By Dafna Linzer
Washington Post Staff Writer
Saturday, November 10, 2007
WHITE PLAINS, N.Y., Nov. 9 -- In 2003, while Bernard B. Kerik was in Baghdad to rebuild Iraq's beleaguered police force, his bank accounts back in New York were allegedly being filled by friends eager to expand their dealings with the city and the federal government.
A Brooklyn businessman supplied Kerik with a personal, interest-free loan of $250,000 -- money allegedly borrowed from an Israeli industrialist whose companies sought business with the federal government. Kerik, according to federal prosecutors, failed to disclose the loan on tax returns. He also left it off the White House forms he filled out nearly a year later when President Bush nominated him to lead the Department of Homeland Security.
On Friday, federal prosecutors unsealed an indictment against the former New York City police commissioner and onetime close aide to Republican presidential candidate Rudolph W. Giuliani, charging him with 16 counts of corruption, mail and tax fraud, obstruction of justice, and lying to the government.
Kerik, 52, pleaded not guilty at an arraignment here and vowed to fight the charges.
"I am disappointed that the government has brought forth this case. This is a battle I'm going to fight," he said outside the federal courthouse in White Plains, north of New York City. He was released on a $500,000 bond, and he surrendered his passport and personal firearms.
Prosecutors said the charges against Kerik carry a maximum sentence of 142 years and more than $5 million in fines. Justice Department officials had hinted that he was under widening federal investigation for improperly accepting apartment renovations and failing to report hundreds of thousands of dollars in income.
But Friday's 30-page indictment, and the stinging condemnation of prosecutors, went much further -- painting Kerik as a corrupt public official since before he came to national prominence.
"Time and again Kerik was asked specific questions about his financial dealings, and time and again he lied," said Michael J. Garcia, U.S. attorney for the Southern District of New York.
Hours after the indictment was unsealed in federal court, Giuliani's Republican presidential rivals -- most notably Sen. John McCain (Ariz.) -- said the former mayor's friendship with Kerik highlights what they see as his lack of judgment.
McCain focused his remarks not on the corruption allegations but on Kerik's brief tenure in 2003 as the person in charge of training Iraq's police force, an endeavor that has been widely judged a failure.
"Kerik was supposed to be there to help train the police force. He stayed two months, and one day left, just up and left," McCain told reporters in New Hampshire, according to the Associated Press.
Giuliani's other chief competitors were more muted. Speaking in New Hampshire late in the day, former Massachusetts governor Mitt Romney called the indictment "very sad and disappointing," according to the Associated Press. "You expect people who assume the public trust to abide by it and to live by high standards of ethical conduct," Romney said. He added: "It's not for me to say at this point what the implications are for Mayor Giuliani."
Former senator Fred D. Thompson (Tenn.), meanwhile, told reporters at a Washington news conference that he didn't know enough about the Kerik case to address it.
Responding to McCain, Randy Mastro, a deputy mayor under Giuliani, invoked the senator's involvement in the Keating Five scandal in the 1980s, when McCain and four other lawmakers were tied to Charles Keating, a corrupt savings-and-loan official. Mastro made the case that no politician is perfect, saying, "It's no fairer to judge Rudy Giuliani on the basis of this one issue than it would be to judge John McCain on the basis of the Keating Five scandal."
Giuliani, who has been dogged by Kerik's expanding legal problems, said Thursday that he made a "mistake" in not investigating Kerik's background. But he has continued to praise Kerik.
Friday's indictment charges that within months of his appointment by Giuliani as New York City's prisons commissioner, Kerik was accepting payments from a New Jersey company eager to shed its mob reputation to win lucrative contracts with the city. The company, which is not identified in the indictment, was under investigation by four government agencies for ties to organized crime when it spent more than a quarter of a million dollars on marble bathrooms, a whirlpool tub and a grand marble rotunda in Kerik's Bronx apartment.
Both the company and Kerik hid the expenses in order to conceal their relationship, the indictment alleges. In exchange, Kerik set up meetings with city officials as recently as 2005 to vouch for the company's reputation.
According to the indictment, over a six-year period, Kerik failed to report $500,000 in income to the Internal Revenue Service and falsely claimed tens of thousands of dollars in tax deductions. The indictment charges Kerik with "selling his office" for hundreds of thousands of dollars when he was prisons commissioner and police commissioner, then lying to cover up the schemes. He is also charged with asking witnesses to lie to investigators about the payments and with providing false information to a state grand jury investigating similar charges.
The indictment is peppered with references to business dealings Kerik had with at least eight unnamed and unindicted co-conspirators, including the owners of the contracting company, the Israeli industrialist and the Brooklyn businessman, whose loan was repaid in mid-2005.
Investigators obtained e-mails and recorded hundreds of hours of Kerik's phone calls, capturing his complaints about feeling as though he was living on "welfare" compared with the wealthy contractors who were shoveling money his way.
The indictment capped a stunning fall for Kerik just three years after Bush nominated him to be homeland security secretary, hailing the former police chief as "one of the most accomplished" law enforcement officers in the nation. At the time, New York's U.S. senators, Democrats Hillary Rodham Clinton and Charles E. Schumer, joined the city's mayor, Michael R. Bloomberg, in championing the appointment.
But Kerik's fortunes soon began to unravel in the vetting process, and he was forced to withdraw his nomination.
Staff writer Alec MacGillis in Washington contributed to this report.