Racism and Favoritism In Pataki Land

Lawsuit Exposes the Secret Albany World of a Disengaged Governor

With special reporting by Ron Zapata

A hornet's nest of revelations about the inner workings of the Pataki administration— including admissions about an asleep-at-the-switch governor whose staff controls a secret patronage machine, damning black employment data, and details about an attempt to steer a lucrative contract to the governor's personal attorney— have become public as part of a two-year lawsuit in Manhattan federal court.

Leressa Crockett, who was hired as a deputy commissioner of the Division of Housing and Community Renewal shortly after George Pataki took office in 1995 and fired on four hours' notice in November 1996, is charging that her termination, as well as those of three other high-level black appointees at DHCR fired in the same time period, was racially motivated. Her suit has already withstood one state motion to dismiss it, and U.S. District Court judge Loretta Preska is currently faced with a second.

The disclosures about George Pataki's uninterested governing style, as well as those about the efforts of his top aides to force approval of a legal retainer sought by his attorney Richard Farren, emerge in depositions taken from his current DHCR commissioner, Joseph Lynch, and from Director of State Operations Jim Natoli, as well as from Crockett and other former state executives. Though individually named as a defendant, Pataki was as removed from the racially charged core of the case as he was from these patronage offshoots. In thousands of transcript pages, he comes across as an absentee overlord, running the state in his spare time.

Crockett, who was hired by Joe Holland, one of only three black commissioners in the Pataki era, contends that she was pushed out by Natoli and other top aides the day after Holland resigned. Undisputed in the court record is Crockett's contention that of the 11 top aides to Holland, four blacks were terminated, leaving five whites, one Hispanic, and a single remaining black. Of the five deputy commissioners, only the two black deputies were axed. While attorneys for the state have argued that the firings were merely routine "reorganization" after the departure of a commissioner, they concede that the only member of what DHCR's Lynch labeled Holland's five-member "A-Team" not to be fired was its solitary white.

In an extraordinary deposition, Lynch, one of Holland's white deputies and his eventual replacement, said he warned Natoli that firing three black women on the same day— Crockett, general counsel Leslie Byrd, and assistant general counsel Sylvia Kinard— "was certainly something we could be criticized for" and "created an appearance of racial discrimination." Lynch recalls that Natoli did not respond to his warning, while Natoli testified that he had no recollection of it.

Though both are still top Pataki aides, Natoli and Lynch repeatedly contradicted each other in depositions taken early this year, with each saying the other was responsible for firing Crockett. While Natoli attributed the dismissal to "the recommendations of Lynch," Lynch said Natoli's secretary "called me to inform me that I was to call Ms. Crockett that day and tell her that her employment was terminated by the end of that afternoon and she was to clear out her desk." Lynch also testified that he was given no reason for the dismissal.

Another former DHCR executive, Antonio Rivera, testified that Harry Ryttenberg, who was then the agency's press secretary, told him that the governor's office thought Holland had packed the agency with "too many Rangel African Americans" and "Rangel Democrats." Rivera, who currently works for the city's housing agency, claimed that Ryttenberg said the governor's office thought "this place is beginning to look like Amsterdam Avenue." Crockett claimed he had a similar conversation with her. Ryttenberg, who is described in court papers as "close to Zenia Mucha, the Governor's Director of Communications," adamantly denied Rivera's charge, calling it a "lie" during his own deposition.

Crockett testified that two other top Pataki aides, Jeff Wiesenfeld and Brad Race, made racial remarks to her. Wiesenfeld, who is a special assistant to the governor, called her repeatedly, Crockett said, to blast her for delaying the removal of Nation of Islam security guards from a state housing project in Coney Island. She says he told her that "if she were not black," she "would see that this group was like the Nazis." Race, who is the governor's secretary, accused Holland and Crockett during a conference call of exhibiting a "sympathy" with NOI, according to Crockett, "that arose from our mutual African American background."

Neither Wiesenfeld nor Race was called as a witness to dispute these comments. Holland, who did a last-minute affidavit for the state this June, did not address the issue. Contacted by the Voice, Holland declined to answer any questions about the lawsuit. Though Holland's resignation from DHCR was presented at the time as voluntary, Natoli testified that he "asked Holland to resign" because "his performance was becoming unsatisfactory."

