By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
Rose Gill Hearn has been the city's top municipal corruption investigator for more than a decade. As commissioner of the Department of Investigation since 2002, the former federal prosecutor, who favors pearls and conservative suits, has caught corrupt contractors, bent tax collectors, bribe-taking plumbing inspectors, an extortionist city councilman, and a housing commissioner using city funds as a personal piggy bank. She has earned a reputation as an antidote to the poisons that seep into City Hall.
But not even Hearn is immune to the forces of entropy that roil this town. The Voice has obtained documents that are part of an ongoing lawsuit that suggest that Hearn, early in her days in office, made some decisions that still haunt her. And the specter in question is none other than Bernard B. Kerik, the now-imprisoned police commissioner under Rudy Giuliani. Eight years after Kerik's plunge into infamy, Hearn may be forced to testify in open court about how she handled one of the most controversial issues of her tenure: the uncomfortably close relationship between Kerik and one of her direct reports, correction department inspector general Michael Caruso.
The details of the case are emerging as part of a wrongful termination lawsuit against Hearn filed five years ago by Caruso. Due to the federal and state criminal probes of Kerik—and a gag order in the suit itself—documents in the case had been locked behind a veil of confidentiality. But in December, a trove of memos, e-mails, and depositions were entered into the court file as part of the bitter, ongoing dispute. The records, obtained by the Voice, offer the most detailed portrait yet of how Hearn and her aides struggled for years to deal with the allegations that Caruso covered up wrongdoing to protect Kerik. And they open a window on the secretive operations of the Department of Investigation (DOI), the agency tasked with policing corruption across the city. DOI's website reads, "We get the worms out of the Big Apple." But the story of Hearn, Caruso, and Kerik reminds us that corruption can be a far subtler thing than we sometimes assume. And it's a story that may unhinge Hearn's scrupulously maintained reputation as a defender of the public trust.
"I think it damages her legacy," says Richard Steier, editor of the Chief-Leader, the city's civil service newspaper, and an expert on the Kerik scandals. "You've got this tough DOI commissioner who is supposed to have a clear-eyed view of what is going on in city government, and in this case, she ignored things that should have been obvious to anyone."
Bernie Kerik was a creature created in Rudy Giuliani's underground laboratory. He was a rough-hewn former narcotics detective with no college degree, a street guy with a burly physique and a booming voice who talked his way into a job driving Rudy around town and organizing his security during the 1993 mayoral campaign. When Rudy won, he rewarded Kerik with a job in the correction department, and quickly promoted him to first deputy commissioner, vaulting him over a number of more qualified people.
According to Kerik's book, The Lost Son, when Rudy promoted him in 1995, the mayor shared a bottle of wine with him, then took him into a room where top City Hall aides kissed him on the cheek. Kerik later wrote it was like becoming a made man in the Mafia. And he acted the part: "I am a hunter of men," he once declared to a room full of junior commanders.
While Kerik won praise for reducing violence in the jails, his stints as correction commissioner (1998-2000) and then police commissioner (2000-2001, after Rudy picked him over the more qualified chief Joseph Dunne) were loaded with questionable decisions: He had an affair with a subordinate. He used correction officers on overtime to staff his wedding. He created a foundation that collected more than $1 million in tobacco-industry money, which then disappeared. He made a deal to sell scrap metal from Rikers Island to garbage haulers, and that money disappeared. He spent city money on custom-made busts of his own image. He also borrowed money and took favors from people who had business with the city, or who wanted to. He even used a free apartment near the still-smoldering ruins of the World Trade Center for trysts with two different women—one of whom was Judith Regan, his publisher. When Regan thought her phone had been stolen, Kerik dispatched five detectives to investigate. Most murders don't get five detectives.
And then there was the rogues' gallery making up his crew of cronies at both the Department of Correction and the NYPD. From Anthony Serra, a chief who forced correction employees to fix up his house and staff Republican campaigns on city time, to Deputy Commissioner Fred Patrick, who raided the Correction Foundation of $137,000 in part to pay for phone sex with prison inmates, to Chief of Staff John Picciano, who was accused of tax fraud and beating his girlfriend with a handgun.
Kerik, though, got a pass, mainly because he had Rudy's backing and because of his supposed heroism during and after the 9/11 attacks. And then, in December, 2004, the street guy reached the apex of his career: President Bush nominated him for the top job at the Department of Homeland Security.
Starting in 1989, and through all the years of Kerik's rise, Michael Caruso was the inspector general for the Department of Correction. Beefy and pale, with a brush cut, a cop's mustache, and a slight limp, Caruso first met Kerik in 1994. After Kerik became first deputy commissioner, Caruso would go through him when he needed access to investigate one of the city's jails.
