By Steve Weinstein
By Devon Maloney
By Tessa Stuart
By Alison Flowers
By Albert Samaha
By Jesse Jarnow
By Eric Tsetsi
By Raillan Brooks
April 16, 2002
On January 16, with just two weeks to go until his last day on the job, Russell Harding, president of the New York City Housing Development Corporationa small but powerful city agencypicked up the phone and called the corporation's travel agent.
"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"
"Harding's Conflict of Interest: After Pledging to Steer Clear of Dad's Law Firm, Son Aided a Client"
"Scandal Repair: As Harding Probe Continues, Cleanup Costs Grow"
Unlike other departing aides to the administration of former mayor Rudy Giuliani who may have been planning post-employment vacations, Harding ordered the bill sent to his agency for payment. That same day, the travel agent faxed an invoice for the trips to HDC, where an official vendor-payment request was immediately prepared. Six days later, on January 22, Senior Vice President Luke Cusack, a close friend who was hired for his job by Harding, signed off on it. A check for the full amount was promptly issued and the invoice stamped "Paid."
Harding, the son of one of the state's most powerful political figures, Liberal Party boss Ray Harding, resigned as scheduled on February 1. But records released in the wake of his departure show the planned Southeast Asia trip was just the cap on a virtual nonstop, three-and-a-half-year spending spree during which Harding and Cusack traveled literally around the world at city expense.
Records show that after Harding was appointed by Giuliani in 1998, he and Cusack racked up more than $250,000 in travel, dining, and entertainment expensesranging from $1000 dinners at the Four Seasons to a Hong Kong junket. Even Harding's morning bagels, purchased for $1.25 each, were charged to the agency.
The records also show that Harding dipped into the agency's pocket to shower presents on at least one friend who hadn't the remotest connection to city affairs, at the same time bragging about his ability to file personal expensesincluding gambling debtswith the agency as business costs.
Those expenses are now being pored over by the city's Department of Investigation, a probe that was set in motion after new agency officials examined the records in order to comply with several long-standing VoiceFreedom of Information requests.
Alerted by agency insiders that Harding was spending freely, the Voicefirst filed to obtain the expenses in October 2000. But Harding produced just a handful of records and claimed the rest had been lost in an office move.
Following Harding's departure in February, however, the Voicere-filed its requests. New HDC president Charles Brass, a Michael Bloomberg appointee, located the records and turned them over. He also immediately fired Cusack, who had remained at the agency, alerted the investigations agency, and ordered Harding's Southeast Asia tickets canceled.
Harding, 37, has refused to discuss his conduct. Irwin Rochman, a criminal attorney hired to represent him, said Harding "decided not to discuss the matter."
Citing the ongoing investigation, HDC president Brass declined to address most questions. A spokeswoman, agency assistant counsel Melissa Barkan, said that Cusack had been informed that "his services were no longer required. Beyond that it is inappropriate to comment."
Cusack also declined comment. "I'm just not going to talk about it," he said.
Rudy Giuliani quietly promoted Russell Harding to the HDC post, at a salary of $111,000, in June 1998. The Daily Newsreported it, pointing out that Harding had never finished college and had no financial background for running an agency that puts together multimillion-dollar bond deals to build city housing.
At a City Hall press conference, Giuliani was instantly defensive. It didn't matter that Harding had no experience in the field, he said. And it mattered less that his father was Ray Harding, Giuliani's chief political adviser, a man he'd publicly embraced and hailed as "a genius" a few months earlier at his re-election victory rally.
"Russell Harding has done an excellent job for this administration," he said. "This new job is something that he will do I'm sure with exceptional skill and ability. I don't hire people because of their father and I don't hold anybody's father against them either.
"What I do is," continued the mayor, warming to his argument, "I try to be fair and have the most talented people I can find in this administration. The reason this administration has been more successful than any administration of the last 30 or 40 years is that we have more talented people than those administrations had," he said.
Then he threw one last jab at the press corps before him. "I knew when I switched him to this position that you would all criticize me. But sometimes I enjoy it. Particularly when I think you're wrong and I'm right."
The mayor knew he was on fairly safe ground at the time. Russell Harding had worked in Giuliani's campaigns and held two prior lower-level posts in the administration. After dropping out of Clark University in 1986, he had worked as an aide to former senator Alfonse D'Amato and later won a series of public relations jobs with his father's help. Unlike his brother Robert, who was considered a rising star in the Giuliani administration (and ultimately served as a deputy mayor), Russell was generally rated merely competent.