Ironically, Lynch, who was Holland's first deputy, had given Crockett the agency's highest rating— "outstanding"— just four months before she was bounced. The sole Hispanic among the high-ranking officials, who was not fired, was described as "lackluster" in a DHCR "confidential" assessment contained in court documents. A month after Crockett's dismissal, Lynch wrote a recommendation letter for her to the Bar Association's Character Committee, attributing her termination to the governor's office and contending that she'd "performed her duties in an outstanding manner."

In an attempt to show that DHCR has a better African American employment record than other state agencies, an attorney for DHCR filed an affidavit revealing that the percentage of black state workers had declined from 16.5 percent in 1991, while Mario Cuomo was governor, to 15.3 percent in 1997 and 14.8 percent in 1998, indicating dramatic reductions under Pataki. This previously unreported downturn in black state employment matches a similar drop in the city's black workforce during the Giuliani years. The dual declines reversed decades of increasing rates, yet they have drawn little media attention or Democratic criticism.

DHCR's 31 percent black workforce "increased marginally" under Pataki, according to the affidavit. No numbers were provided for high-ranking officials within the department, though the percentage has clearly declined dramatically since Holland's departure. A national study in 1997 ranked the Pataki administration 36th in the percentage of high state officials who were black, Asian, or Latino.

The state's brief in the case says Crockett was fired because she was "a controversial figure" at DHCR who "had received criticism for the way in which she handled several important and highly visible matters." One issue Pataki attorneys point to is the NOI delay, but Lynch testified that Crockett's handling of the matter was not "a valid basis for criticizing" her. Asked if "there was anything Crockett could have done to speed up the process" of removing the NOI guards, Lynch replied: "Not to my knowledge."

Instead it was Jerry Belson, the manager of the Coney Island project that employed the Louis Farrakhan­connected guard company, who was named by Lynch, Wiesenfeld, and others in court documents as the primary cause of the delay. Yet, according to Lynch, it was Belson, who heads the Associated Building Owners of NYC, who recommended the hiring of Otis Jones, the deputy who succeeded Crockett.

While it is clear that Crockett raised constitutional questions about terminating a contractor based on its religious affiliation, she quickly eased NOI out of two upstate projects, was fashioning a legal strategy to do the same at Coney Island, and participated in dumping the NOI guards when finally ordered to do so.

The other "controversy" cited by the state was Crockett's attempt in 1996 to remove the politically wired Gretchen Hazell from the chair of the Co-op City board for violations of state regulations. Hazell was then a Republican candidate for a Bronx state senate seat and tied to Guy Velella, the Bronx party boss and state senator who lobbied DHCR on Hazell's behalf. DHCR oversees the massive Bronx project, the largest in the state. Though the state brief describes Crockett as "the visible spokeswoman" who "took the heat" on the Hazell removal, it doesn't contend she did anything wrong other than become "the subject of negative local press stories."

While Lynch wiggled a bit during his testimony on the Co-op City matter, suggesting that Crockett may have allowed herself to become too identified with the anti-Hazell faction on the board, he ultimately acknowledged that everything Crockett did in seeking Hazell's ouster was "consistent with agency policy" and approved by Holland and himself.

In fact, Lynch relied entirely on Crockett's actions in a May 1997 letter written in response to a Co-op City audit by State Comptroller Carl McCall, who criticized DHCR for dawdling on the Hazell case. Saying DHCR took "strong and decisive steps" by dumping Hazell, Lynch condemned Hazell's "defiance" and "unauthorized unilateral actions," adopting precisely the Crockett conclusions that apparently got her in hot water with the governor's office.

The Hazell scenario is a striking indication of just how politicized policy is under Pataki. Lynch and Crockett agree that the governor's office initially approved bringing charges against Hazell. But after Velella and Farren, who had been offered a contract to represent Co-op City by Hazell, interceded on her behalf, Crockett claims, "there was perhaps a change in the governor's office."

Crockett says Holland was "told to hold the release of my report until after the Co-op City elections" in 1996, and, by the time it was released, Hazell had already lost her seat on the board. Lynch is quoted in McCall's audit as confirming Crockett's recollection, leading the comptroller to fault the three-month delay in releasing the report as harmful to project residents. A subsequent Hazell lawsuit challenging Crockett's findings lost in the courts.

The perverse outcome of the controversy is that even though the Pataki administration has used Crockett's actions to defend itself on the Hazell matter, Natoli testified about the executive chamber's "unhappiness" over Crockett's handling of the matter and the state still cites it as a basis for her dismissal. What she did was right, the state seems to be saying, but we can still fire her for not doing what we wanted her to do, which was wrong.

