By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
On December 1, the nipped-and-tucked, professedly progressive pretender to New York's open Senate seatrecently certified as a Friend of Labor by none other than James P. Hoffa himselfstrode into Boston's Park Plaza Hotel for a $500,000 fundraiser. That the party was given by Elaine Schusterwife of Continental Wingate real estate tycoon Gerald Schuster, a man held in such low regard by Massachusetts organized labor that the state's AFL-CIO recently passed a resolution boycotting any fundraiser that boasts his presenceelicited virtually no hue and cry.
That may have been because, unlike Seattle, the 160 protesters from Service Employees International Union (SEIU) Local 285 didn't riotthough their presence did give the scene a nice "let them eat cake" touch. Indeed, it was rather poignant, since Local 285 had sent Hillary a letter two weeks before informing her that the Schusters have retained, in first-time contract negotiations with the local, Jackson Lewis Schnitzler & Krupman, the notorious union-busting law firm that operates with Pinkerton-like zeal in the discharge of its duties (claims to fame: working with Borders management to stop staff from unionizing, and launching a series of nationwide workshops entitled "How to Stay Union-Free Into the 21st Century"). "We felt like it was our duty to let Hillary's people knowif they didn't knowthat they were cavorting with union busters," said SEIU's Libby Devlin. "There was a series of discussions about what would resolve the problems, and they said they would talk to the Schusters, but we don't know that that ever happened. We obviously didn't get what we were looking for or the rally wouldn't have happened."
According to SEIU officials, earlier this year, employees at the Schusters' Wilbraham Nursing Home voted to unionize after a long series of conflicts with management over staffing inadequacies and fair treatement of workers. (This isn't the first time the Schusters have had labor troubles. In 1993, 150 protesters, including Boston City Council members, demonstrated in front of Continental Wingate's headquarters after its subsidiary, Wingate Health Management, replaced a construction company because it decided the previously agreed-upon use of union labor was too expensive.)
Alan Eisner, the Schusters' public-relations representative, counters that the couple's relations with employees have always been "exemplary" and claims it's the "extraordinarily aggressive and opportunistic" actions taken by the union that "required taking a defensive posture and hiring someone familiar with these kinds of tactics." Hillary Clinton, he adds, "knows the type of people [the Schusters] are, and that they are not union-busters, but fair and reasonable people."
While the union takes issue with Eisner's characterization and emphasizes its fight isn't with Hillary, it also bears noting that some folks closer to home have a beef with the First Lady's fundraising pals: The U.S. Attorney's office in Manhattan has received information concerning allegations that Continental Wingate mismanaged a Bronx housing project it formerly ran (or, as one ex-HUD staffer puts it "helped run into the ground"). But, then, this isn't exactly new; in fact, the Schusters have been slammed over the past 20-plus years by everyone from Chuck Schumer to the U.S. Department of Housing and Urban Development (HUD).
Prominent players in the campaign-finance scene of the 1990s, the Schusters have managed to keep a relatively low profile while unleashing torrents of money into various Democratic coffersenough to make the Mother Jones 400 List of top campaign contributors three years in a row, from 1997 to 1999. From the mainstream liberal perspective, they give to, and help raise money for, all the right candidates: Massachusetts favorite sons Marty Meehan, John Kerry, and Ted Kennedy; non-Bay Staters Dick Gephardt, Chris Dodd, Barbara Boxer, Gerry Ferraro; plus, of course, the Democratic National Committee. Indeed, their largesse to the latter body has been so generous as to become indispensable, and while they never slept in the Lincoln Bedroom or rode on Air Force One, the Schusters did spend quality time with Clinton at two of the infamous White House coffee klatches. "I thought it was a very nice way of saying we appreciate your efforts and your interest," Elaine Schuster told The Boston Globe, which cast her in the light of all-American grandmother/political activist in 1998. "The president was always very interested in . . . other people's opinions."
Gerald Schuster took over Wingate Construction Co. three decades ago from founder/father-in-law Bert Seigel, whose chronic practice of defaulting on mortgages led HUD to remove him from the federal-subsidy eligibility list in 1967. Focusing Continental Wingate's business on the federally subsidized public and low-income housing market, Schuster effectively stuck taxpayers with an $8.3 million tab in the early '70s by defaulting on nearly two dozen government-backed mortgages for apartment buildings in Boston's Roxbury area. By 1977, the Real Paper (later folded into the Boston Phoenix) annointed Schuster as one of the city's "10 worst slumlords," citing a two-year total of 1200 code violations; U.S. audits in 1979 and 1983 found examples of financial mismanagement and impropriety.
