city whose economy is as dependent on Wall Street as New York's is, the less immediate effects could prove lingering and serious. Some analysts believe that many investors, particularly foreign ones, will stay away from stocks in U.S. companies because they can no longer believe the information that corporations put in their financial statements. "It may take as much as another generation before people regain confidence in Wall Street," a retired Chicago stockbroker told the Times.

Meanwhile, investigations of corporate malfeasance are circling closer to New York City. State Attorney General Eliot Spitzer, who is probing conflicts of interest among Wall Street analysts, said he would investigate whether some firms improperly promoted WorldCom stock. And Manhattan District Attorney Robert Morgenthau is reportedly investigating financial transactions between Enron and financial institutions, particularly whether JP Morgan Chase and Enron disguised loans that the bank made to the bankrupt energy trading company.

AND IN THE PUBLIC SECTOR

While church and business scandals have captured the lion's share of air time and front pages lately, old-fashioned government corruption continues unabated -- and in all three branches of government.

In March, City Councilmember Angel Rodriguez of Brooklyn, who narrowly lost his bid in January to become speaker of the new City Council, was indicted for extorting $50,000 in cash and $1.5 million in real estate in exchange for his support of a proposed supermarket project on the Red Hook waterfront. The developer for the project was a former New York City detective, who reportedly went to police after being approached about the bribe by the council member's partner and long-time friend, Jonathan Morales. Rodriguez and Morales have pleaded not guilty.

This spring, the Manhattan district attorney charged longtime state Senator Guy Velella of the Bronx and his father along with two other men of taking more than $250,000 in illegal payments between 1995 and 2000 to influence the awarding of public contracts. Velella has denied the charges and said he will seek re-election in November.

Another Bronx legislator, Assemblymember Gloria Davis, is the target of an investigation, also by the Manhattan district attorney and also involving alleged bribes to influence the awarding of construction contracts.

YOUR HONOR'S DISHONOR

Moving on to the judiciary, in January, Brooklyn Supreme Court Judge Victor Barron was accused of soliciting and accepting an $18,000 bribe in exchange for settling a lawsuit by awarding $4.5 million to the plaintiff. The plaintiff's lawyer reported the bribery attempt.

The Brooklyn district attorney is reviewing all of Barron's previous cases. At the same time, allegations have surfaced of misconduct and improper behavior by seven other Brooklyn judges, although none as severe as the charges against Barron. So far, there have been no further indictments.

THWARTED CRUSADER

Few mayors have been seen as more fervent in their fight against corruption than Rudolph Giuliani. A former prosecutor, he waged war on organized crime and on corruption in the Fulton Fish Market and at the San Gennaro festival, to name a few examples. But his crusade proved only partly successful.

As the recent indictments of plumbing inspectors make clear, the Buildings Department remains especially intractable and has been for at least 20 years. In 1996, for example, 18 elevator inspectors pled guilty to federal charges, and two years ago, the department's number two official, its top person in Queens and three other employees were indicted. Giuliani proposed shifting the inspections to the Fire Department, but Bloomberg has apparently abandoned that idea.

Instead new Buildings Commissioner Patricia Lancaster says she intends to clean up the department. In some ways, she said, she welcomed the plumbing indictments because they represented "a first step in sending a signal to the staff that this will not be tolerated."

Lancaster said she was reviewing all department functions with an eye toward reducing inefficiency as well as dishonesty because she believes that the two tend to be linked.

But corruption reaches beyond the Buildings Department. In February, 18 Manhattan tax assessors were indicted on charges that they lowered assessments on at least 500 of the city's most expensive commercial properties in exchange for bribes totaling $10 million. The assessors may have been on the take for more than 30 years and cost the city as much as $1 billion in revenue

Some observers note that over the years, people involved in the tax system, including some tax assessors themselves, raised red flags and suggested improvements but lawmakers and others largely ignored the warnings and suggestions for reform.

Since the indictments, City Finance Commissioner Martha Stark ordered a reassessment of the properties involved and said she would make changes in the property tax assessment system to regain "the public's trust in the integrity of the assessment process."

On another front, a series of investigative reports in the Village Voice allege that Russell Harding, Giuliani's president of the New York City Housing Development Corporation, used public funds for private extravagance. Harding and a top aide spent more than $250,000 in city money for first class airline tickets, meals at fancy restaurants and other expenses.

Harding had few obvious qualifications for the job but is the son of Raymond Harding, longtime Liberal Party boss and a key Giuliani supporter. The son has been quoted as saying that he reimbursed the city for a portion of his expenses and would be willing to pay it all back. Less criminal but perhaps more damaging to Harding are excerpts from his correspondence in which he is contemptuous of minorities and the poor, the very people he was entrusted to help.

TEMPTING TARGETS

"Corruption occurs when people are confronted with great temptation," said historian Edwin Burrows, who co-authored the book, "Gotham, a History of New York City to 1898." "You always have to ask, what is the incentive? For example, do you think we'd have corrupt building inspectors if they were paid enough that no bribe was worth taking?"

Stopping corruption is obviously a work in progress.

The city's Department of Investigation recounts many successes in its 125 year history. Recently, these include ridding the Hunts Point Market of the influence of organized crime; making similar strides in the waste hauling industry; monitoring contractors at ground zero; as well as active involvement in uncovering many current cases.

The department has a mandate under the city charter to investigate any agency, officer of the city, person doing business with the city, or organization that receives city money, where there is suspicion of corruption, conflict of interest, abuse of authority, gross misconduct, or inefficiency and waste. Every year, the office receives approximately 8,500 complaints. It investigates almost half of them, and about 70 percent of investigations lead to a criminal arrest, disciplinary action, or change in policy and procedure.

The department also looks for weaknesses within the system that might create opportunities for wrongdoing. "During the building department scandal, for example," explained Alain Bourgeois, the agency "not only arrested and prosecuted a number of people, we also spearheaded a task force to streamline and redesign how the Buildings Department is run."

And it tries to prevent corruption before it happens. Department representatives visit every city agency and present lectures on corruption. They tell workers that they have an obligation to report wrongdoing and to cooperate with investigations. Employees are informed about the 24-hour complaint line and basically told, according to Bourgeois, "Don't be a schmuck. Don't do this!"

Edwin Burrows suggests that there may not be more misconduct now than at other times, nor does he think the city stands out as more unscrupulous than other locales.

"The history of corruption in New York City is about somebody deciding to go after somebody else," he said. "When you talk about cycles of corruption, you are really talking about cycles of assault on corruption."

THE HIGH COST OF CORRUPTION

Wiping out corruption is up there with god, motherhood and apple pie. And no wonder. Dishonesty probably cost the city tens of millions of dollars year in increased costs and lost revenues. The exact bill is difficult to quantify.

Discussing the plumbing indictments, Barbara Underwood, the chief assistant United States attorney, said the expense to the city was greater than the cash payoffs alone. "These dollars represent costs added to the price of plumbing jobs in the city, and they also represent inspections not made, risks taken with the safety of water and gas pipes all over the city," she said.

Just the perception of widespread wrongdoing is costly. When one city worker is accused of taking a bribe, all city workers are assumed to be corrupt, although the majority are honest, just as many Americans may now view all priests as child molesters. As corruption reaches into other segments of society, from the court chambers of downtown Brooklyn to posh accounting offices, the task of stopping it becomes ever more daunting.

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