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White House Looked Past Alarms on Kerik
Giuliani, Gonzales Pushed DHS Bid Forward

By John Solomon and Peter Baker
Washington Post Staff Writers
Sunday, April 8, 2007

When former New York mayor Rudolph W. Giuliani urged President Bush to make Bernard B. Kerik the next secretary of homeland security, White House aides knew Kerik as the take-charge top cop from Sept. 11, 2001. But it did not take them long to compile an extensive dossier of damaging information about the would-be Cabinet officer.

They learned about questionable financial deals, an ethics violation, allegations of mismanagement and a top deputy prosecuted for corruption. Most disturbing, according to people close to the process, was Kerik's friendship with a businessman who was linked to organized crime. The businessman had told federal authorities that Kerik received gifts, including $165,000 in apartment renovations, from a New Jersey family with alleged Mafia ties.

Alarmed about the raft of allegations, several White House aides tried to raise red flags. But the normal investigation process was short-circuited, the sources said. Bush's top lawyer, Alberto R. Gonzales, took charge of the vetting, repeatedly grilling Kerik about the issues that had been raised. In the end, despite the concerns, the White House moved forward with his nomination -- only to have it collapse a week later.

The selection of Kerik in December 2004 for one of the most sensitive posts in government became an acute but brief embarrassment for Bush at the start of his second term. More than two years later, it has reemerged as part of a federal criminal investigation of Kerik that raises questions about the decisions made by the president, the Republican front-runner to replace him and the embattled attorney general.

A reconstruction of the failed nomination, assembled through interviews with key players, provides new details and a fuller account of the episode -- how Giuliani put forward a flawed candidate for high office, how Bush rushed the usual process in his eagerness to install a political ally and how Gonzales, as White House counsel, failed to stop the nomination despite the many warning signs. "The vetting process clearly broke down," said a senior White House official. "This should not happen."

Federal prosecutors have told Kerik that they are likely to charge him with several felonies, including providing false information to the government when Bush nominated him, sources have told The Washington Post. Kerik recently turned down a proposed agreement in which he would plead guilty and serve time in prison because, his attorney said, he would not "plead to something that he didn't do."

The investigation has put Giuliani's relationship with Kerik back in the spotlight at a time when the former mayor leads the Republican presidential field in national polls. During an appearance in Florida last weekend, Giuliani told reporters that they had a right to question his judgment in putting Kerik in charge of the New York Police Department and recommending him to Bush. "I should have done a better job of investigating him, vetting him," Giuliani said. "It's my responsibility, and I've learned from it."

The White House explanation has shifted significantly. Just after Kerik withdrew, White House spokesman Scott McClellan said that "we have no reason to believe" he lied and that it "would be an inaccurate impression" to say the vetting was rushed. Now current and former White House officials assert that Kerik lied "bald-faced," as one put it, and say they erred by speeding up the nomination.

Aides said they now believe they were lulled by Kerik's swaggering Sept. 11 reputation, and were too passive in accommodating the president's desire for secrecy and speed and too willing to trust Giuliani's judgment.

From 9/11 Hero to Nominee

Bush met Kerik in the debris of the World Trade Center and was so impressed that he later sent him to Iraq to train police. The bald, mustachioed street cop appealed to Bush, who admired his can-do persona. By 2004, Kerik was sent to the Democratic National Convention as part of an opposition war room, given a prime speaking slot at the Republican National Convention and tapped to appear with the president on the campaign trail.

Kerik did not fit the button-down model of the Bush administration. A high school dropout and son of a prostitute apparently killed by her pimp, Kerik became an undercover narcotics detective with ponytail and diamond earrings. He joined Giuliani's 1993 campaign as his driver and was later given top appointments, including corrections commissioner and eventually police commissioner. After office, Giuliani and Kerik became partners in a security consulting firm.

