By John Solomon and Matthew Mosk
Washington Post Staff Writers
Wednesday, December 19, 2007
In the heady days of the 1990s when Rudolph W. Giuliani was mayor of New York and Bernard B. Kerik was one of his most trusted lieutenants, Lawrence Ray enjoyed his own wild ride.
Ray was one of Kerik's closest friends and the best man at his 1998 wedding. As Kerik was rising to become New York's police commissioner, Ray was in touch with him regularly -- lending him money, discussing possible business opportunities, and using Ray's contacts in Russia to arrange a meeting for Giuliani with former Soviet leader Mikhail Gorbachev.
Much has changed since then. Giuliani is now a leading Republican presidential candidate. Kerik has pleaded guilty to state ethics charges and is under federal indictment. And Ray, a convicted felon now in prison on a parole violation, has turned on his former friend. He has provided to state and federal authorities half a dozen boxes of e-mails, memos, faxes, financial statements, photographs and other materials about Kerik's alleged wrongdoing.
That evidence, reviewed by The Washington Post, shows that Kerik brought Ray into contact with Giuliani on a handful of occasions documented in photos and that he invoked Giuliani's name in connection with a New Jersey construction company with alleged mob ties that is now at the heart of the criminal cases.
While campaigning, Giuliani has sought to distance himself from Kerik, his mounting legal problems and associates such as Ray. Asked about Kerik and Ray during a recent appearance on NBC's "Meet the Press," he said: "I made a mistake in not vetting [Kerik] carefully enough. And it's my responsibility. I should have."
This spring, Ray's friend Sidney Baumgarten, a New York lawyer, told former deputy mayor and longtime Giuliani ally Ninfa Segarra that Ray was embroiled in a bitter divorce and an even worse custody dispute over his two daughters. Baumgarten said he told Segarra that Ray possessed "damaging" information about Giuliani but that he would not go public with his allegations if he could receive help with the mounting legal troubles.
"That was the implied quid pro quo," Baumgarten recalled in an interview with The Post, saying the conversation stemmed solely from his desire to help Ray's children in the custody case.
The following day, Baumgarten received an e-mail from Segarra advising Ray to call an acquaintance of hers, a "political heavyweight" lawyer who could assist Ray in the custody dispute in New Jersey. "For now I would ask not to identify me as the referral," Segarra wrote in the March 5 e-mail obtained by The Post.
In an interview, Segarra said she recommended the lawyer for Ray after talking with Baumgarten but did not consult with the Giuliani campaign or anyone else. She said she was not motivated by Baumgarten's offer that Ray would keep silent.
"Baumgarten described to me a very nasty child custody battle," said Segarra, who spoke with The Post at the request of Giuliani aides. "He may have implied something like that and I emphatically told him I didn't want to get involved. Because the welfare of children was at issue, I recommended a well-respected lawyer that was capable of dealing with the child custody issue in New Jersey."
Ray, who has been in prison since July on a parole violation, never acted on the referral. Instead, he reported it to the FBI, wearing a wire to record his friend recounting the referral.
Giuliani's aides dismissed Ray as not credible.
"Larry Ray's accusations are completely false and without merit," said Daniel Connolly, a partner in Giuliani's security consulting firm. "Let us remember Mr. Ray is a convicted felon with a track record of dishonesty whose statements continue to lack one iota of credibility. As anyone familiar with Mr. Ray's history will attest, his character, credibility and motives are all quite suspect and any statements he makes should be judged accordingly."
Kenneth Breen, an attorney for Kerik, said: "As we have consistently maintained, Bernie Kerik denies the allegations in the indictment and will address them in court. Larry Ray's accusations are not worthy of a response."
Speaking last Wednesday from the federal detention center in Brooklyn, Ray said that his motivation is to get the truth out.
"I could have negotiated a great deal for myself," he said in a telephone interview that was monitored by corrections officials. "If I wanted to forget about this thing, I could. But ultimately, this is about the truth. There's no motivation for me to walk away from the truth."'Too Many Questions'
Larry Ray's five-year friendship with Kerik spanned the same time period that is now at the heart of the federal case against Kerik.
Ray, 48, met Kerik at a New Jersey bar during Kerik's rise through the ranks of the Giuliani mayoral administration. In the mid-1990s, Ray said, he and Kerik saw each other almost daily and they e-mailed frequently. Kerik often signed his missives to Ray, "I Love You -- B." In fall 1997, Kerik asked Ray to use his contacts in Russia to try to arrange a meeting between Giuliani and Gorbachev, Ray said. Among his many hats, Ray said that he had managed to become a security advance man for some of Gorbachev's trips to the United States.
"At first, I told him there was no way," Ray said in an interview. "Gorbachev met world leaders, not city mayors. But Bernie kept insisting, and eventually I made it happen."
Ray provided law enforcement officials with photos of the gathering that showed himself, Gorbachev, Giuliani and Kerik at City Hall as well as a letter from Gorbachev via an interpreter thanking him for arranging the New York visit. In addition, Ray provided copies of memos showing that he coordinated the visit with Kerik.
