Like thousands of other New Yorkers, Russell Harding never made it to work on September 11, 2001. He was still at his East Side co-op apartment when the towers were struck. But at the Williams Street offices of the New York City Housing Development Corporation, where Harding was then president, his terrified staff, sitting only blocks from where the towers were crumbling, fearfully awaited his instructions.
“The people inside at HDC were waiting for Russell’s call saying it was all right to leave,” said Jackie Wolfe-Enrione, a former marketing officer at the corporation. “They thought if they did something on their own they’d be fired. Everyone was afraid.”
Expense records, obtained by the Voice after an 18-month tug-of-war with Harding and his aides, later showed that while his boss, Rudy Giuliani, was desperately seeking to hold the city together that day, Harding held a business lunch at a burger joint near his apartment—with his driver—and billed it to the city.
That kind of arrogance of power seemed to run like a steady thread through the 17-page, six-count indictment unsealed Monday against Harding, charging him with an array of financial crimes and two child-pornography violations. Saying that the Voice‘s records request had spurred their inquiry, federal and city law enforcement officials described a laundry list of unchecked and high-powered abuses. Harding had created “his own lifestyle of the rich and famous,” spending “hundreds of thousands of dollars in HDC funds for the personal benefit of himself and his friends,” said United States Attorney James Comey at a press conference, turning “his presidency of HDC into a virtual Roman holiday.”
Money that was supposed to go for affordable housing had been spent on lavish travel junkets to Hong Kong, Vancouver, Portland, San Diego, Las Vegas, and Los Angeles, officials said.
“Russell Harding’s perks were on par with your average CEO’s,” said Department of Investigations commissioner Rose Gill Hearn. “He willfully and shamelessly took advantage of his position.”
Along with the big-ticket items, the trips and a new SUV bought for a friend’s use, there was a litany of other things Harding had bought: Palm Pilots; laptop computers; audio players; spa treatments; tickets to performances by Siegfried and Roy, and the Cirque de Soleil in Las Vegas; a cookbook; The Beatles Anthology; complete DVD sets of the The Sopranos and Sex and the City; language guides for speaking Croatian (the native tongue of his father, Liberal Party leader Raymond Harding); a two-year subscription to Vanity Fair. Even bed linens were charged to the corporation.
In addition, as the Voice reported in detail in a series of articles last year, Harding gave himself illegal salary hikes and bonuses. The indictment also charges that Harding had the agency reimburse him $8597—the cost of the early withdrawal penalty he’d been forced to pay for closing out his city retirement account after he voluntarily resigned.
“I knew 100 percent those payouts were wrong,” said Beverly Ratcliffe, a former administrator at the agency, who said she quit rather than go along with Harding’s plan.
Like Harding’s reimbursement for his two-pack-a-day cigarette habit and his daily dipping into his office’s petty cash to pay for his morning bagel—neither of which were listed in the indictment—it was the little conceits that stood out in the federal charges.
In a last-minute spending spree, days before the end of his term as president of the corporation in January 2002, Harding went to Borders Books & Music and, as the Voice reported last year, charged travel guides to Bali and Singapore. What we didn’t know then, but do know now—after a year-long investigation by the federal Customs Department and the city’s Department of Investigation—is that he charged the $98.32 expense to a Christmas party for children of the corporation’s employees.
When the Voice sought Harding’s expense records in 2000, he initially doled out a meager group of documents. When the newspaper pressed for more, he stalled for months, then, in a letter he compelled underlings to sign, swore that they had all been lost. This week, those actions became counts in a federal indictment. Harding had directed his aides to conceal detailed Diner’s Club bills, the charges state. He had also allegedly told another HDC employee—believed to be his former top aide and traveling companion, Luke Cusack—to put the boss’s expenses on his own credit card.
Further, he ordered corporation employees to “shred paper records and erase computer files in such a way that they could not be recovered,” according to the indictment. Combined with the disturbing charges of receipt and possession of child pornography (the indictment alleges he had 10 still photographs and a movie), those accusations lent an air of shame to Monday’s proceedings, one far deeper than that which usually surrounds scoundrels caught feasting at the public trough.
All this occurred on the watch of the administration of Rudy Giuliani, who rose to fame as a prosecutor by catching municipal crooks. In June 1998, when a Daily News article reported that Harding, who lacked both a college degree and financial know-how, had been appointed to the post by Giuliani, the then mayor barked back that Harding would do his job with “exceptional skill and ability.” He insisted that Harding’s well-connected father, Giuliani’s political mentor, had nothing to do with the hire. On Monday, Giuliani marched in the St. Patrick’s Day Parade but refused all comment through his spokesperson.
City and federal agents arrested Harding at his East 62nd Street home at a little after seven that morning. Harding spent the rest of the morning and much of the afternoon in holding pens at U.S. District Court. At a little after 4 p.m., he emerged through a side door into the courtroom of Judge Lewis Kaplan. Harding had been able to don a dark suit before the agents took him away, but there had been no time to shave, and he wore a heavy weekend’s worth of beard and a hangdog expression as he took a seat alongside his lawyer, Gerald Shargel. Behind him, his father, Raymond, sat in the second row, courteously declining all comment to the reporters who besieged him.
After a not-guilty plea was entered into the record, defense and prosecution attorneys told the court that they had agreed on a bail package consisting of $500,000 in bonds co-signed by Harding’s father and mother (who was away on a trip and blissfully spared the sight of her son in the dock). There was also an agreement that Harding, 38, would continue to see his own therapist and be evaluated by an outside doctor. In an indication of the family’s tense situation, it was made a condition of bail that Russell Harding be in “daily telephone contact with his father.”
After the hearings, lawyer Shargel criticized the government as “somewhat brutish” for having arrested his client at home, instead of allowing him to surrender. “He’s known for months that this day would come,” Shargel said. But some officials familiar with the case said that the decision not to give Harding the usual prior notice accorded white collar defendants was motivated less by fear that he might flee than by concern for his mental state and worry that he might do harm to himself once he knew indictment was certain.
Shargel, however, said his client was in “strong mental health” and fully competent to stand trial. At one point several weeks ago, law enforcement officials were hopeful that a deal would be struck in which Harding would have agreed to plead guilty and serve a substantial prison term. That plan collapsed, however. And as one watched Harding trailing behind Shargel into a welter of TV cameras on Worth Street outside the federal court on Monday, the suspicion lingered that, despite his troubles, he didn’t mind the cameras’ steady attention.