So when Giuliani telephoned Bush to recommend that he make Kerik his second-term homeland security secretary, the president jumped at the idea. The sheen of a 9/11 hero seemed to be just what was needed to take on a troubled new department struggling to integrate 22 agencies and 180,000 employees to protect the nation's ports, borders and airports; enforce immigration and customs laws; and respond to major disasters. Only a few aides, including then-Chief of Staff Andrew H. Card Jr. and senior adviser Karl Rove, were clued in to the president's decision.

As with every nominee, Kerik was given detailed financial disclosure and personal history questionnaires to fill out, all intended to unearth anything that might prove embarrassing in a confirmation hearing. Giuliani's firm assisted in filling out the forms, according to a source familiar with the situation, and the papers are now an issue in the federal criminal investigation. Kerik, his attorney and Giuliani Partners spokeswoman Sunny Mindel declined to comment.

Presidential nominees typically go through a full-fledged FBI background investigation before their appointments are announced. But because it is hard to keep Cabinet selections secret for so long, they are vetted only by the White House counsel's office before being made public. The FBI then conducts its full probe before Senate confirmation hearings begin.

The counsel's vetting depends heavily on honest responses from a nominee, officials said. Yet in Kerik's case, a quick FBI search and research by the White House turned up a host of problems in the couple of weeks before the nomination was announced. According to the sources, who spoke on the condition of anonymity because of White House policy against discussing personnel matters, Bush aides discovered that:

--Kerik was fined $2,500 by New York City for using police detectives to help him with his autobiography. He was also a defendant in a civil lawsuit accusing him of retaliation against a corrections official who had disciplined a female prison guard with whom Kerik was having a relationship. Kerik was scheduled to give a deposition in the case right after his nomination was to be announced.

--One of Kerik's former top deputies was convicted of stealing money from a foundation that Kerik ran while serving as Giuliani's corrections chief. The foundation was funded by rebates from tobacco companies selling cigarettes to prison inmates.

--Kerik, who filed for bankruptcy as a police officer, became rich almost overnight after leaving office. Just before his nomination, he made a quick $6.2 million without investing a dime by exercising stock options from his service on the board of Taser International, a stun-gun firm seeking business with homeland security agencies.

--Kerik's tenure in Iraq generated strong criticism of his management. Iraqi officials complained to U.S. authorities about $1.2 billion Kerik spent to train Iraqi police officers in Jordan, spending they called wasteful. Iraqis also questioned why Kerik spent tens of millions of dollars to buy weapons for Iraqi trainees when the U.S. military had confiscated plenty of such weapons after the invasion.

A Friend Accused of Mob Ties

The loudest alarm bell was Kerik's relationship with Lawrence Ray. The best man at Kerik's wedding in 1998, Ray went to work for a New Jersey construction company, Interstate Industrial Corp., that was seeking a big New York City contract and trying to overcome concerns inside Giuliani's administration that it had mob ties.

Ray, who told friends that he worked with the FBI, military and intelligence agencies in the 1990s, was indicted in 2000 along with organized-crime figures in what prosecutors described as a scheme to manipulate the stock market. He pleaded guilty and was spared prison time.

The White House had the perfect person to question Kerik about his relationship with Ray: Julie Myers, who arrived in the White House personnel office in November 2004 and had worked in the same U.S. attorney's office in Brooklyn that prosecuted Ray. She flagged the relationship and other concerns about Kerik for her White House colleagues, sources said. She aggressively questioned Kerik about Ray and other affiliations. He bristled at her tone, sources said.

In an interview last week, Ray said he had told the FBI and U.S. attorney's office as early as 1999, as he tried to stave off indictment, that he had incriminating information about Kerik. After his guilty plea in 2001, Ray said, he told the FBI that Kerik had agreed to help Interstate Industrial and its owners, the DiTomasso family, try to win city business despite their alleged ties with organized crime. At the time, Kerik solicited and received gifts from company sources, including $165,000 in renovations for his apartment.

"They knew 100 percent of it," Ray said. "There was no way they didn't. I was driving the ball on that."

