A federal grand jury indicted two former city officials today for allegedly conspiring with the late Queens Borough president Donald R. Manes and officials of the Parking Violations Bureau to extort bribes from companies doing business with the city.
The indictment charges former city transportation administrator Michael T. Lazar and former bureau director Lester Shafran with racketeering and mail fraud. Manes, named as an unindicted coconspirator, committed suicide March 13, four days after deputy bureau director Geoffrey L. Lindenauer pleaded guilty to related charges and agreed to testify against him.
Lazar, who amassed a fortune in New York real estate after his retirement 10 years ago and was a major contributor to the campaigns of Mayor Edward I. Koch and Governor Mario M. Cuomo (D), is the most prominent figure indicted in the widening corruption scandal. His dealings with state agencies are also under investigation by U.S. Attorney Rudolph W. Giuliani.
"This investigation is definitely continuing," Giuliani said in a news conference. He called for "systemic reforms in the rules of the game in New York. Too many people can unfortunately say with justification that business or politics as usual in New York means paying off."
In another development today, Thomas Puccio, attorney for Bronx Democratic Chairman Stanley Friedman, called a news conference to announce that Friedman and officials of a company he owns had been ordered to appear Thursday at the office of District Attorney Robert Morgenthau to be arrested.
Lindenauer told a federal court that he had helped Friedman to obtain fraudulently a $22.7 million city computer contract. Puccio said Friedman "has broken no laws, and he has done nothing which runs counter to the ethics of the municipal marketplace."
Taking the offensive, Puccio, the former chief prosecutor in the Abscam corruption cases, said media attention to the New York City investigations "has put tremendous pressure not only on the subjects of scrutiny, but on the prosecutors themselves. The name of the game today is: Make the facts fit the headlines . . . . Thrown into the mix is the fact that a suicide but a few days ago created an empty chair which Stanley Friedman is now being asked to fill."
A spokeswoman for Morgenthau would not comment on whether Friedman is expected to be indicted. Friedman is a close friend and associate of Koch, having served as deputy mayor. As head of the Bronx Democratic Party -- as Manes was head of the Queens Democratic party -- he has important influence on judgeships and other political patronage. Koch said recently that Friedman, who represents the taxi industry and is a law partner of Roy Cohn, was singlehandedly preventing the adoptions of reforms in the city's taxi system.
According to the indictment, Manes and Lindenauer shared $547,000 in bribes from seven companies that collected parking fines for the city.
Lazar, 58, a close associate of Manes, was a city councilman, served as chairman of the city's Taxi and Limousine Commission and oversaw the parking bureau when he was transportation administrator from 1973 to 1976. At the time, he approved a contract for Datacom Systems Corp., a New York company, to collect parking fines.
In 1976, Lazar went into private law practice and real estate development. In two years, the son of a Brooklyn peddler listed his net worth at $7.8 million. Among other business deals, he undertook to represent Datacom. According to the indictment, Lazar paid "at least $20,000 in cash bribes" on behalf of Datacom to Lindenauer, to be divided with Manes.
A Datacom vice president, Allen Scott, was charged in a separate complaint with extorting about $150,000 from a towing company that worked for Datacom on the parking bureau contract. Part of the money allegedly was placed in a Lazar account. Datacom does business with the federal government and 92 state and city agencies. It receives $4 million a year from two Washington, D.C., public works contracts. A Washington official, John Touchstone, director of public works, came under fire this year for accepting from Datacom two nights of free travel and hotel accommodations in New York.
The firm also is under scrutiny in a probe into alleged corruption in the Chicago city government.
Lazar's attorney, Victor Rocco, said tonight that his client had no comment on the charges.
Federal prosecutors have subpoenaed records involving several profitable real estate deals between Lazar and city and state agencies. In 1980, Lazar bought a rundown building on West 42nd Street for $1.3 million and persuaded the Taxi and Limousine Commission to move its offices there. In 1985, he sold the building for $14.7 million.
In another instance, Lazar was given a contract by city and state agencies to renovate five theaters around Times Square, although he had had no previous experience in theater management. In a third, Lazar bought a building in Jamaica, Queens, and, with Manes' help, persuaded state agencies to move there from the World Trade Center.
In another complaint today, Michael Bergman, a former law partner of Manes, was charged with paying more than $30,000 in bribes to Manes and Lindenauer for a collection agency he represents.