Bernie Kerik's Bad Company
The allegedly mob-tied firm at the center of the storm swirling around ex-city police commissioner Bernard Kerik hired another former top Giuliani aide when it wanted to show regulators it was cleaning up its act, the Voice has learned.
Interstate Industrial Corporation hired former deputy mayor Randy Mastro, who served as Giuliani's top gun in chasing down mobbed up outfits doing business with the city. But Mastro said he never told his former bossor anyone elseabout what he learned of Kerik's dealings with the firm, including the former top cop's recommendation to the company that it hire a close pal named Larry Ray, who was later indicted in a mob stock fraud scam.
"Larry Ray predated my time. That had already occurred; he was gone," Mastro said. "There was no retrospective review."
Giuliani has said he knew nothing about Kerik's connection to Interstate until the recent explosion of news reports in the wake of Kerik's decision to withdraw as President Bush's nominee for Homeland Security directora post he initially won with Giuliani's enthusiastic backing.
Mastro said he learned about Kerik's association with Interstate during his "two or three years" with the firm as a kind of inside watchdog, reviewing new deals and hires for any mob taint.
"At some point I was told by people at the company [about Kerik]," he said. "I don't recall exactly when."
Asked if he ever discussed the matter with Giuliani, Mastro said: "No. It wasn't an issue that I ever discussed with anyone."
Mastro's hiring came as the construction firm was desperately battling for the right to hold city and state contracts despite allegations of mob dealings made by several oversight agenciesincluding a business integrity panel that was launched by Mastro when he was still at City Hall.
Interstate was also facing a tough challenge by regulators of New Jersey casinos who said the company should be barred from Atlantic City because it had a long history of conscious involvement with organized-crime figures.
In a controversial decision this summer, the state's Casino Control Commission rejected the state attorney general's advice that Interstate be denied a license for casino work. In recommending approval for the company, the commission cited Mastro's "impressive professional pedigree" as a onetime federal prosecutor and former chairman of the city's Trade Waste Commission as evidence that the company was on the straight and narrow.
The licensing decision outraged state attorney general Peter Harvey, whose office has filed suit to block the move, saying the approval of Interstate was "not just wrong, but dangerously wrong."
Mastro, a partner in Gibson, Dunn & Crutcher, also served under Giuliani in the Manhattan U.S. attorney's office. He said he was brought to Interstate by their attorneys, Tom and Chauncey Durkin, and that his job there was to scrutinize "certain high-level hiring and major transactions" undertaken by the Clifton, New Jersey-based company.
"I can tell you that there was never any recommendation made by this firm that wasn't followed," he said.
But Mastro said he left the company earlier this year after the Casino Control Commission initially OK'd Interstate's application. "There didn't seem to be any further reason for us," he said.
It was during the casino license inquiry, Mastro said, that he learned about Kerik's company tiesand his recommendation that Interstate hire his close friend Ray.
A former insurance and financial-services salesman, Ray was the best man at Kerik's 1999 wedding, and even helped the apparently cash-strapped former cop pay for the event, according to reports by the Daily News' Russ Buettner and the Times' William K. Rashbaum and Kevin Flynn.
Kerik also went to bat for the firm with a top official of the Trade Waste Commission, the body established by Giuliani to weed out mob-tied carters and headed by Mastro until he left the administration in 1998. Later that year, when Interstate was awaiting approval to operate a waste transfer station it had purchased from mob figures, Kerikat the time the city's corrections chiefspoke with Raymond Casey, the commission's top enforcement officer. According to the Times, Kerik told Casey that his friend Ray was now working with Interstate and that Ray was "an honest person with a security background" and "someone we could work with."
Kerik's dealings with Interstate and Ray were later the subject of an inquiry by the city's Department of Investigationa probe that Giuliani has said he was never told about even as he promoted Kerik to police commissioner.
Interstate co-owner Frank DiTommaso has acknowledged that he was friendly with Kerik and often visited him at his city offices, even hiring Keriks brother for a job with his company. DiTommaso said he hired Ray for a $100,000-a-year post after Kerik said he could vouch for him. According to DiTommaso, Ray said he had "law enforcement experience" and could help with the company's regulatory problems.
But officials of the New Jersey Attorney General's Division of Gaming Enforcement later pointed out that Ray's prior dealings with Interstate would hardly have inspired confidence: A recommendation Ray made to DiTommaso concerning the company's insurance policies had resulted in a "financial disaster" for the firm, according to the attorney general. Just prior to his hiring by DiTommaso in 1998, Ray had left the insurance business and had set up his own business, "providing security to celebrities and dignitaries," according to the casino probe.
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 nightcluba 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 states 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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