Rudy's Bus Pal Admits Paying Mob

As mob-fighting mayor, Giuliani did nothing but help the guy—and get helped in return

Gatto's attorney, Peter Silverman, seconded that opinion. "He was extorted," said the lawyer. "These were serious people he was dealing with."

If so, Gatto stayed scared for a very long time. After he received immunity from prosecution last year, Gatto admitted that he made his first mob payoffs for the right to be in the school-bus business in 1974. He did so, a report from a March 2007 meeting between Gatto, the FBI, and prosecutors states, at the direction of his father, whom he described as "a low-level organized crime figure." Gatto was 24 years old at the time, a recently returned Vietnam veteran, and a dutiful son. "Gatto Jr. did not argue with his father and did what he was told," wrote the agents who interviewed him.

Gatto said his dad took him to a candy store on Avenue X in Brooklyn's Gravesend section. There, the facts of this life were explained to him by a gangster named "Fat Larry" Paladino and a Local 1181 official named Julius "Spike" Bernstein. Fat Larry, Gatto's dad explained, was the mob conduit to Spike. The mob tax imposed on the young bus entrepreneur back then was a relative bargain: $250 a week.

Gatto got along well enough with this crowd that he was made a trustee of the union's benefit funds, a duty that entailed frequent visits to the local's Queens headquarters. On one of those visits in 1986, another union official, John Ambrosio, noted Gatto's growing success. "You got to do better for us," Ambrosio told him. His tax then rose to $400 weekly, Gatto said.

During this period, drivers at one of Gatto's largest firms, the Staten Island Bus Company, somehow remained unorganized. They weren't happy about it. After Local 1181 declined to sign them up, drivers sought out other unions. According to a 1993 National Labor Relations Board decision, this greatly upset the bus owner. In a 1990 incident, Gatto spit on one pro-union driver, an ex-cop, and ripped his shirt off before firing him and four others, the decision stated. As penance, the board ordered Gatto to rehire the fired drivers and refrain from physically assaulting them.

In his briefing last year with the feds, Gatto said that unspecified labor problems prompted him to seek a 1995 sit-down with the mobsters at Local 1181. The meeting resulted in a kind of global settlement whereby Gatto agreed to pay an additional $150,000, with $15,000 handed over each Christmas, and another $15,000 at the end of the school year.

The tributes continued. A couple of years ago, when Gatto won four new school-bus routes on Staten Island, he said he forked over another $8,000 for the privilege. As late as June 2006, months after Battaglia and Bernstein had both been arrested and it would appear the feds were finally riding to the rescue, Gatto continued to meet secretly with the gangsters, according to the FBI report. One meeting with Spike Bernstein—then out on bail—took place in the bathroom of a Queens restaurant; another was at the Hilton hotel in Staten Island. There, the bus magnate handed over another $20,000. He did so, Gatto told the feds, in hopes the mobsters would finally leave him alone.

Gatto was spared the ordeal of testifying about all this after Battaglia's last-minute guilty plea. He declined to discuss it further. "It is a painful chapter in his life," said attorney Silverman. "He doesn't want to relive it."

Understandably. But had Gatto ever reached out to the authorities to complain about this ruthless Mafia extortion—even as the fearless Giuliani ruled City Hall?

"I don't know," said Silverman

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