Kerik told the White House that the allegations were untrue, sources said. "He was told many times, 'Be honest,' " said one person familiar with the process. Myers, presidential personnel director Dina Powell and others raised concerns in the West Wing, according to the sources. They were "very, very adamant about how serious the vetting needed to be," one source said.

Gonzales, then the White House counsel, who was about to begin his own confirmation process for attorney general, took charge of questioning Kerik, grilling him for hours on several occasions, the sources said. At one point, Gonzales called while Kerik was having lunch at a New York steakhouse and talked to him on his cellphone for an hour and a half. Nanette Everson, then the White House ethics counsel, was kept on the sideline for the heavy-duty part of the vetting.

But in the end, White House officials knew that Kerik had been head of the nation's largest police department and had a security clearance for his work in Iraq. He was a hero of Sept. 11. He was well liked by the president. No one checked with key officials at the Homeland Security, Defense or State departments or elsewhere in the government. Even within the White House, the choice was kept secret so Bush could make a splash.

"The loop on it was extremely small," said a former official. "That's a president-of-the-United-States, 'I don't want anyone to know, I want to announce it on Friday' [deal]. It drives people to not follow all the normal procedures."

The Past Comes to Light

The initial reviews were positive. New York's Democratic senators, Hillary Rodham Clinton and Charles E. Schumer, issued laudatory statements. But from corners of Washington and New York, calls began pouring in to the White House and to newsrooms.

Stories began circulating about Kerik's time in Iraq, about an arrest warrant issued when he failed to respond to a civil lawsuit, about his extramarital affair with book publisher Judith Regan, about his trysts in a city apartment meant as a place for police officials to rest near Ground Zero. Ray went public with his allegations about Kerik's gifts from the DiTomasso family. Kerik and the White House tried to ride it out. Giuliani advised Kerik through the political storm.

But then people at the Giuliani firm who were scouring Kerik's finances discovered that he had not paid Social Security taxes for a nanny who apparently was an illegal immigrant, Kerik later said. By Kerik's account, Giuliani told him he had to call the White House, and by the end of the day on Dec. 10, they agreed he had to pull out. Statements were issued after the evening news, and Giuliani came to console his friend.

"I made some major mistakes, and they catch up to you," Kerik told New York magazine a few months later. "I didn't focus enough on ethical issues. But I still believe that my successes over my 30-year career outweigh the errors in judgment." Except for the nanny, he said, "everything that's come out is stuff I either told the White House about or they already knew."

But more was to come. After Kerik withdrew, Ray became the central witness in several investigations. The New York Department of Investigation and the Bronx district attorney's office opened probes into Kerik's gifts using wiretaps, grand jury testimony and numerous e-mails Ray gave them.

In the e-mails, Kerik appears to be soliciting Ray for money. "I was going to ask you if we had between 18 and 2,000 available," Kerik wrote in 1999. Another time, Kerik mentioned financial difficulties and the apartment. "I've got to make sure we can do the renovations," he said. Sources familiar with the investigation said Kerik may challenge the authenticity of the e-mails if federal charges are filed, but the Bronx district attorney's office authenticated the e-mails as it brought its case against Kerik, according to lead investigator Stephen Bookin.

New Jersey gambling-enforcement authorities also filed a complaint in 2005 accusing Kerik of misusing his Giuliani administration jobs to solicit gifts from the DiTomassos, who have fought allegations of mob ties, while helping them try to win city business. Kerik asserted his Fifth Amendment right not to answer some questions in the proceedings. He pleaded guilty to two misdemeanors in New York court last summer, acknowledging that he had accepted the apartment renovations.

In the White House, there is still resentment toward Giuliani for foisting the problem on the president. "There are two people who are to blame for what happened -- Rudy Giuliani and Bernie Kerik," said one former White House official. Still, a senior administration official acknowledged some responsibility as well. Bush wanted "a hard-charging personality" to get the department in line, he said. "Instead, we ended up shooting ourselves in the foot."

Staff writers Matthew Mosk and R. Jeffrey Smith contributed to this report.

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