Flush from his landslide re-election, Giuliani was rewarding his allies, and Ray Harding had proved to be his most valuable political ally. The senior Harding not only helped forge electoral and city policies but also screened potential administration job candidates. He also used his law firm to lobby city commissioners, a practice that had made him wealthy under Giuliani.
The Housing Development Corporation was a perfect spot for Russellone of those out-of-the-way places where it is hard to foul up too badly. The agency generates its own budget from fees charged to developers who are seeking city-authorized, tax-exempt bond financing for their development projects. In bureaucrat-ese, HDC is "off-line," meaning no one, neither the city or state comptrollers, nor the City Council has direct oversight or regulatory authority.
It is, in short, the perfect municipal hideaway.
And the newly released records show Russell Harding took his appointment there as a gold-plated ticket to the high life.
From the Bellagio to a bagel: no expense was too great or too small. Harding's petty cash receipt for his morning bagel.
"The siren, yeah, we used it to beat traffic," said one of Harding's city drivers, Herminio Torres. "It was cool. I personally liked using it."
But Harding was in the fastest lane when he traveled outside the city. Records show Harding and Cusack, traveling together, logged more than 30 lengthy trips, visiting Vancouver, Seattle, Portland, Toronto, Palm Springs, Dallas, Chicago, Tampa, Denver, Las Vegas, Charleston, Los Angeles, San Diego, and Miamioften returning to favorites for a second stay.
They listed the business purpose of the trips as attendance at housing finance and technology conferences. But they rarely stayed at the hotels where the conferences were held, and according to others who attended, they were usually absent from the proceedings.
Instead, the expenses show that they ran up huge car rental bills and dining tabs as they sampled local fare.
The pair's travel tabs dwarf even those of most private, corporate executives. A survey of 200 private corporations conducted in 2000 by a management consulting firm found that the average three-day domestic business trip cost $970, while international trips of seven days averaged $3455.
Harding and Cusack also logged expenses way beyond those of other city officials. When former police commissioner Howard Safir was criticized for taking 10 separate out-of-town trips in 1999, his total expenses were $9100, almost half of which was paid by a private company.
To pay for their travel and entertainment, Harding and Cusack bypassed their agency's own written expense guidelines. HDC rules mandate that lodging costs at conferences are to be at the set conference rate. Airfare is to be "the most economical." Meals, both on the road and at home, are not to exceed "reasonable and customary" costs. Exceptions can be granted by the president, however, the rules state, and Harding and Cusack appear to have had a full-time waiver.
Their most exotic fling came in November 1999 when they flew to an international housing conference in Hong Kong. They put up at the Royal Garden there for $2000 in a four-day stay, and spent $1000 on meals. They stopped off in San Francisco on the way back, staying at a small luxury hotel called the Monaco, running a tab of $4000 over four days and dining at a nearby French spot, Restaurant Lulu, where one dinner came to $400.
Last year, records show, Harding and Cusack were on the road almost constantly. For a Washington, D.C., visit in March, they spent $2800 at the Four Seasons in Georgetown, where rooms start at $390 a night.
In April, they jetted to San Diego, saying they would attend a meeting of the National Association of Local Housing Finance Agencies. It was an apparently last-minute decision; tickets were booked just two days before departure and cost $2437 apiece, as much as the first-class rate. They checked into the Hotel del Coronado, considered the city's most luxuriousand expensiveretreat, where the bill ran to $5300. They spent another $280 on a rental car and almost $1000 on dining.
In May, there was a short, $2500 jaunt to Tampa. In July, Harding went to the Snow Flake Inn in Stowe, Vermont, for a housing meeting, spending $2200. The same month, records show he made quick visits to Houston and Las Vegas.
In October, Harding and Cusack flew to Los Angeles for a "technology" conference. They stayed at the Casa del Mar in Santa Monica (cost: $5780), and dined at Spago, Hollywood's most crucial see-and-be-seen spot (tab: $390). Harding also asked to be reimbursed for $751 charged to his personal Visa credit cardwhich he rarely used for business purposesfor the cost of two visits to "Aqua" in Santa Monica, describing them as "conference dinner expenses." But a search shows no restaurant by that name in Santa Monica, only a plush spa overlooking the Pacific Ocean that offers "exquisite pampering" with massages and aromatherapiesand doesn't take Diners Club. The L.A. trip cost $11,725.