The entire mission of an inspector general is to be immune to outside influence, and city rules required Caruso to be independent of the agency he oversaw—Kerik's. But Caruso just couldn't resist Bernie. He attended Kerik's wedding. He prepped Kerik for his interview with Giuliani. He partied in Kerik's apartment when Rudy named him police commissioner. In his book, Kerik calls Caruso one of his closest friends, a man who "shared the battleground" with him.
If there was any sense between the two men that their relationship was inappropriate, they didn't work very hard to conceal it. And given how close they were, it is hard to believe that Caruso had no idea of the questionable things Kerik was doing. Indeed, as early as 1995, DOC insiders were accusing Caruso of covering up Kerik pal Serra's use of staff to pretty up his house. To this day, Sidney Schwarzbaum, the leader of the deputy warden's union, insists that Caruso "squashed" Kerik chief of staff Picciano's 1998 arrest for beating his girlfriend. "I would testify to it under oath," he says.
But it was a 1999 meeting with trade waste commissioner Raymond Casey that would come back to torment both men—and now, possibly, DOI's Hearn.
Casey, who is also Rudy Giuliani's cousin, was investigating whether a company called Interstate Industrial Corp., which was owned by brothers Frank and Peter DiTomasso, had ties to organized crime. The DiTomassos had already hired Kerik's brother, Donald, as well as the best man at his wedding, Larry Ray, so there was an atmosphere of mutual support among the men already. The DiTomassos couldn't bid for any city business without a clean bill of health from Casey, so they naturally turned to Kerik, not only a favorite of the mayor's but one of the city's top law enforcement officials, to put in a good word for them. Kerik, as it happened, was in the market for a remodeling job on his apartment that his government salary couldn't cover. He agreed to assuage Commissioner Casey's concerns in exchange for the $200,000 he needed to fix up the place.
In July 1999, Inspector General Caruso joined Kerik and Casey at Walker's Restaurant in Tribeca. With Caruso—the government watchdog—at the table, Kerik assured Casey that Interstate would cooperate fully with the investigation. Of course there was no legitimate reason for the correction commissioner to be touting some contractor, nor was there any legitimate reason for Caruso to attend such a meeting. His mere presence was unethical.
When Caruso's boss, then DOI commissioner Edward Kuriansky, found out about the meeting a few months later, he did nothing.
In 2002, Hearn was appointed by Mayor Bloomberg as DOI commissioner. A blonde Hamptons habitué whose dad was tight with Ed Koch, Hearn had most recently been a federal prosecutor working for the U.S. Attorney's office in Manhattan.
She came aboard at a time when Kerik was having the time of his life. Although he had stepped down as police commissioner at the end of Rudy's tenure, he was still basking in post–9/11 fame and holding down a cushy job at Giuliani Partners chasing lucrative federal security contracts. But it didn't take long for allegations about the Caruso-Kerik alliance to come across Hearn's desk. When some of these claims ended up in the newspaper—most of them planted by sources in the correction department—Hearn publicly defended Caruso, saying she had "full faith and confidence in him." She even personally vouched for Caruso with Mayor Bloomberg, according to a deposition by one of her aides.
Hearn may have been concerned about angering two of the most prominent figures in the post 9/11 world—a possible presidential candidate and his henchman. "They realized Bernie could mess with them, and they wanted to stay on his good side, so they stuck with Caruso," says one retired correction official.
Steier agrees with this assessment. "To the extent that an investigations commissioner is attuned to the mayor's feelings, she had to know acting against Caruso would have drawn complaints from Kerik and Giuliani," he says. "It politically may not have made sense."
A DOI official, who could not speak for attribution, disputes this characterization of Hearn's motives: "The record just doesn't support that impression. DOI investigated Serra, two top Giuliani officials, and opened the Kerik investigation."
But Hearn knew she had a problem. A year into her administration, she ordered her general counsel, Marjorie Landa, to examine all the allegations against the IG, referring to the investigation as the "Mike Caruso project." The inquiry concluded that there was no basis to any of the claims.
That conclusion seems questionable, given the abundant evidence of Caruso's involvement with Kerik. And it seems even more so given that when Bush nominated Kerik to run Homeland Security in December 2004, Caruso immediately started telling people he was leaving DOI to go to Washington with Bernie. Rather than let him go—and for reasons the documents don't explain—Hearn asked him to give her a chance to match the offer.
And then, the whole thing went off the rails. Kerik withdrew his name from nomination. The newspapers disclosed his extramarital affairs and his Ground Zero love nest. The Bronx District Attorney was probing the apartment renovation and his ties to Interstate and the DiTomassos. And Rudy Giuliani was running away as fast as possible.
"We have a problem with Mike Caruso on our hands," Hearn told an aide on Dec. 20, 2004, about a week after Kerik withdrew his name. "A big problem." Outwardly, Hearn was still publicly supporting Caruso. Privately, she was struggling. The court records portray her as complaining about Caruso even as she was insisting that he stay on.
