Gotti's Golden Goose
A prescription drug company that services 91,188 city workers and retirees has been linked to mob payoffs in the trial of Peter Gotti, the recently convicted head of the Gambino crime family.
At least five major public-employee unions, representing firefighters, police sergeants, corrections officers, Teamsters, and transit workers, have multimillion-dollar, city-subsidized contracts with General Prescription Programs Inc., which manages their drug plans. The millions in city or Transit Authority contributions paid to support these often no-bid contracts is the latest example of abuses by these funds detailed recently in a three-part Voice series. The Bloomberg administration is exploring the possibility of the city taking over the funds as part of the $600 million in labor gap-closing concessions it's seeking, with a joint management/union board setting policy, as is done almost everywhere else in the country.
Federal prosecutors have connected GPP to the alleged funneling of more than $400,000 in bribes to Gotti and other gangsters in a successful effort to secure the national pharmaceutical-management contract of the mob-controlled International Longshoremen's Association (ILA). The small, closely held, New Jersey-based company won the contract though it was rated fifth of five finalists by outside consultants, according to prosecutors, and was paid $4 million more than the nationwide prescription provider that succeeded it.
In the ILA deal, GPP was the 80 percent partner of Value Integrated Pharmacy (VIP), a firm owned by Vincent Nasso, an indicted Gambino associate. Tapes and testimony at the trial indicated that Sonny Ciccone, a Gambino capo who controlled the Brooklyn docks, fixed the 1998, three-year contract for GPP/VIP. Nasso, who will be tried separately from Gotti in September, is charged with steering the bribes to Ciccone, who allegedly "kicked up" some of the payoffs to Peter Gotti, the brother of longtime Gambino boss John Gotti.
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While GPP is not associated with Nasso in any of its city union business, its principal, Joel Grodman, did join with another Nasso entity, Pharmaceutical Consultants & Administrators Inc. (PCAI), to win the prescription contract at Local 6, which represents hotel and restaurant workers. In addition to describing the PCAI partnership with Grodman, Nasso attorney Barry Levin told the Voice that his client has frequently used GPP as a subcontractor on contracts with other private unions. Local 6, the Sergeants Benevolent Association, Teamsters Local 237, and the Transport Workers Union are in the process of terminating their contracts with Grodman and GPP, neither of which were indicted in the case.
In addition to the continuing Uniformed Firefighters Association contract with GPP, the union's welfare fund has also paid over $6 million to another company associated with the Grodman family, Bio Reference Laboratories Inc., formerly known as Med-Mobile Inc., which dispatches vans to firehouses for physicals and blood tests. Levin says that Dr. Marc Grodman, who is Joel Grodman's younger brother, "formed BRLI with Nasso in 1989 as a partnership" and that Grodman "bought Nasso out, making interest and commission payments to Nasso up to at least two years ago."
However, ex-BRLI vice president David Bennett claims in a still-pending 2002 lawsuit against the company that Grodman told him Nasso was "a salesman" for the company. Bennett says that when he "repeatedly questioned" Nasso's "connections with organized crime" and "employment by BRLI," Grodman told him any claims that Nasso was connected were "outrageous," firing Bennett two weeks later.
Joel Grodman got his brother's fledgling company the UFA contract in the mid '80s, according to the union's then president Jimmy Boyle, who called the contract "a waste" (Voice, March 12-17). BRLI and GPP have also begun a joint venture, and BRLI has contracts with other unions that use GPP, including Local 6. In addition to its association with Nasso, BRLI's public offering was handled by A.S. Goldmen, a brokerage house whose allegedly mob-tied principals were convicted by Manhattan D.A. Robert Morgenthau, on fraud charges and, in one instance, a conspiracy to murder the judge hearing their case. BRLI's precursor, Med-Mobile, was one of a handful of "house stocks" fraudulently marketed by another penny-stock brokerage house, J.T. Moran Inc., brought down by federal civil and criminal prosecutions.
Despite this history, the fire department entered into a $6.6 million deal with BRLI in 2001 for lab tests of firefighters beyond those already provided by the union, with a $5 million agreement still in place. Corrections officials have also awarded BRLI contracts to do lab tests at Rikers Island and other detention facilities. Neither Grodman responded to Voice inquiries, though Joel Grodman's criminal attorney, Mike Shaw, acknowledged that "all of his records were subpoenaed" and that he was referred to "as the fat Jew" on tapes in the Gotti case. "But I'm not aware of his name coming up in any culpable context," said Shaw.
Actually, Grodman was referred to only as "the Jew" in taped conversations involving Ciccone, Nasso, and others. Indeed, there were angry and panicky references to Grodman by Ciccone when Grodman missed monthly payoffs in 2001 that the government contended were being split with Gotti. "Tell him we saved his ass, this fuckin' Jew," Ciccone ordered Nasso. In the same time frame, Nasso told Ciccone that a union official, "Louie" Valentino, has "the money for the Jew" and "the Jew's gotta send me the money." Ciccone directed Nasso to remind the Jew that "I'm calling the shots over here" and that he's "only here on account of me."
Prosecutor Andrew Genser left no doubt that these are references to Grodman when he argued in his rebuttal summation that "Nasso is talking about the money from Joel Grodman who is down in Florida" at an ILA meeting. Later, Nasso reiterated "how he had to get the money from the Jew, who we know is Grodman," concluded Genser. The prosecutor also told the jury that Nasso said he wanted "Joel Grodman to" get the
money from Valentino and "give it to me." Ciccone was upset because he had "to lay out" any payments Grodman missed rather than skip paying Gotti his "tribute." The government called this scheme "one of the most disturbing crimes" in the far-reaching case, because "a few greedy gangsters ripped off a health plan that was supposed to provide quality drug benefits to thousands of active and retired members."
Pointing out in a letter to the judge that Grodman, not Nasso, pocketed $2 million of the $2.4 million paid in fees to GPP/VIP, Levin told the Voice that Grodman and his father "controlled the ILA's prescription business in New Jersey for 30 years," well before GPP was created. Since Jersey's ILA was as dominated by the Genovese crime family as Brooklyn's was by Gambino, Levin contends that its longstanding relationship with a pharmacy owned by the Grodmans shows that they have "always had a relationship with the Genovese family," suggesting that Joel Grodman could have gotten the ILA contract without Nasso.
That's what Levin will argue at Nasso's upcoming trial, where Grodman may well finally appear as a witness. The Nasso trial will also involve his brother Jules, who is charged with using Ciccone to shake down actor Steven Seagal for $3 million in payments associated with their onetime movie partnership.
The myriad ties between the union funds and Grodman entitiesincluding the placement of the son of onetime transit union boss Sonny Hall on GPP's payrollare another indicator of the patronage bastions some of these funds have become. With prescription contracts often their biggest prize, city unions have spurned the nation's premier benefit managers to reward smaller firms like GPP and National Prescription Administrators (NPA), another Jersey company enriched by its relationships with labor power brokers.
The city's largest union, DC 37, saved $7 million a year when it finally put its NPA contract to bid after 14 years of no-bid renewals, and the ILA saved $4 million when it dropped GPP. That's some measure of what might be saved if Bloomberg took over the 104 funds and made central contracting decisions himself, conforming to regular bid procedures.
Research assistance: Cathy Bussewitz, Alexa Hinton, Felicia Mello, Solana Pyne, E.B. Solomont, and Steven I. Weiss
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