New York once boasted the nation’s finest labor department, an agency that aggressively rooted out abuse and wage underpayments and served as a first line of defense for the state’s working men and women. But the agency that once dispatched its agents into the field to inspect every workplace now waits passively for complainants to come to it. And according to agency veterans, those complaints often wind up sitting uselessly in file cabinets.
Once staffed with committed civil servants and those who embraced its mission, the labor department is now little more than a sinkhole of political patronage. Under a Republican governor, the most powerful patron at the department is Guy Velella, the GOP state senator from the Bronx. Despite his own pending criminal case, Velella is chair of the senate labor committee, a post that allows him to stock the labor agency with friends and allies, in much the same way as the state stocks its trout streams.
For a glimpse into how far things have degenerated, just stop by the bribery trial of former state labor commissioner James McGowan, now under way in federal court in White Plains.
McGowan, ousted from his post in October 2000, is alleged to have taken cash payments from an old friend, driving-schools operator John Segreti, to steer state grants Segreti’s way. Segreti, who is also charged, boasts powerful Albany friends, including Velella. According to the charges, McGowan allegedly leaned on aides to make sure federally funded welfare-to-work programs included mandatory courses in driver’s ed, courses that would conveniently be offered by Segreti’s National Traffic Safety Institute. In turn, Segreti is alleged to have spent some $12,400 on McGowan’s behalf, picking up the tab for a trip to Disney World, an office Christmas party, hotel stays, country club dues, and small monthly payments to the commissioner.
As bribery payoffs go, it’s not a large amount of money, but McGowan was clearly already favorably disposed toward helping his friend. The two were such close chums that several payments were listed on Segreti’s ledgers as going to “Dog Face”—the auto school executive’s endearing nickname for his pal the commissioner. According to Ronald Harnisch, a veteran Albany lobbyist who pled guilty to his own role in the scheme last summer, Segreti had also pledged to put McGowan on the company payroll at the end of his term as commissioner.
McGowan is a short man with a thick shock of gray hair and a cheerful grin. He was head of the state firefighters’ association, and uniformed fire officers have been a steady courtroom presence at his trial. A resident of Yorktown Heights, McGowan was friendly with George Pataki, and when a vacancy arose in early 1998, Pataki, with Velella’s blessing, named him labor commissioner. At the end of his first year in office, McGowan threw a Christmas party for friends and top agency executives at LoPorto’s Sign of the Tree in Albany. There was lavish food, an open bar, and a crowd of songsters around the piano, led by McGowan. “I recall they kept the piano player late,” a restaurant manager testified last week at the trial. The manager also testified that the bills for that party, as well as a more expensive earlier one celebrating McGowan’s appointment, were routed to Segreti.
Last week, prosecutors Cynthia Dunn and Perry Carbone presented high-level testimony about McGowan’s efforts to help his friend’s firm. State education commissioner Richard Mills took the stand to tell about a special early-morning appointment McGowan made to see him in the fall of 1999 to discuss welfare-to-work programs. Upon his arrival, Mills said, McGowan explained that he knew someone who had a driving school that needed to obtain a proprietary license from Mills’s agency in order to qualify for state training grants. “It struck me as unusual for a commissioner to come and have a meeting for something like this,” said Mills. When the license was slow in being approved, Mills testified, McGowan complained to the education commissioner and his top assistant.
Karen Papandrea, who directs the labor agency’s welfare-to-work programs, said she also encountered a less jovial side of McGowan. She said the commissioner continually spoke about the need to include a drivers’ training component in all training grants awarded by the agency, despite staff insistence that, since two-thirds of the state’s welfare recipients reside in New York City, where most people take public transportation, there was no need to make driver training mandatory. Yet McGowan was adamant, she said. In early 2000, a “red-faced” McGowan returned from lunch and took her aside, demanding to know where things stood with the driver training. “It was clear he’d been drinking,” Papandrea testified. Later, she said, at McGowan’s urging, the ranking of applicants for state grants was redone, benefiting at least one large state contractor that had agreed to use Segreti’s company.
The changes were never implemented, however, because McGowan was forced to resign a few weeks later, after Papandrea and other agency aides alerted the state’s inspector general. McGowan’s attorney, Ronald Rubenstein, said his client had done nothing wrong. “He was an outsider in an agency where they were used to business as usual,” he said. “There was no quid pro quo here and, hence, no crime.”