One December 1997 fax from Kerik to Ray, sent on the eve of Gorbachev's arrival, suggested that the city, not the FBI, should provide security for the visit. "This is not an official government trip. FBI is not indemnified being on duty. Off duty if something happens, there will be too many questions . . . that we don't want to be involved in," Kerik wrote. "There would be no questions of City personnel, not to mention the mayor is aware of the trip."
Connolly, Giuliani's partner, said the former mayor "denies making any request of Bernie Kerik or Larry Ray to arrange a meeting with Mikhail Gorbachev."
In the late 1990s, Ray worked as a security consultant for Interstate Industrial, a New Jersey construction company that had been wrestling with allegations of ties to a New York crime family. Kerik, then commissioner of New York's corrections department, offered to help Interstate contest those allegations so it could win contracts from Giuliani's administration, according to the indictment. At the same time, Kerik accepted $255,000 in illegal gifts from Interstate that included extensive renovations to one of his apartments, prosecutors say in court records. The Giuliani administration never approved Interstate for the contracts.
New York investigators told The Post that Ray provided evidence to them before Kerik pleaded guilty in June 2006 to two state misdemeanor charges involving the gifts. Ray also provided similar evidence to the FBI before the recent federal indictment of Kerik on corruption and tax charges, according to interviews with law enforcement officials and e-mails between Ray and the FBI obtained by The Post.
FBI documents show that while Ray has served as a confidential informant, agents have at times questioned his credibility. He can ramble for hours, weaving conspiratorial theories with folksy tales about his high-flying days as Kerik's buddy and his secretive work for the FBI and U.S. military.
Ray was described as a "calculating, manipulative and hostile man" in a psychological evaluation conducted by an expert his wife hired for the divorce case.
Ray's expert provided a more favorable analysis. Earlier this year, federal officials gathered evidence suggesting that he had, for a second time, violated his probation in connection with his conviction in an earlier organized-crime securities fraud case. They declared him a fugitive, even as Ray continued talking to and e-mailing the FBI.
U.S. marshals spent weeks tracking Ray's cellphone traffic across New York, with agents working 24-hour shifts until they caught his signal in July in an apartment on the city's Upper East Side. Five marshals burst in, pinned him to the floor and handcuffed him, breaking his arm. Inside, they found two computers, six cellphones and photographs of Kerik. As they hauled Ray away, one marshal recalled hearing his 18-year-old daughter scream, "Police corruption! This is because of Mayor Rudy Giuliani and Bernard Kerik!"
His legal problems aside, Ray has supporters in government circles who say that over the years he assisted them with delicate matters. Ray's court files include a letter from NATO thanking him for his "efforts to ensure good communication and understanding between ourselves and the Russian leadership" in reaching a deal to end bombing during the Kosovo crisis in the late 1990s. FBI files reflect his help with organized-crime cases.
"One of the problems with Larry's story is it is so complex," said retired three-star Marine Gen. Charles H. Pitman, a Purple Heart recipient who befriended Ray a decade ago. "It is like reading a novel, you can't put it down but it goes on and on. In fact, he has been straightforward. He was anxious to help the government. He was kind of a wannabe minuteman."The Evidence
Larry Ray began providing New York authorities with evidence of Bernard Kerik's wrongdoing in December 2004 when the former New York police commissioner was nominated for the post of homeland security secretary. The nomination was pulled within days because of questions about Kerik's background.
Ray turned over voice recordings, e-mails, photographs, city documents and other items outlined in a 33-page roster of evidence. That material offers new details about the Interstate matter.
Records, for instance, show that Interstate first faxed a copy of its application to the Giuliani administration to Kerik in November 1998. A separate affidavit that Ray filed with New Jersey gambling authorities, which rejected Interstate for business, also alleges that Kerik arranged for meetings between company representatives and gambling authorities.
Kerik told Ray repeatedly that Giuliani was aware of Interstate's desire to secure city contracts, Ray alleged in an interview with The Post. Ray added that he once sat in Kerik's office as Kerik discussed the matter in a phone call with Giuliani. After hanging up, Ray said, Kerik went over to City Hall to meet with Giuliani.
Connolly said that Giuliani never had a conversation with Kerik regarding Interstate at the time. "The only conversation he recalls ever having with Bernie regarding Interstate occurred in December 2004 when the press was reporting that relationship in connection with events at the time," Connolly said, adding, "There were never any one-on-one meetings with Larry Ray and Rudy Giuliani ever."
On April 29, 1999, Kerik sent Ray an e-mail titled "Important!!!!!!!!!!!!" that said that the mayor had appointed Raymond Casey, one of his relatives, to a top job at the city's Trade Waste Commission, which Interstate was trying to influence. The e-mail was turned over to authorities and The Post.
"Rudy's nephew in the Tradewaste has been appointed from Inspector General to Deputy Commissioner of Investigations," Kerik wrote. "That's how he's aware of everything going on. He's overseeing all of the investigations. That could be bad for me at the moment but I think overall good for us."
