Shopping for Gracie Mansion
John Catsimatidis, so the story goes, has a couple of jets he wants to sell. But the market is tanking, so the only place to go is Africa. It's 1996. He and a couple of aides—and his longtime pilot, Jim Wilbert—fly to Mali to do the deal.
Catsimatidis is mainly known for his supermarket chain, but at the time he had this side business leasing and selling jets.
Just to be careful, Big John calls the U.S. Embassy in Mali and reminds the buyers that he's a good friend of Bill Clinton—you know, the president of the United States. So don't mess with us.
"I figure, shit, I want to get out of here alive," he recalls. "So I had pictures of me and Bill Clinton [taken] the week before. If anything happens, they're going to send in the Marines. My exit strategy had to be as good as my entrance strategy."
Well, for some reason the buyers decide they want a discount, and seem to think they can make a small down payment and still get the jets. They show Big John their grandiose plans for an all-Africa airline and say they'll pay him back when the whole thing gets off the ground, so to speak.
Come on, Catsimatidis replies, that's not the way this works. This is a business. So what do the buyers do? They actually take Wilbert hostage, put him in a hotel and won't let him go. For two weeks. Much fulminating occurs. High-level phone calls, etc., etc.
"They were going to let him go if we lowered the price for the airplanes, but we had promised the bank a certain price," Catsimatidis says. "We ended up getting the bank to reduce the price; they wired the money, released Wilbert, and life goes on."
All right, so: On the way out, Big John and his people file past hundreds of not-so-friendly onlookers, board their plane, and get out of Mali—but not before wondering for an uncomfortable moment whether someone has stuck a bomb on the jet.
"I don't know how the hell we ever got back," he says. End of story. (Well, not quite: In 2004, Wilbert turned around and sued him in a federal court in Tennessee, claiming that his boss had abandoned him in Mali. The case was subsequently dismissed.)
Catsimatidis, 58, the city's latest mogul who would be mayor, tells this story in his war room on the third floor of a brick building on Eleventh Avenue. Periodically, he wrinkles his brow at the disco music thumping through the ceiling from the recording studio upstairs—which, for all his money, he hasn't been able to expel.
"The good news is, they don't wake up until 4 in the afternoon," he says about his noisy neighbors. "And their lease is up."
He's dressed in a suit and puffing a cigar, keeping one eye on the stock ticker flashing across a flat-screen television hung on the far wall, as well as the buzzing BlackBerry that he says contains 9,000 phone numbers. The room has three desks, each one stacked with paper. The walls are covered (and we mean covered) with pictures of Big John and famous politicians—Clinton, Gore, Reagan, Bush I, Hillary—many of whom have made a pilgrimage to this very office to kiss his ring (read: beg for campaign cash).
"Those are my memories," he says. "After all is said and done, what do you have? Memories. What else are you going to put on your walls?"
You think billionaire, and you picture high-story offices in glass-and-steel cathedrals. You think Bloomberg and his immaculate outfits for every occasion. The horsey set.
But that's not Catsimatidis's style. You could call him the rumpled billionaire. He insists on running his business empire from his cluttered offices. He clearly relishes playing the hardscrabble kid almost as much as he likes telling old war stories. "I don't have to be on Fifth Avenue to prove anything to anyone," he says. "I know who I am."
Catsimatidis lives on the Upper East Side with his wife and their teenage son and daughter. His main holdings include 50 Gristedes supermarkets, 371 gas stations in three states, $500 million in real estate, and an expanding oil business for which he just raised $450 million in an IPO. He employs 7,800 people. He's worth about $2.2 billion. He's on the board of the Police Foundation and the Police Athletic League and is involved with a bunch of charities.
In fact, Catsi—another of his nicknames—is something of a walking conflict of interest. His supermarket and real-estate interests are thoroughly embedded in the city's fabric. His firm is constantly interacting with city agencies and slugging it out with other companies here.
This is a guy who fought the big-box stores, who went to war over untaxed cigarettes, who is seeking city tax breaks for his big high-rise in Brooklyn. So what's he going to do as mayor when the same kinds of issues come up and he's required to be relatively fair about them?
"Look, first he has to make the decision that he's going to run, then he has to be elected. We'll deal with that issue at the appropriate time," Rob Ryan, Big John's spokesman, tells the Voice.
Outside the building, the only clue to its owner's wealth is the sleek, late-model Mercedes-Benz that happens to be parked rather blatantly on the sidewalk with a Detectives Endowment Association placard on the dashboard.