But in 1979 it was New York's current junior senator, Chuck Schumer, who arguably slammed Continental Wingate the hardest. In the early '70s, the companythrough a subsidiary, Los Unidostook over the federally subsidized Jose De Diego Beekman Housing Project in the Mott Haven section of the South Bronx. Schumerthen a state assemblymanconvened an investigative panel, whose final report reamed everyone from Continental Wingate to the city to the Carter administration. "How," asked Schumer's report, "was it possible for the federal government to spend $20 million on these houses and still have them remain such horrible slums?" The answer, the report concluded, was twofold: First, because Continental Wingate was "an unscrupulous developer only interested in profit," and second, because it had "well-placed friends in HUD's Washington and New York offices" who helped the company "make Section 8 subsidized housing a profitable venture." No prosecutorial action ever was taken, and Schumer's office did not respond to a request for an interview.
Twenty years later, however, the situation at Beekman Houses doesn't appear to be much better. While some problems that plague Beekman, such as drugs and crime, can by no means be laid at Continental Wingate's doorstep, it seems clear that the company has had some problems in its management role. In 1996, the weekly Bronx Beat newspaper found "at least" 1600 code violations in Beekman Houses; residents quoted in the articlemany of whom were meeting with HUD officialsweren't exactly laudatory about the management company. Nor, for that matter, was HUD's inspector general in New York.
In December 1996, HUD assumed a caretaker role at Beekman after Continental Wingate defaulted on $27.4 million in U.S. loans. According to a HUD source, the department began crafting a plan that would gradually ease Continental Wingate out of Beekman and require the company to contribute to an interim refinancing plan. On October 10, 1997, acting district inspector general David J. Niemiec sent a memo to assistant secretary for housing Nicolas P. Retsinas, expressing strong concerns about a proposed refinancing plan for Beekman in which "substantial benefits can accrue to these owners, while only a nominal contribution for their continued participation is required." Noting that the plan called for nearly $181 million of HUD money and more than $8 million in loans and tax abatements from the citybut only $1 million from Continental WingateNiemiec called the proposed plan "a poor deal for HUD and the taxpayers," adding that "the plan rewards a landlord who may bear responsibility for existing conditions and undermines HUD's enforcement ability."
Niemiec further noted that a previous report had found "major life-threatening health and safety conditions" at Beekman which "pose immediate health and safety risks" (over 80 percent of the units didn't meet basic housing-quality standards), and expressed concern about whether an interim plan between HUD and Continental Wingate "effectively provides a safe harbor to these landlords to participate in these future HUD programs, regardless of whether a HUD audit determines that the landlords are liable civilly or criminally for the condition of the developments."
A HUD audit on Continental Wingate's stewardship of Beekman Houses was completed earlier this year; one source characterizes it as "scathing," and HUD officials actually sent it on to the U.S. Attorney's office in Manhattan with an eye toward civil litigation. The matter appears to be a political hot potato; HUD officials in New York said that because the Justice Department now has the report, regulations prohibit them from releasing it. The U.S. Attorney's office, meanwhile, is cryptic: "The situation is, there is no public record on the matter," spokesman Herb Haddad said in a voice mail message, "so we would have no comment."
On March 31, however, The New York Times reported in a back-page story that the audit found, among other things, the diversion of $1.4 million from Beekman to various Continental Wingate holdings. On the heels of the IG report, according to a Washington-based HUD official who confirmed key details of the audit, the department asked Continental Wingate to contribute more to the refinancing plan, but the company balked. "So we took them over," said the official. "The whole takeover was unprecedented, because the conditions there were horrendous. Since then, we've made millions of dollars in capital improvements and have beefed up security, and Continental is out of the picture."
The Schusters' representative told the Times that "to the best of our knowledge and ability," Continental Wingate had been in "full and complete compliance" with HUD standards. While the company hasn't had similar problems elsewhere and enjoys a good working relationship with HUD in other areas, says the HUD official, Eisner's statement strains credulity. "You don't just take over a development if there's nothing wrong," the official explained. "We wouldn't have done so in this case if we didn't feel there was a grave problem and that it was putting the residents at risk." Asked about Continental Wingate's reaction to the audit, Eisner would only say that "we have responded fully to the government's questions regarding Beekman Houses, and we expect a positive resolution of this matter." As for the Clinton campaign's take on all this, calls were not returned.