While all Crockett has to prove in her case is that race was a factor— not the only factor— in her firing, the Pataki administration's implicit contention that she was dumped because she resisted the pro-Hazell importuning of Farren and Velella is as much an indictment as the race charges themselves. In a similarly oblivious vein, the state papers make a point of how much Crockett now as a managing director of CBIC Oppenheimer World Markets— describing her $158,778 salary as "twice" what she made at DHCR. Her new prestigious position— like the ones she held as chair of the city's Industrial Development Agency and financial services commissioner before joining DHCR— just make her sudden dismissal look more and more transparent.

Meeting federal standards in a race discrimination case is a tall order. If Crockett succeeds, her case will stain the Pataki record, even though the governor is never mentioned as involved in any of the related personnel or policy decisions. At a minimum, the case has already exposed the administration's ugly innards.

Research: David Altschuler, Chisun Lee, Bryan Mealer, Kandea Mosley


The Unelected Elite
Who Really Makes The Capitol Decisions

Leressa Crockett's lawsuit provides a remarkable window into the hiring and firing practices of the Pataki administration, revealing a disengaged governor, a politicized process, and a powerful inner circle of aides.

Joseph Lynch, the current commissioner of the State Division of Housing and Community Renewal, testified in January that "appointments of deputy commissioners or higher" could be made by Brad Race, the governor's secretary; Jim Natoli, the director of state operations; or others "without the governor being personally involved in the decision." He also stated that Natoli made termination decisions.

Natoli testified this March that a group of five— Race, general counsel James McGuire, executive assistant Monica Bell, communications chief Zenia Mucha, and himself— review résumés and "approve or disapprove." The governor, Natoli said, gets involved "at the commissioner level," only "rarely" participating in anything below commissioner. The commissioners are "instructed to hire" the candidates selected by the Natoli group for other positions. Discharges, Natoli said, are "normally not done without my approval."

The hires are so political that Lynch said "candidates would be proposed by political leaders of counties or people who were active in the administration, legislators, etc., that would produce some candidates." In fact, Lynch indicated that when he was hired in 1995 as a deputy commissioner, it was because "strong supporters of the governor in western New York" approved him, including an unnamed assemblyman. Natoli testified that the governor, Race, Mucha, and he "collaboratively" decided to make Lynch commissioner after his predecessor, Joe Holland, resigned. That was the only time the governor personally participated in any of the matters discussed in Crockett's case.

When Crockett was fired, Natoli said he asked Lynch to prepare an organization chart and "to put together a list of the people who he wanted to replace and who their political parents were, in terms of their responsible sources." Executives with clout— one of whom was identified as championed by Westchester GOP senator Nick Spano and another by Staten Island beep Guy Molinari— were spared. Those without clout were then dumped, without so much as a nod from the ultimate man in charge. — W.B.


Contract For A Crony
Gov's Lawyer Chases State-Tied Business

¤ Richard Farren is as close to George Pataki as it gets. The two went to Yale together in the '60s, then were young associates at Dewey, Ballantine in the '70s, playing on the same championship basketball team in a law-firm league. Farren has been the lawyer on virtually every real-estate transaction of Pataki's life— from his homes to his more speculative ventures. Early this year, the 62-year-old commercial attorney did the governor's tax returns, just as he has for decades. He chaired the governor's transition committee for environmental appointments. Farren's brother David is a top executive at the State University of New York, and his sister-in-law, Dr. Barbara DeBuono, was, until recently, the state health commissioner.

While neither he nor his law firm, McLaughlin and Stern, has received any direct state business since Pataki took office in 1995, the Leressa Crockett lawsuit has, for the first time, shed some light on Farren's maneuverings to get indirect state work. Indeed, Crockett contended in her initial complaint that her refusal to approve a 1995 Co-op City contract for Farren, as well as her rejection of Farren's advice about the project, was a factor in her firing. A judge struck the Farren issue from the case for legal, not evidentiary, reasons and Farren has, since Crockett's departure, obtained a $175,000-a-year retainer from the board of the 15,500-unit Bronx development.

Farren acknowledged his Co-op City role in a Voice interview, but insisted that he got the business despite what he characterized as "the paranoia, the not-to-be-believed bunker-down mentality" of the governor's staff, which he says "works against" him getting any state-related business. The state's Division of Housing and Community Renewal, where Crockett was deputy commissioner, oversees Co-op City and has to approve contracts authorized by the project's board of directors. Farren insists that the governor's office, which he also contacted repeatedly about the Co-op City conflict, told him to "stay away" from it, expressly barring him from taking the 1995 retainer.

