Pataki's Sick Department of Health

How a Collusive Contagion Has Infected a $34 Billion Bureaucracy

Mahoney was also the chief campaign consultant for Westchester D.A. Jeanine Pirro, and Pirro's husband, supercharged lawyer/ lobbyist Al, was given a significant slice of CarePlus from the start. A close friend of the Pataki family and a Westchester GOP ally for years, Jeanine Pirro was named to the governor's transition committee, as were Farren and Lawson. Though the capital call lists Pirro and his law partner Phil Halpern as having invested just $10,000 apiece in the company, each got 8 percent of its shares. The top investor listed on the call, Breindy Melnicke, who is a major nursing-home operator with her husband, Michael, and is close to Lawson, contributed $960,000 and got a mere 7.5 percent stake.

Since other shareholders performing direct services for the company got discounted stock, it's reasonable to presume Pirro, a registered state lobbyist who did not list CarePlus as a lobbying client at the time, was also given a break in exchange for professional help. Pirro's filings with the state during the early Pataki years, when CarePlus got its initial DOH approvals, listed Kieran Mahoney as a lobbyist with Pirro's firm.

By the time Pirro first registered as a lobbyist for CarePlus in 1999, he had reportedly sold his stock in the HMO and was already under federal indictment in a widely publicized tax fraud case. Mahoney was no longer listed as a Pirro associate, and Pirro's new partner was Jeff Buley, the counsel to the State Republican Party who currently represents the Pataki campaign committee. While Pirro served his 17-month prison and halfway house sentence, his firm became Buley Public Affairs, continuing to represent CarePlus and Lawson's nursing-home association. Pirro's interest in the firm—which earned the highest per-client fee of any lobbyist in Albany—was placed in a trust while he was in prison, with his wife as trustee. Since his release early this year, he's rejoined Buley, and is once again a consultant to CarePlus, which has paid the firm $183,288 since 1999 (part of an extraordinary $391,334 it spent on lobbyists in that period).

Another principal of CarePlus was Joseph Zappala, the Florida and New York businessman who's been its board chairman since the beginning and is said to be friendly with Charles Gargano, the Pataki economic development czar. Zappala and a business associate of his from Boca Raton, Jerome Ansel, also a major CarePlus investor, have contributed a remarkable $225,214 to Pataki and the state party since 1994. Zappala invested $11,000 in the initial capital call and got 6 percent of the stock, an amount raised to 9 percent after Ansel kicked in $3 million (and got only a 7 percent stake). CarePlus is using a Florida firm Zappala is also tied to as its pharmaceutical benefits manager.

Sued last year by the Securities & Exchange Commission for failing to comply with subpoenas for testimony and documents "relating to his investment activities," Zappala is a major Republican donor who was the national finance co-chair for George Bush Sr.'s inaugural in 1989. Zappala became the focus of a Washington furor when Bush named him ambassador to Spain though he spoke no Spanish, apparently qualifying by contributing $127,000 to the GOP. Pataki campaign operatives recall his periodic appearances at the headquarters in 1994, where he was still addressed as Ambassador Zappala.

The CarePlus centerpiece, however, was Lawson, whose personal, PAC, and association contributions to Pataki, totaling $180,096, are dwarfed by the hundreds of thousands he's helped raise from nursing- and adult-home interests. It was Lawson who befriended Farren, meeting him at the campaign headquarters, by Farren's account, taking him on golf outings sponsored by the Friends of Pataki, and retaining him as an attorney for CarePlus and other business. Acknowledging that he "worked for CarePlus for a few years on other matters," Farren insisted he was "out" of his CarePlus representation by the time it won its first Child Plus contract.

Incredibly, the last of a half-dozen DOH officials to approve the contract was an attorney from legal affairs, and he signed off on July 28, the same day Farren's sister-in-law DeBuono announced she was resigning. She did not leave until November, simultaneous with the DOH memo that sent the contract to the comptroller for confirmation and payment.

Lawson was also the one who agreed to hire Wiesenfeld's wife as a part-time bookkeeper at $35,000 a year, allowing her to work at home for CarePlus and two other Lawson entities. "I knew Bart from the campaign, and when my wife was ill, I called him up and asked if he had any need for an offsite clerical employee," Wiesenfeld said. Wiesenfeld, who has since left the executive chamber, where he was special assistant to the governor, insists he never interceded with DOH on Lawson's behalf, precisely what he was accused of doing on behalf of the infamous two Josephs.

Lawson has become a pivotal player in Pataki's Albany not just because of his legendary fundraising prowess, but because of his ironically close ties to the governor's No. 1 union backer, Dennis Rivera. Indicted in the early '80s for paying to have a trailer used by Rivera's striking union blown up—and then submitting the $5000 payment for Medicaid reimbursement—Lawson was acquitted at trial. He subsequently sued the union for conspiring with prosecutors to have him indicted. But now the two are quite friendly, having negotiated labor agreements for years.

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