Bernie Kerik's Bad Company

Another Giuliani aide went to bat for troubled construction firm

At Interstate, however, Ray's duties were a mystery, investigators said. "Larry Ray was employed in an undefined capacity wherein he had no office, no phone, never generated a memo or other writing, and had no specific hours," state gaming enforcement director Thomas Auriemma wrote in a June letter to the state's Casino Control Commission.

At a hearing before the panel in July, assistant attorney general Gary Ehrlich bluntly called Ray's position "a no-show, no-work job."

Yet Ray remained in good graces with DiTommaso and his brother Peter, who even agreed to have the company loan him $350,000 so that Ray could buy out a partner in a nightclub—a loan that he failed to pay back.

But the company quickly fired Ray after he was indicted in March 2000 in a case brought by federal prosecutors in Brooklyn. Although the indictment focused on a securities scam orchestrated by several high-level Mafia members, it contained eerie echoes of Interstate's own dealings. Among the defendants was Edward Garafola, a soldier in the Gambino family who had earlier sold the waste transfer station to Interstate.

It was that deal with Garafola, who recently pled guilty to both extortion and attempted murder charges in two separate federal cases, that first brought notoriety to Interstate and led to a series of investigations. The probes were the first stumble for a firm that had started in a basement apartment on Staten Island and later went on to win more than $75 million in city and state contracts, including work on the new stadium for the Yankees affiliate on Staten Island, and a massive project at the Fresh Kills landfill.

Ray eventually pled guilty in the stock scheme and was sentenced to five years probation. Later, however, Ray appealed his sentence, saying he had had faulty legal representation. In court papers, Ray detailed his own associations with both the Mafia and Russian organized-crime figures, and stated that he became an informant for the FBI in 1996 after learning that Garafola had put out a "contract" on his life. He claimed that in exchange for his help, FBI agents promised not to prosecute him, but later reneged on the deal.

The DiTommasos have long insisted that Ray and Garafola were both examples of the way legitimate businessmen brush up against the mob in the construction industry. But the city's Business Integrity Commission and the state‘s Dormitory Authority have disagreed, labeling the firm "a non-responsible contractor"—a finding that is a kiss of death for those seeking lucrative government work.

Those rulings were underscored earlier this month when two mobsters now cooperating with the government testified at the trial of Gambino crime family boss Peter Gotti that Interstate made regular payments to organized crime figures in exchange for being allowed to pay non-union rates to workers.

Mastro declined to offer an opinion about the company's qualifications, or Kerik's involvement. But the former deputy mayor was one of a trio of ex-Giuliani officials, along with former fire commissioner Tom Von Essen and ex-top City Hall aide Joseph Lhota, who appeared on NY1 shortly after Kerik's appointment, describing their former colleague as a stellar candidate for the Homeland Security post.

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