As part of her lawsuit, Crockett testified in federal court that Farren called her twice that year, introducing himself as the governor's personal attorney, and saying that he'd met with Gretchen Hazell, the Co-op City board president whom Crockett was then investigating for misconduct, and Iris Baez, the former board president. He said they'd "offered him" $150,000 to represent the board, but he "didn't think he should get involved" on retainer because of his relationship with the governor. Nonetheless, he'd "decided to advocate their point of view" and try "to keep Gretchen in office." Crockett, with the approval of the governor's office, had already begun hearings on Hazell's removal for violations of state rules.

Farren also called and wrote Crockett's boss, then-DHCR commissioner Joe Holland, urging that "the hearing to remove Hazell be tabled." In the September 26, 1995, letter, the attorney says he was drawn into the Co-op City dispute by E.T. Marshall, a Republican businessman who ran unsuccessfully against Bronx congressman Eliot Engel in 1994 and was backed by Baez's faction on the project board. A few months later, Marshall was indicted for skimming nearly a half million dollars from a Brooklyn state housing project and funneling $30,000 of the proceeds into campaign donations for Pataki, the state GOP, and others (he pled guilty last year).

Farren's four-page letter went so far as to blast Crockett for backing the award of a $5 million toilet- replacement contract to a plumbing firm that "has no strong ties to the Governor's supporters." He also accused Crockett of "siding with" the seven-member minority on the 15-member board even though it included what he called a "communist true believer element" among project residents. While the letter indicated Farren's decision not to accept the retainer Hazell and Baez had offered, it warns that removing the board president "could create a very awkward circumstance for the state." Farren now says the letter was "a mistake."

Farren concedes that he then brought another firm— Gibney, Anthony & Flaherty— into the Co-op City controversy, and Hazell personally approved a $175,000 contract for the firm towards the end of 1995. Now one of the top lobbying firms in Albany, averaging $800,000 in annual billings over recent years, Gibney was to either share its fee with Farren or refer other future business to him, the lawyer says. "It wasn't settled yet," Farren told the Voice. "I would've liked to get some part of the fee. I did the work. But there are ethical questions about fee splitting and I wouldn't get it unless it was approved by my partners. I certainly hoped to get the business back. Gibney and my firm refer a lot of business to each other."

Crockett refused to approve the Gibney deal. Then in mid 1996 the governor's office began pushing for Gibney to be paid. Crockett contends in her deposition that Tom Doherty, the governor's appointments secretary, talked to Holland and her on a conference call, accusing her of "blocking a worthy firm from getting compensation to which they were entitled." Citing Doherty's "high energy level," Crockett testified that he questioned "the explanation I'd given him for why the contract didn't move forward" and insisted it be approved. "It was an unusual call," says Crockett, coming from a personnel officer who she says had nothing to do with contracts. "I felt threatened," Crockett concluded.

Farren says he "probably did discuss the Gibney retainer with Doherty," adding that he may have said: "Why not hire our people?" Indeed, current DHCR commissioner Joseph Lynch confirmed that Holland told him Doherty had called to complain about Crockett, adding that he'd also heard about the earlier Farren pressures from Holland. In response to Crockett's allegations, state attorneys filed a brief affidavit from Holland, but he did not comment on the Farren or Doherty calls, nor did Doherty himself file any contrary affidavit. Doherty did not respond to Voice calls about the allegation.

Ultimately, Director of State Operations Jim Natoli, who was one of Farren's contact people on the governor's staff regarding the Co-op City issue, ordered Crockett's firing, according to Lynch. In January 1998, Co-op City authorized a new $175,000 contract, this time directly with Farren's law firm. Farren was brought on to help with a $400 million refinancing of the project's state mortgage, which is dependent on approval from Pataki's Housing Finance Agency.

Though Farren says his firm has done a lot of bond work, the only specific bond experience it cited in a letter to Co-op City was its work on a $260 million Montefiore Hospital offering in 1996. A representative of Health Commissioner DeBuono, who is Farren's sister- in-law, voted as a member of the State Dormitory Authority for the Montefiore offering, and the expansion project funded by the bonds had to pass through what was described in Dormitory Authority minutes as an "unusual" Health Department review. Farren points out that his firm has done business with the hospital for many years and that he personally "had nothing to do with the Montefiore bond issue." — W.B.

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