To the police photographer in central booking in the Bronx, it was just another mug shot.
"Be seeing you the next time around," he told Labor Secretary Raymond J. Donovan.
Donovan seemed taken aback, then began laughing, according to people who were there. The photographer, they explained, says that to everybody.
Donovan indignantly said later that day two weeks ago that he felt he should not have been booked.
Arraigned with nine other men on 137 counts of grand larceny, falsifying business records and filing false reports with a public agency, all felonies, he pleaded not guilty, then denounced the indictment secured by Bronx District Attorney Mario Merola as an "outrageous case" and said he would press for expedited court action to end "this inquisition."
Merola replied at a news conference that he considers the indictment, alleging fraud on a $186 million New York City subway project by Donovan's construction company, the product of a careful investigation.
The charges stem from FBI surveillance in 1979 of the south Bronx warehouse of reputed Mafia soldier William P. Masselli. It began as Masselli and a dirt-hauling company he had organized, Jopel Contracting and Trucking, were preparing to begin work as a subcontractor for Donovan's firm, Schiavone Construction Co. of Secaucus, N.J., on a new 63rd Street subway job.
Masselli had set himself up as a minority subcontractor in partnership with Joseph Galiber (D), a black state senator from the Bronx.
Congress had decreed in 1977 that "no grant shall be made . . . for any local public works project unless the applicant gives satisfactory assurance . . . that at least 10 per centum of the amount of each grant shall be expended for minority business enterprise."
The New York City Transit Authority was incorporating the requirement, by contract, for the first time on the 63rd Street subway. But the FBI surveillance tapes, sources say, recorded conversations to the effect that Galiber had put no money into Jopel and that its minority status was fraudulent.
Merola's office entered the case by a circuitous route last year. The Bronx grand jury has charged that Donovan, executive vice president of Schiavone before joining President Reagan's Cabinet in 1981, and seven current Schiavone executives conspired with Masselli and Galiber to submit fake bills and statements inflating the value of Jopel's work to help Schiavone meet the minority-business requirement.
The grand larceny count in the indictment amounts to a short paragraph, charging that the 10 individual defendants and the two companies, Schiavone Construction and Jopel, "acting in concert with each other and others" between Oct. 1, 1979, and Sept. 24, 1984, "did steal property with a value exceeding $1,500: to wit, payments of money by the New York City Transit Authority on Contract No. C-12098," the 63rd Street subway project.
There is no allegation that Schiavone Construction billed the transit authority for work not done. Rather, Bronx authorities contend that Donovan's firm did the work and kept about $8 million of the $12 million that it told the transit authority was going to Jopel as the principal minority-business enterprise on the job.
Chief prosecutor Stephen Bookin declined to elaborate, but lawyers familiar with New York criminal law said second-degree grand larceny, the charge in question, consists of a "wrongful obtaining" of money or property. They said that can be accomplished in many ways, including "obtaining property by false pretenses."
Lawyers for Schiavone Construction and Donovan contend that the company's arrangement with Jopel was proper and that Schiavone simply deducted rental costs of equipment that Jopel needed but could not afford to buy.
Thus, they said, the transit authority was told that Jopel had done about $12 million worth of work as a minority subcontractor but received a net of $4 million "after satisfying their equipment leasing costs to Schiavone."
Bronx authorities contend that this amounts to obtaining money "under false pretenses," or grand larceny. They also maintain that the rentals were at least partly a sham, citing a $1 million "subagreement" whereby Schiavone was to buy six special trucks for Jopel to use in hauling dirt below the surface at a rental of $15,000 a month for each truck. They said Schiavone employes drove the trucks and were simply "switched to the Jopel payroll off and on."
The question remains as to what Donovan and the others might have known about the alleged scheme. But lawyers said the indictment is worded so that if a conspiracy can be established, one defendant's actions will be binding on the others.
Merola charged that Donovan "knew all about these illegal transactions" and "certainly was the beneficiary of the skulduggery." Merola also cited what he described as an "extraordinary" $200,000 interest-free loan from Schiavone Construction to Masselli for "start-up costs" and expenses.
The $200,000 check allegedly was signed by Donovan and Schiavone executive Joseph DiCarolis on March 13, 1979. Masselli, now in federal prison for other offenses, has charged that he paid a $20,000 kickback at DiCarolis' instructions in return for the loan. DiCarolis has denied receiving kickbacks, although a note he jotted mentioned a "$200,000 loan" for Jopel and an amount of "20,000" as "Received."
During special prosecutor Leon Silverman's 1982 investigation of the matter, DiCarolis told him the $20,000 figure reflected the "savings" to Jopel in not having to pay interest on the six-month loan. As Silverman noted, $20,000 worth of interest on a $200,000 loan for six months would have been a 20 percent interest rate.
Donovan took a polygraph test last month in which said he saw nothing "highly unusual or out of the ordinary" about the $200,000 advance. He also denied knowing of "any illegal arrangements or deals with anyone at Jopel Construction as the basis for hiring them as a subcontractor."
The indictment is of little help on this aspect of the case. It is largely a numbing recitation of allegedly phony billings and reports that Jopel submitted to Schiavone Construction and Schiavone submitted to the transit authority to carry out the alleged scheme.
Although much of the evidence is presumably circumstantial, prosecutors are evidently convinced that they can stitch together FBI surveillance tapes, federal and state grand jury testimony and other evidence in a way that will implicate the defendants in the alleged conspiracy.
A few of the tapes that might be used were disclosed two years ago in Silverman's federal investigation of alleged ties between Donovan and organized crime. According to a Jan. 24, 1979, tape, Masselli was overheard saying, "I get along good with all the bosses . . . Joe DiCarolis, Dick Callaghan, Ray Donovan, Al Magrini, Gerry Ligouri."
Silverman found "insufficient credible evidence" to warrant indictment of Donovan for any federal crime. At the same time, he apparently brushed aside evidence of the alleged minority-business fraud without digging as deeply into it as Merola did.
Sources said there are several FBI-taped conversations concerning Masselli's dealings with Schiavone Construction that Silverman never disclosed and transit authority records that he never reviewed.
Merola told reporters, "We uncovered certain data that had not been discovered before . . . . We had a lot of pieces. We put together a mosaic."