Bronx Clash

A Contractor's Commission Payment Sparks Probe

In an October 2002 letter to the city's Office of the Criminal Justice Coordinator, the comptroller's office also questioned why the city, already paying $240,000 a year in rent for the space, had agreed to pay for a new roof, new exterior walls, and heating and ventilation equipment for the former restaurant, in addition to the $1 million renovation of the interior space. Those types of repairs, the comptroller wrote, "are generally the responsibility of the landlord and not the tenant."

"The allegations are under review," said Emily Gest, a spokeswoman for the investigations department, which is conducting the probe.

Under its current two-year contract with the city, Bronx Defenders receives $7.6 million to represent some 12,500 indigent defendants. Since its launch, the group has received high marks from city evaluators and legal experts. It prides itself on providing a broad array of assistance to defendants, including social service aid and civil representation.

Disputed territory: the old Alex & Henry's restaurant, now a renovated legal services office
photo: Tania Savayan
Disputed territory: the old Alex & Henry's restaurant, now a renovated legal services office

Giuliani's call for alternative providers of legal defense came after a brief 1994 strike by attorneys at the Legal Aid Society. Giuliani threatened to fire the striking lawyers and the walkout was quickly settled. Many Legal Aid lawyers saw Giuliani's subsequent request for new legal services providers as an effort to break their union. Feelings have cooled considerably since then, but there is still much bitterness. "I look on them as runaway shops," said Michael Letwin, a former union official.

Records show that the Bronx Defenders proposal, which listed Arshack as president and managing attorney and Steinberg as vice president and executive director, was the highest ranked of several competitors. The group, which needed to be close to the courts, found its first offices on Grant Avenue near the Bronx Criminal Courthouse. In 2000, however, its building was condemned by the city for a new courthouse, and the group was forced on short notice to find new space. Arshack, who had quit the organization the prior year to return to private practice, was asked by Steinberg to help handle the search. The then vacant Alex and Henry's site was discovered, she said, not by Arshack but by a staff member who went on a lunchtime walk.

The discovery was a windfall for the owner, a real estate firm headed by Manhattan businessman Gabriel Boter, which had purchased the building just a few months earlier for $940,000 and was in search of a tenant. With Arshack handling the negotiations, the group signed a 25-year lease at $240,000 per year. The comptroller's office said that while it had found no evidence of any link between the timing of the purchase and the subsequent long-term lease, the transaction "rises to the level of requiring further scrutiny."

Arshack said he hadn't known the building or its owner before the site was located and only handled negotiations on the lease. Boter did not return calls.

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