Ryan and Michael Palladino, the president of the union, both point out that it's not a parking placard, God forbid—it's just a bumper sticker left there by Catsimatidis's driver, who happens to be a retired detective.
Catsimatidis last mulled a mayoral run in 2003. He was knocking Mayor Bloomberg at the time, saying there was a "clear leadership vacuum" at City Hall. But he backed off when his fellow rich guy decided to run for re-election.
This time, he tells the Voice, he's much more serious about running. These days, his message is that Bloomberg and Giuliani did good jobs. Let's not let the city go to the dogs, he says; let's keep it away from the "professional politicians." What the city really needs is another CEO.
And so he hired Ryan, a veteran campaign manager who headed up George Pataki's first run for governor, and is preparing to form an exploratory committee.
Last time, Catsimatidis said he would spend $15 million and take contributions. This time, he says he'll pay for the campaign himself. He's budgeted about $30 million for the run, though he says he'll spend more if necessary. (Bloomberg spent $85 million, so Catsimatidis's figures might reflect the frugal thinking of a man used to watching the bottom line.)
"I think it's a sin that we have politicians that take taxpayer money to promote themselves," he says. "If they are good enough, they can sell themselves to the public without taking money." (Never mind that without public campaign financing, only rich guys can afford to run for office these days.)
He says he's trying to lose weight and cut back on the cigars. "I get a little sensitive about my weight," he admits, his brow wrinkling at the music still thumping through the ceiling. "I'm trying to work out. I gotta lose 20 or 30 pounds—I'll look better on television."
Catsimatidis once said that the Democrats give better parties. Last October, however, he switched his party affiliation to Republican.
Five weeks later, the man who used his nonprofit foundation to donate $100,000 to the Clinton presidential library in Little Rock was in Astoria to collect—of all things—a Ronald Reagan leadership award from Queens Republicans.
But the Clinton connection goes much deeper. Catsimatidis estimates that he's raised $3 million to $5 million for Bill and Hillary since 1992. He was so close to the Clintons that the president visited him in the Hamptons and at his Fifth Avenue apartment. He visited the Clintons at Camp David. He slept at the White House. His wife danced with Bill. He even threw a surprise birthday party in his apartment for the then president.
On top of that, he has personally given more than $1 million to candidates from both parties at the federal, state, and local levels. Name a pol, and it's more than likely that Big John has given him or her money.
He even has an assistant in his office whose job is primarily to send out invitations to fundraisers. Just last March, the aide sent out an e-mail calling for "friends who will contribute at least $1,000 - $2,300 to Senator Clinton's historic campaign for President of the United States."
Despite his thoughts of running as a Republican, Catsimatidis still donates money to Democrats. On January 11, he sent off a $10,000 donation to Governor Eliot Spitzer's re-election campaign.
Of course, not unwisely, he has also started giving generously to local Republicans. He's handed out at least $17,000 to Republican county organizations since October, and $20,000 to local Republican candidates.
So what did he get for all that generosity? "I never asked anything from anyone," he says. "I enjoy doing it. After you make x amount of money and you have disposable dollars—when the dollars don't matter as much—you can either buy paintings, or you can donate to politicians who you think will do a decent job. I'm not a paintings type of person."
Was there any consternation among Democrats over the party switch? Catsimatidis wouldn't say. The Voice got only a glacial silence from the Democratic National Committee.
On occasion, his largesse has sparked controversy. There was the time he wrote to President Clinton asking for a pardon for William Fugazy, an influential limousine mogul convicted of perjury. Clinton pardoned Fugazy. Catsimatidis says a lot of other people wrote to Clinton on Fugazy's behalf as well.
And then there was the time in 2002 that he flew Representative Charles Rangel and two dozen others to Cuba. They had dinner with Fidel Castro. Rangel eventually had to repay $1,922 in travel costs following an ethics investigation.
If he runs, Catsimatidis likely would face Comptroller Bill Thompson, Congressman Anthony Wiener, or Council Speaker Christine Quinn in the general election.
His Republican allies seem to think that Catsimatidis has a good chance to win against that field. They think his life story will appeal to middle-class New Yorkers. The prospective Democratic field, they argue, is weak on experience.
"Look at the Democratic field," Catsimatidis says. "Quinn, Wiener, and Thompson are all professional politicians. Have they ever run a business?"