In the same e-mail, Kerik lamented his problems paying for his new apartment. He also mentioned that his brother Donald was looking for a new job. Within months, Interstate started renovations at Kerik's apartment and hired Donald.
Interstate President Frank DiTommaso wrote to the trade waste agency to announce his new employee. "The day to day operations of Interstate Materials Corp. have been taken over by Mr. Don Kerik," the note said. "Don is a fine individual and will continue to provide your agency with full cooperation."
In July 1999, Bernard Kerik arranged a meeting with Casey and a New York Department of Investigations agent at a Manhattan restaurant to discuss Interstate, according to the recent federal indictment of Kerik. Kerik "questioned" city officials' concerns about the company having alleged mob ties. "I put my reputation and integrity on the line" for the company, he wrote in an e-mail to the company's owners after that meeting.
Kerik arranged a subsequent meeting between city officials and an Interstate representative later that summer in his Department of Corrections office, the indictment states.
As Kerik pressed Interstate's case, he asked Ray for money. "I've got to take care of those things we talked about a few weeks ago," he said. "If possible, I need about 2 to 2,5 to take care of it," Kerik wrote in an e-mail in May 1999 asking for $2,000 to $2,500. A few weeks later, Kerik sought more. "If possible I don't want to spend any of the down payment for the apartment and I've got a few things that I've got to pay off," he wrote to Ray. "Can we spare 2500 to get me by until something else comes up."
The materials Ray provided to law enforcement also suggest that he and Kerik discussed a range of private business proposals. Kerik sent and received numerous faxes from his city office addressed to Ray about several possible deals, including one in 1998 titled "Proposed Acquisition of Sugar From Brazil for Russia." Another in 1997 from a major international bank concerned possible real estate transactions in New York and Russia. The investigative files give no indication whether any of the deals occurred. Ray also alleges that Kerik notified him when Giuliani planned to appoint Kerik in 1997 to New York's gambling regulatory commission. Ray had an application for a license to run a riverboat, according to the documents he turned over to police.
"Kerik was real excited about that. He wanted me to purchase the ship and do the retrofitting," Ray said. "It was supposed to be offshore. He would get 50 percent. We would set up a company to own the ship." That plan never materialized.Parting Ways
Kerik and Ray began parting ways in 2000 around the time Ray was indicted on charges of securities fraud in connection with the mob stock scheme. The indictment surprised Ray and his lawyers because Ray had worked with the FBI as a confidential informant to make the case, according to FBI documents. The documents show that the FBI eventually came to believe that Ray had not told them everything about his own role in the scheme.
In a November 2001 e-mail exchange, Ray reached out to Kerik for help. "I am sorry I have to burden you with any of this at all. But I need you and my family needs you. I have done my best to keep you out of it all along. . . . As a friend I was mindful of the sensitivity of your position. . . . Now I need you as a friend to do nothing more than be willing to state the truth as to the things that you do know."
Kerik's stinging reply arrived the next morning. "In the event that I am called to testify, I must tell you that my recollection of the events is not consistent with what you remember. And this would have a severely negative impact on your credibility." Ray eventually pleaded guilty to the securities charge in 2003 and was sentenced to house arrest and probation.
When Kerik's nomination to head up the Department of Homeland Security was announced in 2004, Ray went public with his allegations about Kerik and Interstate, giving an interview to the New York Daily News and going to authorities in New York and New Jersey. Kerik's nomination was quickly withdrawn.
The next year, Ray's life continued its downward spiral. His marriage fell apart, and he became embroiled in the custody battle. Ray's New Jersey home was raided by police in connection with the dispute. Eventually, the case led to Ray's probation violation -- he was accused of ignoring a restraining order to stay away from his children -- and he was sent to prison.
Ray became convinced that Kerik was exerting influence behind the scenes to damage his reputation with police and prosecutors in New Jersey. He said that a local prosecutor told him "the party line is to get Larry Ray." That prosecutor, Michele D'Onofrio, concluded that the police search of Ray's home was illegal and recently was interviewed by the FBI about the search, according to court records.
Ray filed a civil rights lawsuit against local authorities about the search. His 18-year-old daughter hired Florida lawyer Mark Gelman, a specialist in child sex abuse cases, to prepare a lawsuit that was filed last Friday alleging that she was abused by her mother and one of her relatives. A lawyer for the wife has said that Ray has repeatedly made such allegations and that they have always been determined to be unfounded. Messages left for Ray's ex-wife were not returned.
The ugliness of the New Jersey custody case is what prompted Baumgarten, whose law license was recently restored after it was revoked over billing issues, to reach out to Segarra, the former Giuliani deputy mayor.
"It just sickened me what was going on against the children," said Baumgarten, a retired brigadier general who was a deputy mayor in New York. He was credited during the 1970s with overseeing a law enforcement effort to clean up vice-infested Midtown Manhattan.