Two weeks later, the duo was off to Las Vegas for the Comdex computer technology show, considered one of the nation's largest and wildest. They stayed at the posh Bellagio and spent a total of $7030.
They squeezed in one last trip in 2001, returning in early December to San Diego and the palatial Hotel del Coronado. Airfare ran a staggering $4000 apiece. Another $7000 was consumed in lodging, dining, and car rental.
Back home, in between the four-star hotels and resorts, Harding and Cusack continued to live large, the records reveal. When in New York, they regularly dined at the city's most expensive restaurants. Their tastes ranged from the chic and trendyMetrazur, Da Nico, Craft, L'Orto, Etoile, and Union Pacificto the dependable: Ben Benson's, the Palm, 14 Wall Street. There were more than 300 such meals recorded. In a one-week stretch in April 2000, Harding managed to dine out six times, spending a total of $880 at restaurants including L'Orto, Estiatorio Milos, Fresco, and Fireman's, one of his favorite haunts around the corner from his East 62nd Street apartment. On June 1, 2001, Cusack charged a $1000 meal at the Four Seasons, the city's swankest restaurant.
On January 11, Harding had lunch at the new Water Street steakhouse, Marc Joseph, for $230. Then he dined at Café des Artistes for $198.
All of the meals were recorded simply as "business" occasions, with no indication of the purpose or the companions. Based on his expense statements, Harding was a man who rarely rested from his work. On July 4, 2000, a national day of relaxation, Harding charged a $23 "business lunch" at Vinci's, a pizza parlor near his home.
Even on the harrowing afternoon of September 11, Harding wasn't too shaken to talk business over lunch. He billed the agency $36 for burgers at Jackson Hole, also around the corner from where he lives. That one time he listed a dining companion: his driver.
No item was too small to be charged to the agency. Petty cash logs show that Harding regularly reimbursed himself for the bagel he bought in the morning. He submitted receipts for individual 69-cent sodas, bought at the drugstore next door to his office. A heavy smoker, Harding daily dispatched his driver to buy his cigarettes, always at least two packs at a time. They were recorded on petty cash chits as "incidentals" or "office supplies." Smoking, of course, is an increasingly expensive habit. And the records show that in a two-year stretch from December 1999 to December 2001, more than $2500 was charged this way.
Harding was also generous with his friends in spending agency funds. When a friend he met in an AOL chat room for movie buffs told him he was watching TV on an old 13-inch Emerson, Harding ordered a new Sony 20-inch combination TV-VCR for him. A couple of months later he had a new DVD player sent as well.
"Don't worry about the price," he typed in a message on September 9, 2000, to his online pal, Fred Sawyers of Indianapolis, "i can put them both on an expense report at work. i do it all the time with shit like that . . . just one of the perks of being president." He added a sideways cyber smile, :), then continued, "besides that is how i paid for the tv i got you."
Sawyers, 33, said these and other comments made him suspicious about what Harding was doing and he decided to file away copies of their online chats. "I was worried I might get in trouble," he said. "I didn't know what he was doing and my tendency is to save everything anyways. I'm a pack rat." He also saved the packaging receipts, which he gave to the Voice. They show that both items were sent to him by Harding from his home address via online vendors. The DVD receipt from Crutchfield.com indicates it cost $359.90 and that Harding paid for it with his Diners Club card.
Agency expense records show that Harding submitted the Crutchfield charge, along with the rest of his Diners Club expenses, to HDC for payment. The purchase was marked "MIS [management information systems] equipment."
Similarly, Harding sent Sawyers, by way of Amazon.com, a DVD of Billy Wilder's Sabrina last June 21. On the same date, expense records show, Harding charged $72.94 to Amazon using his Diners Club. He listed the expenses as "president's publications."
On one occasion, Sawyers said Harding sent him an unsolicited $500 by FedEx to help Sawyerswhom he has never metpay some bills. After the package arrived, Harding ordered him to destroy the packing slip. "I don't want anything in your house with my name and number on it . . . you understand???" typed Harding. Sawyers agreed, but held on to the slip. The FedEx air bill shows Harding's name and address, in his characteristic left-slanted handwriting.