Some local political observers give him a chance. "He's counting on the Democrats lining up their firing squad in a circle, as usual," says one. "The Democratic field is a bit unexciting—when Bill Thompson is Mr. Excitement, we've got some problems here."
"What's attractive is the bio," says another political adviser. "He's more in the neighborhoods, more in the streets."
Some noted, however, that if Ray Kelly, the city's police commissioner, decides to run, it's a different story. Whatever you think about his press operation, Kelly is viewed as a strong candidate.
One of Catsimatidis's competitors puts it bluntly: "I don't give him a snowball's chance in hell."
The main challenge for Catsimatidis in any campaign would be selling himself to voters on an agenda that goes beyond "I'm a businessman with a heart-warming life story."
To that end, he says he wants to bring the World's Fair to New York in 2014 and use the project to improve a blighted area of the city. He wants to encourage higher-density development around transit hubs to keep the middle class in the city. He wants cops and firefighters to live within city limits. And, of course, he says New York can't return to its crime-ridden days of old.
While Bloomberg earned his billions on Wall Street, Catsimatidis got rich in a more rough-and-tumble world. The son of a Greek busboy, he grew up on West 135th Street in Harlem. His dad paid $48 a month in rent back then. No one spoke English in the house until he was in kindergarten.
He bagged and delivered groceries at the age of 14, taking payment in empty bottles that he redeemed for two pennies apiece back at the store. He says he despised the work.
His parents cobbled together enough money to send him to New York University, but to their chagrin, he dropped out to help a friend's uncle run a supermarket on 100th and Broadway. He later borrowed $10,000 from the man to become a partner in the store. He says he worked constantly, even sleeping at times in the back.
In 1970, he opened his first Red Apple supermarket a few blocks from the first store and moved himself and his parents into an apartment on an upper floor. By the time he was 25, he owned 10 stores and was grossing $25 million a year.
He expanded, he says, not by borrowing from banks, but by borrowing from his suppliers: "The milk supplier would loan us $50,000 to $70,000 a store, and they'd make it back on the price of milk. The grocer would fill the initial order on credit, and I would pay him back over a year's time."
Catsimatidis claims that he was the first supermarket owner to open his stores seven days a week—an assertion disputed by one of his competitors.
He says that he never had any dealings with the mob, expect for the occasional demand from a garbage hauler. "The guy would come and say, 'Hey, I'm your garbage guy, and this is how much you're paying a month,' " he recalls. "I said, 'OK.' You say OK and you pay it. And there were always a few mob guys in the meat business. But I stayed away from them, and they stayed away from me."
In 1977, he began to buy real estate, and he also expanded into the airplane business. Meanwhile, he continued to build up the Red Apple chain, and acquired a reputation for buying distressed companies and turning them around.
He bought the reeling Gristedes chain in 1986 for $50 million, and the collapsing Sloan's chain between 1991 and 1993. He bought United Refining Company in 1986, saving it from bankruptcy. He's had some setbacks—like the time he bought Capital Airlines, which went bust not long afterward. He still owns a few of the jets, which he's scrapping and selling for parts—except for the one that shuttles the NBA's Charlotte Bobcats to their away games.
Catsimatidis says he's acquired a thick skin over the decades. "The biggest aggravation you have is when you have trusted employees and they hurt you," he opines. "I would never, ever want my kids in the supermarket business—it's not worth the suffering. I had no choice; I took whatever I could get. I had to claw and climb out of the ghetto."
Catsimatidis describes himself as a "nice, easygoing person," but it's clear that he relishes a fight. He once threatened to sue the city's consumer-affairs commissioner for claiming that his stores' employees leaned on their meat scales.
His most high-profile battle erupted when he took on the Daily News after it ran a series of articles slamming his stores for a lack of cleanliness.
Catsimatidis charged that the records used in the story were outdated. He yanked his ads from the paper and convinced other grocery magnates to do the same. He also called on the Daily News to apologize and demanded that it fire the reporter. He claims the move cost the paper $50,000 a week.
The New York Post gleefully reported that Daily News owner Mort Zuckerman softened the tone of the offending series and moved it to an inside page following the protests. The News later published a four-page advertising supplement loaded with positive coverage of the supermarket industry.
"I wanted to make a point," Catsimatidis says. "It was not a point of showing my power. It was that the reporter was wrong, and they should have checked it out."
Even so, the Daily News didn't fire the reporter, nor did it acknowledge any deficiencies in the series. Catsimatidis still keeps one of the offending covers on a wall in the hallway outside his office.
