By Steve Weinstein
By Devon Maloney
By Tessa Stuart
By Alison Flowers
By Albert Samaha
By Jesse Jarnow
By Eric Tsetsi
By Raillan Brooks
Even to those who worked with him regularly during his term as president of the city's Housing Development Corporation, Russell Harding was a remote figure.
At work, he spent much of his time in his office, alone, peering into his computer. Those who managed an occasional glance at his screen noticed he spent time checking stock prices or roaming eBay, the sales and trading site.
Computers were a crucial part of Harding's approach to his job. His biggest project at the corporation was a costly multimillion-dollar transition to a new computer system to handle the agency's massive paperwork load.
And he used his computer at home for work as well, billing the agency for the $40-a-month Internet connection. Those bills were among the least dubious of the expenses that Harding and a top aide ran up during three and a half years when they spent more than $250,000 on a whirlwind of travel and fine diningexpenses that the city's Department of Investigation began scrutinizing in March.
Last month, however, Harding's home computer was seized by a team of federal agents and city investigators who served a search warrant on the former Giuliani aide at his Upper East Side apartment.
The seizure came amid a widening investigation into Harding, 38, who has already admitted wrongfully spending more than $52,000 in city money on personal expenses.
"I will confirm that there was a search and that the Southern District of New York is investigating and will say no more about that," said Gerald Shargel, a prominent criminal defense lawyer who is representing Harding.
But the seizure is also part of what has become an embarrassing investigation into Harding's secret personal life and, according to sources familiar with the probe, his alleged use of the computer to transmit child pornographya potential federal offense.
At the same time, investigators are also looking into allegations involving questionable city transactions allegedly mentioned by Harding himself during online chats with a friend.
In one instance, Harding said in a Web chat that close ties between his father, Liberal Party leader Raymond Harding, and former mayor Rudy Giuliani, had helped his father win legal representation of a firm seeking to manage the city's airports.
On another occasion, Harding allegedly said that he "made a few extra dollars" from contractors he had helped on a Bronx renovation project funded by the housing corporation.
Shargel said those charges are untrue.
"Russell Harding vehemently denies ever taking a dime from a contractor," he said.
Instead, Shargel accused the man on the other end of those Web exchanges, a 33-year-old clerk in Indianapolis, Indiana, whom Harding met in a movie chat room, of manufacturing the accusations.
As he did last month after the Voicepublished a series of racist online comments allegedly made by Harding, Shargel attacked the credibility of Fred Sawyers, who is currently cooperating with investigators. Sawyers has provided authorities with records of expensive giftsincluding a television and a DVD playergiven to him by Harding. Expense records obtained by the Voiceshow that Harding billed the city for those items.
"Fred Sawyers is patently untrustworthy," said Shargel. "The information he is spreading around is demonstrably untrue." Shargel pointed to an inconsistency in the dates of one chat that appeared to show Harding saying derogatory things about former president Bill Clinton's renting an office in Harlem in September 2000, several months before the move occurred. Shargel labeled Sawyers's explanation, that some chats had become merged, as "preposterous." The lawyer asserted that he had other information damaging to Sawyers but declined to provide it.
"The Southern District isn't showing its cards, and neither am I," he said.
The relationship between Harding and Sawyers raises many questions. On the one hand, it is a modern, cyber-age phenomenon in which two people meet online, become friends, and share regular communications over the Internet for years without ever actually meeting face-to-face. At the same time, it is the oldest of tales, in which one friend is left feeling betrayed.
Sawyers, who suffers from leukemia, acknowledges that he went public with the chats after a bitter break between the two men last summer. The break came when Harding, who had already asked Sawyers not to visit him, became outraged that Sawyers had accepted a free trip to New York from a cancer support group.
"I should have known you would do something like this, you're sick," wrote Harding in their final chat last August. "Come to NYC and stalk me, right."
Sawyers denies he was seeking to stalk Harding. And he said he sought out a Voicereporter with his information so that Harding "wouldn't hurt anyone again."
Included in that potential for harm, said Sawyers, was Harding's alleged pursuit of sex with children.
Shargel declined to comment about the child-sex allegations concerning his client. He declined as well to respond to questions about troubling Internet postings from someone using screen names listed to Hardingpostings that had nothing to do with Sawyers.