During their online chats, Harding often bragged about billing other personal expenses to his agency. In one exchange on November 15, 2000, Harding told Sawyers he was writing on his laptop from his hotel room in Las Vegas. He was having a great time, Harding typed. "I've been playing the tables some . . . lost a few thou :( . . . but it's cool . . . I can just work anything I lose back into my expenses that I turn in for the trip."
Harding was in Las Vegas that day, the expense records show, attending a computer conference. The records show Harding and Cusack ran their largest tab ever on that trip, almost $17,000 for airfare, two hotels, restaurantsand a $936 helicopter ride.
Sawyers acknowledges that his decision to seek out the Voiceearlier this year came after hearing from Harding that a reporter was seeking his recordsand after Harding badly hurt his feelings last summer. A cancer care group in Indianapolis gave Sawyers, who suffers from leukemia, a free trip to New York, a place he said he always wanted to visit. When he shared the good news with Harding, however, his friend became irate, insisting that he not come.
Harding has since accused Sawyers of "stalking" him and warned him in an e-mail that if he talked to the reporter about him it would be considered "extortion." Sawyers denies that he's ever demanded anything of Harding or threatened to pursue him.
"It's kind of hard to stalk someone from Indianapolis," said Sawyers, who returned the free New York ticket to the cancer group unused.
Neither does Sawyers appear to be motivated by publicity. He initially maintained that he did not want to be named in this article and only agreed after the Voicewent to Indianapolis to interview him and confirm his identity.
As an administrator at HDC, Harding got mixed grades. He was credited with updating the agency's obsolete computer systems. In a move that he said was designed to improve morale and productivity, he relocated the agency in plush offices on Williams Street, spending millions in the process. He bought expensive Aeron chairs for every worker and spent thousands more installing a shower in the president's office. He also held corporate picnics, spending $15,000 for an outing held last August, and extravagant Christmas parties costing tens of thousands more.
But he showed little patience with his employees, firing at least 14 during his term in office and making other workers so nervous that some began taking home records that documented his spending sprees. "The man was a tyrant," said one longtime staffer.
One executive, Mina McEvoy, 63, was fired from her post as vice president for marketing after running afoul of Harding in 2000. In response to an age discrimination complaint filed by McEvoy, Harding listed McEvoy's shortcomings as failing to get the agency's more than 700 holiday greeting cards out on time and omitting a photograph from the agency's annual report. McEvoy denies those charges, but both parties agree on one thing: The annual report was pulped and destroyed, at a cost of more than $25,000.
Harding knew he was unpopular, according to his online chats with Sawyers. "I found out last week that my whole staff hates me," he typed on October 3, 2000. "It was very upsetting . . . not so much because they hate me but because i actually thought i was very well liked. And bear in mind i have a staff of 110."
At least a year before he resigned, Harding told friends he knew he'd be out of a job once a new mayor was in City Hall. His February 1 departure date was set weeks ahead of time, and Cusack had the agency shell out $665 for a farewell party. But Harding had already made sure he would be going out in style.
Records show he had HDC pre-pay one-year subscriptions to The New York Times, the Daily News, the New York Post, Newsday, The Wall Street Journal, U.S. News and World Report, and Vanity Fair, at a cost of more than $2500, to be delivered to his home. He also had the agency pay more than $1000 for a year's service for his handheld computer. On Christmas Eve, he went on an $860 shopping spree at Borders. He used his corporate Diners Club card to buy what appear to be either last-minute presents or a stack of reading material for a long vacation. He purchased a book on old cars, two biographies of Ronald Reagan, Caspar Weinberger's memoirs, and new thrillers by Ken Follett and John Grisham, as well as three $200 gift cards. He also picked up maps and guides to Bali. On his next-to-last day in office, January 31, Harding spent $264 at Staples on office supplies and billed the agency.
His planned trip to Southeast Asia didn't come to light until after the Voicefiled its new requests for all travel and expense records. On March 14, HDC president Brass canceled the tickets. It was too late, however, to avoid one more Harding expense: a cancellation penalty of $500.
In his only comment, Harding's attorney said that the agency has been reimbursed for the cancellation penalty, as well as the Borders shopping spree.