(When asked if he would have any difficulty as mayor talking to the press despite unfavorable coverage, Catsimatidis responded: "I have no problem. I'm a nice guy.")
A couple of years ago, he also mounted a quixotic campaign to stop two Indian reservations from selling untaxed cigarettes to non-Indians. He sued the tribes, making the over-the-top claim that they were funding organized crime and international terrorism. He says the practice hurts the "poor innocent taxpayer."
Around the same time, then–Attorney General Eliot Spitzer—a man who has benefited from Big John's campaign generosity—moved to limit the practice.
But Catsimatidis says he's disappointed in Spitzer for not enforcing a state law banning the practice outright. "Spitzer promised he would enforce it," he says. "He has not. It's a sin."
He also battled the big-box stores, and threatened to fight the state's attempt to condemn one of his supermarkets to make way for the Second Avenue subway. And he's still irked by the Bloomberg administration's decision to give a huge supermarket site on 125th and Lexington to Pathmark rather than him. "They never went to the local supermarket chains," he says. "It was a no-bid process."
There was also his failed bid, seven years ago, to buy Getty Petroleum. Catsimatidis says he bid $6 a share for the company, but the Getty people sold it instead to the Russian oil giant Lukoil for $5 a share. He was so angry at the time that he wrote an unusual letter to the Getty CEO, railing against what he called the unfairness of the agreement. To this day, the dispute still rankles. "We were never able to get to the bottom of it," he says. "It's one of the things I still get sick about."
Catsimatidis says his firm has never been under criminal investigation, except for one murky case back in 1990 involving internal wiretaps at the headquarters of United Refining. Catsimatidis says he was unaware of the practice, which predated his purchase of the company. Catsimatidis manages his real-estate holdings via a web of limited-liability corporations that make it difficult to determine just what he owns. He admits that he doesn't have a list of all his holdings.
Here and there, he's had to pay several large fines in connection with his businesses. The Federal Trade Commission has investigated Red Apple a couple of times for violating anti-trust laws, because Catsimatidis owns so many stores in Manhattan. In 1993, following FTC scrutiny, he agreed to sell off six stores. But in 1997, the FTC fined Catsimatidis and two other supermarket companies $600,000 for failing to live up to the terms of the agreement.
In August 2003, the federal Occupational Safety and Health Administration hit Gristedes with 73 safety violations at eight locations after an employee at an East 96th Street store had an arm ripped off in a cardboard bailer. OSHA said the bailer wasn't equipped with a guard to prevent contact with the moving parts. OSHA also cited the company for having walk-in freezers that couldn't be opened from the inside. Catsimatidis denied that his company was at fault in the accident.
In a December 2003 pact with then–Attorney General Spitzer, Gristedes agreed to pay $3.25 million in back wages and fees to settle a lawsuit brought by 34 delivery men who claimed the supermarket chain paid them well below the minimum wage. Catsimatidis also agreed to hire the workers and give them health benefits. He says the workers were actually employed by a subcontractor, and that his company was targeted because of its deep pockets. And he charged that Spitzer strong-armed him into the settlement.
In 2006, two female cashiers sued Gristedes for failing to promote women. According to their lawsuit, men received the higher-paying full-time positions through an informal "tap-on-the-shoulder" promotion system. Most of the store managers are men, the lawsuit also claims. In response, the supermarket's lawyers insisted that the company complies with the law. "Throughout Gristedes, women occupy important and significant positions," they assert in court papers.
Recently, Catsimatidis has embarked on a campaign to build housing in the city. His most ambitious project is a complex with 660 mixed-income apartments and 290,000 square feet of commercial space on Myrtle Avenue between Prince and Ashland streets in Brooklyn. He's also talking about similar projects in Coney Island and Upper Manhattan.
He did the demolition on the Myrtle Avenue project and overcame neighborhood complaints about the loss of a supermarket. He also had to weather a stop-work order and a $2,500 city fine after his contractors failed to construct a proper safety fence.
Now, he says, he's worried that the current credit crunch is going to stop him from raising the money to go forward with construction. He's waiting on the city to clear out some underground pipes and fears that he'll lose his chance to get a government tax break.
"Is there aggravation? There's aggravation every day," he says. "We're proceeding in good faith. Tell me what the real-estate market will be in six months and I'll let you know whether we're building. You watch TV and you scratch your head. If it makes sense, we'll go forward. "
He could be talking about his mayoral run.
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