One such listing was posted in October 1997 on a bulletin board called "nyc.personal." A person using the screen name "JockCop7@aol.com" posted a notice with the heading "Looking for Dads&Sons in NYC." The message read, "If ur a dad w/a yng son, I'm looking to hook with u. Please im [instant message] me." (Another visitor to the bulletin board responded, "You are SICK!!!!!")
The JockCop7 screen name is listed on the Switchboard.com e-mail directory as one of five names used by an R.A. Harding with the same home address as Russell Harding. Also listed for the same name and address are several other logons, including "Dadsons711," "Nyc1711," and "Edc16309." Prior to joining HDC, Harding worked for the city's Economic Development Corporation, commonly referred to by its initials, EDC.
Another ad, seeking "teenage muscle," was posted on a Web bulletin board called "Muscle-Minded Married Men" by the Nyc1711@aol.com screen name.
According to Sawyers, Harding often spoke of his interest in sex with young boys during their chats, and spoke of plans to re-visit Thailand, where he had once taken a sex tour. This January, in his last days on the job, Harding booked a $10,000 trip to Southeast Asia, including several stops in Thailand, and billed it to the housing corporation. The reservation was later canceled after the Voiceobtained Harding's travel records through a Freedom of Information request, and Harding later repaid the city for $500 in cancellation penalties.
In a December 1999 exchange with Sawyers, Harding allegedly stated his interests directly: "I sometimes wonder if you fully understand that I'm a pedophile who needs yng boys to be totally happy." Sawyers responded in an e-mail, asking Harding not to discuss the issue with him. "I am willing to be your friend, but I really don't want any part of your personal life where boys are concerned. . . . I don't judge you or anything for who you are, but please understand I do not want a part of it."
Harding allegedly responded by saying he understood and they would remain friends. But Harding persisited. In May 2001, he expressed his frustration at not finding boys. "I'd love to find a kid in high school still though or younger . . . but [it's] just too risky looking for that yng anymore."
The chats depict Harding as someone who enjoyed impressing his friend, with his ability to give expensive gifts, at no cost to himself, as well as his easy access to power. Sawyers, who was raised in a conservative home in Virginia and has never been to New York, was easily impressed.
According to a September 22, 2000, chat, Harding casually mentioned that he was going to visit New Jersey casinos that weekend. "I got an old casket factory turned into low class apartments," he typed. "I made a few extra dollars on the deal with a couple of the contractors and they gave me the money on the deal the other day . . . so rather than declare it on my taxes I'm just gonna take it to the casinos tomorrow . . . [New Jersey] has a few good ones there."
The chat occurred two days after Harding presided over the ribbon cutting at a new apartment complex at the former Hygrade Casket factory on Brook Avenue in the Mott Haven section of the Bronx. The project, originally launched with state funding, received $5.9 million in tax-exempt bonds from HDC to pay for construction and a $2.75 million permanent mortgage.
The project was developed by a local nonprofit organization, the South Bronx Overall Economic Development Corp., known as SOBRO, in partnership with a for-profit firm, L&M Equity Participants. L&Mis a development group that has forged strong political connections to both Albany and City Hall and won more than a dozen project financings from HDC during Giuliani's term. Ron Moelis, a principal in the firm, is also chairman of the Affordable Housing Political Action Committee, which has raised funds for state and city candidates. Moelis failed to respond to several messages.
If money changed hands, it wasn't the first time on the project, according to an indictment unsealed last month by Manhattan District Attorney Robert Morgenthau. In that case, Morgenthau charges that State Senator Guy Velella, along with Hector Del Toro, a former high-level state housing official, shook down the project's developers for campaign contributions and $4000 in legal business to Velella's law firm. Both Velella and Del Toro have pleaded not guilty.
Still, the executive director of SOBRO, Phillip Morrow, said Harding appeared to have little personal involvement with the project. "I never met him until after the project was done, on the day of the opening," said Morrow. That day, September 20, 2000, a story appeared in the Daily Newsquoting Morrow about the project and mentioning HDC's contribution, without citing Harding by name. When Harding arrived that day for the ribbon cutting, he was irate that he hadn't been mentioned in the story. According to two people who were present, Harding ordered Morrow removed from the dais and barred him from speaking at the ceremony.
"It was pretty absurd," recalled Morrow. "He took me off the agenda for the grand opening of my own building."