Hearn was now trapped between her prior support of Caruso and the impending fallout from Kerik's inevitable indictment. "Kerik gets whacked, and at that point they had already broken bread with Caruso, so now they had to go easy on him," the retired correction official says. At one point in 2005, about six months after Kerik's career imploded, she begged him not to resign. "I need people who are loyal to me," she told Caruso when he offered to step down. "If you resign, that means you're not loyal to me. You better not resign."
As the investigation into Kerik gathered steam in February, 2006, Hearn offered Caruso additional duties, more office space, and a raise. It was as though her aides were trying to build a record that somehow legitimized the relationship. In early March, DOI concluded that Caruso's past contacts with Kerik were clean. In a March 7 e-mail, Landa, the agency's general counsel, called the media's criticism of Caruso "largely unfair."
With the Kerik grand jury just a couple of weeks away, Hearn finally decided to move Caruso out of correction and put him in charge of sanitation and parks. "Knowing that the criticism which had rained down on Mike for two to three years was going to get worse, I decided that if he were out of [correction] that would be an acceptable way of dealing with the criticism," she said in a deposition. The move was presented to DOI staff as a promotion.
The main concern in DOI was not Caruso's unethical behavior and possible misconduct involving Kerik, but how it would look in the press. According to a memo from Landa, "The move away from DOC would blunt the criticism . . . The motive to move him right then was to [pre-emptively] avoid anyone saying the transfer was because of Kerik's indictment." In fact, Landa came very close to suggesting that the DOI spokesperson had been intentionally misleading reporters about how close the two men were. "[The spokesperson] could no longer say that Mike was not really Kerik's friend when she provided the press with her other explanations for why the substance of any allegation against Kerik was not reasonably known to Mike and DOI," she wrote.
Michael Caruso testified before the grand jury in March, 2006. The centerpiece of that testimony was the troubling 1999 meeting he attended in which Kerik lobbied Ray Casey on Interstate's behalf. It was clear that if Kerik was indicted, the meeting—the quid pro quo for the apartment renovation, a bribe—would be crucial to the foundation of the criminal complaint.
On March 21, the very morning of Caruso's testimony, Hearn was still planning to avoid bad press by transferring him to sanitation and parks, rather than firing him. "Hurricane Mike/Kerik will have hit within/before three months," Hearn wrote in an e-mail. An aide replied, "I would move Mike without any big announcements. In the meantime, you can . . . quietly look for his replacement."
Three days after he testified, Hearn decided to fire Caruso. "He was terminated because he didn't sign on to the version of events they wanted him to," says Caruso's lawyer, Marc Bogatin. Caruso is seeking back pay and a better pension, and claims Hearn fired him because she didn't like the way he testified in the Kerik grand jury. He claims that he was told to perjure himself, and when he refused, Hearn retaliated.
Hearn was not available for an interview, and her spokeswoman Diane Struzzi was limited in what she could say because of pending litigation. But she did offer this defense of the agency's handling of Caruso: "DOI is an agency that investigates and acts on facts, which is what we did in this matter now almost seven years ago, and even then we were reconstructing events that happened six years prior to that."
Yet in their depositions, Hearn and her aides deny that the grand jury testimony was the reason for Caruso's firing, but they contradict one another in offering other explanations. Some of Hearn's aides say Caruso was fired because he attended Kerik's 1999 meeting with Casey—but by that point DOI had known about the meeting for six years.
Other aides say Caruso was tossed because he kept talking to Kerik. But Hearn had known about those calls for at least two years.
Hearn offered still a third explanation in her own deposition. She claims she fired Caruso because he whined about being moved out of correction during a meeting with her. "My idea to transfer him was thrown back in my face and imploded right there and then," she stated, adding that Caruso had become a "disruption" in the office.
The trouble with that account of the meeting is that a memo written by Landa contradicts it. She writes that Caruso said he would do whatever was asked of him, and that "he never felt so supported by DOI executive staff as he feels under this administration."
Even after deciding to fire Caruso, Hearn tried to keep it quiet. While one aide looked into other jobs for him, another helped him update his résumé. The plan was to give him good references, and a send-off with, according to Hearn's deposition, "the traditional thanks and well wishes."
Bernie Kerik is now on the short end of a four-year bid in federal prison. And Caruso is edging ever closer to a final result in his stubborn, quixotic six-year legal battle to clear his name—or at least to get paid.
"They handled him with kid gloves," says the retired correction official, "and now it's probably going to end up costing the city a lot of money."
As for Hearn, she'll probably follow Bloomberg out the door next January, bringing both of their long tenures to a close. Caruso's lawsuit won't cost her a dime, but it could leave a nasty blot on her reputation—and that might well be even worse.