Making money was par for the course, Harding revealed in his chats with Sawyers. In a June 2001 exchange, Harding spoke about his father's working relationship with the mayor.
"My dad is always helping the mayor with projects for money making," typed Harding. Writing in his characteristic three-dot style, he added, "And the mayor is always helping my dad as well . . . he had my dad go over some contracts a while back about a company taking over the airports here . . . so not only in the long run will the mayor profit from it . . . but my dad already has with doing the contract . . . they both have a wash each other's back thing going."
The confusing language may just have been Russell Harding's bragging to someone who says he knew nothing about the issues.
"I really must admit I don't understand half of what you just said," responded Sawyers, "but I guess it makes sense."
"LOL," typed Harding, using the cyber-ese for "laugh out loud." "Trust me Fred . . . it makes perfect sense for the line of work my dad is in . . . as well as with my job . . . we all help the mayor and he helps us."
At the time of the chat, Raymond Harding's law firm had only recently ceased representing BAA USA Inc., a British firm that had been selected by the Giuliani administration for a long-term contract to take over management of the city's airports. The contract was the first step in Giuliani's long cherished, but unsuccessful goal of removing the Port Authority from its control of both Kennedy and LaGuardia airports.
BAA is the owner of Heathrow Airport, Britain's largest, and is a leader in airport privatization efforts worldwide. The firm quickly beat out three other competitors for the consulting contract, but then faltered during negotiations with the City Council.
A BAA representative said the decision to hire Raymond Harding's law firm, Fischbein Badillo Wagner Harding, was made soon after the company began competing for the contract in late 1999. The company hired other prominent representatives as well, including former first deputy mayor Peter Powers and the public relations firm Rubenstein Associates.
"When we came to the New York marketplace we wanted some solid advisers who could cover the waterfront," said company spokesman Dennis Roseboro. "Fischbein Badillo was obviously a good firm and understood the process."
According to two people who helped advise the company, Ray Harding was instrumental in the effort and presided over the advisers' strategy meetings.
But an April 2001 story by Newsdayreporter Mohamad Bazzi disclosed the company's powerful ties to City Hall and BAA quickly dropped Fischbein Badillo and Powers. "The project was in a new stage and everyone agreed it was in our best interest to sever our relationship with Fischbein Badillo and Powers, given their political activities," said Roseboro.
A former Giuliani official said the impetus came from an embarrassed City Hall. "Someone had to drop a dime to tell them this wasn't a good idea," said the official.
Giuliani has always acknowledged the political debt he owes Raymond Harding, whose Liberal Party backing gave the ex-prosecutor his margin of victory over David Dinkins in 1993. At his 1997 re-election, Giuliani publicly hailed Ray Harding as "a genius." Harding also profited from the relationship. He launched a thriving lobbying operation on behalf of firms doing business with the administration.
Giuliani has always defended his dealings with Ray Harding as proper, but he has yet to comment on the revelations concerning Russell Harding, whom he appointed to his post in 1998 even though he lacked a college degree and experience in housing finance. Sunny Mindel, spokeswoman for Giuliani's new consulting firm, Giuliani Partners, said the former mayor had no comment.
Shargel again challenged the authenticity of the chats. "Russell never discussed this with him. And everything about BAA was publicly available in Newsday."
A spokeswoman for the city's Economic Development Corporation, which selected BAA, said the contract was never executed and no payments made. She said no one at the agency was aware of law enforcement interest in the matter.
The Harding investigation continues to consume the Housing Development Corporation, however. On May 31, four members of the corporation's board of directors unanimously approved the hiring of a law firm, Debevoise & Plimpton, to represent the corporation, as the retainer agreement states, "in connection with investigations relating to the conduct of certain of the company's former executives." Leading the law firm's efforts is Bruce Yannett, a former federal prosecutor who worked for the Iran-Contra independent prosecutor.
After approving Debevoise's retainer, the directors went into executive session to discuss the probe. They were behind closed doors for over 75 minuteslonger than any meeting they'd held during Harding's presidency.
Related Stories by Tom Robbins:
"Harding's Hustle: Bonuses, Bargains, and Strip Clubs at the Housing Development Corporation"
"Low-Class Act: Russell Harding on Blacks, the Poor, and the Clintons"
"Bonus Baby: A Hefty Something Extra in Russell Harding's Last Paycheck"